BADM Ch7/Ch8

The customer segment known as the early majority tends to enter the market: -in large numbers -as soon as product is ready for testing -slowly & sporadically

in large numbers

Type of innovation applies to existing markets and existing technologies; and after a firm gained market acceptance with radical innovation it follows with this too: incremental disruptive radical architectural

incremental innovation

Allows a firm to redefine a market in its favor: innovation implementation

innovation

Commercialization of a new invention by entrepreneurs is called: innovation or imitation

innovation

Transaction costs

are all internal and external cost associated with an economic exchange

A small app developer seeking to enter a highly competitive mobile gaming industry. To overcome the industry barriers and compete against incumbent firms, they have the economic incentive to: -pursue radical innovations -purse incremental innovations

-Purse radical innovations

The Boston Consulting Group growth-share matrix located a firms's individual SBUs in which of the following dimensions (2)?

-Relative market share -Speed of Market growth

Characteristics of early majority: -Rely on reviews from magazines -Weight benefits and costs -Quick to Commit -Not concerned with cost -Strong sense of practicality

-Rely on reviews from magazines -Weight benefits and costs -Strong sense of practicality

Why firms need to grow?

1. increase profits 2. lower costs 3. increase market power 4. reduce risk 5. motivate management

Winners in shakeout stage are: -cost leaders -product innovators

Cost leaders

Platform businesses are organized as traditional linear pipelines. T or F

False

Firms that pursue _______ strategy minimize the amount of resource support in order to -maximize cash flow. -maintain -harvest consolidate

Harvest

Platform business: -It creates value not only for the businesses but for the customers -It is organized along a linear value chain

It creates value not only for the businesses but for the customers

Business pipeline: -relies heavily on innovation and community feedback and involvement -It is the traditional system of horizontal business organization

It is the traditional system of horizontal business organization

Customers who research the product, wait until new-product kinks have been fixed and purchase from established companies are: -early adopters -early majority -late majority

Late Majority

A product is patentable it must be: novel accessible non-obvious useful

Novel, Non-obvious, Useful

Metrics used by social entrepreneurs to evaluate performance: -power -people -planet -profits

People, Planet, Profits

Refers to the assets whose physical and engineering properties are designed to satisfy a particular customer?

Physical -asset specificity

Business structure that is linear and has producers on one end and consumers on the other end: -platform -pipeline

Pipeline

What are risks of vertical integration?

Reduced flexibility Increases Costs Reduced Flexibility

what type of curve is an industry development structure shape: C S T

S curve

-Moving internal value chain activities -To other firms (Example: HR management)

Strategic Outsourcing

-Backward and Forward Integration -Plus reliance on outside firms

Taper integration

A theoretical framework that helps explain and predict the boundaries of the firm:

Transaction Cost Economics

Platform outperform vs pipeline t or f

True

Industry value-chain is known as:

Vertical value chain

Architectural innovation is: -innovation that draws on novel methods or materials and is derived from an entirely different knowledge base -a new product in which existing tech are used in a novel way to create new markets

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

equity alliance

a partnership in which at least one partner takes partial ownership in the other partner

taper integration

a way of orchestrating value activities in which a firm is backwardly integrated but also relies on outside market firms for some of its supplies, and/or is forwardly integrated but also relies on outside market firms for some of its distribution

During the shakeout stage of the industry cycle, process innovation: -becomes less important -becomes more important -drives cost up

becomes MORE important

1. Lowering costs 2. Improving quality 3. Facilitating scheduling and planning 4. Facilitating investments in specialized assets 5. Securing critical supplies and distribution channels

benefits of vertical integration

involves the decisions that senior management makes and the goal-directed actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously

corporate strategy

corporate strategy

decisions that leaders make and the goal-directed actions they take in the quest for competitive advantage in several industries and markets simulations *where to compete

radical innovation

derived either from an entirely different knowledge base or from a recombination of existing knowledge bases with a new stream of knowledge ***Many firms start success this way**** Example: New sportswear company

It is challenging for firms to cross the chasm because..... -firms cannot deal with tech changes -firms have a hard time moving from process to product innovation -each stage of the industry life cycle features a different group of customers with different preferences and demands -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

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

early adopters and the early majority

The shakeout stage of the industry life cycle is dominated by_________. -early majority -late majority

early majority

A manufacturer that relies on an established network of suppliers to produce its goods is an _____ and less likely to produce radical innovations. -innovation ecosystem -invention channel -product pipeline

innovation ecosystem

What is true about business pipeline ? -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 organizations

it is the traditional system of horizontal business organizations

Forward vertical integration

moving ownership of activities closer to the end customer

Backward vertical integration

moving ownership of activities upstream to the originating inputs of the value chain

Apple became popular bc companies created apps that worked only for Apple. Which did Apple leverage to create a competitive advantage? -network effects -social entrepreneurship

network effects

Disruptive innovation

new tech attacks existing markets, invades bottom up int he market, slow to change

After a standard is established in an industry, firms tend to focus more on _____________ innovations: process product

process

A strategy where executives pursue various businesses opportunities that share only a limited number of linkages

related-linked diversification strategy

joint venture

special form of strategic alliance, two or more partners create and jointly own a new organization

Incremental innovation

squarely build on an established knowledge base and steadily improves an existing product or service being offered.

One way to counter a disruptive innovation is to: -establish outlets of disruptive activity -stay ahead of the competition with continued innovation

stay ahead of the competition with continued innovation

Diversification discount

stock price of such highly diversified firms is valued at less than the sum of their individual business units *** Firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience this.

The customer segment in the intro stage of the industry life cycle is?? -tech enthusiasts -early adopters

tech enthusiasts

A patent holder typically has a: -permanent monopoly -temporary monopoly

temporary monopoly

Key advantage of effective use of tech for business platform is that: -the barriers of time and space are reduced -costs are reduced for customers

the barriers of time and space are reduced

The most integrated alternative to vertical integration is:

the parent-subsidiary relationship

The reason incumbent firms are vulnerable to disruptive innovation is that: -they are out of touch with the needs of their customers -they are too committed to existing products to make rapid changes in the face of disruptive innovations

they are too committed to existing products to make rapid changes in the face of disruptive innovations

Related diversification strategy

when a firm derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business linked to the primary business activity