Business Policy & Strategy - Exam 2

Paris Convention for the Protection of Industrial Property

Foreign nationals can apply for the same patent rights in each member country as that country's own citizens.

Strategic Alliance

Formal or informal agreements between two or more organizations (or other entities) to cooperate in some way

virtual teams

In ____________________ , members may be a great distance from each other, but are still able to collaborate intensely via videoconferencing, groupware, email, and internet chat programs.

Centralization, decentralization

_________________ vs. ______________ is a particularly important issue for multinational firms. •Foreign markets offer diverse resources, and have diverse needs.

Early Majority

__________________ responds to marketing emphasizing product's completeness, ease o fuse, consistency with customer's life, and legitimacy. - Need media with high reach and high credibility.

Lou Lehr

___________________ consolidated the 42 divisions and 10 groups into 4 business sectors. He also established a three-tiered R&D system: central research laboratories for basic research, sector labs for core technologies, and division labs for projects with immediate applications.

"Desi" Desimone

___________________ eased company back toward a looser, more entrepreneurial focus with less centralization.

Mechanistic Structures

___________________ have high formalization and standardization. (1) Good for operational efficiency, reliability. (2) Minimizes variation à may stifle creativity.

Failure Modes and Effects Analysis

___________________ is a method by which firms identify potential failures in a system, classify them according to their severity, and create a plan to prevent them.

Three-dimensional printing

___________________ is where a design is printed by laying down thin horizontal strips of material until the model is complete.

Centralized Authority

____________________ ensures projects match firm-wide objectives, and may be better at making bold changes in overall direction.

Late Majority and Laggards

____________________ respond to marketing emphasizing reliability, simplicity, and cost-effectiveness. - Need media with high reach, high credibility, but low cost.

Centralized Activities

_____________________ avoid redundancy, maximize economies of scale, and facilitate firm-wide deployment of innovations.

became eligible for patent protections

In 1998, many software algorithms.....

Manipulate customer's perception of price.

- Free initial trial or introductory pricing - Razor and Razorblade model

Original Equipment Manufacturers (OEMs)

A company that buys products (or components) from other manufacturers and assembles them or customizes them and sells under its own brand name. For example, Dell Computer.

Licensing

A contractual arrangement that gives an organization (or individual) the rights to use another's intellectual property, typically in exchange for royalties

Patent Thickets

A dense web of overlapping patents that can make it difficult for firms to compete or innovate

Partly Parallel Development Process

A development process in which some (or all) development activities at least partially overlap. That is, if activity A would precede activity B in a partly parallel development process, activity B might commence before Activity A is completed:

Copyright

A form of protection granted to works of authorship

Publicity and Public Relations

A marketing attempt to generate free publicity and word-of-mouth

Joint Ventures

A particular type of strategic alliance that entails significant equity investment and often establishes a new separate legal entity

Trademark (servicemark)

A word, phrase, symbol, design, or other indicator that is used to distinguish the sources of goods from one party

1. May accrue more rapid adoptions if produced and promoted by multiple firms. 2. Technology might be improved by other firms (though external development poses its own risks).

Advantages of Product Diffusion

1. Proprietary systems offer greater rent appropriability. 2. Rents can be used to invest in further development, promotion, and distribution. 3. Give the firm control over the evolution of the technology and complements.

Advantages of Product Protection:

Center-for-global

All R&D activities centralized a single hub. (a) Tight coordination, economies of scale, avoids redundancy, develops core competencies, standardizes and implements innovations throughout firm.

transnational approach

Bartlett and Ghoshal encourage _________________ _____________: resources and skills anywhere in firm can be leveraged to exploit opportunities in any geographic market.

1. Center-for-Global 2. Local-for-Local 3. Locally Leveraged 4. Globally Linked

Bartlett and Ghoshal identify four strategies of multinational innovation. What are they?

sequential new product development process

Before mid-1990s, most US companies used ___________________; now many use partly parallel process.

Berne Union for the Protection of Literary and Artistic Property

Copyright law varies from country to country. However, the _________________________________specifies a minimum level of protection for member countries. Also eliminates differential rights to citizens versus foreign nationals.

1. Reproducing the work in copies of phonorecord 2. Preparing derivative works based on the work 3. Distributing copies for sale, rent, or lease 4. Performing the work publically 5. Displaying the work publically

Copyrights prohibit others from:

Local-for-local

Each division does own R&D for local market. (a) Accesses diverse resources, customizes products for local needs.

