CHAPTER 6
In a mature industry, a company can employ several
Quiz
1. The problem of excess capacity in a mature industry is often
caused by competitive factors. Which of these represents an
effective capacity control strategy?
a. The 12 nations of OPEC gather regularly to discuss oil
production across the globe. Their decisions and
2. A strategy that involves developing new products to serve
every niche and segment of the marketplace to prevent start-
up companies from entering an industry is known as:
d. Product proliferation strategy
3. After a company has developed a value innovation in a
fragmented industry, it often needs to scale up quickly. Which
of these is a strategy for growing a business with multiple
corporate-owned locations?
c. Chaining
4. Often companies employ a blend of the franchising and
chaining model. Which of these is a recent example of this
blended model and the implications the structure can have on
a stakeholder group?
a. McDonald's announced plans to increase the minimum
wage of its workers at 1,500 corporate-owned stores
5 A mature industry is one that:
c. is dominated by a small number of large companies but may
also have specialized medium-sized and small companies.
6. Social media has become an excellent tool for organizations
to spread the word about their products and causes. Which of
these demonstrates the viral model of infection at work on a
social media platform?
b. During a video campaign on social media that included
numerous celebrities and thousands of submitted videos of
people dumping buckets of water over their head,
7. Social media has become an excellent strategy for start-up
companies w/ little access to capital to spread the word abt
their innovative products. This is an example of what strategy?
d. Observability
8. Craig is a product development manager for a home
appliance company. Which of these strategies can Craig
implement in his functional role to deter this rival before they
gain traction in the industry?
b. Move up the launch date for a new line of tech-connected
appliances his team has been working on in recent months.
9.
potential strategies to compete with existing
companies in the industry. Which of these is a strategy
that it seeks to manage rivalry?
c. employ a strategy to identify a new market for the
company's existing products.
10. An industry shows signs of decline when:
d. demand for its products falls because a technology
makes the industry's product obsolete.
11. A group of strategies designed to moderate the
intensity of competition within a mature industry
among existing companies within that industry is
known as:
a. managing rivalry.
12. A company in a declining industry employs several
tactics as part of its current strategy ramping up
marketing and acquiring smaller businesses. This
company is executing a:
c. leadership strategy.
13. Keesha works as a marketing manager for a
running shoe company. What first step could she take?
a. Research the market segments of individuals who
might purchase running shoes and compare it to the
demographics of the stores existing customers.
Identify any customer segments the company is not
currently serving.
14. Which of these is not true of a fragmented
industry:
c. It features companies that enjoy the benefits of
economies of scale as they grow.
15. An industry moves from the embryonic stage to the
growth stage when a mass market starts to develop for
its product. What three things spur a mass market to
emerge?
b. Technology advances to make the product easier to
use, complementary products are developed and the
industry finds ways to reduce the cost of the product
and lower prices.
16. Several strategies for mature industries have the
potential to result in anti-trust violations. Which
describes a potentially illegal implementation?
b. Price Leadership: Apple collaborates with ebook
publishers to raise prices on millions of titles offered
through the iBooks store.
17. Organizations can experience a high return on investment
if they are able to consolidate a fragmented industry. This is
known as:
b. Value innovation
18. For companies to successfully implement a divestment
strategy they must:
a. recognize the signs of an industry's decline earlier than their
competitors to divest while the company still has something to
offer.
19. As a customer group, innovators are:
c. skilled in technology and able to experiment with systems
that have glitches and failures.
20. Companies utilize strategies that deter entry into their
mature industries because:
b. new entrants in an industry can generate additional
competitive forces that may cause a company to lose
customers, lose profitability and reduce the return on
investment.
21. Companies can also consolidate a fragmented industry
through horizontal acquisition. What is horizontal acquisition?
b. Acquiring competitors in an industry to combine into a
single, larger enterprise to build a more compelling national
brand.
22. Joaquin is part of the team developing strategies for new
wearable technology that integrates smartphone and fitness
tracker tools. He should:
b. educate customers about the ways in which the new device
replaces several products in among their personal gadgets and
show how the consolidated product saves them money and
23. The passenger railroad industry in the United States has
been in decline for the last several decades. Identify the
strategy passenger rail companies are using here and what
other parts of the country might also utilize this same strategy.
c. Niche strategy; Southern California could also have rail
passenger lines connecting densely populated cities with
strong commercial ties in a region of the country with heavy
24. When companies enter an industry during the embryonic
stage of that industry and then seek to grow with the industry
to serve the mass market, this is known as:
a. crossing the competitive chasm.
25. Non-price competition is a group of market strategies that
companies utilize to manage rivalry without price cutting and
price wars. a company must:
b. define its differentiation through products or market
segments.
26. A company that wishes to exit a declining industry
and makes decisions to optimize cash flow in the short
term is using a:
c. harvest strategy.
27. In the market demand S-shaped growth curve, the
early majority is:
d. the group of customers who begin purchasing a
product at the beginning of an industry's transition
from embryonic to growing.
28. Marguerite has developed a restaurant concept
featuring her grandmother's recipe. Which of these
consolidation strategies for fragmented industries
could she utilize?
d. Franchising
29. Adaya works for a start-up software company with
an innovative product in an embryonic industry. Which
of these strategies should she recommend?
c. A strategy to increase the efficiency of the product,
lowering its cost and price to consumers.
30. Which of these industries have the most factors
that indicate it is in a severe decline?
a. The wired telecommunications industry has a
mature infrastructure and nearly all of the companies
operating in the industry offer the same services to the
same customers.
VIDEO QUIZ
1. McDonald's is operating in the quick-serve
restaurant business. McDonald's business model is a
classic example of:
b. a company in a fragmented industry that
consolidated the industry through value innovation
and used franchising and chaining to enjoy scale
economies.
2. For a company with both franchisees and chain
stores, Which of these could be an issue due to the
nature of the company's business model?
a. Interactive ordering will require franchisees to make
an investment in new equipment, and they may be
3. McDonald's is currently developing business
strategies based on which industry life cycle stage?
d. Mature
4. The reporters discuss how McDonald's menu has grown over
time and the implications for the company. This is an example
of the company's use of which strategy over recent years?
d. Product proliferation strategy

5. McDonald's decision to get back to its core business as a

burger restaurant runs counter to its prior strategy of product
proliferation.
c. Product development strategy

6. Other restaurants in the industry are seeing improvements

in their sales, rather than declines. Identify which strategy
these newer organizations are using to compete against the
older more established rivals.
a. Non-price competition strategy