Chapter 7: Business Strategy- Innovation and Strategic Entrepreneurship

Growth stage

After the inital innovation has gained market acceptance, demand increases rapidly as first time buyers rush to enter the market. The new group of buyers are called the EARLY MAJORITY

industry life cycle

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

discontinuities

periods of time in which the underlying technolgical standard changes

network effects

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

maturity stage

Growth comes from buyers called the late majority entering the market.

decline stage

Laggards customers who adopt a new product only if its absolutely neccesary

strategic entrepreneurship

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

Introduction stage

a company launches a successful innovation. Only EARLY ADOPTERS are willing to pay a premium price

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

paradigm shift

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

hypercompetition

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

thin markets

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

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 different knowledge base or from the recombination of 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 attack 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

innovation

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