Strategic Management - Chapter 7

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Innovation

The commercialization of any new product, process, or idea, or the modification and recombination of existing ones. The drive growth, innovation also needs to be useful and successfully implemented.

Industry life cycle

The four different stages- introduction, growth, maturity, and decline-that occur in the evolution of an industry over time.

network effects

The positive effect (externality) that one user of a product or service has on the value of that product for other users.

strategic entrepreneurship

The pursuit of innovation using the tools and concepts available in strategic management.

absorptive capacity

A firm's ability to understand, evaluate, and integrate external technology developments.

architectural innovation

A new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets.

Hypercompetition

A situation in which competitive intensity has increased and periods of competitive advantage have shortened, especially in newer, technology-based industries, making any competitive advantage a string of short-loved advantages

thin markets

A situation in which transactions are likely not to take place because there are only a few buyer and sellers who have difficulty finding each other.

Paradigm shift

A situation is which a new technology revolutionizes an existing industry and eventually establishes itself as the new standard.

The long tail describes

a business model in which companies can obtain a significant part of their revenues by selling a small number of units from among almost unlimited choices.

Discontinuities can lead to

a paradigm shift, in which a new technology revolutionizes an existing industry and eventually establishes itself as the new standard.

Innovation is

a potent competitive weapon; it enables firms to redefine the marketplace in their favor and achieve much-needed growth.

Technologies follow

a predictable technology S-curve, improving in performance over time as a consequence of continued R&D efforts.

Any competitive advantage must be

a string of short-lived advantages. This is achieved through a constant escalation of competition in the areas of price, quality, timing and know-how, capital commitments, and supply-chain management.

The probability of a

discontinuity increases when a given technology approaches its physical limit.

Industries generally

follow a predictable industry life cycle, with four distinct stages; introduction, growth, maturity, and decline.

Different life-cycle stages

have different consumer adoption rates and different competitive implications

Competitive intensity has

increased and periods of competitive advantage have shortened, especially in newer, technology-based industries.

Innovations frequently

lead to the birth of new industries.

Strategic entrepreneurship focuses

on generating integrated insights pertaining to innovation and change using the concepts available in strategic management.

The successful commercialization of a new

product or service allows a firm to extract temporary monopoly profits.

Hypercompetition can

result form a lack of strategic positioning

No single strategy can

sustain competitive advantage over time

The Internet is a strongly disruptive force

that digitized any industry that can be digitized.

Continuous innovation is

the engine behind successful companies.

Four types of innovation emerge when applying

the existing versus new dimensions of technology and markets: incremental, radical, architectural, and disruptive innovations,

entrepreneurship

the process by which people undertake economic risk to innovate - to create new products, processes, and sometimes new organizations.

Standard

An agreed-upon solution about a common set of engineering features and design choices; also known as dominant design.

radical innovation

An innovation that draws on novel methods or materials, is derived from either an entirely differently knowledge base or from the recombination of the firm's existing knowledge base with a new stream of knowledge, or targets new markets by using new technologies.

disruptive innovation

An innovation that leverages new technologies to attach existing markets from the bottom up.

incremental innovation

An innovation that squarely builds on the firm's established knowledge base, steadily improves the product or service it offers, and targets existing markets by using existing technology.

long tail

Business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices.

Discontinuities

Period of time in which the underlying technological standard changes

Product innovations

New products, such as the jet airplane, electric vehicle, MP3 player, and netbook.

Process innovations

New ways to produce existing products or deliver existing services.


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