MGMT 493 Test 3
laggards
only adopt the product if absolutely necessary
by focusing its resources on producing high-quality content for content streaming
1. How was Netflix able to outperform both Hulu and Amazon? A. by focusing its resources on buying classic blockbusters movies B. by expanding its content streaming to include foreign markets C. by expanding from content streaming to theatrical releases and cable content D. by focusing its resources on producing high-quality content for content streaming
the two entities complementary assets matched
1. The success of the Pixar-Disney strategic alliance demonstrated that A. Disney was in desperate need of Pixar's graphic display systems. B. the two entities' complementary assets matched. C. it was easier for the alliance partners to reduce the value gap created. D. the companies were effectively managing an unrelated diversification strategy.
shakeout stage
102. EasyOpen Inc. has entered a stage in which the demand for their innovative electric can openers has declined. Now most customers are buying replacement parts or buying their second can opener from the firm. What stage in the industry life cycle does this scenario describe? A. growth stage B. maturity stage C. shakeout stage D. decline stage
engaging in strategic outsourcing
44. Today, many companies use PeopleSoft and EDS to avoid maintaining a human resource management system. By doing this, these firms are A. engaging in strategic outsourcing. B. increasing their level of vertical integration. C. offshoring their core activities. D. engaging in unrelated diversification.
related-constrained diversification.
103. In 2009, ExxonMobil bought XTO Energy, a natural gas company, for $31 billion. XTO Energy is known for its core competency to extract natural gas from unconventional places such as shale rock—the type of deposits currently being exploited in the United States. ExxonMobil hopes to leverage its core competency in the exploration and commercialization of oil into natural gas extraction. Based on this example, ExxonMobil is engaging in A. unrelated-linked diversification. B. unrelated-constrained diversification. C. related-linked diversification. D. related-constrained diversification.
growth stage
105. The leading producer of gardening tools, YourGarden Inc, has achieved great success because they produce high-quality tools that are not too expensive. Even so, another company that produces lower-quality tools at the same price has also achieved some success, but not as much as YourGarden. Also, in general, the price of gardening tools has declined because of economies of scale and learning. In addition, YourGarden has added complementary assets, such as gardening instruction. Considering all of these factors, the gardening tool industry is most likely in the A. introduction stage. B. growth stage. C. shakeout stage. D. maturity stage.
building new core competencies to create and compete in markets of the future
105. Which quadrant in the core competence-market matrix is the hardest to pursue? A. building new core competencies to protect and extend current market position B. building new core competencies to create and compete in markets of the future C. leveraging core competencies to improve current market position D. redeploying and recombining core competencies to compete in markets of the future
business strategies
108. The crossing-the-chasm framework states that _____ need to be adjusted for each customer segment. A. incremental contributions B. business strategies C. innovations D. competitors
architectural innovation
109. Canon was able to redesign the copying machine so that it didn't need professional service—reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the components of the copying machine could be put together in an altogether different way that was more user-friendly. This example describes A. architectural innovation. B. incremental innovation. C. radical innovation. D. disruptive innovation.
provide stock options to managers.
11. The most efficient way to overcome the principal-agent problem in a firm is to A. increase the level of vertical integration within the firm. B. provide stock options to managers. C. downsize the existing workforce. D. organize economic activities within the firm.
disruptive innovation
110. Futura Inc. introduced an automobile that could run completely on electricity for longer periods of time than any other electronic or hybrid automobile. Also, this vehicle was less expensive than the vehicles of competitors. On the downside, it required more repairs than the competition's automobiles. However, the technology of the Futura vehicle improved rapidly, thereby improving its repair record. This example describes A. architectural innovation. B. incremental innovation. C. radical innovation. D. disruptive innovation.
question mark
110. TimeEnough Inc. entered the low-priced digital watch market several years ago. This firm's earnings have been unsteady, but might be growing. According to the BCG growth matrix, TimeEnough is a A. cash cow. B. star. C. dog. D. question mark.
