Business 498-Chapter 7: Business strategy: Innovation, Entrepreneurship, and platform.
A patent holder has ---
Temporary monopoly.
Which type of innovation applies to existing markets and existing technologies?
Incremental
Which of the following statements about patents is not true?
A patent over a product translates into a permanent monopoly position.
Which characteristics always change as the industry life cycle progresses?
type and level of innovation. number and size of competitors. type of customer
Which of the following are ways in which standards can emerge?
Through market competition. by being imposed by government or other agencies.
The introductory stage of the industry life cycle is often a Blank______-intensive process.
Capital
During the decline stage of the industry life cycle, product innovation efforts ______.
Come to halt.
Winners in the shakeout stage are generally ______.
Cost leaders
Demand falls most rapidly in the Blank______ stage of the industry life cycle.
Decline
Place the S-curve development of most industries in order, with the first step at the top.
Demand for a new product is slow to take off. demand accelerates. demand decelerates. demand turns to zero. demand becomes negative as a market contracts.
Japanese carmakers first introduced small fuel-efficient cars and then leveraged their low-cost and high-quality advantages into high-end luxury segments, dominated by brands such as Lexus, Infiniti, and Acura. This initiative best illustrates a(n)
Disruptive innovation
According to the crossing-the-chasm framework, the largest difference in consumer expectations is between ______.
Early adopters and early majority.
Because Lorraine wants to introduce innovative new production processes to the local restaurant industry, she is considered a(n) Blank______.
Entrepreneur
The process in which change agents create new products or processes at significant economic risk is known as ______.
Entrepreneurship
During the decline stage of the industry life cycle, which strategic option requires firms to declare bankruptcy or undergo liquidation?
Exit
In the maturity stage of the industry life cycle, industry growth ______.
Flatten or decline
At which stage of the industry life cycle does the size of the market expand rapidly?
Growth
During which stage does a standard develop?
Growth
In a typical industry life cycle, an industry immediately moves to the ________ after the introduction stage.
Growth stage
A firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making, is referred to as a(n) _____.
Innovation ecosystem
People who pursue entrepreneurship within an existing company are called Blank______.
Intrapreneurs.
Which of the following statements about a business pipeline is true?
It is the traditional system of horizontal business organization.
A significant difference between the early majority and the late majority is that ______.
Late majority is not confident using new technology.
Of the following competencies, which one is the most important in the introductory stage of the industry life cycle?
Marketing
When Apple launched the iPhone, it quickly became popular because many companies created apps that worked exclusively on the iPhone. Which of the following did Apple leverage to create a competitive advantage?
Network effects
New methods for producing existing products or delivering existing services are known as ______.
Process innovation
Which of the following statements is typically true of early adopters?
They appreciate new technology that can add value to their personal and professional lives.
Which of the following are advantages of platform businesses compared to pipeline businesses?
They scale efficiently by eliminating gatekeepers. They benefit from community feedback. They unlock new sources of value creation and supply.
The ______ determines whether an invention can be patented.
U.S. Patent and Trademark Office
An architectural innovation is ______.
a new product in which existing technologies are used in a novel way to create new markets
Using known components, based on existing technologies, in a new configuration to create a new market is known as ______.
architectural innovation
A disruptive innovation is more likely to be successful if it ______.
captures the low end of the market first
One way to counter a disruptive innovation is to ______.
continue to innovate
Which of the following allows a firm to redefine a market in its favor by introducing change that other firms must respond to?
innovation
Apple famously ignores feedback from customers because ______.
it is focused on producing disruptive innovations rather than incremental innovations based on the needs of existing customers
What are the most important core competencies for competitive advantage in the growth stage?
manufacturing capabilities. marketing capabilities
The one key advantage of the effective use of technology for business platforms is that ______.
the barriers of time and space are reduced
During the shakeout stage of the industry life cycle, profits degrade for ______.
All but the most efficient firms.
In the third step of the innovation process, a(n)
Invention is commercialized by entrepreneurs.
The fundamental question of ______ is how to combine entrepreneurship with the concepts of strategic management in order to achieve a competitive advantage.
