Student name:__________

TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) It is wise for firms to always respond to competitive actions with competitive responses.

⊚ false

2) When breweries in Sweden cooperate in recycling used bottles but still compete for
customers on the basis of taste and variety, this is closely related to forbearance.

⊚ false

3) The cycle of actions and reactions that occur in business every day is a vital aspect of
entrepreneurial strategy that leads to continual new value creation and the ongoing advancement
of economic well-being.

⊚ true

4) Successful entrepreneurs are usually young.

⊚ false

5) As explained in Strategy Spotlight 8.1 Pillpack originated from a need identified by a

pharmacist.

⊚ true

6) Small businesses create the majority of new jobs in the U.S. economy.

⊚ true

7) Opportunity recognition is the process of identifying and selecting entrepreneurial

opportunities. It does not involve the development of those ideas.

⊚ false

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8) The evaluation phase of opportunity recognition occurs when an entrepreneur has an
insight about a new business venture, often based on prior knowledge.

⊚ false

9) The majority of entrepreneurial start-ups are financed with angel financing.

⊚ false

10) An entry wedge is a type of entrepreneurial strategy firms can use to enter into business.

⊚ true

11) Adaptive new entry involves offering a radical new product or highly innovative service.

⊚ false

12) Choosing which new entry strategy is best depends on competitive financial and
marketplace considerations. The greatest opportunities most likely will be in existing markets,
rather than in new markets.

⊚ false

13) Smell-O-Vision created an invention that would pump odors into movie theatres. It did
not make it to market. This was an attempt to be an adaptive entry strategy.

⊚ false

14) Entrepreneurial firms are often in a strong position to use combination strategies, because
they have the flexibility to approach situations uniquely.

⊚ true

15) The Amazon approach to selling books online, offering superior customer service, gave it
a strong entry strategy. This is an example of a focus strategy.

⊚ false

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16) A focus strategy must not include elements of differentiation and overall cost leadership
in order to be successful.

⊚ false

17) Running Press created a line of palm-sized mini books that were sold as point-of-sale
impulse items. The company grew rapidly, even though it had a small fraction of the sales in the
publishing industry. They used a pure overall cost leadership strategy to capture market share.

⊚ false

18) Entrepreneurial new entry is often perceived as a competitive threat to incumbent firms
because most market needs are being met, either directly or indirectly, by existing firms.

⊚ true

19) New entry is among the most common reasons why a cycle of competitive actions and
reactions gets started among similar competitors.

⊚ true

20) New entry into markets, whether by start-ups or by incumbent firms, rarely threatens
existing competitors.

⊚ false

21) If similar competitors vie for the same customers in a marketplace, they are likely to
escalate their competitive strategy through a reactive series of actions and responses.

⊚ true

22) Market commonality is the extent to which rivals draw from the same types of resources.

⊚ false

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23) When attacked, older and larger firms tend to respond more quickly, but their responses
are often more predictable.

⊚ false

24) Cutting prices or increasing marketing efforts are examples of tactical competitive
actions.

⊚ true

25) Forbearance is a particularly aggressive type of competitive attack.

⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
26) According to an Inc. magazine survey, the average age of entrepreneurs at the time of
firm founding is between ________. For the fastest growing entrepreneurial firms the average
age of the founder is ________.

A) 40 to 42; 49

27) It is called ________ when a firm chooses not to react to the competitive action of a
rival.

C) forbearance

28) ________, a combination of competing and cooperating, is a strategy used often by

companies and from which they benefit.

D) Co-opetition

29) As long as the benefits of ________ are enjoyed by all participants in a co-opetition
system, the practice can aid companies in avoiding intense and damaging competition.

A) cooperating

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30) A risk of co-opetition is if the companies actions are perceived as

C) collusion.

31) When Volkswagen, BMW, and Mercedes were accused of limiting the emission reducing
technology included in their cars in order to minimize their production costs, the European
Commission investigators found that they had ________ which was illegal.

