Deck 5: Timing of Entry

Question 1

Not all innovations require complementary goods.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

Doven Inc.pioneered software development in the 1970s and introduced its range of office tools well ahead of its 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

Answer 3

A

Question 4

All pioneers face customer uncertainty.

Question 5

Late entrants typically bear the bulk of the research and development expenses for their product or service technologies.

Question 6

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

Question 7

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

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

Question 8

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

Question 9

In industries that have increasing returns to adoption due to network externalities,allowing competitors to get a head start in building an installed base is the safest strategy.

Question 10

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

Question 11

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

A) result in an inability to preemptively capture scarce assets.
B) enable it to yield sustained monopoly rents.
C) result in lower bargaining power over suppliers.
D) mean negligible research and development costs.

Question 12

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

Question 13

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 14

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

Question 15

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

Question 16

Other things being equal,an entrant with a strong reputation can attract adoptions earlier than entrants without strong reputations.

Question 17

Magnitude Inc.was the first company to introduce a video gaming 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 Corp.and Adventura Inc.came up with their respective gaming consoles and successfully established their products.In this scenario,Mantel and Adventura would be considered:

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

Question 18

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

Question 19

A disadvantage of using parallel development processes is that it greatly lengthens the new product development time.

Question 20

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

Question 21

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

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

Question 22

_____ require multiple stages of a new product development process to occur simultaneously.

A) Incumbent development processes
B) Parallel development processes
C) Monopoly development processes
D) Slow-cycle development processes

Question 23

Which of the following statements is true of first movers in comparison with 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 24

Alpen Inc.is a manufacturing firm that holds the patent for a new food processing machine that is considerably safer and more efficient than the others available in the market.Being the only firm that manufactures this product,Alpen charges a very high price for it.This is referred to as _____.

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

Question 25

Why were other keyboards that claimed to be more efficient not able to replace the QWERTY keyboard? Explain how this illustrates the need to consider switching costs when introducing new technologies.

Question 26

Pioneer Athletics Inc.wants to provide better landing mats for gymnasts.It therefore asks its foam suppliers to use a new innovative process to manufacture higher quality,durable foam for use in its mats.This new process used to develop the foam represents a(n)_____ for Pioneer Athletics.

A) network externality
B) preemption rent
C) enabling technology
D) incumbent rent

Question 27

Since SmartShoe Inc.is the market leader in the gliding shoe market,it enjoys an excellent reputation.It is 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 the new product's acceptance among distributors and consumers.

Question 28

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

Question 29

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 30

Fashion Fair Corp.,the first mover in the "all-year discount" stores market,lost its market share to a late entrant,Brand Fair Inc.Brand Fair operates its discount stores solely through the Internet,which saves a lot of expenses.Fashion Fair has been unable to replicate this strategy by adopting the online store business model due to its existing contracts with suppliers and heavy investment in retail stores.Fashion Fair has been experiencing:

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

Question 31

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

A) Late entrants are the first to capture scarce resources.
B) Late entrants often do not have to invest in exploratory research.
C) Late entrants often are most likely to capitalize on monopoly rents.
D) Late entrants are unaffected by switching costs.

Question 32

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 33

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

A) Ensuring that customers find its software simpler and more convenient to use than that of Coral
B) Keeping the initial cost of its software higher than that of Coral's
C) Keeping the prices of the complements required for its software higher than that set by Coral
D) Ensuring that fewer complementary products are available for its products in comparison to that for the products of Coral

Question 34

Loren has invented a product that detects water leakages caused by 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.Therefore,he borrows enough money from his friends to enter the market and begins to experience some success.The product is not patentable because it is too similar to other existing technologies.Major corporations have seen his success and have now entered the market with competing products.What will be the probable destiny of Loren's company?

Question 35

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 36

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

Question 37

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

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

Question 38

When Fun Bun Inc.,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 how 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 39

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

A) Distribution channels required for the firm's products will be well established prior to its entry.
B) Enabling technologies and complements available to the firm will be immature.
C) The firm's 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 40

New innovations typically tend to:

A) be adopted very slowly at first.
B) eliminate incumbent inertia for late entrants.
C) eliminate monopoly rents when they are first introduced.
D) reduce the effectiveness of future enabling technologies.