MGMT 681 Chap 7

The demand for fax machines has drastically reduced, and there are only a few consumer electronics companies selling them. Also, the current buyers of fax machines are mainly categorized under laggards. Which stage of the industry life cycle is the fax machine industry in currently?

Decline

Pick a life cycle stage and list all of the conditions for that life cycle stage. (For the class: You should know the conditions that prevail for an industry in each life cycle stage.)

Decline: demand is falling, strong pressure on prices. You could exit, harvest, or maintain.

Schumpeter and Kirzner: 1) Which one argued the entrepreneurial discovery is the gradual and systematic pushing back of the boundaries of sheer ignorance (ideas are discovered)? 2) Which one argued that creative destruction is the process by which a new economic order replaces an older one through the new application of technology to problems (ideas are created)?

1) Kirzner- entrepreneurial discover 2) Schumpeter- creative destruction

Schumpeter and Kirzner: Which one said that 1) entrepreneurship required new information and was an equilibrium destroying process, and which one said that 2) entrepreneurship did not require new information and was an equilibrium restoring process.

1) Schumpeter- equilibrium destroying process 2) Kirzner- opp. discovery

After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. What is this an example of? Answer in terms of idea, invention, innovation, and imitation.

Innovation, because there is created value. Didn't create internet, online retail, etc just a different way to dominate online sales.

List the stages of the industry life cycle in the correct order.

Introduction > Growth > Shakeout > Maturity > Decline

What is a harvest strategy? What is the best life cycle stage to execute it?

When you're trying to get leftover scraps in the industry, harvesting what's left. Decline. It's neither product or process innovation. EX: Typewriters

What is creative destruction? Who viewed true entrepreneurship as creative destruction?

While a new industry is being created it destroys another. Schumpeter.