BUSMGT4490: Chapter 7 - Innovation, Entrepreneurship, and Platforms
Because Lorraine wants to introduce innovative new production processes to the local restaurant industry, she is considered a(n)
entrepreneur
In the maturity stage of the industry life cycle, industry growth
flattens or even declines
The tendency of customers to enter the market in large numbers during the growth of the industry life cycle is known as the ____ effect
herding
Which of the following characteristics change as the industry life cycle progresses?
- number and size of competitors - type and level of innovation - type of customer
During the growth stage of the industry life cycle, firms focus on process innovation in order to ____
- reduce per unit production costs - increase production volume
S-Curve Development
1. Demand for a new product is slow to take off (Top) 2. Demand accelerates 3. Demand decelerates 4. Demand turns to zero 5. Demand becomes negative as a market contracts (Bottom)
Which of the following are ways in which standards can emerge
- by being imposed by government or other agencies - through market competition
First-mover disadvantages can include which of the following
- continuously perfect a product - educate potential customers about the product's benefits - find distribution channels
Innovation can
- make existing products or businesses obsolete - provide firms with a competitive advantage
The process in which change agents create new products or processes at significant economic risk is known as
entrepreneurship
Four Steps of the Innovation Process
idea, invention, innovation, imitation
The key objective for firms in the growth stage of the industry life cycle is
to establish a strong strategic position so that rivals cannot imitate it easily
Which of the following re advantages of platform businesses compared to pipeline businesses
- they scale more efficiently by eliminating gatekeepers - they unlock new sources of value creation and supply
The primary objective of firms during the introductory stage of the industry life cycle is to
establish themselves as a market participant and position themselves for future growth
Applying concepts from strategic management to the innovation process is known as ____
strategic entrepreneurship
Industry Life Cycle
the five different stages -- introduction, growth, shakeout, maturity, and decline -- that occur in the evolution of an industry over time
Strategic Entrepreneurship
the pursuit of innovation using tools and concepts from strategic management
Social Entrepreneurship
the pursuit of social goals while creating a profitable business
During which stage does a standard develop?
Growth
The development of most industries follows a(n)
S-Curve
True or False: Industries often tend to follow a predictable industry life cycle
True
Architectural Innovation
a new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets
Which of the following is most likely to produce a radial innovation
a new sportswear company with a handful or employees that perform a number of loosely defined roles
Platform Businesses
an enterprise that creates value by matching external producers and consumers in a way that creates value for all participants, and that depends on the infrastructure or platform that the enterprise manages
Radical Innovation
an innovation that draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of the existing knowledge bases with a new stream
The explosive growth of the apply iPhone was due in part to the network effects created by
complementary apps
Benny Baos is in a decline industry, but Benny thinks he can still survive by buying his competitors. Which strategic option is he planning to use?
consolidate
Successfully transitioning from one stage of the industry life cycle to the next is referred to as
crossing the chasm
In the _____ stage of the industry life cycle, falling demand leads to a reduction in market size
decline
It is challenging for firms to "cross the chasm" because
each stage of the industry life cycle features a different group of customers with different preferences and demands
Customers who desire a product because it stokes their imagination and creativity are known as ______
early adaptors
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
growth
Which of the following are types of innovation?
incremental, radical, disruptive, and architectural
The ____ identifies how industries tend to develop and change over time
industry life cycle
The commercialization of an invention by entrepreneurs is called
innovation
Creating new products out of new or existing ideas is known as
invention
Which customer segment will only adopt a new product when it becomes absolutely necessary?
laggards
Winner-Take-All Markets
markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created
Increases in the value of a product or service that result from a corresponding increase in the number of users are known as
network effects
A form of intellectual property that grants an inventor a temporary monopoly on a new product or process in exchange for disclosing the details of how the product or process is made is called a(n)
patent
After a standard is established in an industry, firms tend to focus more on ____ innovations
process
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
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
shakeout
Which of the following types of entrepreneurship involves leveraging innovation for competitive advantage?
strategic
A patent holder typically has a
temporary monopoly
Entrepreneurs
the agents that introduce change into the competitive system
Winners in the shakeout stage are generally
the cost leaders
A significant different between the early majority and the late majority is that ______
the late majority is not confident in using new technologies
Entrepreneurship
the process by which people undertake economic risk to innovate -- to create new products, processes, and sometimes new organizations
Innovation
the successful introduction of a new product, process, or business model -- is a powerful driver in the competitive process.
Types of Innovation: Combining Markets and Technologies
New Market/Existing Technologies: Architectural Innovation Existing Market/Existing Technologies: Incremental Innovation New Markets/New Technologies: Radical Innovation Existing Markets/New Technologies: Disruptive Innovation
Markets-and-Technology Framework
a conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions
Innovation Ecosystem
a firm's embedded ness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making
Which of the following are characteristics of the early majority?
- they have a strong sense of practicality - they rely on reviews by reputable magazines - the weigh benefits and costs carefully
The _____ determines whether an invention can be patented
U.S. Patent and Trademark Office
An architectural innovation is
a new product in which existing technologies are used in a novel way to create new markets