Term
Switching costs are the costs that consumers must bear to switch from a product based on one technological standard to a product based
on another.
a. True
b. False |
|
Definition
|
|
Term
A possible strategy for winning a format war is for a company to make sure that, in addition to the product itself, there is an adequate supply of complements.
a. True
b. False
|
|
Definition
|
|
Term
Technological paradigm shifts occur when new technologies come along that revolutionize the structure of the industry, dramatically alter the nature of competition, and require companies to adopt new
strategies to survive.
a. True
b. False |
|
Definition
|
|
Term
Which of the following is not a basic strategy for a first mover?
a. Develop and market the innovation itself
b. Develop and market the innovation jointly with other companies
through a strategic alliance or joint venture
c. License the innovation to others
d. Discourage development of complementary assets
e. All of these choices |
|
Definition
| d. Discourage development of complementary assets |
|
|
Term
If a first mover has complementary assets, barriers to imitation
are high, and capable competitors are few, the first mover should
a. license the innovation to others.
b. develop and market the innovation jointly with other companies
through a strategic alliance or joint venture.
c. develop and market the innovation itself.
d. sell the technology outright to another firm.
e. wait until competitors develop an alternative product. |
|
Definition
| c. develop and market the innovation itself. |
|
|
Term
If a first mover does not have complementary assets, barriers to
imitation are high, and there are several capable competitors, the
first mover should
a. license the innovation to others.
b. enter into a joint venture to protect the product.
c. produce the product itself.
d. sell the technology outright to another firm.
e. wait until competitors develop an alternative product. |
|
Definition
| b. enter into a joint venture to protect the product. |
|
|
Term
If a first mover does not have complementary assets, barriers to
imitation are low, and there are many capable competitors, the first
mover should
a. license the innovation to others.
b. enter into a joint venture to protect the product.
c. produce the product itself.
d. sell the technology outright to another firm.
e. wait until competitors develop an alternative product. |
|
Definition
| a. license the innovation to others. |
|
|
Term
A technological paradigm shift is most likely to occur in which
stage of the industry life cycle?
a. Embryonic
b. Growth
c. Shakeout
d. Maturity
e. Decline |
|
Definition
|
|
Term
Consumers will bear the costs of switching technologies when
a. the benefits of adopting the new technology outweigh the
costs of switching.
b. switching costs are substantial.
c. switching costs are reimbursed by makers of a product.
d. all of these choices.
e. none of these choices. |
|
Definition
| a. the benefits of adopting the new technology |
|
|
Term
Cell phone technology is replacing traditional wired phone
technology. This is an example of a(n)
a. first-mover advantage.
b. technological paradigm shift.
c. format war.
d. complementary product.
e. embryonic industry. |
|
Definition
| b. technological paradigm shift. |
|
|
Term
Which of the following will not help an established company in
addressing the potential challenge of a disruptive technology?
a. Access to knowledge about how disruptive technologies can
revolutionize markets
b. Investing in newly emerging technologies that may ultimately
become disruptive technologies
c. Anticipating and planning for how disruptive technology will
change business
d. Distinctive competencies in the current business model
e. Understanding that a disruptive technology will require a
radically different value chain with a different cost structure |
|
Definition
| d. Distinctive competencies in the current business model |
|
|
Term
Technological disruption
a. typically happens slowly.
b. is usually begun by the industry leaders.
c. affects mostly small niche markets.
d. causes firms to adopt a new business model.
e. is a problem primarily in embryonic industries. |
|
Definition
| d. causes firms to adopt a new business model. |
|
|
Term
Which of the following factors is a disadvantage of being a first
mover?
a. First movers have to bear pioneering costs.
b. First movers are prone to make mistakes.
c. First movers run the risk of building the wrong resources and
capabilities.
d. First movers may invest in inferior or obsolete technology.
e. All of these choices. |
|
Definition
|
|
Term
Which of the following are major sources of first-mover advantages?
a. An opportunity to exploit network effects
b. The ability to establish significant brand loyalty
c. The ability to ramp up sales volume before rivals can
d. The ability to accumulate valuable knowledge of consumer needs
e. All of these choices |
|
Definition
|
|
Term
Licensing a format to other enterprises is often used by a company
so that the company can
a. earn substantial license fees without having to manufacture
products.
b. create a monopoly.
c. produce products that can be based on the licensed format.
d. all of these choices.
e. none of these choices. |
|
Definition
| c. produce products that can be based on the licensed |
|
|
Term
The various strategies that companies should adopt to win format
wars revolve around
a. getting the federal government to intercede.
b. making network effects work in their favor and against their competitors.
c. effective use of advertising.
d. driving competitors out of business.