Lead Users

Customers who face the same general needs of the marketplace but are likely to experience them earlier than the rest of the market and stand to benefit disproportionately from solutions

Globally linked

Decentralized R&D labs but each plays a different role in firm's strategy and are coordinated centrally. (a) Accesses diverse resources, improve diffusion of innovation throughout firm and markets, may help develop core competencies.

Contract Book

Defines in detail the basic plan to achieve goals laid out in charter. It provides a tool for monitoring and evaluating the team's performance. Typically provides: (1) Estimates of resources required. (2) Development time schedule. (3) Results that will be achieved.

Resource Fit

Degree to which potential partners have resources that can be effectively integrated into a strategy that creates value

1. Lightweight Teams 2. Heavyweight and Autonomous

Different team types need different leader types: 1. _______________ teams need junior or middle managers 2. ________________ teams need senior manager with high status, who are good at conflict resolution, and capable of influencing engineering, manufacturing, and marketing functions.

1. Combining Complementary capabilities or Transferring Capabilities 2. Individual Alliances or Network of alliances

Doz and Hamel note that a firm's alliance strategy might emphasize:

Mavens in the workplace

Driven to obtain and disseminate knowledge about one or more of their. Interests Will track prices, tend to be consumer activists. Take great pleasure in helping other consumers.

Locally leveraged

Each division does own R&D, but firm attempts to leverage most creative ideas across company. (a) Accesses diverse resources, customizes products for local needs, improve diffusion of innovation throughout firm and markets.

Project Charter

Encapsulates the project's mission and provides measurable goals. May also describe: (1)Who is on team. (2)Length of time members will be on team. (3)Percentage of time members spend on team. (4)Team budget. (5) Reporting timeline. Key success criteria.

1.Can firm produce the technology at sufficient volume or quality levels? 2.Are complements important? Are they available in sufficient range and quality? Can the firm afford to develop and produce them itself? 3.Is there industry opposition against sole source technology? 4.Can the firm improve the technology well enough and fast enough to compete with others? 5.How important is it to prevent the technology from being altered in ways that fragment it as a standard? 6.How valuable is architectural control to the firm? Does it have a major stake in complements for the technology?

Factors influencing benefits of protection versus diffusion:

crowdsourcing

Firms can also open up an innovation task to the public through _______________, where people voluntarily contribute their ideas or effort.

beta testing

Firms may also use ______________ to get customer input early in the development process.

Patent Trolling

Firms seek patents just to limit the options of competitors or to earn revenues through aggressive patent lawsuits:

Wholesalers

Firms that buy manufacturer's products in bulk then resell them (typically in smaller, more diverse bundles).

Retailers

Firms that sell goods to the public

more compelling features, greater quality, more attractive pricing than the competitors

For a new product to be successful in the marketplace, it must offer:

1. Maximizing the product's fit with customer requirements. 2. Minimizing the development cycle time 3. Controlling development costs

For new product development to be successful, it must simultaneously achienve three goals. What are they?

Connectors in the workplace

Have exceptionally large and diverse circle of acquaintances Knack for remembering names and important dates.

competitors can easy copy the product

If a company's product had high appropriability, then

1. Useful 2. Novel (new) 3. Not Obvious

In order to get a patent, the product must be:

the risks of costs of the development process

In some situation, using a parallel development process can substantially increase:

Schumpter

In the 1940s, ____________ argued that large firms would be more effective innovators.

Manufacturers' Represntatives

Independent agents that may promote and sell the product lines of one or a few manufacturers.

Trade Secret

Information that belongs to a business that is generally unknown to others

suppliers

Involving ______________ on NPD team or consulting as an alliance partner can improve product design and development efficiency. Suppliers can suggest alternative inputs that reduce cost or improve functionality.

Formalization and Standardization

Large firms typically make greater use of ______________________ and ________________ because of challenges with oversight.

administrative costs and communication problems.

Large teams create more:

Alliance Contracts

Legally binding contractual arrangements to ensure that partners are (1) fully aware of their rights and obligations in the collaboration and (2) have legal remedies available in a partner should violate the arrangement:

Advertising, Promotions, and Publicity

Major marketing methods include:

project charter and contract book

Many organizations now have heavyweight and autonomous teams develop a __________________ and ________________________.