Strategic entrepreneurship
True or false: Industries often tend to follow a predictable industry life cycle.
TRUE
True or false: Once a standard is reached, process innovations occur more often than product innovations.
TRUE
A disruptive innovation typically requires a(n) ______ approach to capturing the market.
Bottom up
It is challenging for firms to "cross the chasm" because ______.
Each stage of the industry life cycle features a different group of customers with different preferences and demands.
The customers coming into the market in the shakeout stage are called ___.
Early majority
Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___.
Network effects.
A company that resists change and sticks to formalized business processes and structures is likely experiencing ______.
Organizational inertia
Janet is a marketing and sales employee at 4-Ever-Foods Inc. She has invented a new way to process and pack the company's food products that would avoid the usage of chemical preservatives. Which of the following terms best describes Janet?
An intrapreneur
Introducing a new technology to an existing market to better address consumer needs is known as ______ innovation.
Disruptive
Which type of innovation uses new technologies to invade an existing market from the bottom up?
Disruptive
True or false: Platform businesses are organized as traditional linear pipelines.
FALSE
What is the commercialization of an invention called?
Innovation
Radical innovations are usually introduced by ______.
New entrepreneurial ventures.
An enterprise that creates value by matching external producers and consumers in a way that creates value for all participants and that depends on the infrastructure that the platform manages is a(n) ______.
Platform business
Business model innovations that use technology to interactively connect organizations, information, resources, and people in value-generating transactions are ______.
Platforms
What can incumbent firms do to counter disruptive innovations?
Protect the low end of the market. continue to innovate . disrupt themselves
Innovations that target NEW markets and represent a major break from existing technologies or ways of thinking, such as the digital camera, the touch-screen smart phone, or the decoding of the human genome, are examples of ______ innovations.
Radical
Which of the following statements is true of the growth stage in the industry life cycle?
The prices begin to fall during this stage when compared to the introduction stage.
Which of the following is the best example of a platform business?
Uber ride-hailing services.
In developed countries, the industry for thumb drives is in the maturity stage, and the industry for floppy disks is in the decline stage. What does this imply?
While the thumb drive industry has reached its maximum market size, the market size for floppy disk is small and contracting.
A large incumbent firm that has established a number of formalized practices and procedures may have a difficult time producing radical innovations due to its ______.
organizational inertia
What term is used to refer to the market environment in which all players participate relative to the platform?
the platform ecosystem
Which term is used for the customer segment in the introductory stage of the industry life cycle?
Technology enthusiasts
Which of the following is a disadvantage faced by first movers in an industry?
They will have to find distribution channels and complementary assets.
Incumbent firms that are part of an innovation ecosystem are less likely to produce radical innovations because ______.
radical innovations disrupt established relationships within the ecosystem
The primary reason incumbent firms are vulnerable to disruptive innovations is that _____.
they are too committed to existing products to make rapid changes in the face of disruptive innovations
An incumbent firm in a winner-take-all market will typically seek to extend the time it can extract profits through ___.
A focus on incremental innovation
Which of the following statements is true?
A platform business exists to help make matches among users and facilitate the exchange of goods, services or social currency.
Stuart bought his laptop and smartphone when these products had just entered their respective growth stages. More than the technological sophistication of these products, it was the idea that these products would allow him to multitask and work when traveling that drove him to make his purchase decision. Which of the following customer segments does Stuart best represent?
Early adopters
--- is best described as the process by which people undertake economic risk to innovate—to create new products, processes, and sometimes new organizations
Entrepreneurship
The customer segment known as the early majority tends to enter the market ______.
In Large numbers
The most type of innovation is --- innovation
Incremental
The type of innovation that focuses on improving an existing product by using existing technology and targeting existing markets is a(n) ______ innovation.
Incremental
The ______ identifies how industries tend to develop and change over time.
Industry life cycle.
When a company introduces a new product or process or business model with the intent of gaining a competitive advantage, that company is engaging in ______.
Innovation
What is the relationship between innovation and competitive advantage?
Innovation is a powerful weapon for gaining and maintaining competitive advantage.
Creating new products out of new or existing ideas is known as ______.