e. joint ventures. |
|
Definition
| b. making network effects work in their favor and against their competitors. |
|
|
Term
Which of the following is not a disadvantage to being a first
mover?
a. Significant pioneering costs
b. Tendency to make mistakes
c. Risk of building the wrong resources and capabilities
d. Accumulation of market knowledge
e. Possibility of investing in inferior or obsolete technology |
|
Definition
| d. Accumulation of market knowledge |
|
|
Term
Which of the following is not one of the benefits that first movers
enjoy?
a. Earlier benefits from economies of scale
b. Ability to create customer switching costs
c. First to obtain brand loyalty
d. Ability to accumulate knowledge about the market
e. Lower pioneering costs |
|
Definition
| e. Lower pioneering costs |
|
|
Term
Which of the following is not a true statement?
a. First movers are the first to recover the costs of a new technology.
b. First movers have higher pioneering costs than do later entrants.
c. Later entrants can avoid the mistakes of first movers.
d. Later entrants have lower pioneering costs than do first
movers.
e. First movers are more likely to make mistakes than are later
entrants. |
|
Definition
| a. First movers are the first to recover the costs of a |
|
|
Term
Which of the following actions will not help protect intellectual
property rights?
a. Suing copyright violators in court
b. Threatening to sue potential violators
c. Digitalizing creative output
d. Encrypting creative output
e. Enforcing patent and copyright laws |
|
Definition
| c. Digitalizing creative output |
|
|
Term
Digitalization refers to
a. the increasing use of the Internet in corporations.
b. a firm's database of client information.
c. manufacturing with the aid of robotics.
d. turning intellectual property into digital form.
e. the use of encryption software to protect intellectual
property. |
|
Definition
| d. turning intellectual property into digital form. |
|
|
Term
Which of the following is not intellectual property?
a. A song written down as sheet music
b. A Tom Clancy novel
c. A computer software package
d. A patented invention
e. A new organizational structure |
|
Definition
| e. A new organizational structure |
|
|
Term
In 2001, Intel spent $7.5 billion to upgrade its facilities so it
could produce the Pentium 4 semiconductor chip. Each chip cost $130 to
make and sold for $200 each. What is the marginal cost of a Pentium 4
chip?
a. $70
b. $130
c. $200
d. $7.5 billion divided by the number of chips produced
e. $7.5 billion |
|
Definition
|
|
Term
Consider a cost curve, with production volume on the horizontal
axis and marginal costs on the vertical axis. What shape would the
marginal cost curve most resemble in a high-tech industry?
a. Upward at a 45-degree angle
b. U-shape
c. Straight and vertical
d. J-shape
e. Straight and flat |
|
Definition
|
|
Term
Aggressive marketing to jump-start demand for a product often
involves
a. substantial upfront marketing.
b. point-of-sale promotion techniques.
c. low introductory prices.
d. use of free sampling.
e. all of these choices. |
|
Definition
|
|
Term
Marginal cost refers to the cost of
a. switching to a new technology.
b. buying stock with loaned funds.
c. producing one extra unit of product.
d. realizing a profit.
e. motivating other firms to produce complements. |
|
Definition
| c. producing one extra unit of product. |
|
|
Term
Cellular phone service providers often sell the phone itself at
very low prices and then charge a relatively high fee for usage. This
illustrates
a. first-mover strategy.
b. competitive cooperation.
c. the razor-and-blade strategy.
d. competitive positioning.
e. format licensing. |
|
Definition
| c. the razor-and-blade strategy. |
|
|
Term
The razor-and-blade strategy was pioneered by
a. Procter & Gamble.
b. Sony.
c. Toyota.
d. Ford.
e. Gillette. |
|
Definition
|
|
Term
Killer applications are applications or uses of a new technology or
product that
a. are so compelling they persuade customers to adopt or use the new technology in droves.
b. drive consumers to the products or technology of another company.
c. repulse new customers.
d. kill demand for the product or technology.
e. backfire on the company producing them. |
|
Definition
| a. are so compelling they persuade customers to |
|
|
Term
An adequate supply of complements to a product helps ensure that
consumers
a. will buy the company's product.
b. will experiment with the products of other companies.
c. will buy the complements to use with the products of other companies.
d. all of these choices.
e. none of these choices. |
|
Definition
| a. will buy the company's product. |
|
|
Term
Often, the industry standard is selected competitively by
a. market supply.
b. market demand.
c. government contracts.
d. all of these choices.
e. none of these choices. |
|
Definition
|
|
Term
What percentage of the world's PCs adhere to the Wintel standard?
a. 95%
b. 50%
c. 20%
d. 75%
e. 5% |
|
Definition
|
|
Term
When it comes to developing a business model and strategies that
will lead to competitive advantage and superior profitability, high-technology companies
a. often face similar situations.