Promotions

Marketing method that includes temporary selling tactics that include: 1. Samples or free trials 2. Cash rebates after purchase 3. Incentives for a repeat purchase

Team Size

May range from a few members to hundreds.

1. Identify which projects met their goals and why. 2. benchmark the organization's performance compared to that of competitors, or to the organization's own prior performance. 3. Improve resource allocation and employee compensation, and. 4. refine future innovation strategies.

Measures of New product development performance can help management:

95%

More than ___________ of new product development projects fail to earn an economic return.

Salesperson in the workplace

Naturally talented persuaders. Acute ability to send and respond to nonverbal cues; can infect others with their mood!

1. What is the average cycle time for development projects? 2.What percentage of development projects undertaken within the last five years met all or most of the deadlines set for the project? 3.What percentage of development projects undertaken within the last five years stayed within budget? 4.What percentage of development projects undertaken within the last five years resulted in a completed product?

New Product Development Process Metrics include:

Collective Research Organziatons

Organizations formed to facilitate collaboration amount a group of firms

1.What is the firm's return on innovation? 2.What is the percentage of projects that achieve their sales goals? 3.What percentage of revenues are generated by products developed within the last five years? 4.What is the firm's ratio of successful projects to its total project portfolio?

Overall Innovation Performance measures include:

Plant Patents

Patents that protect distinct new varieties of plants

Utility Patents

Patents that protect new and useful processes, machines, manufactured items, or combination or materials

Design Patents

Patents that protect original and ornamental designs for manufactured items

positioning, rate of adoption, and cash flow

Price influences product:

Contracts and Sponsorship

Provide price discounts, special service contracts or advertising assistance to distributors, complementary goods providers or large and influential end users.

Alliances with Distributors

Providing distributor with stake in product's success or exclusivity contract can motivate them to promote more

Guarantees and Consignment

Reduces risk to intermediaries and complements providers

Patents

Rights granted by the government that excludes others form producing, using, or selling an invention

Relational Governance

Self-enforcing governance based on the goodwill, trust, and reputation of the partners that is build over time through shared experiences of repeatedly working together

Bundling Relationships

Sell in tandem with product already in wide use

1. Break overall firm into several subunits 2. Can utilize different culture and controls in different units

Small firms often considered more flexible and entrepreneurial. Many big firms have found ways of "Feeling Small" by:

True

T/F: Often better for firm to invest in continuous innovation and willing cannibalize its own products to make it difficult for competitors to gain a technological lead.

Icarus Paradox:

That which you excel at can be your undoing.

Backward Compatibility

The ability to take advantage of complementary products developed for a prior generation of technology.

Appropriability

The degree to which a firm is able to capture the rents from its innovation (determined by how easily or quickly competitors can copy the innovation)

Standardization

The degree to which activities are performed in a uniform manner

Centralization

The degree to which decision-making authority is kept at top levels of the firm OR the degree to which activities are performed at a central location.

Strategic Fit

The degree to which partners have compatible objectives and styles

Formalization

The degree to which the firm utilized rules and procedures to structure the behavior of employees.

Autonomous Teams

The following characteristics describe: - Members collocated and dedicated full-time (and often permanently) to team. - Project manager is typically very senior manager. - Project manager is given full control over resources contributed from functional departments and has exclusive authority over evaluation and reward of members. - may have own policies, procedures and reward systems that may be different from rest of firm. - Likely to be appropriate for breakthrough and major platform projects. - Can be difficult to fold back into the organization.

Heavyweight Teams

The following characteristics describe: - Members are collocated with project manager. - Manager is typically senior and has significant authority to command resources and evaluate members. - Often still temporary, but core team members often dedicated full-time to project. - Likely to be appropriate for platform projects.

Functional Teams

The following characteristics describe: - Members report to functional manager. - Temporary, and members may spend less than 10% of their time on project. - Typically no project manager or dedicated liaison personnel. - Little opportunity for cross-functional integration. - Likely to be appropriate for derivative projects.

Lightweight Teams

The following characteristics describe: - Members still report to functional manager. - Temporary, and member may spend less than 25% of their time on project. - Typically have a project manager and dedicated liaison personnel. - Manager is typically junior or middle management. - Likely to be appropriate for derivative projects.

Market Skimming Strategy

The following describe what pricing strategy? - High initial prices - Signals market that innovation is significant. - Recoup development expenses (assuming there's demand). - Attracts competitors, may slow adoption.

