What Are the Unintended Consequence of Long-Established "Industry Recipes

question 38

Multiple Choice

What are the unintended consequence of long-established "industry recipes"?

• A)Top managers' understanding of their industry tends to fossilize, so they cannot imagine reconfiguring the industry with new products or new ways of doing business
• B)They have no side effects at all
• C)They can lead mature executives to take large risks because they are rejuvenating while having mid-life crises
• D)They can foster radical innovation

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Definitions:

Real Interest Rate

The interest rate that has been adjusted to remove the effects of inflation, representing the true cost of borrowing and the true yield on investing.

Nominal Interest Rate

The interest rate before adjustment for inflation; the stated rate on a loan or investment.

Rate of Inflation

The uplift in the general cost of products and services in an economy over an allotted period.

Consumer Price Index

A device that evaluates the average adjustment over time in the spending of urban consumers on a carefully selected series of consumer goods and services.