4490 Chapter 7

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

T

True or false: Innovation can create value for one firm while destroying value for another.

T

True or false: The chasm separating the early adopters from the early majority is the largest.

True

The four-step innovation process begins with ______. invention imagination an idea inspiration

an idea

Customers who desire a product because it stokes their imagination and creativity are known as ______. laggards the early majority the late majority early adopters

early adopters

In which stage of the industry life cycle does competition become more intense, forcing weaker firms out of the industry? shakeout growth decline maturity

shakeout

Which of the following are types of innovation? (Check all that apply.) architectural radical consolidation disruptive harvest incremental

architectural radical disruptive incremental

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 competitive complacency conflicting investor interests high labor costs

organizational inertia

Innovation can ______. (Select all that apply.) only be achieved by government agencies never be a basis for competitive advantage provide firms with a competitive advantage make existing products or businesses obsolete

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

During the introductory stage of the industry life cycle, innovators will likely devote most of their time, money, and effort to ______. management human resource recruitment operations management research and development

research and development

An agreed-upon solution about a common set of engineering features and design choices is known as a ______. strategic objective link dominant currency standard

standard

Which is the most common customer segment in the introductory stage of the industry life cycle? the late majority technology enthusiasts laggards the early majority early adopters

technology enthusiasts

What does the innovation process begin with? an idea an innovation an imitation an invention

an idea

Which statement describes the long tail? A small amount of revenue derived from a large number of units among a small number of choices A large amount of revenue derived from a small number of units among almost unlimited choices A large amount of revenue derived from a large number of units among a small number of choices A small amount of revenue derived from a small number of units among almost unlimited choices

A large amount of revenue derived from a small number of units among almost unlimited choices

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. incremental disruptive radical architectural

disruptive

The process in which change agents create new products or processes at significant economic risk is known as ______. branding entrepreneurship competitive advantage franchising

entrepreneurship

During which stage does a standard develop? growth maturity decline introduction

growth

Which is the most common customer segment in the introductory stage of the industry life cycle? the early majority the late majority technology enthusiasts early adopters laggards

technology enthusiasts

True or false: Platform businesses are organized as traditional linear pipelines.

False

Which of the following statements about platform business is true? It is organized along a linear value chain. It creates value not only for the businesses but also for consumers. It is a new business phenomenon that did not exist before the advance of technology and smart phones. Its overarching purpose is to create wealth for its employees.

It creates value not only for the businesses but also for consumers.

Which statement best describes the speed of innovation over the past hundred years? It has accelerated dramatically. It has increased moderately. It has been relatively stagnant. It has grown at a slow but steady pace.

It has accelerated dramatically.

During the shakeout stage of the industry life cycle, profits degrade for ______. all firms in the industry the most efficient firms only all but the most efficient firms a few of the weakest firms

all but the most efficient firms

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. architectural radical disruptive incremental

architectural

In the maturity stage of the industry life cycle, industry growth ______. increases dramatically flattens or even declines increases slightly maintains the same pace as during the growth stage

flattens or even declines

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. innovation shakeout growth maturity

growth

When a company introduces a new product or process or business model with the intent of gaining a competitive advantage, that company is engaging in ______. cost control franchising branding innovation

innovation

Which of the following is a primary factor in avoiding creative destruction? mergers and acquisitions branding innovation stock options

innovation

Increases in the value of a product or service that result from a corresponding increase in the number of users are known as ___. core competencies strategic objectives harvest strategies network effects

network effects

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

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. introduction growth shakeout decline

shakeout

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? laggards the late majority technology enthusiasts the early majority

the early majority

The shakeout stage of the industry life cycle is dominated by ______. early adopters the late majority laggards the early majority

the early majority

The shakeout stage of the industry life cycle is dominated by ______. laggards early adopters the late majority the early majority

the early majority

One of the largest customer segments of the market that includes customers who research the product, wait until new-product kinks have been resolved, and purchase from well-established companies is ______. the late majority the early majority technology enthusiasts early adopters

the late majority

A significant difference between the early majority and the late majority is that ______. the early majority enjoys providing voluntary feedback to producers the late majority is not confident in using new technologies the late majority is comfortable purchasing from new or unknown firms the late majority is more adept with technology

the late majority is not confident in using new technologies

Which of the following is an example of invention? Nike rereleasing an exact replica of a popular sneaker from the 1980s Walmart increasing the number of local and organic products in its stores McDonald's cutting items from its dollar menu Apple combining smart phone and wristwatch technologies to create the Apple Watch

Apple combining smart phone and wristwatch technologies to create the Apple Watch

What is the relationship between innovation and competitive advantage? Innovation is a powerful weapon for gaining and maintaining competitive advantage. Innovation is the enemy of competitive advantage because it is a constant process. Although innovation can help a company gain competitive advantage, it cannot help a firm maintain that advantage. Because innovation happens so quickly, it is of limited use when it comes to gaining competitive advantage.

Innovation is a powerful weapon for gaining and maintaining competitive advantage.

Which of the following statements about a business pipeline is true? It is likely to outperform even the most successful platform business. It creates value by matching external producers and consumers in a way that creates value for all participants. It is the traditional system of horizontal business organization. It relies heavily on innovation and community feedback and involvement.

It is the traditional system of horizontal business organization.

Which of the following statements about platform businesses is true? They tend to receive little to no benefits from community feedback. Growth involves time and planning and a complex supply chain. They are not efficient in managing the flow of information from producer to consumer. They can grow faster than pipeline businesses.

