Chapter 7 Strategic Management

Innovators can benefit from a number of _______-MOVER ADVANTAGES. These are competitive benefits that accrue to the successful innovator. EX) Microsoft Word users might find switching to another Word processor too expensive. Too much time/money already invested.

First

Innovators may encounter ________-______ Disadvantages in the INTRODUCTION stage such as (1) need to educate customers about product. (2) find distribution channels. (3) continue to perfect new product.

First Mover

________ concerns the commercialization of an INVENTION. Companies must continue to innovate, in order to remain competitive for a long haul. EX) Netflix first offered home delivery DVD's, now they offer customized streaming services.

Innovation

INTRODUCTION stage "Technology Enthusiasts" (Industry Life Cycle)

Innovator's core competency is R&D. Objective is to achieve market acceptance. Small Market & growth, high entry barriers. One way to accomplish this is through NETWORK EFFECTS.

Decline Stage "Laggards" (Industry live cycle)

Market size contracts. Strategic options are (1)Exit- by bankruptcy. (2) Harvest- Reduce investments in product support. (3) Maintain- survive by marketing efforts. (4) Consolidate- Buying rivals to reduce competition.

Network Effects

Positive effect that one user of a product has on the value of that product for the other users. EX) Apple-launching Iphone, gaining a lot of users, then adding applications like App Store.

A ________ Innovation is a new way to produce existing products or deliver existing services. EX) Shipping containers.

Process

A _________ Innovation draws on novel methods from a different knowledge base to target new markets. (New Markets using New Technologies) EX) the invention of Airplanes.

Radical

__________ Entrepreneurship is the pursuit of innovation using Strategic Management concepts. Striving to combine entrepreneurial actions, creating new opportunities, or exploiting existing ones. Can take place in new ventures (Telsa Motors) or existing ones (Apple)

Strategic

Absorptive Capacity

Firms ability to understand external technological developments, evaluate them, and integrate them into current products or create new ones.

Markets & Technology Framework

Model to categorize innovations along the market & technology (existing & new) dimensions.

An __________ Innovation is when known components, based on existing technologies, are reconfigured i na new way to create new markets. EX) Canon redesigned a copier so it didn't need professional service. People could buy replacement parts.

Architectural

_______ Innovation states all R&D is conducted in house & not allowed to leave firm. Outside ideas lead to "not invented here" syndrome."

Closed

Innovation ________ competition, while simulatneously creates & _______ value.

Drives, Destroys

Why can't many innovators successfully transition from one stage of the Industry life cycle to the next?

Each stage of the ILC is dominated by a different customer group.

The Innovation Process ends with ________. Where competitors attempt to Imitate an innovation.

Imitation

Transformation of an idea into new product is an ________, can be a modification of existing ones, & can be patented or kept secret.

Invention

________ Innovation allows firms to benefit from internal and EXTERNAL ideas & inventions. Can share developments with other companies.

Open

_________ Entrepreneurship is the pursuit of social goals while creating a profitable business. Use a triple bottom line approach to assess performance. Profits, Planet, People. EX) Toms Shoes, Tacos for life.

Social

During the GROWTH stage, a ________ signals the market's agreement on a common set of engineering features & design choices. Helps reduce confusion, & can persist a long time.

Standard

Trade Secrets

Valuable proprietary information that is not in the public domain where the firm makes every effort to maintain its secrecy. EX) Coca Cola recipe, secret for over a century.

Patent

intellectual property that gives inventor rights to benefit from the technology for a specific time, and becomes a temporary monopoly. Exposed after patent expires.

Innovation

The discovery, development & transformation of new knowledge into a four step process captured with the 4 I's=Idea, Invention, Innovation, & Immitation.

A ________ Innovation is an innovation that leverages new technologies to attack existing markets from the bottom up. Begins as low cost solution to a problem. EX) Laptop computers disrupted desktop computers. EX) Dollar shave club disrupting Gillette

Disruptive

________ can introduce new products or services, new production processes, & new forms of organization. EX) Mark Zuckerberg, Oprah

Entrepreneurs

The process by which change agents (entrepreneurs) undertake economic risk to innovate. Create new products, processes is ____________.

Entrepreneurship

An Invention turns into an innovation only when it is successfully ________.

Commercialized

The innovation process begins with an ______. This is often presented in abstract journals from basic research. EX) wireless technology is built on Albert Einsteins research over 100 years ago.

Idea

An _________ Innovation builds on Established knowledge base & steadily improves on an existing product or service offerings. (Existing Markets using Existing Technology) EX) Gilette adding one blade back in 1903, to 6 blades today.

Incremental

Maturity Stage "Late Majority" (Industry Life Cycle)

Objective: Maintain a strong strategic position. Demand now consists of replacement or repeat purchases. Industry growth is at zero or decline. Few firms remain (oligopoly) & most enjoy economies of scale. EX) the smartphone industry is at Maturity stage. Competition is increasing even more.

SHAKEOUT stage. "Early Majority" (Industry Life cycle)

Objective: Surviving by drawing on "deep pockets." Market growth delcines. Firms compete directly for market share. Cost leaders thrive, weaker firms drop out. Product innovation begins to decline.

GROWTH stage "Early Adopters" (Industry Life Cycle

Objective: stake out strong position & imitation risk. Accelerated market growth, Both efficient & inefficient firms thrive. Moves from PRODUCT innovation to PROCESS innovation after a "standard" is established.