b. often face different situations.
c. are extremely unique in the situations they face.
d. cannot be compared in terms of the situations they face.
e. commonly face overwhelming situations. |
|
Definition
| a. often face similar situations. |
|
|
Term
Which of the following strategies should a company not adopt if it
wants to win a format war?
a. License their technology to competitors.
b. Develop complementary products.
c. Enter into a joint venture to ensure compatibility.
d. Aggressively market to jump-start demand.
e. Price the product high to recover steep upfront costs. |
|
Definition
| e. Price the product high to recover steep upfront costs. |
|
|
Term
What advice would you give to a firm that wants to exploit network
effects?
a. Price your products high in the early stages of the market's
development.
b. Be a first mover and thus establish the technical standard.
c. Create incentives for other firms to develop complementary products.
d. Develop more killer applications than do competitors.
e. Ask customers to bear the switching costs. |
|
Definition
| c. Create incentives for other firms to develop complementary products. |
|
|
Term
Matsushita licensed its VHS technology to rivals, while Sony kept
its Beta technology proprietary. This action allowed Matsushita to
a. win the format war.
b. enter into an alliance with Sony.
c. earn higher profits than Sony.
d. enjoy a first-mover advantage.
e. bear switching costs better than Sony. |
|
Definition
|
|
Term
When automobiles first became available to the public, it was
difficult for buyers to find products such as tires, gasoline, and
light bulbs for their cars. Early automobile owners
a. faced a first-mover disadvantage.
b. lacked complementary products.
c. were locked out of the market.
d. lost the format war.
e. were too innovative. |
|
Definition
| b. lacked complementary products. |
|
|
Term
Microsoft released its latest operating system, Windows Vista, and intended it to replace earlier versions of Windows. Buyers of Vista had to learn how to use the features of the new software; thus, buyers were facing
a. a first-mover disadvantage.
b. outmoded technology.
c. a positive feedback loop.
d. a format war.
e. switching costs. |
|
Definition
|
|
Term
Recently, the U.S. Food and Drug Administration began to require more descriptive labeling of food products. This is an example of standards that developed
a. in the public domain.
b. with a dominant design.
c. through industry cooperation.
d. by government mandate.
e. through market demand. |
|
Definition
| d. by government mandate. |
|
|
Term
Intellectual property refers to
a. the product of a manufacturing activity.
b. a narrow range of intellectual pursuits.
c. the product of any intellectual and creative effort.
d. any idea produced for profit.
e. nonfinancial ideas and concepts. |
|
Definition
| c. the product of any intellectual and creative effort. |
|
|
Term
Which of the following economic benefits result from the use of
standards?
a. Compatibility
b. Reduction in confusion
c. Reduction in production costs
d. Reduction of risk in supplying complementary products
e. All of these choices |
|
Definition
|
|
Term
When a standard exists in the public domain,
a. the standard was created from outside the mainstream of the industry.
b. consumers selectively chose that standard.
c. the government chose the standard that would best serve the public's interests.
d. the standard may be used by any company.
e. the standard was developed in an open and cooperative fashion. |
|
Definition
| d. the standard may be used by any company. |
|
|
Term
In the 1870s, Christopher Sholes invented the layout of keys on a
typewriter keyboard, sometimes called the QWERTY layout. This invention
is a(n)
a. technical standard.
b. first-mover advantage.
c. complementary product.
d. outmoded technology.
e. high-tech industry. |
|
Definition
|
|
Term
Makers of complementary products will begin large-scale production
when
a. the first mover introduces a new product.
b. the dominant design is changing.
c. consumer demand reaches the plateau of maturity.
d. the technical standard is firmly established.
e. industry participants begin to purchase from suppliers. |
|
Definition
| d. the technical standard is firmly established. |
|
|
Term
When an industry's products rely on a common set of features, these features are called a
a. dominant design.
b. format war.
c. first mover.
d. public domain.
e. high-tech industry. |
|
Definition
|
|
Term
An industry is considered to be high technology, or high tech, when
a. its products are electronic or electrical.
b. the firms in the industry own intellectual property.
c. its products are computers or are related to computers.
d. firms are innovative.
e. the underlying scientific knowledge that companies in the industry use is advancing rapidly. |
|
Definition
| e. the underlying scientific knowledge that companies in the industry use is advancing rapidly. |
|
|
Term
When standards are part of the public domain, they can be used
a. only by companies in a particular industry.
b. only by federal contractors.
c. by paying a fee to the Federal Communications Commission
(FCC).
d. freely by any company.
e. once without payment of a fee. |
|
Definition
| d. freely by any company. |
|
|
Term
Which of the following is an example of a technical standard?
