MAN4720 chapter 7

hypercompetition

a situation in which competitive intensity has increased and periods of competitive advantage have shortened, especially in newer, tech based industries, making any competitive advantage a string of short lived adv. cause-result of firms trying to imitate each other rather than attempting to be different

growth stage

accelerated growth, demand increases rapidly, new group of buyers called the early majority. leading edge of the large customer wave. see the benefit from adopting a new product or service key objective: stake out a strong strategic position not easily imitated by rivals

standard

an agreed upon solution about a common set of engineering features and design choices, also known as dominant design

long tail

companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices allows online retailers to overcome the problem of think markets(few buyers, few sellers, difficulty finding each other) EBAY barnes n noble carries 100,000 books, amazon: 5 mill

radical innovation

draws on novel methods or materials, is derived from either entirely different knowledge base or from the recombination of the firms existing knowledge base with a new stream of knowledge, or targets new markets by using new technologies example-introduction of Ford model T

reasons for incremental innovation

economic-established firms have incentive to defend strategic position/market power, extend time it can extract profits organizational-estab. firms rely heavily on formalized business processes, want to reinforce existing structure strategic- must consider the ramifications on other parties (suppliers, buyers exc)

industry life cycle

four different stages-introduction, growth, maturity, and decline-that occur in the evolution of an industry over time

strategic entrepreneurship

fundamental question-how to combine entrepreneurial actions that create new opportunities or exploit existing ones with strategic actions we take in the pursuit of competitive advantage example-P&G detergents

maturity stage

growth comes from late majority buyers, replacement or repeat purchases additional demand in this stage is limited, increased competitive intensity key success factors-manufacturing and process engineering capabilities to drive costs down (price is the dominate weapon in this stage) industry morphs into an oligopoly

introduction stage

individual or company launches a successful innovation, a new industry may emerge the (few) innovators core competency is R&D initial growth is slow-only early adopters are willing to pay a premium price to have the latest gadget

disruptive innovation

leverages new technologies to attack existing markets from the bottom up combating-invest in staying ahead of competition, protect the low end of the market by introducing low-cost innovations to preempt stealth competitors use reverse innovation

architectural innovation

leveraging existing tech. into new markets a new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets ex- canon entering printer market

"Razor and razor blade" business model

low price for the equipment (razor) but higher prices for the equipment needed for the constant use of equipment (blade)

product innovations

new products, such as the jet airplane, electric vehicle

process innovations

new ways to produce existing products or deliver existing services

discontinuities

periods of time in which the underlying technological standard changes can lead to a paradigm shif(new revolutionary standard) example-the move from film based to digital cameras

decline stage

size contracts and demand falls, laggards: customers who adopt a new product only when necessary four strategic options at this stage: exit, harvest (invest in only in growth products), maintain, or consolidate

incremental innovation

squarely builds on the firms established knowledge base, steadily improves the product or service it offers, and targets existing markets by using existing technology example-gillette going from one blade to six

innovation (vs invention)

the commercialization of any new product, process, or idea, or the modification and recombination of existing ones (invention). to drive growth, innovation also needs to be useful and successfully implemented

network effects

the positive effect (externality) that one user of a product or service has on the value of that product for other users-value of product increases with number of users

absorptive capacity

a firms ability to understand, evaluate, and integrate external technology developments

reverse innovation

a firm develops products specifically for emerging markets such as china and india, and then introduces these innovations into developed markets