the first mover will be able to reduce costs through economies of scale
13. Which of the following is a competitive benefit experienced by the first mover firm in an industry? A. The first mover will be able to achieve a less steep learning curve. B. The first mover will be able to reduce the switching costs. C. The first mover will not have to patent its products or technology. D. The first mover will be able to reduce costs through economies of scale.
it has access to convenience stores and a new distribution channel
16. How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010? A. Its main strategic focus is now on the domestic market. B. It opens a market for it that is growing slowly but has high profit margins. C. It has access to convenience stores and a new distribution channel. D. It automatically gains monopoly in the chocolate-manufacturing industry.
a firm that buys all the required raw materials from multiple external vendors
17. Which of the following firms is least integrated? A. a firm that enters a joint venture with another company to develop a new technology B. a firm that owns production subsidiaries across the globe C. a firm that makes equity investments in its supplier's company D. a firm that buys all the required raw materials from multiple external vendors
there are only a few competitors in the 3-D television market
19. The market for 3-D televisions is in the introduction stage of the industry life cycle. What does this imply? A. There are only a few competitors in the 3-D television market. B. The number of buyers in the market is high. C. The prices of 3-D televisions will be lowest during this stage. D. The barriers to entry are low in the industry.
related-link diversification
2. Disney became the world's leading media company to a large extent by pursuing a corporate strategy of A. related-linked diversification. B. cost-leadership. C. unrelated diversification. D. hostile takeovers.
pursue a harvest strategy
20. The strategic objective of a first mover during the introduction stage of the industry life cycle is to A. pursue a harvest strategy. B. survive by drawing on deep pockets. C. achieve market acceptance. D. lower entry barriers.
network effects
21. NextDoor is an instant messaging application for smartphones. New smartphone users find it easier to connect with friends and relatives through this mobile app when compared to other similar instant messaging applications. Hence, it has the largest user base in the industry. Thus, NextDoor app's value has increased primarily due to its A. learning curve effects. B. economies of scale. C. economies of scope. D. network effects.
business model innovation
22. Dollar Shave Club is an ecommerce start-up that delivers razors by mail. By doing this, Dollar Shave Club is using a(n) _____ to disrupt an existing market. A. innovation ecosystem B. architectural innovation C. business model innovation D. incremental innovation
As the size of the market expands, a standard signals the markets agreement on a common set of engineering features and design choices
23. In the context of industrial growth, which of the following statements is true of standards? A. Standards emerge exclusively from bottom-up through competition in the marketplace. B. As the size of a market expands, a standard signals the market's agreement on a common set of engineering features and design choices. C. Standards are exclusively imposed top-down by government or other standard-setting agencies such as the Institute of Electrical and Electronics Engineers. D. After a standard is established in an industry, the basis of competition tends to move away from process innovations toward product innovations.
growth stage
24. In which of the following stages of the industry life cycle is a standard first established? A. maturity stage B. growth stage C. shakeout stage D. introduction stage
parent-subsidiary relationship
25. Which of the following alternatives on the make-or-buy continuum allows for most integration? A. short-term contracting B. joint ventures C. licensing D. parent-subsidiary relationship
the consumer demand increases
25. Which of the following is a feature of the growth stage of the industry life cycle? A. The consumer demand increases. B. The prices of goods begin to rise. C. The basis of competition moves away from process innovation. D. The number of competitors decreases.
an automobile company using computer-aided design in its production
26. Which of the following best illustrates a process innovation as opposed to product innovation? A. a consumer electronics company developing a new generation of tablet computers B. an automobile company using computer-aided design in its production C. a consumer electronics company launching 3-D televisions D. an automobile company commercializing electric cars
a standard, in terms of engineering features and design choices, has been set across the industry.