B) colluded

32) Competitive actions can take many forms. Which is not likely to be one of them?

B) the exit of a successful business from the market

33) When Hollywood studios agreed to cooperate on buying movie film from Kodak, this is
an example of

B) co-opetition.

34) TJ Parker went through the process of opportunity recognition when he developed
PillPack. This means he ________, ________, and ________ the potential opportunity that arose
from customers finding it difficult to keep to their medication schedule.

D) identified; selected; developed

35) During the ________ phase, TJ Parker became aware of a new business concept to help
patients keep on schedule with their medications. The result was the PillPack firm.

D) discovery

36) For TJ Parker of PillPack, ________ discovery occurred as the result of a deliberate
search for a creative solution to the problem his customers had with adhering to their medication
schedule.

C) opportunity

37) According to the text, for an entrepreneurial start-up to be successful, three ingredients
are critical. What are they?

B) a viable opportunity, available resources, and a qualified and motivated founding team

38) Which of the following is not a common source of new business opportunities?

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D) future work

39) ________ is the process of identifying, selecting, and developing new venture
opportunities.

C) Opportunity recognition

40) Generally speaking the opportunity recognition process consists of two phases of activity.
They are ________ and ________.

D) discovery; evaluation

41) Which of the following is not one of the characteristics of an entrepreneurial

opportunity?

A) affordable

42) ________ is a value required when an opportunity is attractive long enough for it to be
successfully developed and deployed.

B) Durable

43) Which of the following terms is used to refer to opportunities that are practical and
physically possible?

D) achievable

44) Which of the following is not a primary source of financing for entrepreneurial start-
ups?

B) public equity

45) According to a study by the Kauffman Foundation, which of the following is the largest
source of funding for businesses that have been operating at least five years?

C) loans

46) The majority of entrepreneurial start-ups are financed through monies from

C) personal savings and the contributions of family and friends.

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47) ________ are private individuals who provide seed capital to young ventures.

B) Angels

48) Which of the following statements about venture capital is false?

D) Venture capital is a form of public equity financing.

49) Opportunities can be found through a structured search process. The example of Ancient
Ales with their innovative line of craft beers demonstrates which of the following types of
structured search?

D) Find historical ideas and re-purpose them.

50) According to the text, new ventures launched by entrepreneurial teams are more likely to
be successful than ventures launched by

B) lone wolf entrepreneurs.

51) Which of the following is the most important resource for a start-up activity?

D) money

52) ________ provide(s) a key avenue for growth for many young and small firms through
partnering to obtain resources and to expand into new markets.

A) Strategic alliances

53) The U.S. Small Business Administration supports small business through all the
following except

B) investing venture capital.

54) Which of the following is not one of the three characteristics of entrepreneurial
leadership mentioned by the text?

A) clarifying job responsibilities

55) Vision is an important element of entrepreneurial leadership because

B) the entrepreneur has to envision realities that do not yet exist.

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56) Jeannine Fradelizio noticed that at parties she hosted, guests would set down their wine
glasses and forget which one was their glass. She designed the Wine Glass Writer to solve this
problem. She used the process of

C) opportunity recognition.

57) Precision Hawk, a company using drones to do aerial data analysis reached out to Hahn
Estate Winery to understand their needs in analyzing crop health. Precision Hawk was
conversing with Hahn Estate Winery in order to

D) identify an opportunity.

58) According to the textbook, which of the following is not a common new entry strategy?

D) proactive new entry

59) Seeking products or services that have been successful in one market and introducing the
same basic product or service in another segment of the market is referred to as ________ new
entry.

B) imitative

60) When launching a new venture, finding a way to begin doing business must ________
generate cash flow, build credibility, attract good employees, and overcome the liability of
newness.

B) quickly

61) The first personal computer revolutionized computing and how business is conducted. It
was using a(n) ________ entry strategy.

B) pioneering

62) The new entry strategy that a firm chooses is dependent upon the ________ and the
________ of the new business concept.