a. Typewriter keyboard
b. Dimensions of containers used to ship goods on trucks,
railcars, and ships
c. The Universal Serial Bus (USB)
d. Communication between a PC and the Internet via a modem (TCP/
IP)
e. All of these choices |
|
Definition
|
|
Term
Technical standards in high-technology industries are
a. specifications developed by each producing company for its own products.
b. specifications that all producers adhere to when making a product or product component.
c. product specifications imposed by the federal government.
d. expressions of product features desired by consumers.
e. general guidelines proposed by industry leaders. |
|
Definition
| b. specifications that all producers adhere to when making a product or product component. |
|
|
Term
Which of the following has been thought of as a high-technology
industry?
a. Computers
b. Telecommunications
c. Consumer electronics
d. Pharmaceuticals
e. All of these choices |
|
Definition
|
|
Term
In high-technology industries, the underlying scientific knowledge companies use is
a. increasing slowly.
b. advancing rapidly.
c. steadily decreasing.
d. tripling every quarter.
e. becoming stagnant. |
|
Definition
|
|
Term
Even if they are constrained by a lack of capital, new entrants should avoid partnering with a larger company and go it alone.
a. True
b. False |
|
Definition
|
|
Term
One strategy for success in high-tech industries is to keep prices low and thus increase sales volume.
a. True
b. False |
|
Definition
|
|
Term
The law of diminishing returns states that marginal costs fall as a company tries to expand output.
a. True
b. False |
|
Definition
|
|
Term
An example of an important complementary asset is a state-of-the-art manufacturing facility.
a. True
b. False |
|
Definition
|
|
Term
Marginal costs in high-technology industries tend to stay very low as production rises.
a. True
b. False |
|
Definition
|
|
Term
When a company is trying to win a format war it should license its format for a low fee rather than a high fee.
a. True
b. False |
|
Definition
|
|
Term
One important advantage of being a first mover is that it
guarantees success.
a. True
b. False |
|
Definition
|
|
Term
Digitalization has made it more difficult to protect some
intellectual property rights.
a. True
b. False |
|
Definition
|
|
Term
Aggressive marketing is a key factor in jump-starting demand to get potential early adopters to bear the switching costs associated with adopting a new innovation.
a. True
b. False |
|
Definition
|
|
Term
A razor-and-blade strategy refers to lowering a company's cost structure.
a. True
b. False |
|
Definition
|
|
Term
Microsoft Word word-processing software is so easy to use and has so many useful features that no other software can compete with it. Therefore, Microsoft Word is a killer application.
a. True
b. False |
|
Definition
|
|
Term
Companies that are locked out of a market are those in which consumers are unwilling to bear the switching costs required for them to abandon the established standard and adopt the new one.
a. True
b. False |
|
Definition
|
|
Term
When two or more companies are competing with each other to get their technology adopted as a standard in an industry, and when network effects and positive feedback loops are important, the company that wins the format war will be the one whose strategy best exploits positive feedback loops.
a. True
b. False |
|
Definition
|
|
Term
Digital music downloads have high marginal costs.
a. True
b. False |
|
Definition
|
|
Term
Dolby Laboratories' exploited a positive feedback loop in becoming the standard for sound quality.
a. True
b. False |
|
Definition
|
|
Term
Consumers chose Microsoft Windows operating system as the technical standard through their many purchases of that software.
a. True
b. False |
|
Definition
|
|
Term
Ownership of an industry standard that is protected from imitation by patents and copyrights is a weak organizational resource.
a. True
b. False |
|
Definition
|
|
Term
Technical standards always exist in the public domain so that any company can use them.
a. True
b. False |
|
Definition
|
|
Term
A set of related technical standards that specify the common set of features or design characteristics of a product is called a dominant
design.
a. True
b. False |
|
Definition
|
|
Term
The layout of the keys on a computer keyboard is an example of a technical standard.
a. True
b. False |
|
Definition
|
|
Term
Battles to set and control technical standards in a market are referred to as product positioning.
a. True
b. False |
|
Definition
|
|
Term
It can be argued that Microsoft's near monopoly of PC operating systems helped raise the level of industry profitability.
a. True
b. False |
|
Definition
|
|
Term
At the moment, Motorola appears to have the advantage in format for the next generation of TV and DVD players.
a. True
b. False |
|
Definition
|
|
Term
In the past, format wars have been relatively common in the consumer electronics industry.
a. True
b. False |
|
Definition
|
|
Term
Technical standards create benefits primarily for those firms that do not adhere to them.
a. True
b. False |
|
Definition
|
|
Term
High-technology industries are those in which the underlying scientific knowledge that companies in the industry use is advancing rapidly.
a. True
b. False |
|
Definition
|
|