27. Process innovation is more important than product innovation during the growth stage because A. companies produce very few products during the growth stage, often just prototypes or beta versions. B. technological and commercial uncertainties about a new product still exist during this stage. C. it is more crucial to adopt the integration strategy during this stage. D. a standard, in terms of engineering features and design choices, has been set across the industry.
the transaction costs that arise are frequently due to transfer prices
27. Which of the following is true of the parent-subsidiary relationship? A. The ability to create a community of knowledge is low. B. The parent firm has no control and command over the subsidiary. C. The transaction costs that arise are frequently due to transfer prices. D. The parent firm will lack specialization and division of labor.
while the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation
28. While cell phones with holographic keyboards are currently in the introduction stage of the industry life cycle, tablet computers are in the growth stage. In the context of this scenario, which of the following statements is true? A. The industry for cell phones with holographic keyboards will face greater competition than the tablet industry. B. While the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation. C. While the industry for cell phones with holographic keyboards can reap the benefits of economies of scale, the tablet industry will experience no such benefits. D. The industry for cell phones with holographic keyboards will face price competition, whereas, in the tablet industry, the mode of competition will be non-price.
vertical integration
28. _____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs. A. Venture capitalism B. Bootlegging C. Vertical integration D. Crowdsourcing
there is more strategic variety in the growth stage when compared to the introduction stage
29. Which of the following statements accurately brings out the distinction between the introduction and growth stages of the industry life cycle? A. There is more strategic variety in the growth stage when compared to the introduction stage. B. The number of competitors is more in the introduction stage than the growth stage. C. The market size for a new product or service is larger in the introduction stage when compared to the growth stage. D. While achieving market acceptance is the strategic objective during the introduction stage, the objective in the growth stage is to pursue a harvest strategy.
stake out a strong strategic position not easily imitated by rivals
30. The key objective for firms during the growth phase is to A. invest as many resources as possible in product innovations. B. stake out a strong strategic position not easily imitated by rivals. C. pursue a harvest strategy. D. reduce their network effects.
it enabled HP to compete head on with Cisco's videoconferencing solution
31. How did the strategic alliance between HP and DreamWorks Animation SKG affect HP? A. It helped HP pursue a taper integration strategy. B. It enabled HP to compete head on with Cisco's videoconferencing solution. C. It resulted in depreciation of HP's shareholder value. D. It failed because HP lacked the expertise in selecting and integrating technology acquisitions.
it exposes in-house suppliers and distributors to market competition to make performance comparisons possible
41. Which of the following statements is true of taper integration? A. It is the most integrated alternative to performing an activity within one's own corporate family. B. It refers to a situation in which firms narrow their focus on downstream value chain activities and ignore the upstream value chain activities. C. It exposes in-house suppliers and distributors to market competition to make performance comparisons possible. D. It does not rely on outside-market firms for its supplies.
reduces its level of vertical integration
43. A firm that engages in strategic outsourcing typically A. increases its internal transaction costs. B. reduces its level of vertical integration. C. reduces its level of external transaction costs. D. increases its level of horizontal integration.
organizational interita
65. A firm's resistance to changes in the status quo is referred to as A. organizational parity. B. organizational liquidity. C. organizational inertia. D. organizational efficacy.
product diversification
49. BM Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate? A. process diversification B. product diversification C. geographic diversification D. market diversification
They enjoy using Beta versions of products and providing feedback to companies
51. Which of the following statements is true of technology enthusiasts? A. They make up the largest market segment. B. They are the customer segment in the maturity stage of the industry life cycle. C. They are highly price conscious buyers. D. They enjoy using beta versions of products and providing feedback to companies.
a dominant- business firm
52. White Leo Motors (WLM) Inc. generates a major portion of its revenues by manufacturing luxury sports cars. However, the company also derives an insignificant percent of its annual revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes WLM? A. a conglomerate B. a subsidiary C. a dominant-business firm D. a single-business firm
related-constrained diversification
54. When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources, it can be concluded that the firm is using A. related-constrained diversification. B. related-linked diversification. C. strategic outsourcing. D. offshore outsourcing.
related link strategy
55. Evara Inc. started as a luxury brand for designer apparel. Soon, the company expanded by launching its own line of premium perfumes, watches, bags, and home furnishings. This expansion allowed the businesses under the company to share a few, if not all, of the common competencies in products, services, technology, and distribution. Which of the following corporate strategies is Evara pursuing in this scenario? A. taper integration strategy B. niche marketing strategy C. related-constrained strategy D. related-linked strategy
TL & Co. will share fewer common competencies and resources between its various businesses when compared to Soar Inc.
