TESTBANK: CHAPTER 10
Competitive Advantage in Mature Industries
1. Very few companies in mature industries are able to achieve high profitability and rapid growth.
[See p.274]
2. Maturity tends to shift the opportunities for competitive advantage from differentiation-based factors to
cost-based factors.
[See p.274]
3. Low-cost inputs, low overheads, and R&D effectiveness are the three primary drivers of cost in
mature industries.
[See p.275]
4. Overinvestment in production capacity, internationalization, and commoditization are factors that
depress the profitability of mature industries.
[See p.275]
5. In mature industries new entrants are almost always at a cost disadvantage to established firms.
[See p.275]
6. The correlation between return on investment and market share in mature industries indicates the
importance of scale economies as a source of competitive advantage in mature industries.
[See p.275]
7. In mature industries, the profitability advantages of specializing in only attractive industry segments
are usually outweighed by the scale advantages of a broad segment scope.
[See p.276]
8. In tires, domestic appliances, and airlines, achieving differentiation advantage is constrained by
customers’ unwillingness to pay a price premium for differentiation that exceeds the cost of
differentiation.
[See p.277]
9. The retail sector offers many opportunities for establishing differentiation advantage and these
advantages can usually be sustained over time.
[See p.277]
10. “New game strategies” and “blue-ocean strategies” and both types of strategy oriented towards
strategic innovation.
[See p.278]
11. Strategic innovation in mature industries usually involves the application of new technology.
[See p.278]
12. Central to the strategies of Starbucks and Harley Davidson is the notion that they are not simply
supplying a product but involving their customers in an experience of which the product forms only
one component.
[See p.279]
13. Providing “customer solutions” involves offering customers a customized bundle of products and
services.
[See p.279]
14. Enterprise Rent-A-Car and wealth management advisers, Edward Jones are examples of companies
that have established a competitive advantage through defying the conventional wisdom concerning
key success factors in their industries.
[See p.279]
15. Bureaucratic approaches to management are seldom conducive to cost efficiency within a mature
industry.
[See p.280]
16. Leadership models which have been shown to be effective for companies in mature industries
include: the administrator, the autocrat, and the strategic leader.
[See p.281]
17. Companies in mature industries where cost efficiency is the critical success factor (such as
wholesale distribution, airlines, and logistics) tend to favour qualitative performance targets over
quantitative performance targets.
[See p.282]
18. The transition of an industry from mature to decline is most commonly the result of technological
obsolescence as superior substitutes become available.
[See p.282]
19. A critical determinant of the profitability of a declining industry is the balance between capacity
and output during decline.
[See p.283]
20. An industry leadership strategy involving continued investment, acquiring competitors, and
encouraging rivals to exit is seldom advisable for a firm in a declining industry.
[See p.284]
21. The evidence from watches, pens, and cigars is that the best segments of a declining industry in
which to be located are usually the low-price segments that cater to the mass market.
[See pp.284-285]
Multiple Choice Questions
22. An implication of industry maturity for competitive advantage is that:
[See pp.274-275]
23. Warren Buffet’s distinction between a “franchise” and a “business” refers to:
[See p.275]
24. In mature industries, the most important sources of cost advantage are:
[See pp.275-276]
25. With maturity, the opportunities for differentiation become scarcer due to:
[See p.281
26. The major source of differentiation in mature industries is:
[See p.277]
27. Competition in mature, low-technology industries such as tires, brassieres, and fishing rods reveals:
[See pp.277-278]
28. Which of the following tends not a major source of strategic innovation in mature industries?
[See pp.278-279]
29. Strategic innovation is best described as:
[See p.278]
30. The success of Edward Jones (a wealth management advisor) and Enterprise Rent-A-Car is based
upon:
[See p.279]
31. In terms of building competitive advantage, Harley-Davidson’s motorcycles and Nintendo’s Wii
video games console share the following:
[See p.278]
32. A key assumption that underlines the strategies of most banks, hotels, international airlines and Las
Vegas casinos is:
[See p.279]
33. A distinctive feature of the strategies of Starbucks, Lego, and Harley-Davidson is:
[See pp.278-279]
34. Achieving strategic innovation requires that managers in mature sectors need to:
[See p.279]
35. The management systems of leading firms in mature industries such as UPS, Wal-Mart, Nucor, and
ExxonMobil are characterized by:
[See p.282]
36. The pursuit of efficiency within mature industries is typically achieved through management
systems that:
[See p.282]
37. One of the greatest challenges of strategy implementation in mature industries is:
[See p.282]
38. In mature industries where companies compete primarily on prices and cost efficiency, the most
appropriate type of performance controls are:
[See p.287
39. In a declining industry that lacks strong pockets of continuing demand, a suitable strategy would
be:
[See pp.284-285]
40. The single most important factor that determines the profitability of a declining industry is:
[See p.283]
41. Conditions conducive to a firm adopting a leadership strategy in a declining industry are:
[See p.284]
42. Which of the following factors is not a source of barriers to the exit of capacity from the European
oil refining industry: a declining industry includes not just the presence of durable, specialized assets
and the costs of plant closure, but also:
[See: pp.283-284]