Deck 10: Innovative Strategies That Change the Nature of Competition

Question 1

An automobile company used its profits from the sale of motorcycles to invest in the development of cars.These cars were less expensive but technologically more advanced than those of its competitors.This is an example of _____.

A) disintermediation
B) low-end disruptive innovations
C) standardization
D) high-end disruptive innovations

Answer 1

B

Question 2

Which of the following statements is true of an incremental innovation?

A) It focuses on a different knowledge base to deliver value in a truly unique way.
B) It creates new values through a different set of resources and capabilities than that of rivals.
C) It sustains a company's current product offering and revenues.
D) It typically creates improvements based on the knowledge perceived from competitors.

Answer 2

C

Question 3

Lila, the CEO of Purple Inc., a bag manufacturing company, observes that customers prefer some personalized features.She considers implementing a mass customization strategy, while the production manager, Steven, suggests that standardization is the best strategy.Which of the following will strengthen Lila's decision?

A) Purple's customers are wholesalers who prefer bulk order of standard products.
B) Purple's production budget allows only mass production from start to finish.
C) Purple's value is primarily based on it being perceived as an economical brand.
D) Purple's production facility allows for mass production and alterations at the end stage.

Answer 3

D

Question 4

An automobile manufacturer creates high-performance products, which are new in the market.Since the product offers features that are unique, customers were willing to pay a high price for the product.However, after a couple of months, other brands offered the same features at a lower price, which made the innovators reduce the price as well.Which of the following innovations is being exemplified in this scenario?

A) A disintermediation strategy
B) A low-end disruptive innovation
C) A customization strategy
D) A high-end disruptive innovation

Question 5

Inks Corp.is a manufacturer of pens.It creates a new product called  HYPERLINK "http://en.wikipedia.org/wiki/Quink" \o "Quink" Quink, a quick-drying ink pen that does not require the use of blotting paper.It creates this product by building on its established knowledge of the properties of ink and the mechanisms of a pen.Which of the following innovations is being exemplified in this case?

A) A revolutionary innovation
B) An incremental innovation
C) A radical innovation
D) A subversive innovation

Question 6

A salon that specializes in haircuts comes up with a new service that sets it apart from those of its rivals.Clients are requested to send in their photographs; the stylists then create a set of digital images with various looks.Once the client chooses a desired look, a stylist goes to the client's home to deliver the service.The strategy of creating digital images, which requires a unique set of resources and skills, is an example of a(n) _____.

A) altered innovation
B) incremental innovation
C) radical innovation
D) progressive innovation

Question 7

Prints Inc., offers visiting cards, brochures, business cards, and personalized greeting cards.It allows customers to choose from a set of modules and create their own designs.Which of the following is being exemplified in this case?

A) Recon?guration of the value chain to eliminate activities
B) Creation of a low-end disruptive innovation
C) Reconfiguration of the value chain to allow for mass customization
D) Creation of a high-end disruptive innovation

Question 8

Gem Inc.a clothing manufacturer, creates a new strategy to increase its customer base.Maya, a marketing student, observes that Gem engages in disintermediation, while Nate, her friend, believes that this observation is incorrect.Which of the following statements is likely to support Maya's observation?

A) Gem is likely to offer coupons to regular customers and increase brand loyalty.
B) Gem is likely to create disruptive innovations to eliminate competition.
C) Gem is likely to eliminate middlemen and directly deliver products to customers.
D) Gem is likely to misrepresent facts in its promotions to increase sales.

Question 9

Which of the following statements is true of a high-end disruptive innovation?

A) It disrupts an existing market by displacing a high-end technology with a low-end tool.
B) It relies on discounted prices to increase the sale of high-end services.
C) It uses the price skimming strategy to gain a foothold in the market.
D) It creates new products that offer superior performance on some existing product features.

Question 10

Which of the following statements is true of a firm that creates a radical innovation?

A) It focuses on the established knowledge base of a firm to deliver value.
B) It relies on existing technologies and resources to create a new product.
C) It employs a fundamentally different business model than its rivals.
D) It aims to sustain its current product offering and revenues.

Question 11

A software firm decides to offer its products at a lower price.In order to reduce costs, it outsources some of its in-house functions to countries that offer less expensive labor.As a result, it gains a cost advantage.The strategy adopted by this firm is an example of _____.

A) disintermediation
B) low-end disruptive innovations
C) free business models
D) high-end disruptive innovations

Question 12

Copper Inc., an existing clothing outlet, decides to shift from direct to online retailing.It offers the same products at a reduced price as it does not have to incur the costs to manage a store.In this case, which of the following patterns of innovative strategies has Copper adopted?