56. TL & Co. is following a related-linked diversification strategy, and Soar Inc. is following a related-constrained diversification strategy. How do the two firms differ from each other? A. Soar Inc. generates 70 percent of its revenues from its primary business, while TL & Co. generates only 10 percent of its revenues from its primary business. B. Soar Inc. pursues a backward diversification strategy, while TL & Co. pursues a forward diversification strategy. C. TL & Co. will share fewer common competencies and resources between its various businesses when compared to Soar Inc. D. TL & Co. pursues a differentiation strategy, and Soar Inc. pursues a cost-leadership strategy, to gain a competitive advantage.
early majority
57. At the time when Kevin decided to purchase a tablet computer, the product had just become accessible to the mass market. He purchased the tablet only after he was completely convinced that the benefits it would offer him would far exceed its price. Also, he waited for his friends to try the product and popular gadget television shows to endorse it. Which of the following customer segments does Kevin best represent? A. laggards B. technology enthusiasts C. early adopters D. early majority
a conglomerate
59. Red Empire Inc., a large multinational company owned by two partners, is active in the petroleum, capital market, chemicals, steel, beverages, hospitality, airlines, education, automobiles, and consumer electronics industries. The company has multiple brands and a large product portfolio under its banner. Which of the following terms would best describe this company? A. a flagship brand B. a single-business firm C. a dominant-business firm D. a conglomerate
The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies.
60. How does a conglomerate benefit from following an unrelated diversification strategy? A. The conglomerate can solely depend on its primary business activity for a major portion of its revenues. B. The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. C. The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. D. The conglomerate can limit the learning- and experience-curve effects it faces.
laggards
61. While the personal computer industry is flooded and growing with laptops and tablets, Ivan recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects, and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Ivan best represent? A. early adopters B. category captains C. laggards D. early majority
redeploying and recombining existing core competencies to compete in future markets
63. The core competency of MotorCraft Inc. is its fuel-efficient engine found in its cars. These engines are developed and built in-house. The company realizes that there is a new market opportunity to diversify. Thus, it produces the car engines on a large scale and sells them to other automobile companies. In this scenario, MotorCraft is A. leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. B. redeploying and recombining existing core competencies to compete in future markets. C. building new core competencies to create and compete in future markets. D. building new core competencies to protect and extend current market position.
new markets by using new technologies
64. In a radical innovation, a firm targets A. existing markets by using new technologies. B. new markets by using existing technologies. C. new markets by using new technologies. D. existing markets by using existing technologies.
building new core competencies to protect and extend current market position.
64. Vehmo Inc. is an automobile company whose core competency lies in manufacturing petrol- and diesel-based cars. The company realizes that more of its potential customers are switching to electric cars. The R&D department of the company acquires competencies in developing electric cars and launches its first hybrid car. In this scenario, Vehmo is primarily A. leveraging new core competencies to improve current market position. B. redeploying existing core competencies to compete in future markets. C. unlearning existing core competencies to create and compete in markets of the future. D. building new core competencies to protect and extend current market position.
Unlike incumbent firms, new entrants do not have formal organizational structures and processes.
67. Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms? A. Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. B. New entrants are embedded in an innovation ecosystem, while incumbent firms are not. C. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. D. Incumbent firms do not have the advantages of network effects that new entrants have.
a company that pursues unrelated diversification
68. Which of the following firms is most prone to experiencing a diversification discount? A. a company that deals in petroleum as well as natural gas B. a company that derives its revenues from selling aerated drinks and health drinks C. a company that pursues unrelated diversification D. a company that pursues related-constrained diversification
are able to increase value due to economies of scope.
