Chap 7

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?

The ______ determines whether an invention can be patented.

U.S. Patent and Trademark Office

Which of the following statements about platform businesses is true?

They can grow faster than pipeline businesses.

The invention of small desktop copiers to create a new consumer market using the same technology as large, stand-alone copiers is an example of a(n) ______ innovation.

achritectual

A disruptive innovation is more likely to be successful if it

captures low end first

Entrepreneurs innovate by

commercializing new ideas and inventions

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

Taking on an economic risk in order to innovate is known as

entrepreneurship

The customer segment known as the early majority tends to enter the market

in large numbers

The ______ identifies how industries tend to develop and change over time.

industry life cycle

What is the commercialization of an invention called?

innovation

Which of the following allows a firm to redefine a market in its favor?

innovation

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

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

What term is used to refer to the market environment in which all players participate relative to the platform?

platform ecosystem

New methods for producing existing products or delivering existing services are known as

process innovations

During the introductory stage of the industry life cycle, innovators will likely devote most of their time, money, and effort to

r&d

Innovation helps firms achieve a competitive advantage by

redefining the market in their favor

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

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?

trade secret

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

Most firms consider laggards to be

not worth the effort of pursuing

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

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.

The introductory stage of the industry life cycle is a ______-intensive process.

capital

mover advantage refers to the competitive benefits that accrue to the successful innovator.

first

Radical innovations are usually introduced by

new entrepreneurial ventures

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 a big gulf separating the early adopters from customer segments that make up the mass market.

Which type of innovation applies to existing markets and existing technologies?

incremental

Which of the following is a disadvantage faced by first movers in an industry?

They will have to find distribution channels and complementary assets.

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.

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.

Which of the following statements about the maturity stage of the industry life cycle is true?

Only a few large firms remain.

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 are characteristics of the early majority?

They have a strong sense of practicality. They weigh benefits and costs carefully.

Which of the following are advantages of platform businesses compared to pipeline businesses?

They scale efficiently by eliminating gatekeepers. They unlock new sources of value creation and supply. They benefit from community feedback.

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 laptops will be limited.

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 innovations

During the shakeout stage of the industry life cycle, profits degrade for

all but the most efficient firms

A disruptive innovation typically requires a(n) ______ approach to capturing the market.

bottom up

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

complementary apps

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

decline

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

early adopters

Which customer segment dominates the market growth stage of the industry life cycle?

early adopters

According to the crossing-the-chasm framework, the largest difference in consumer expectations is between

early adopters and the early majority

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

herding effect

The most common type of innovation is ______ innovation.

incremental

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

intrapreneurs

Which of the following are stages of the industry life cycle?

introduction shakeout decline growth maturity

The second step of the four-step innovation process involves the transformation of an idea into a new product or process and is known as

invention

Business model innovations that use technology to interactively connect organizations, information, resources, and people in value-generating transactions are

platforms

Which of the following metrics are used by social entrepreneurs to evaluate performance?

profits, people, planet

Attempting to address social or ecological issues when building a for-profit business is known as

social entrepreneurship

An agreed-upon solution about a common set of engineering features and design choices is known as a

standard

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

strategic entrepreneurship

The fundamental question of ______ is how to combine entrepreneurship with the concepts of strategic management in order to achieve a competitive advantage.

strategic entrepreneurship

The customer segment known as ______ enjoy testing product prototypes and providing voluntary feedback that companies use to perfect their products.

technology enthusiasts

Which term is used for the customer segment in the introductory stage of the industry life cycle?

technology enthusiasts

First-mover disadvantages can include which of the following?

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

An architectural innovation is

a new product in which existing technologies are used in a novel way to create new markets

Educational organizations, such as Coursera, offer massive open online courses on the web as an alternative to traditional universities. This is an example of a(n) ______ innovation.

disruptive

Introducing a new technology to an existing market to better address consumer needs is known as ______ innovation.

disruptive

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. DaShawn is likely a member of which type of customer?

early majority

Which two customer segments make up the largest percentage of the market potential?

early majority, late majority

Platform businesses are organized as traditional linear pipelines.

false

businesses evolve through each stage in the industry life cycle.

false

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

flattens or even declines

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

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

After a firm has gained market acceptance with a radical innovation, it will typically follow up with

incremental innovations

In the third step of the innovation process, a(n)

invention is commercialized by entrepreneurs.

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

Using a ______ strategy, a firm continues to market its products at the same level despite a decline in consumer demand.

maintain

Netflix was able to attract subscribers and grow largely because

media executives did not view it as a threat

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

In order for a product or service to be considered patentable, it must be

novel, useful, non-obvious

Which characteristics always change as the industry life cycle progresses?

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

A company that resists change and sticks to formalized business processes and structures is likely experiencing

organizational inertia

What can incumbent firms do to counter disruptive innovations?

protect the low end of the market continue to innovate disrupt themselves

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

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

Because it targeted a new market and used new technologies, the first mass-produced automobile is considered a(n) ______ innovation.

radical

It is common for firms to get their start by introducing a(n) ______ innovation.

radical

A patent holder typically has a

temporary monopoly

Which of the following are types of innovation?

architectural incremental disruptive radical

during the decline stage of the industry life cycle, which strategic option requires firms to declare bankruptcy or undergo liquidation?

exit

What are the most important core competencies for competitive advantage in the growth stage?

manufacturing capabilities marketing capabilities

Of the following competencies, which one is the most important in the introductory stage of the industry life cycle?

marketing

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 one key advantage of the effective use of technology for business platforms is that

the barriers of time and space are reduced

A significant difference between the early majority and the late majority is that

the late majority is not confident in using new technologies