Penetration Pricing

The following describe what pricing strategy? - very low price or free - Accelerates adoption, driving up volume. - Requires large production capacity be established early. - Risky; may lose money on each unit in short run. - Common strategy when competing for dominant design.

1. How does the new product fit with the distribution requirements of firm's existing product lines? 2. How numerous and dispersed are customers, and how much product education or service will they require? Is prepurchase trial necessary? Is installation or customization required? 3. How are competing products or substitutes sold?

These factors help determine whether and what types of intermediaries the firm should use:

1. Reciprocal interdependence among divisions. 2. Strong integrating mechanisms such as personnel rotation, division-spanning teams, etc. 3. Balance in organizational identity between national brands and global image.

Transnational Approach requires:

1. Survival 2. Maximize current profits 3. Maximize market share

What are a firms objectives?

1. Resource Fit 2. Strategic Fit 3. Impact on Opportunities and Threats 4. Impact on Internal Strengths and Weaknesses 5. Impact on Strategic Direction

What are characteristics that help companies find the right partner for collaboration?

Organizational tenure, cultural, gender, and age

What are differnet types of diversity?

1. Rights to trademarks are established in legitimate use of the mark; does not require registration 2. However, marks must be registered before suit can be brought over use of the mark 3. Registration can also be used to establish international rights over trademarks.

What are some of the stipulations to getting a trademark?

1. Work that is not fixed in tangible for in not eligible 2. Copyright is established in first legitimate use (However, "doctrine of fair use" stipulates that others can typically use copyrighted material for purposes such as criticism, new reporting, teaching research, etc.) 3. Copyright for works created after 1978 have protection for author's life plus 70 years.

What are some stipulations of a copyright?

1. Idea Screen 2. Does this idea justify more research? 3. Is this business case sound? 4. Should project be moved to external testing 5. Is the product ready for commercial launch?

What are the Gates in the Stage-Gate Launch Process?

•Senior execs have power to fight for project. •They can gain access to resources. •They can communicate with multiple areas of firm.

What are the benefits of having a senior exec be a Champion for a research project?

1. Gives firm great control over selling process, price and service. 2. Can be expensive and/or impractical.

What are the benefits of selling direct?

1. Projects with champions are more likely to be successful in the market. 2. Champions get involved because they are excited about the project rather than of self-interest 3. Champions are more likely to be involved with radical innovation 4. Champions are more likely to be from high (low) level infirm 5. Champions are more likely to be from marketing

What are the five myths about Champions?

Discovery: Idea Generation 1. Scoping 2. Build the Business Case 3. Development 4. Testing and Validation 5. Launch

What are the five stages in the Stage-Gate Launch process?

1. Manufacturers' Representatives 2. Wholesalers 3. Retailers 4. Original Equipment Manufacturers (OEM's)

What are the intermediaries channels that products are sold through?

1. Timing 2. Licensing and Compatibility 3. Pricing 4. Distribution 5. Marketing

What are the key elements of an effective deployment strategy?

1. Availability of Capabilities 2. Protecting proprietary technologies 3. Controlling technology development and use 4. Building and renewing capabilities

What are the reasons a firm would choose to engage in solo development or collaboration will be influenced by:

•Role as champion may cloud judgment about project. •May suffer from escalating commitment. •Others may fear challenging senior executive.

What are the risks of having a senior member be a champion for a research project?

1.Team identifies customer requirements. 2.Team weights requirements in terms of relative importance. 3.Team identifies engineering attributes that drive performance. 4.Team enters correlations between different engineering attributes. 5.Team indicates relationship between engineering attributes and customer requirements. 6.Team multiplies customer importance rating by relationship to engineering attribute and then sums for each attribute. 7.Team evaluates competition. 8.Using relative importance ratings for engineering attributes and scores for competing products, team determines design targets. Team evaluates the new design based on the design targets.

What are the steps for the Quality Function Deployment? (QFD)

1. Alliance contracts 2. Equity ownership 3. relational governance

What are the three main types of governance mechanisms for partnerships?

1. Madrid Agreement Concerning the International Registration of Marks 2. Madrid Protocol (Countries that adhere to both are in the Madrid Union)

What are the two treaties that simplify registration of trademarks in multiple countries?