71. Companies that pursue related diversification are able to create a diversification premium because they A. are able to leverage time compression economies. B. can operate beyond the minimum efficient scale. C. are able to increase value due to economies of scope. D. can reduce the value gap created by its products.
disruptive innovation
73. As a start-up company, Virtue Mobiles Inc. entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to its low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company to create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate? A. radical innovation B. incremental innovation C. architectural innovation D. disruptive innovation
guard the company against disruptive innovation by protecting the low end of the market
78. Intel's Celeron chip and Atom chip are initiatives to A. introduce a new product in a new market to extend its leadership. B. guard the company against disruptive innovation by protecting the low end of the market. C. stall its own disruption strategies and wait for its rivals to introduce disruptive forces. D. target that section of the market that is not particularly price sensitive.
invade the healthcare market from the bottom up.
80. By introducing Vscan, a small, wireless ultrasound device, GE Healthcare (General Electric) was primarily trying to A. cater to the healthcare needs of the developed countries over developing countries. B. invade the healthcare market from the bottom up. C. leverage existing technologies to attack new markets. D. find a market for high-end, high-price diagnostic devices.
increasing supply and mobility of skilled workers
86. Large companies, such as AT&T, IBM, and GE, have been shifting their knowledge landscape from closed innovation to open innovation because of the A. decreasing capability of external suppliers and vendors. B. lack of reliability on venture capital. C. increasing need to internally control research and development. D. increasing supply and mobility of skilled workers.
firms in the closed innovation model are extremely protective of their intellectual property
87. Which of the following statements is true of firms pursuing a closed innovation? A. Firms following the closed innovation model are less likely to be prone to the not-invented-here syndrome. B. Firms in the closed innovation model are extremely protective of their intellectual property. C. Firms in the closed innovation model focus on building a more effective business model to commercialize R&D, rather than focusing on being first to market. D. Firms following the closed innovation model will find activities such as spin-out ventures or strategic alliances crucial to commercialize their internally developed R&D.
by using internal capital markets as a source of value creation
88. How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies? A. by using internal capital markets as a source of value creation B. by adding more unrelated businesses into its corporate portfolio C. by increasing its coordination and influence costs D. by investing in businesses under the question mark quadrant of the BCG matrix
by having higher performance in another sector
93. The managers at AHL Chemicals Inc. decided that their firm needed to diversify because of falling sales and lower performance in one sector. How does diversifying compensate for the lackluster performance in this sector? A. by having higher performance in another sector B. by sharing their market power C. by increasing the firm's risk in another sector D. by motivating managers
network effect
94. First movers often have several competitive benefits including A. incremental effects. B. shakeout effects. C. network effects. D. experience effects.
lowering costs
94. There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale? A. increasing profits B. lowering costs C. reducing risk D. motivating managers
it increases the potential of legal reprecussions
98. Which of the following is a drawback of vertical integration? A. It increases the difficulty of securing critical supplies. B. It impedes scheduling and planning. C. It increases the potential of legal repercussions. D. It impedes investments in special assets.
entrepreneur who commercialized invention into an innovation
After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. This is clearly an example of a(n) A. firm that uses closed innovation. B. entrepreneur who commercialized invention into an innovation. C. business that entered the industry during its maturity stage. D. exception to the long tail business model.
the stock price of related-diversification firms is valued at greater than the sum of their individual business units
Diversification premium is a situation in which A. customers have to pay premium prices on products manufactured by firms pursuing unrelated diversification due to the lack of economies of scope. B. the overall value creation of highly diversified firms is more than the sum of the value created by individual business units. C. the stock price of related-diversification firms is valued at greater than the sum of their individual business units. D. shareholders are benefitted from the market capitalization of a highly diversified firm because of its economies of scale.
introducing inexpensive and smaller diagnostic devices in developing countries
General Electric (GE) disrupted itself in the healthcare industry by A. replacing the top levels of the executive hierarchy. B. introducing inexpensive and smaller diagnostic devices in developing countries. C. saturating the global market with multiple diagnostic devices. D. targeting the comparatively less price-sensitive sections of the market.
The firm will have more flexibility in purchasing and comparing prices of goods and services.