Invention
________ is best described as the process of transformation of an idea into a new product or process, or the modification and recombination of existing ones.
Invention
Tomas recently acquired a cell phone but only because his company insisted that he do so. Tomas likely belongs to which of the following consumer segments?
Laggards
A business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choice is referred to as _____.
Long tail
Using a ______ strategy, a firm continues to market its products at the same level despite a decline in consumer demand.
Maintain
In the ______ stage of the industry life cycle, a few numbers of large firms compete for a share of a market that has reached its maximum size.
Maturity
Netflix was able to attract subscribers and grow largely because ______.
Media executives did not view it as a threat.
Which of the following statements about the industry life cycle are true?
Not all industries go through the entire life cycle. Industries can be rejuvenated, even during the decline stage.
The business structure that is linear and has producers at one end and consumers at the other is known as a(n) ______.
Pipeline
The market environment in which all players participate relative to the platform is the ---ecosystem
Platform
After a standard is established in an industry, firms tend to focus more on ______ innovations.
Process
If a pharmaceutical company develops a first-of-its-kind vaccine to prevent HIV/AIDS and thus creates a whole new market for the product (non-infected civilians), it would be a(n) _________ innovation.
Radical
Innovation helps firms achieve a competitive advantage by ______.
Redefine the market in their favor
During the introductory stage of the industry life cycle, innovators will likely devote most of their time, money, and effort to ______.
Research and development.
Redwood Corp. follows a business model in which the performance of the company is not only based on how much profits were generated, but also on how the community in general benefited from its operations. Thus, the company under its "Plant a Life" campaign promises to plant a tree with every customer purchase. Which of the following terms best describes the performance valuation model of Redwood Corp.?
Social entrepreneurship
The customer segment known as ______ enjoy testing product prototypes and providing voluntary feedback that companies use to perfect their products.
Technology enthusiasts.
A patent holder typically has a ______.
Temporary monopoly
How are the early majority and late majority different in their attitudes toward technology?
The early majority is confident in their ability to master the new technology: the late majority is not.
While the industry for 5G compatible devices is in the introduction stage, the industry for 3G compatible devices are in the maturity stage. What does this imply?
The market for 3G compatible devices has reached its maximum size, whereas the market for 5G compatible devices is still small in size.
According to the crossing-the-chasm framework, a firm's transition between the different parts of the industry life cycle is difficult because
There is big gulf separating the early adopters from customers segment that make up the mass market.
Which of the following statements about platform businesses is true?
They can grow faster than pipeline businesses
While the industry for tablet computers is in the growth stage, the laptop industry is in its shakeout stage. What does this imply?
While the market demand for tablets will be high, the demand for laptop will be limited.
In the introductory stage of the industry life cycle, an innovator can achieve market acceptance by ______.
increasing the number of users to encourage network effects
Simone was the first among her peers to try the new unicorn hair dye. For months she was the only person with unicorn hair. After some time, though, the product became available everywhere, and nearly every other person began sporting unicorn hair, even Simone's mom. This situation describes which of the following?
the crossing-the-chasm framework
The explosive growth of the Apple iPhone was due in part to the network effects created by ______.
Complementary apps
During the decline stage of the industry life cycle, some firms choose to consolidate, meaning that they ______.
Purchase rival firms in order to achieve near monopolistic control of the industry.
A firm that successfully leverages network effects can ___.
Push its industry into the growth stage.
Which statement describes the long tail?
A large amount of revenue derived from a small number of units among almost unlimited choices
What is valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy called?
A trade secret.
Which of the following is an example of invention?
Apple combining smart phone and wristwatch technologies to create the Apple Watch
Which of the following are types of innovation?
Architectural, radical, disruptive, incremental.
During the shakeout stage of the industry life cycle, process innovation ______.
Becomes more important.
Benny's Baos is in a declining industry, but Benny thinks he can still survive by buying his competitors. Which strategic option is he planning to use?
Consolidate
The four strategic options that managers have in the decline stage are: exit, harvest, maintain, or ______.
Consolidate
The negative effect of innovative ride-sharing services, such as Uber and Lyft, on traditional taxicab companies is an example of ______.
