Strategy and Innovation – Portfolio Test 3 Question 1 True or False? Path dependency not only impacts on the strategic choices a firm considers and makes, it also influences the expectations of key stakeholders – shareholders, regulators, media etc. An approach in the industry becomes the expected norm and managers are challenged if they go against that norm. Ultimately the approach becomes taken for granted and not even thought about.  True  False Question 2 Kim and Mauborgne’s strategy canvas depicts the ‘as is’ value curve and ‘target’ value curve by plotting competitive factors against which of the following? The amount of each competing factor (e.g. in the hotel industry the number room types) The perceived quality or value as rated by customers) The level of fit to customer’s needs derived from senior managers interviewing customers and non customers The difficulty competitors have copying each competing factor Question 3 Which of the following is at the core of the Blue Ocean strategy perspective? a. Possessing a small number of unique and difficult to copy competencies that enable the firm to do things others can not b. Looking across and challenging existing industry boundaries to create uncontested market space c. Seeking a series of resource advantages. As competitors match an advantage the firm has moved on to a new source of advantage d. Choosing a position in an industry and then aligning all the activities in the firm to that choice Question 4 Which of the following were competing factors in the ‘as is’ value curve for Blockbuster and other video rental stores a. The customer value delivered by the video store offering. b. Number of copies available in store of new release hit films c. Rental price d. Proximity of physical store to residential areas e. Number of Stores Question 5 True or False? As a product or service passes through its life cycle – from invention to maturity – a dominant design will emerge in an industry. At early stages of the life cycle there will be wide variations in the components used and also in the product and production architecture. However, in maturity, when a dominant design is established, the architecture will be set  and often taken for granted, with competition taking place on changes to components.  True  False Question 6 Which of the following are symptoms you will tend to see if a firm has misinterpreted architectural innovation as component or modular innovation? a. Legacy processes and systems (e.g. IT systems) hinder the transitioning to a new architecture b. Change is being interpreted through existing, usually effective, frameworks (e.g. capital allocation processes, capacity planning) and explained by making links to previous events c. The firm makes rational choices to serve the needs of it’s best customers for whom the new approach does not offer the required performance d. The firm is reluctant or unable to redirect time and resources to the new approach (often the firm is still reliant on the revenue generated by the old approach) e. Managers are unsure of what existing architectural knowledge can be retained and what needs to be replaced f. The firm does not possess the competencies needed to make the change and can not obtain them Question 7 True or False? As performance of a low end innovation improves and starts to attract the customers who had traditionally been price sensitive, and who made little contribution to profitability, Christensen argues that the a logical reaction of existing firms is to increase focus on existing customers especially those who need higher performance and are often more profitable. True  False Question 8 What are the two types of innovation that Christensen suggests have the potential to cause disruption a. An innovation with very low performance on attributes valued in the market (Low-End Foothold) b. An upgrade in the performance of the the products sold in the market (High-End Foothold) c. An innovation in a new market segment/adjacent industry offering different attributes not valued in the established market (New-Market Foothold) d. A radical innovation that offers superior performance to existing customers (First Mover Foothold) Question 9 How should you use the theories of disruption to analyse a case or business? a. Work through each of the two theories separately and see what facts from the case or business fit the theory. b. Pick the theory you prefer and just use that in your analysis c. Work through the case drawing in which ever element of the theory fits what you see. Question 10 Which of the following suggest that Christensen’s theory of disruptive innovation may explain the failure of Blockbuster? a. Initially Netflix was a low performing market entrant that could not match the performance of Blockbuster on traditional industry metrics (e.g. availability of latest Hollywood film releases) b. Recruitment of a new CEO with retail turnaround experience c. The focus by Blockbuster on to in-store cross-sales to its regular (best) customers d. Netflix/streaming was just one of the competitive changes faced by the video rental market in the early 2000s (e.g. supermarket sales, vending machines, Amazon)

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