Grace Apparel Inc. has decided to procure fabrics required for its garments from external suppliers instead of maintaining its own dyeing and weaving facilities. How will this decision affect the firm? A. The firm will be protected against the principal-agent problem. B. The firm's administrative costs will be low because of necessary bureaucracy. C. The firm will have more flexibility in purchasing and comparing prices of goods and services. D. The firm will have high-powered incentives, such as hourly wages and salaries.
by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
How does horizontal integration within an industry affect the surviving firms? A. by increasing the threat the surviving firms will face from new entrants B. by strengthening the rivalry among existing firms C. by requiring the surviving firms to shift their focus from non-price to price competition D. by strengthening the bargaining power of the surviving firms vis-à-vis suppliers and buyers
building new core competencies to create and compete in markets of the future.
In 2007, Salesforce.com recognized an emerging market for platform as a service (PaaS) offerings and developed a new competency in delivering software development and deployment tools. This allowed its customers to either extend their existing CRM offering or build completely new types of software. This is an example of A. leveraging existing core competencies to improve current market position. B. building new core competencies to achieve vertical integration. C. redeploying and recombining existing core competencies to compete in markets of the future. D. building new core competencies to create and compete in markets of the future.
early majority
Relies on endorsement by others. They seek out reputable references such as reviews i prominent trade journals and magazines.
parent-subsidiary relationship
The most-integrated alternative to performing an activity within one's own corporate family. The corporate parent owns the subsidiary and can direct it via command and control.
disruptive innoation
To be a ______ ______ the new product or technology has to have additional characteristics: 1. It begins as a low cost solution to an existing problem 2. Initially, its performance is inferior to the existing technology, but its rate of technological improvement over time is faster that the rate of performance increases required by different market segments
when it fails to successfully launch a mass-market version of its product
When does a firm fall into the large competitive chasm between early adopters and early majority? A. when it cannot attract technological enthusiasts to try the beta versions of its products B. when it creates strong network effects during the growth stage C. when it fails to successfully launch a mass-market version of its product D. when the early majority create herding effects for its products
the level of process innovation reaches its maximum as firms attempt to lower cost
Which of the conditions prevail when an industry is at the end of its life cycle? A. The level of process innovation reaches its maximum as firms attempt to lower cost. B. The industry structure is perfectly competitive with a large number of buyers and sellers. C. The strategic objectives of businesses will involve gaining market acceptance. D. The market reaches its maximum size at this stage.
the company was no longer able to generate adequate growth through closed innovation
Which of the following reasons led to the launch of Procter & Gamble's "Connect + Develop," a web-based interface that connects the company's internal-innovation capability with the distributed knowledge in the global community? A. The company wanted to focus on process innovation rather than product innovation. B. The company was no longer able to generate adequate growth through closed innovation. C. The company wanted to carefully protect its intellectual property. D. The supply and mobility of unskilled workers within the industry had increased drastically.
principal agent problem
a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him This is also called the motivation for managers
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
product diversification strategy
corporate strategy in which a firm is active in several different product markets
backward integration
involves moving ownership of activities upstream nearer to the originating inputs of the industry value chain
principal costs
is a major disadvantage or organizing economic activities within a firms as opposed to within markets. It can arise when agents such as a manager, performing activities on behalf of the principal (the owner of the firm) pursues his or hers own interests
disruptive innovation
leverages new technologies to attack existing markets. It invades the existing market from the bottom up
strategic outsourcing
moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain
forward integration
moving ownership of activities closer to the end (customer) point of value
product innovation
new or recombined knowledge embodied in new products ex: electronic vehicle, airplane, smartphones, wearable computers
process innovation
new ways to produce existing products or deliver existing services Made possible through advances with the internet, lean manufacturing, six sigma, biotechnology, nanotechnology, and so on
information asymmetry
one party is more informed then another
open innovation
opening up the search for new ideas beyond the organization's boundaries and allowing innovations to easily transfer inward and outward
shakeout stage
rates of growth declines. Demand is largely satisfied in the prior growth stage. Demand now consists of replacement or repeat purchases only
growth stage
since demand is strong during the growth phase, both efficient and inefficient firms thrive, the rising tide lifts all oats. Moreover, pricing begins to fall, often rapidly, as standard business processes are put in place and firms begin to reap economies of scale and learning. Distribution channels are expanded and complementary assets in the form of products and services become widely available