BUSMGT4490: Chapter 7 - Innovation, Entrepreneurship, and Platforms

Because Lorraine wants to introduce innovative new production processes to the local restaurant industry, she is considered a(n)

entrepreneur

In the maturity stage of the industry life cycle, industry growth

flattens or even declines

The tendency of customers to enter the market in large numbers during the growth of the industry life cycle is known as the ____ effect

herding

Which of the following characteristics change as the industry life cycle progresses?

- number and size of competitors - type and level of innovation - type of customer

During the growth stage of the industry life cycle, firms focus on process innovation in order to ____

- reduce per unit production costs - increase production volume

S-Curve Development

1. Demand for a new product is slow to take off (Top) 2. Demand accelerates 3. Demand decelerates 4. Demand turns to zero 5. Demand becomes negative as a market contracts (Bottom)

Which of the following are ways in which standards can emerge

- by being imposed by government or other agencies - through market competition

First-mover disadvantages can include which of the following

- continuously perfect a product - educate potential customers about the product's benefits - find distribution channels

Innovation can

- make existing products or businesses obsolete - provide firms with a competitive advantage

The process in which change agents create new products or processes at significant economic risk is known as

entrepreneurship

Four Steps of the Innovation Process

idea, invention, innovation, imitation

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 it easily

Which of the following re advantages of platform businesses compared to pipeline businesses

- they scale more efficiently by eliminating gatekeepers - they unlock new sources of value creation and supply

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

Applying concepts from strategic management to the innovation process is known as ____

strategic entrepreneurship

Industry Life Cycle

the five different stages -- introduction, growth, shakeout, maturity, and decline -- that occur in the evolution of an industry over time

Strategic Entrepreneurship

the pursuit of innovation using tools and concepts from strategic management

Social Entrepreneurship

the pursuit of social goals while creating a profitable business

During which stage does a standard develop?

Growth

The development of most industries follows a(n)

S-Curve

True or False: Industries often tend to follow a predictable industry life cycle

True

Architectural Innovation

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

Which of the following is most likely to produce a radial innovation

a new sportswear company with a handful or employees that perform a number of loosely defined roles

Platform Businesses

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 or platform that the enterprise manages

Radical Innovation

an innovation that draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of the existing knowledge bases with a new stream

The explosive growth of the apply iPhone was due in part to the network effects created by

complementary apps

Benny Baos is in a decline industry, but Benny thinks he can still survive by buying his competitors. Which strategic option is he planning to use?

consolidate

Successfully transitioning from one stage of the industry life cycle to the next is referred to as

crossing the chasm

In the _____ stage of the industry life cycle, falling demand leads to a reduction in market size

decline

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

Customers who desire a product because it stokes their imagination and creativity are known as ______

early adaptors

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

Which of the following are types of innovation?

incremental, radical, disruptive, and architectural

The ____ identifies how industries tend to develop and change over time

industry life cycle

The commercialization of an invention by entrepreneurs is called

innovation

Creating new products out of new or existing ideas is known as

invention

Which customer segment will only adopt a new product when it becomes absolutely necessary?

laggards

Winner-Take-All Markets

markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created

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 form of intellectual property that grants an inventor a temporary monopoly on a new product or process in exchange for disclosing the details of how the product or process is made is called a(n)

patent

After a standard is established in an industry, firms tend to focus more on ____ innovations

process

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

Benny's Baos had an edge in the market, but other companies began to enter the market . Benny is now losing customers even though he has launched an aggressive marketing campaign in an attempt to attract customers. Benny's Baos is likely in the ______ stage of the industry life cycle

shakeout

Which of the following types of entrepreneurship involves leveraging innovation for competitive advantage?

strategic

A patent holder typically has a

temporary monopoly

Entrepreneurs

the agents that introduce change into the competitive system

Winners in the shakeout stage are generally

the cost leaders

A significant different between the early majority and the late majority is that ______

the late majority is not confident in using new technologies

Entrepreneurship

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

Innovation

the successful introduction of a new product, process, or business model -- is a powerful driver in the competitive process.

Types of Innovation: Combining Markets and Technologies

New Market/Existing Technologies: Architectural Innovation Existing Market/Existing Technologies: Incremental Innovation New Markets/New Technologies: Radical Innovation Existing Markets/New Technologies: Disruptive Innovation

Markets-and-Technology Framework

a conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions

Innovation Ecosystem

a firm's embedded ness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making

Which of the following are characteristics of the early majority?

- they have a strong sense of practicality - they rely on reviews by reputable magazines - the weigh benefits and costs carefully

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