C) riskiness; innovativeness

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63) Smell-O-Vision designed an invention to pump odors into movie theatres. It flopped, in
spite of its innovativeness. What kind of new entry strategy was the company using to penetrate
the market?

C) pioneering

64) Square provides a means for small businesses to process credit and debit card sales
without signing up for a traditional credit card arrangement of monthly fees and minimum
charges. When its business grew rapidly, Apple, Google, and PayPal responded with ________
actions.

B) imitative

65) Tom Monahan, a business creativity coach, says that every new idea is merely a spin of
an old idea. A company that enters the market by offering a product or service that is somewhat
new and sufficiently different in order to create value for customers by capitalizing on current
trends is using which new entry strategy?

D) adaptive

66) In 2005, Plum Organics entered the market with convenient organic baby food and snack
foods for children. It now has over 20 products and had sales of over $50M in 2017. It used
which new entry strategy in 2005?

D) adaptive

67) Mint entered the market in 2005 with comprehensive online money management systems
that tells users what they are spending by aggregating financial information from online bank and
credit card accounts. Today it has over 20 million users and is helping them manage over 3
billion USD in assets. It used which new entry strategy in 2005?

B) adaptive

68) Founded in 1995, Under Armour, Inc. sells undershirts and other athletic gear using
moisture-wicking fabric for sweaty sports. By 2016, it reached the number two athletic clothing
firm spot with over 5.2 billion in sales. It used which new entry strategy in 2005?

C) adaptive

69) Spanx, the footless pantyhose and other undergarments for women company was founded
in 2000. It combined nylon and Lycra to create a new type of undergarment that is comfortable
and eliminates panty lines. It now produces over 200 products, generating over 400 million USD
in annual sales. It used which new entry strategy in 2005?

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 A) adaptive

70) Which of the following is not a factor that makes it more difficult for new ventures to be
successful as differentiators?

D) Customer service is often costly, but it does not affect a differentiation strategy.

71) Amazon is an example of a company that used the differentiation strategy to enter the
market. The differentiation features included

C) exceptional customer service.

72) Shakespeare & Co. was reimagined in 2015 to meet the current needs of the market when
Dan Neller purchased the NY bookstore. He provided a place to find the hottest books, the
ability to print more obscure titles, and a rare level of service that made the store feel like a
destination. He used which generic strategy to achieve competitive advantages?

B) differentiation

73) One of the ways entrepreneurs achieve success is by using resources more efficiently.
This is an example of how entrepreneurs use a(n) ________ strategy.

B) low-cost leader

74) Entrepreneurial firms that pursue a low-cost leadership strategy use all the following to
achieve lower costs except

D) extensive investment in order to achieve economies of scale.

75) When an industry is mature, a(n) ________ strategy is considered one of the most
effective approaches for a new entrant.

A) focus

76) According to the text, which of the following does not make it difficult for
entrepreneurial firms to effectively pursue a strategy of differentiation?

B) Incumbent firms are constantly seeking opportunities to specialize in market niches.

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77) New ventures may find it difficult to use differentiation strategies successfully because
they lack ________ and ________.

A) sufficient funding; superior innovation

78) Running Press launched the Miniature Editions line of books in 1993. Today it has sold
over 20 million copies. Which of the following most closely represents their strategy?

C) focus

79) ________ is the intense rivalry involving actions and responses among similar
competitors vying for the same customers in a marketplace.

A) Competitive dynamics

80) Competitors in a mature market typically find that a new entrant is threatening because

A) nearly all market need is already being met.

81) In competitive dynamics, new entrants may be forced to change their strategies or
develop new ones to ________ competitive challenges by ________.

C) survive; incumbents

82) Unilever has taken a dominant position (65 percent market share) in the Vietnamese
laundry detergent market by employing an investment and marketing campaign that decimated
the market position of the local, incumbent competitors. According to the Stalk and Lachenauer
book, this is an example of ________ strategy.