A) Recon?guring the value chain to eliminate activities
B) Creating low-end disruptive innovations to decrease competition
C) Forming product differentiation strategies to increase value
D) Adding additional product features to increase the product life-cycle

Question 13

A clothing manufacturer produces some basic models on a large scale.The customers can then choose print, color, embellishments, and size and place a specific order.Which of the following is being exemplified in this case?

A) Recon?guration of the value chain to eliminate activities
B) Creation of a low-end disruptive innovation
C) Reconfiguration of the value chain to allow for mass customization
D) Creation of a high-end disruptive innovation

Question 14

Stars Corp.decides to eliminate activities associated with collecting and storing the products by directly distributing the finished goods to its customers.This enabled Stars to reduce the total cost.Which of the following is being exemplified in this case?

A) Disintermediation
B) Low-end disruptive innovations
C) Standardization
D) High-end radical innovations

Question 15

Nathan, a designer at Zeal Inc., comes up with a new idea.While Nathan considers turning it into a piece of art, Ricky, his colleague, suggests converting the idea into a product that generates revenue.Ricky's suggestion to convert the idea into a revenue-generating product refers to a(n) _____.

A) innovation
B) revolution
C) invention
D) variation

Question 16

The approach, or pricing strategy, a company uses to get paid for the value it delivers through its business model is called the _____.

A) cost model
B) customization model
C) differentiation model
D) revenue model

Question 17

Pearl Corp., a manufacturer of dental equipment, creates a new instrument.With the experience it has in creating small equipment required for dental surgeries, it customizes the new tool to be more accurate and effective.It also comes with an improvised handle.Which of the following innovations has Pearl adopted in this scenario?

A) An altered innovation
B) An incremental innovation
C) A radical innovation
D) A progressive innovation

Question 18

Crimson Inc.initially introduced a new gadget to the niche market.Eventually, other organizations provided the same product at a lower price.Hence, Crimson had to reduce the price of the gadget to the market price.This is an example of a _____.

A) disintermediation strategy
B) low-end disruptive innovation
C) differentiation strategy
D) high-end disruptive innovation

Question 19

Which of the following statements is a characteristic of a disruptive innovation?

A) It disturbs an existing market by displacing an earlier technology.
B) It typically uses old technologies used by competitors in the market.
C) It sustains a company's current product offering by the firm's established knowledge.
D) It typically offers value in a way that is easy to imitate.

Question 20

A telecommunications service provider, Chrome Inc., creates a new application for its users.The application allows users to make free calls through the Internet.While this increased the number of paid subscribers of Chrome, its competitors who levied a fee for their telecommunication services lost their customers.This is an example of a _____.

A) supporting innovation
B) complementary innovation
C) disruptive innovation
D) decremented innovation

Question 21

The Table Mat, an online review site, provides information about restaurants, the products they offer, details on home delivery, take away, and so on.Restaurants are charged by The Table Mat for advertising to millions of product users.Which of the following is being exemplified in this case?

A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy

Question 22

Which of the following statements is true of a bundling strategy?

A) It works particularly well when a company offers a broad array of products.
B) It works best in markets where freebies are likely to be very expensive.
C) It typically uses price skimming as a strategy to increase profits.
D) It encourages sales by providing products at a discount.

Question 23

Which of the following is true of the introduction stage of the product life cycle?

A) It tries to get early adopters to try out a new product.
B) It focuses not only on a proven concept but also a low price.
C) It emphasizes increased sales and high profits.
D) It tries to minimize competition by forming an alliance with rivals.

Question 24

_____ refers to Professor Rich's argument that competitive intensity has increased, and that periods of competitive advantage have decreased.

A) Hypercompetition
B) Mass customization
C) Third-party competition
D) Standardization

Question 25

Which of the following statements is true of the cross-sell strategy?

A) It focuses on a small product user base.
B) It offers premium features to free users.
C) It requires a high conversion rate.
D) It uses discounts to gain widespread initial use.

Question 26

Flytech Inc.is an online store where people and businesses buy and sell a broad variety of goods and services.Various brands pay Flytech to advertise and sell their products online.Which of the following is being exemplified in this case?

A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy

Question 27

Peach Corp.continues to refine its chocolate products even as they look for innovative ways to reach customers through marketing and new distribution channels.In this case, the organization is in the _____ stage of the product life cycle.

A) introduction
B) growth
C) maturity
D) decline

Question 28

An organization launched a new product in the market.It offered a free trial of the basic model to gain widespread initial use, after which users were offered a nonfree premium version of the same product.Which of the following strategies is used by the company in this case?