1. Need Translation 2. Connecting 3. Evaluation 4. Acquisition

What are they typical crowdsourcing challenges?

1. Severity 2. Likelihood 3. Inability of controls to detect the failure (all given a rating of 1-5 and a highest composite score is used to prioritize)

What criteria are failure modes evaluated on?

1. What each partner is obligated to contribute to the collaboration 2. How much control each partner has in the arrangement 3. When and how proceeds of the collaboration will be distributed 4. Review and reporting requirements 5. Provision for terminating relationships

What do contracts typically include?

May not tap diverse skills and resources, and projects may not closely fit needs of divisions or markets

What is a downfall of centralized authority and activities?

Impact on Internal Strengths and Weaknesses

What is being assessed by questions such as: "How would the collaboration leverage or enhance the firms' strengths?"

Impact on Opportunities and Threats in the External Environment

What is being assessed by questions such as: "How would he collaboration change the bargaining power of customers and suppliers?" or "Would the collaboration influence the availability of complementary goods toe the threat of substitutes?"

Impact on strategic direction

What is being assessed by questions such as: "Would the collaboration help the firms achieve its strategic intent?"

A product has to be fairly modular

What is needed for agile development to work?

1. Information must not be generally known or ascertainable. 2. Information must offer a distinctive advantage to the firm that is contingent upon its secrecy. 3. Trade secret holder must exercise reasonable measures to protect its secrecy.

What is needed to qualify something to be a trade secret?

1. Firms can use timing of entry to take advantage of business cycle or seasonal effects. 2. Timing also signals customers about the generation of technology the product represents. 3. Timing must be coordinated with production capacity and complements availability, or launch could be weak.

What is strategic timing of entry?

Cannibalization

When a firm's sales of one product diminish its sales of another

Outsourcing

When an organization (or individual) procured services or products from another rather than producing them in house

Equity Ownership

When each partner contributes capital and owns a share of the equity in the alliance.

When installed base and complements are important

When is backward compatibility good?

Agile Development Process

Whereby a product is broken up into smaller parts or features that are build by autonomous teams and released quickly, enabling developers to get feedback and fix bugs early:

Wholly open system

Wholly open system may be freely accessed, augmented and distributed by anyone.

1. Better able to obtain financing 2. Better able to spread costs of R&D over a large volume 3. Greater economies of scale and learning effects 4. Taken on a large scale or risky projects

Why may large companies be better for innovation?

1. R&D efficiency may decease due to the loss of managerial control 2. Large firms have more bureaucratic inertia 3. More strategic commitments tie firm to current technologies.

Why may large firms be bad innovators?

Customers

_____________ are often best able to identify the maximum performance capabilities and minimum service requirements of new product. Customers may be involved on NPD team.

Diversity

______________ in functional backgrounds increases breadth of knowledge base of team.

Computer-Aided Design (CAD)

______________ is the use of computers to build and test designs. (Enables rapid and inexpensive prototyping.)

Organic structures

_______________ have low formalization and standardization; described as "free flowing". (1) Encourages creativity and experimentation. (2) May yield low consistency and reliability in manufacturing.

Team leader

_______________ is responsible for directing team's activities, maintaining alignment with project goals, and communicating with senior management. Their impact team performance more directly than senior management or champions.

Viral Marketing

_________________ an attempt to capitalize on social networks by "seeding" information to well-connected individuals

Jake Jacobsen

_________________ encouraged more disciplined project selection and shifted focus from individual entrepreneurs to teams.

Computer-Aided Manufacturing (CAM)

_______________________ is the use of machine-controlled processes in manufacturing. (Increases flexibility by enabling faster changes in production set ups. More product variations can be offered at a reasonable cost.)

Design for Manufacturing

_______________________ often involves a set of design rules that reduce cost and development time, while boosting quality.

Innovators and Early Adopters

_________________________ respond to marketing that offers significant technical content and emphasizes leading-edge nature of product. - Need media with high content and selective reach.

Wholly proprietary systems

________________systems may be legally produced or augmented only by their developers.

loosely-coupled organization

•In a ____________________, activities are not tightly integrated; they achieve coordination through adherence to shared objectives and standards.

Patent Cooperation Treaty

•Inventor can apply for patent in a single PCT receiving office and reserve right to apply in more than 100 countries for up to 2 ½ years. Establishes date of application in all member countries simultaneously. Also makes results of patent process more uniform.