They can grow faster than pipeline businesses.

Which of the following are advantages of platform businesses compared to pipeline businesses? (Check all that apply.) Multiple select question. They unlock new sources of value creation and supply. They scale efficiently by eliminating gatekeepers. They own and control all their resources. They benefit from community feedback.

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

The introductory stage of the industry life cycle is a ______-intensive process. leisure sales profit capital

capital

It is challenging for firms to "cross the chasm" because ______. firms have difficulty moving from process to product innovation each stage of the industry life cycle features a different group of customers with different preferences and demands firms are not able to deal with the technological challenges required transitioning between stages requires significant amounts of capital

each stage of the industry life cycle features a different group of customers with different preferences and demands

Which customer segment dominates the market growth stage of the industry life cycle? early adopters laggards technology enthusiasts the late majority

early adopters

The customer segment known as ______ enjoy testing product prototypes and providing voluntary feedback that companies use to perfect their products. laggards early adopters the early majority technology enthusiasts

technology enthusiasts

What question is asked along the horizontal axis of the markets-and-technology framework? Is the innovation architectural in design or incremental? Does the innovation build on existing technologies or create new ones? Is the innovation radical or disruptive to current technologies? Is the innovation targeted toward existing markets or new markets?

Does the innovation build on existing technologies or create new ones?

An architectural innovation is ______. a new product in which existing technologies are used in a novel way to create new markets an innovation that builds on an established knowledge base and steadily improves an existing product an innovation that draws on novel methods or materials and is derived from an entirely different knowledge base an innovation that leverages new technologies to attack existing markets from the bottom up

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

During the decline stage of the industry life cycle, product innovation efforts ______. increase slightly increase dramatically decline slightly come to a halt

come to a halt

Entrepreneurs innovate by ______. commercializing new ideas and inventions limiting competition in a given market increasing demand for existing products acquiring promising start-up companies

commercializing new ideas and inventions

Successfully transitioning from one stage of the industry life cycle to the next is referred to as ______. stepping off the bridge crossing the chasm minding the gap stage-transitioning

crossing the chasm

Demand declines most rapidly in the ______ stage of the industry life cycle. decline shakeout maturity introduction

decline

In the ______ stage of the industry life cycle, falling demand leads to a reduction in market size. consolidation shakeout growth introduction decline

decline

During the growth stage of the industry life cycle, ______ increases rapidly. research and development the cost of production imitation demand

demand

Which type of innovation uses new technologies to invade an existing market from the bottom up? disruptive architectural incremental radical

disruptive

According to the crossing-the-chasm framework, the largest difference in consumer expectations is between ______. the early majority and the late majority technology enthusiasts and early adopters early adopters and the early majority the late majority and laggards

early adopters and the early majority

Which two customer segments make up the largest percentage of the market potential? (Check all that apply.) technology enthusiasts laggards the early majority early adopters the late majority

early late majority

Which of the following are characteristics of the early majority? (Check all that apply.) They are quick to commit to new products. They are not concerned with cost. They have a strong sense of practicality. They weigh benefits and costs carefully.

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

The type of innovation that focuses on improving an existing product by using existing technology and targeting existing markets is a(n) ______ innovation. disruptive architectural radical incremental

incremental

Which type of innovation applies to existing markets and existing technologies? radical disruptive incremental architectural

incremental

The ______ identifies how industries tend to develop and change over time. network effect AFI framework VRIO strategy industry life cycle

industry life cycle

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 implementation imitation initiation

invention

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 the early majority technology enthusiasts the late majority

laggards

Which customer segment will only adopt a new product when it becomes absolutely necessary? late adopters technology enthusiasts laggards the late majority

laggards

A company that resists change and sticks to formalized business processes and structures is likely experiencing ______. organizational inertia winner-take-all markets disruptive innovation innovation ecosystems

organizational inertia

The business structure that is linear and has producers at one end and consumers at the other is known as a(n) ______. pipeline innovation ecosystem platform digital disruption

pipeline

New methods for producing existing products or delivering existing services are known as ______. industry standards process innovations business-level strategies product innovations

process innovations

A firm that successfully leverages network effects can ___. bring its industry life cycle to a halt establish a permanent competitive advantage eliminate competition push its industry into the growth stage

push its industry into the growth stage

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. incremental radical disruptive architectural

radical

A business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choice is referred to as _____. the shakeout stage the long tail the short leash strategic entrepreneurship

the long tail

Which of the following are ways in which standards can emerge? (Check all that apply.) through market competition by letting consumers vote for their preferred standard by having firms purchase the license for a standard by being imposed by government or other agencies

through market competition by being imposed by government or other agencies

Simone was the first among her peers to try the new unicorn hair dye. For months she was the only person with unicorn hair. After some time, though, the product became available everywhere, and nearly every other person began sporting unicorn hair, even Simone's mom. This situation describes which of the following? the exit strategic option of the industry life cycle the shakeout stage of the industry life cycle process innovation the crossing-the-chasm framework

the crossing-the-chasm framework

Which of the following statements about the maturity stage of the industry life cycle is true? Demand for the product increases. The market has many competitors, each competing for a piece of the pie. Product innovation becomes the most important competitive weapon. Only a few large firms remain.

Only a few large firms remain.

Which are the four steps of the innovation process? invention imitation innovation instigation imagination idea

idea invention innovation imitation

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

radical