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Exam 3: Entrepreneurial Strategy: Generating and Exploiting New Entries

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Question 1

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Franchising:

A) is the only imitation strategy discussed in the text.
B) reduces risk of downside loss.
C) is the same as the me-too strategy.
D) reduces the amount of competition an entrepreneur will face.

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Question 2

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Regarding entry into a new market,which of the following is(are) true?

A) First movers gain expertise through participation.
B) First movers are not able to detect changes in the market.
C) First movers suffer a cost disadvantage.
D) First movers face more competitive rivalry.

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Question 3

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First movers face:

Identify and briefly describe the major stages of entrepreneurial strategy.

An entrepreneurial strategy is the set of decisions,actions,and reactions that protect the firm from new entrants.

The longer the entrepreneur takes to research a new entry,the less accurate customer demand estimates are.

The basic building blocks to a firm,or the inputs into the production process,are:

By entering a market later,

Technological uncertainty:

Knowledge is the basis of the entrepreneurial resource.

List the 5 main first-mover advantages discussed in the text.

An error of omission occurs from the decision not to act of a new entry opportunity when in hindsight they should have.

Which of the following is not a reason that first movers are better positioned to satisfy their customers?

Which item is not part of the new entry generation stage in the entrepreneurial strategy process?

Experience is idiosyncratic-unique to the life of the individual.

To be the basis of a firm's superior performance over competitors for an extended period of time,valuable and rare resources need to be:

By overestimating demand,the entrepreneur will suffer the costs of under capacity.

Identify and describe the three major risk reduction strategies. A.Narrow scope - A narrow-scope strategy offers a small product range to a small number of customer groups to satisfy a particular need.The narrow scope can reduce the risk that the firm will face competition with larger,more established firms in a number of ways.A narrow-scope strategy focuses the firm on producing customized products,localized business operations,and high levels of product quality.By focusing on a specific group of customers,the entrepreneur can build up specialized expertise and knowledge that provide an advantage over companies that are competing more broadly.The high end of the market typically represents a highly profitable niche. B.Broad scope - broad-scope strategy can be thought of as taking a "portfolio" approach to dealing with uncertainties about the attractiveness of different market segments.By offering a range of products across many different market segments,the entrepreneur can gain an understanding of the whole market by determining which products are the most profitable.Unsuccessful products (and market segments)can then be dropped and resources concentrated on those product markets that show the greatest promise.In essence,the entrepreneur can cope with market uncertainty by using a broad-scope strategy to learn about the market through a process of trial and error. C.Imitation strategies - Imitation is another strategy for minimizing the risk of downside loss associated with new entry.Imitation involves copying the practices of other firms,whether those other firms are in the industry being entered or from related industries.Entrepreneurs may simply find it easier to imitate the practices of a successful firm than to go through the process of a systematic and expensive search that still requires a decision based on imperfect information.In essence,imitation represents a substitute for individual learning.Imitating some of the practices of established successful firms can help the entrepreneur develop the skills necessary to be successful in the industry,rather than attempting to work out which skills are required and develop these skills from scratch.Imitation also provides organizational legitimacy.If the entrepreneur acts like a well established firm,it is likely to be perceived by customers as well established.Imitation is a means of gaining status and prestige.Customers feel more comfortable doing business with firms that they perceive to be established and prestigious.

A broad-scope market strategy:

Offering a small product range to a small number of customer groups is: