Deck 5: Timing of Entry

Question 1

First movers typically invest more in exploratory research than late entrants.

Answer 1

True

Question 2

Early leaders are firms that are the first to enter the market.

Answer 2

False

Question 3

If entry barriers are high,entering a market early becomes necessary.

Answer 3

False

Question 4

In an industry characterized by increasing returns to adoption,there can be powerful advantages to being an early provider.

Question 5

Many start-up firms demise because new innovations tend to be adopted very slowly at first.

Question 6

The credibility of a firm can influence the rate of adoption of its technology.

Question 7

Early followers enter the market only after a product begins to penetrate the mass market.

Question 8

A firm intending to refine an earlier entrant's technology should avoid fast-cycle development processes.

Question 9

When a market is characterized by mature enabling technologies,a firm should enter the market late.

Question 10

Other things being equal,less customer uncertainty favors earlier timing of entry.

Question 11

The initial cost of a good itself can be a switching cost.

Question 12

A technology may be underdeveloped and its fit with customer needs unknown in the early market stages.

Question 13

All pioneers face customer uncertainty.

Question 14

New product development time increases when using strategic alliances and cross-functional teams.

Question 15

In industries that have increasing returns to adoption,allowing competitors to get a head start in building an installed base is a safe strategy.

Question 16

The time invested by buyers to become familiar with a product's operation cannot be considered as a switching cost.

Question 17

If you are a first mover in the market of a new technology,you may find that your product offerings will have to be revised as consumers reveal their preferences.

Question 18

Late entrants typically bear the bulk of research and development expenses.

Question 19

For a very new product technology,market research will be of great help.

Question 20

Not all innovations require complementary goods.

Question 21

Doven Inc.pioneered software development in the 1970s and introduced its range of office tools well ahead of competitors.According to the classification scheme of entrants,Doven would be classified as a(n) _____.

A) first mover
B) early follower
C) early leader
D) laggard

Question 22

When Fun Bun,an international fast food chain,first moved into China,it had to teach farmers how to grow a particular variety of potatoes and bakers had to be taught to make hamburger buns.This is an example of:

A) corporate social responsibility.
B) an undeveloped supply channel.
C) incumbent inertia.
D) monopoly rents.

Question 23

Which of the following is an advantage of being a later entrant into a market?

A) Firms can capture scarce resources.
B) Firms do not have to invest in exploratory research.
C) Firms have to develop their own supply and distribution channels.
D) Firms are unaffected by switching costs.

Question 24

Which of the following is an example of an enabling technology for the computer hardware industry?

A) Laptops gradually replacing desktops at workplace.
B) Computer hardware has zero utility without a microprocessor.
C) Employees using anti-glare eyeglasses to increase readability from computer screens.
D) Availability of special chairs with back support for people who work for long hours on computers.

Question 25

After much experimentation and trial and error,TechSmart launched a GPS-enabled shoe into the market.It was the first company to introduce such footwear.Later,several other firms also began to offer similar shoes.Which of the following is most likely to be true for TechSmart?

A) TechSmart had incurred significant research and development expenses.
B) TechSmart's ability to exploit monopoly rents will be low.
C) TechSmart will be able to exploit incumbent inertia of the late entrants.
D) TechSmart had to invest less on establishing distribution channels and generating consumer awareness, compared to firms that entered the market after it.

Question 26

Which of the following statements is true of first movers relative to early followers and late entrants?

A) Cost of developing necessary production processes and complementary goods is lower for first movers.
B) First movers are in a better position to exploit buyer switching costs and also to reap increasing returns advantages.
C) First movers, being incumbents, have greater ability than later entrants to respond to changes in the industry environment and adopt newer production processes.
D) First movers fail to capture scarce resources such as key locations, government permits, access to distribution channels, and relationships with suppliers.

Question 27

Fashion Fair,the first mover in the "all year discount" stores market,lost its market share to a late entrant-Brand Fair.Brand Fair operated its discount stores solely over the Internet,which,in turn,saved a lot of expenses.However,Fashion Fair was unable to adopt the online store business model due to its existing contracts with suppliers and investment in a physical infrastructure.This is an example of:

A) incumbent inertia.
B) monopoly rents.
C) path dependency.
D) technology spillover.

Question 28

Which of the following statements is true of customer preferences?

A) The importance of technological features to customers stays constant over time.
B) Customers can differ from producers in their understanding of a new technology.
C) All pioneers of new-to-the-world technologies face customer uncertainty.
D) Other things being equal, more customer uncertainty favors earlier timing of entry.

Question 29

If the aspects that customers have come to expect in a technology are difficult for competitors to imitate,a technology leader:

A) will have to bear monopoly costs.
B) can yield sustained monopoly rents.
C) will have lower bargaining power.
D) will have higher switching costs.

Question 30

The first entrants to sell in a new product or service category are referred to as _____.

A) pioneers
B) early leaders
C) early followers
D) laggards

Question 31

The tendency of existing firms to be slow to respond to changes in the industry environment due to their large size,established routines,or prior strategic commitments to existing suppliers and customers is known as:

A) monopoly costs.
B) path dependency.
C) incumbent inertia.
D) technology trajectory.

Question 32

Marine Systems was the first company to develop inventory management software specifically for hotels and restaurants.Soon after Marine Sytems had launched its product,Unicorn Systems developed similar software.The software developed by Unicorn Systems outperformed the one developed Marine Systems,and it eventually became the market leader.Unicorn Systems is an example of a(n) _____.

A) pioneer
B) late mover
C) early follower
D) laggard

Question 33

When Pioneer Athletics wanted to provide better landing mats for gymnasts,it asked its supplier Delta Foam Industries (DFI) used a new processes to manufacture higher quality,durable foam for use in its mats.This foam represents a(n) _____ for Pioneer Athletics.

A) network externality
B) monopoly cost
C) enabling technology
D) incumbent inertia

Question 34

There are more chances for a technology to be underdeveloped and its fit with customer needs unknown in the _____ market stage.

A) very early
B) late
C) maturity
D) mass

Question 35

In the video game console industry,Magnitude was the first firm to introduce a console in the market.However,consumers were uncertain about the product,and its high costs discouraged consumers from purchasing it.Eventually,Magnitude withdrew the product from the market.A few years later,Mantel and Adventura came up with their respective gaming consoles and successfully established their products.Mantel and Adventura will be considered as:

A) pioneers.
B) early followers.
C) laggards.
D) late movers.

Question 36

Alpen Inc.is a manufacturing firm that holds a patent for a new food processing machine,which is considerably more efficient and safe.Being the only firm that manufactures that product,Alpen Inc.charges a very high price for its products.This is referred to as _____.

A) monopoly rent
B) technology lag
C) incumbent inertia
D) absorptive capacity

Question 37

Which of the following is true of a firm entering a market too early?

A) The distribution channel will be well established prior to its entry.
B) The technology and complements will be underdeveloped.
C) Competitors would have already captured controlling shares of the market.
D) The firm will not be able to reap the advantages of monopoly rent.

Question 38

Jupiter Inc.,a software firm,is starting to face competition from the new entrant Coral Inc.Jupiter Inc.wants to prevent its existing customers from switching to Coral's newly developed software.Which of the following measures should Jupiter Inc.adopt?

A) Ensure that customers find its software more convenient and simpler to use, as compared to that of Coral Inc.
B) Keep the initial cost of the software higher than that of Coral Inc.
C) Keep the prices of the complements required for the software higher than that of Coral Inc.
D) Ensure that fewer complementary products are availability for its products, as compared to that of Coral Inc.

Question 39

Jacob had been using WordPerfect 5.1 for DOS for several years and was quite an expert at it.When his boss wanted him to change to a Windows-based system,Jacob told his boss that it would slow him down.Jacob also pointed out that it would cost a lot of money to train him to use the new system.This is an example of:

A) cognitive dissonance.
B) high switching costs.
C) high monopoly rents.
D) early entry continuation.

Question 40

Component technologies that are necessary for the performance or desirability of a given innovation are referred to as _____ technologies.

A) architectural
B) diffused
C) primary
D) enabling

Question 41

Explain why sometimes the follower and not the first mover of a new technology is more successful in the marketplace.

Question 42

Loren has invented a new product that detects water leakages due to broken pipes and sends out an alarm similar to a smoke alarm.However,Loren has very little personal money to invest in this new product.He finally raised enough money to enter the market and began to experience some success.The product was not patentable because it was too similar to other existing technologies.Major corporations saw his success and have now entered the market with competing products.What will be the probable destiny of Loren's company?

Question 43

New innovations typically tend to:

A) be adopted very slowly at first.
B) have a rapid initial takeoff.
C) provide high sales revenue when they are first introduced.
D) be adopted as soon as they are introduced.

Question 44

Explain the reasons why other keyboards claimed to be more efficient were not able to replace the QWERTY keyboard.Which principle is illustrated in this scenario?

Question 45

What assumptions underlie the use of timing of entry strategies into the market for new products?

Question 46

Since SmartShoe Inc.is the market leader in the gliding shoe market,it enjoys an excellent reputation.It was the pioneer of this new market and currently holds 40 percent market share.Now SmartShoe wants to introduce a new range of orthopedic shoes.Discuss how its reputation might affect its acceptance among distributors and consumers.

Question 47

If _____ is high,firms will have to enter a market early.

A) threat of competitive entry
B) entry barrier
C) inability to improve previous technology
D) customer ambiguity

Question 48

Which of the following calls for an early entry into a market?

A) Immature enabling technologies
B) Unavailability of complementary goods
C) High customer uncertainty
D) Low entry barriers

Question 49

A delayed entry into a market with a new technology is preferred when:

A) support by complementary goods providers is initially high.
B) enabling technologies are initially less mature.
C) customer uncertainty is low in the beginning.
D) the scope for improving over previous technologies is high.

Question 50

If a firm has a longer new product development process,it means that the firm will:

A) have a better chance to introduce a refined version of a competitor's technology.
B) face a high possibility of losing to an early entrant.
C) have an increased ability to respond to changes in customer requirements.
D) overburden its development team by following a parallel development process.