D) unleash massive and overwhelming force

83) Walmart began offering low-priced extended warranties on home electronics after
learning that its rivals such as Best Buy derived most of their profits from extended warranties.
According to the Stalk and Lachenauer book, this is an example of the strategy to

C) devastate rivals’ profit sanctuaries.

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84) In designing its smartphones, Samsung copied the look, feel, and technological attributes
of the Apple iPhone. By copying Apple, Samsung was able to improve its market position.
According to the Stalk and Lachenauer book, this is an example of strategy to

A) plagiarize with pride.

85) The business-to-business cleaning supply company, Ecolab, encouraged a leading

competitor, Diversity, to adopt a strategy to go after low-volume, high-margin customers. What
Ecolab knew that Diversity did not is that the high servicing costs involved with the segment
makes it unprofitable. Ecolab bid high enough to lose the contracts to Diversity but low enough
to ensure that Diversity lost money. According to the Stalk and Lachenauer book, this is an
example of the strategy to

C) raise competitors’ costs.

86) Which of the following is not one of the reasons a company might launch new
competitive actions?

C) to find new sources of raw materials

87) BCG authors Stalk and Lachenauer published a book in which they listed competitive
strategy for winning against incumbent rivals. Which of the following is not one of their
suggested strategies?

B) lower competitors’ costs

88) Aircraft makers Boeing and Airbus have a high degree of ________ because they make
very similar products and have many buyers in common.

C) market commonality

89) Telecommunication equipment providers, Huawei and Nokia, have a high degree of
________ because they have patent rights to similar technologies, high-quality engineering
staffs, and global sales forces.

B) resource similarity

90) The Wall Street Journal and New York Times have seen the intensity of their rivalry
increase. One factor driving this is that The Wall Street Journal has moved from financial news
reporting to general national and global news reporting and finally, to adding local New York
news. The rivalry of these two news providers has increased due to

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C) increased market commonality.

91) When any two firms have both a high degree of market commonality and highly similar
resources, a ________ threat is present.

C) stronger competitive

92) Which of the below best describes the competitive tendencies of small firms?

C) Small firms are more nimble and can respond quickly to competitive attacks.

93) Southwest Airlines began its no frills, no meals strategy in the late 1960s as a direct
assault on the major carriers of the day. What type of competitive action does this represent?

B) A tactical action because it is a refinement of an existing strategy.

94) All the following are examples of strategic actions a firm might take except

D) change product packaging.

95) The best example of a tactical action that a company might use in response to a
competitive attack is to

B) offer price discounts and rebates.

96) Which of the following is not a factor that affects how a competitor will respond to a
competitive attack?

C) the stock market reaction to the initial competitive attack

97) Which of the following refers to a situation where a company has a high concentration of
its business in a particular industry market?

C) market dependence

98) A firm is considering a large price cut on its leading product to gain market share. One
executive strongly disagrees with the price cut. He observes that they are in the same
marketplace as their rivals and do not have any competitive advantages in their cost structure. If
they cut prices, their competitors will likely do the same. The result is that everyone will make
less money. These arguments are an example of a

B) strategy of forbearance.

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99) Strategic competitive actions include all the following except

C) product and service enhancements.

100) When a company chooses to maintain low-price dominance, it is using which tactical
action?

B) price cutting

101) When a company chooses to use guerrilla marketing, it is using a ________ competitive
action.

B) tactical

102) TOMS Shoes generates interest in its products without a large advertising budget. It uses
a Facebook page to create buzz. This is an example of a

B) tactical action.

103) A small firm may be unable to mount a serious attack due to lack of resources. As a
result, it is more likely to react to ________ actions, such as incentive pricing or enhanced
service offerings, because they are less costly to attack than large-scale strategic actions.

C) tactical

104) When GM offers discounts and incentives, rivals Ford and Chrysler cannot afford to
ignore the challenge and quickly follow suit. Which one of the following is a reason Ford and
Chrysler are more likely to respond?

C) the reputation and history of GM in the market

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