Creative destruction.
The process by which word-processor manufacturer Wang Laboratories captured the market from typewriter manufacturers, and which explains how it was later replaced by PC manufacturers and mobile-phone companies, is known as ______.
Creative destruction.
What question is asked along the horizontal axis of the markets-and-technology framework?
Does the innovation build on existing technologies or create new ones?
A significant difference between technology enthusiasts and early adopters is that ______.
Early adopters are interested in how a new technology will improve their lives, rather than in the details of the technology itself.
Which customer segment enter the market in the growth stage of the industry life cycle?
Early adopters.
DaShawn likes to do a lot of research before he buys a new product and relies on the endorsement by others. He also wants to be sure the product will be practical. DeShawn is likely a member of which type of customer?
Early majority
Taking on an economic risk in order to innovate is known as ______
Entrepreneurship
True or false: Businesses evolve through each stage in the industry life cycle.
FALSE
True or false: Once an innovation has failed, it is a waste of time to try to apply it to other situations.
FALSE
---- mover advantage refers to the competitive benefits that accrue to the successful innovator.
First
Establishing a solid strategic position that competitors cannot easily imitate is the key objective of a company in the ______ stage.
Growth
The stage during which a new product has gained some acceptance, thus causing first-time buyers to eagerly acquire the product and accelerate demand, is the ______ stage.
Growth
Firms that pursue a(n) ______ strategy minimize the amount of resources devoted to product support in order to maximize cash flow.
Harvest
The tendency of customers to enter the market in large numbers during the growth stage of the industry life cycle is known as the ---- effect.
Herding
Place the four steps of the innovation process in order from first to last. Place the first step at the top.
Idea, invention, innovation, imitation.
After a firm has gained market acceptance with a radical innovation, it will typically follow up with ______.
Incremental innovation
Which of the following is a primary factor in avoiding creative destruction?
Innovation
What statements about innovation are true?
It can make existing products or businesses obsolete. It can provide firms with a competitive advantage.
The success of Netflix can be attributed to which of the following?
It disrupted the TV industry more than once to gain a competitive advantage.
Which statement best describes the speed of innovation over the past hundred years?
It has accelerated dramatically.
Most firms consider laggards to be ______.
Not worth the effort of pursuing.
Which of the following statements about the maturity stage of the industry life cycle is true?
Only a few large firms remains.
PixelPower is a small app developer seeking to enter the highly competitive mobile games industry. In order to overcome the industry's barriers to entry and compete against incumbent firms, Pixel Power has an economic incentive to ______.
Pursue radical innovations
It is common for firms to get their start by introducing a(n) ______ innovation.
Radical
In which stage of the industry life cycle does competition become more intense, forcing weaker firms out of the industry?
Shakeout
Attempting to address social or ecological issues when building a for-profit business is known as ______.
Social entrepreneurship
Which statement about innovations is true?
Some innovations that initially fail can be put to use in other industries or for other purposes
Applying concepts from strategic management to the innovation process is known as ______.
Strategic entrepreneurship
True or false: The chasm separating the early adopters from the early majority is the largest.
TRUE
One of the largest customer segments of the market that includes customers who research the product, wait until new-product kinks have been resolved, and purchase from well-established companies is ______.
The late majority
First-mover disadvantages can include which of the following?
The need to educate potential customers about the product benefits. The need to continuously perfect a product. the need to find distribution channels.
The key objective for firms in the growth stage of the industry life cycle is ______.
To establish a strong strategic position so that rivals cannot imitate easily.
What must a product or service be in order for it to be considered patentable?
Useful, novel, and non-obvious.
Which of the following are ways in which standards can emerge?
by being imposed by government or other agencies. Through market competition
The primary objective of firms during the introductory stage of the industry life cycle is to ______.
establish themselves as a market participant and position themselves for future growth
During the growth stage of the industry life cycle, firms focus on process innovation in order to do which of the following?
increase production volume. reduce per-unit production costs
Netflix was able to attract subscribers and grow largely because ______.
media executives did not view it as a threat
Which of the following is an example of creative destruction?
mobile phones replacing traditional telephones