A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy

Question 29

A cell phone manufacturing company gives away a free case with a purchase of any product higher than $50.Which of the following is being exemplified in this case?

A) A blue ocean strategy
B) A cross-sell strategy
C) A third-party pay strategy
D) A bundling strategy

Question 30

Mel Inc., a popular cosmetics and perfume brand, delivers free samples with products worth $75 and more.This is an example of _____.

A) a blue ocean strategy
B) a cross-sell strategy
C) a third-party pay strategy
D) a bundling strategy

Question 31

Lica Inc., a software company, initially offers a small percentage of its services for free.Once customers get familiar with the services, they decide to purchase them at a premium.The company makes money on the add-on services like application downloads, messenger updates, and other online services.Other companies pay Lica for advertising through these portals.Which of the following innovative strategies has been adopted by the company?

A) A combination of freemium and third-party strategies
B) A cross-sell strategy
C) A combination of high-end and low-end disruptive strategies
D) A bundling strategy

Question 32

Zolac Inc.is an online store that sells lifestyle products.It offers 15% discount on weekend purchases.This marketing strategy is an example of a _____.

A) blue ocean strategy
B) differentiation model
C) standardization strategy
D) revenue model

Question 33

Which of the following statements is true of the blue ocean strategy?

A) It disrupts an existing market by displacing an earlier technology.
B) It relies on its existing knowledge of products to improvise on new features.
C) It uses low-end disruptive innovations to compete in the market.
D) It creates new demand in an uncontested market space.

Question 34

Which of the following statements is true of mass customization?

A) It is the best option when products need to be customized from start to end.
B) It works best if a product can be broken into modules that offer different features.
C) It does not need the additional costs of creating need-specific components.
D) It does not require standard core components to be produced in large scale.

Question 35

Paws Corp., a manufacturer of pet products, tries to get a few customers to try out their products.The primary goal of the organization is to get some reference customers that will seed future growth to increase market acceptance.In this case, the organization is in the _____ stage of the product life cycle.

A) introduction
B) growth
C) maturity
D) decline

Question 36

Palm's, a new restaurant in Boston, enters the market with a new strategy.Cooking enthusiasts can co-create a dish for their family along with the in-house chefs.They also allow families to cook their meals together and dine by the poolside.None of the other restaurants in the city offers this unique service.This is an example of a _____.

A) blue ocean strategy
B) low-end disruptive innovation
C) mass-customization strategy
D) high-end disruptive innovation

Question 37

J.J.Inc., a software company, was the first to create a customized messenger application.The subscribers can choose the features they wish to install.The value offered by J.J.is different from its competitors in the market.Which of the following is being exemplified in this case?

A) A blue ocean strategy
B) A low-end disruptive innovation
C) A standardization strategy
D) A high-end disruptive innovation

Question 38

Which of the following statements is true of a third-party pay strategy?

A) It focuses on a small product user base.
B) It charges the consumers of the actual product or service a high price.
C) It requires a targeted community of users that comprises a customer segment.
D) It typically sells products for a premium price rather than at a discount.

Question 39

Jobs Now is an employment website.Like its competitors, it offers free listings in every category, which is free for job seekers but not for companies.This feature of Jobs Now is an example of _____.

A) a blue ocean strategy
B) a mass-customization strategy
C) a standardization model
D) a revenue model

Question 40

Ochre Inc.uses the freemium strategy to enter a market.This strategy becomes successful and the organization gains a wide customer base.Which of the following is likely to be true in this case?

A) It is likely to use the high-end disruptive innovation strategy.
B) It is likely to use product differentiation to mark-up the initial price of the product.
C) It is likely to gain a wide customer base only if there is a high conversion rate.
D) It is likely to gain new customers in an existing market only through price skimming.

Question 41

_____ coined the term hypercompetition.

Question 42

What is a business model? Briefly explain the revenue model.

Question 43

A radical innovative strategy in which companies in the same industry find the innovation so destructive that they can no longer do business as usual is called a(n) _____.

Question 44

A(n) _____ describes the creation of a unique or novel concept, method or process that is often turned into a tangible outcome.

Question 45

What are low-end disruptive innovations? Explain with an example.

Question 46

Explain the four stages of the product life cycle.

Question 47

Explain mass customization with an example.

Question 48

Creating new demand in an uncontested market space is called the _____.

Question 49

Define two general categories of innovations.

Question 50

Groups of people who share similar needs and thus are likely to desire the same features in a product are called _____.