BADM 449 Midterm 2

Identify the process leading to hypercompetition and explain why competitive advantage can be sustained through continuous innovation

- Competitive intensity has increased and periods of competitive advantage have shortened, especially in newer, technology-based industries. - No single strategy can sustain competitive advantage over time. - 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. - Hypercompetition can result from a lack of strategic positioning

Define innovation and describe its role in the competitive process.

- Continuous innovation is the engine behind successful companies. - Innovation is a potent competitive weapon; it enables firms to redefine the marketplace in their favor and achieve much-needed growth. - The successful commercialization of a new product or service allows a firm to extract temporary monopoly profits.

Evaluate discontinuities and describe the dynamics of paradigm changes.

- Discontinuities can lead to a paradigm shift, in which a new technology revolutionizes an existing industry and eventually establishes itself as the new standard. - Technologies follow a predictable technology S-curve, improving in performance over time as a consequence of continued R&D effort. - The probability of a discontinuity increases when a given technology approaches its physical limit.

Innovation in introduction stage

- Early adopters will pay a premium - Only a few innovators in the market - differentiated - Strategy here — market acceptance & seeds for growth

Innovation in growth stage

- Early majority buyers increase growth rapidly - Dominant design is set - Core competencies move to manufacturing & marketing

Describe the competitive implications of different stages in the industry life cycle

- Innovations frequently lead to the birth of new industries. - 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 (see Exhibit 7.4)

Innovation in decline stage

- Laggards are buyers and market size shrinks - Four strategic options: - Exit - get out of the industry - Harvest - stay with limited investments (Olivetti) - Maintain - stay & continue marketing (Marlboro) - Consolidate - buy rivals, near monopoly (IBM mainframes)

Innovation in maturity stage

- Late majority buyers & more limited market growth - Increased competitive rivalry - Cost leadership firms tend to drive industry - Weaker firms will exit - Oligopoly is dominant industry structure in this stage

Sources of innovation

- Research lab - basic = universities, applied = firms - Entrepreneurs - start up companies (sillicon valley) - User innovations - lead users= customers with demanding usage patterns are about 3-5 years ahead of mainstream consumers - Average Joes - youtube

Describe the long-tail concept and derive strategic implications.

- The Internet is a strongly disruptive force that digitizes any industry that can be digitized. - 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.

Name the types of innovation, their relationships to tech and markets, and give an example

1. Architectural: Existing Tech, New Market. Ex) handheld GPS 2. Radical: New Tech, New Market. Ex) MRI Radiology 3. Incremental: Existing Tech, Existing Market. Ex) upgraded processors 4. Disruptive: New Tech, Existing Market. Ex) Digital photos

Evaluate different types of innovation and derive their strategic implications.

Four types of innovation emerge when applying the existing versus new dimensions of technology and markets: incremental, radical, architectural, and disruptive innovations.

Apply strategic management concepts to entrepreneurship and innovation

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