Question 1

In fast changing industries, firms have to maintain market share, efficiency, and simultaneously commit to new technologies and standards for their future. How can they achieve this?

Accepted Answer

They have to simultaneously run their operations very efficiently, which can be achieved through repetition, formalization, certainty, stability, and volume and, at the same time, be flexible, prepare for future, and change their activities, operations, and procedures to adapt to a new situation. This fundamental issue is a common problem for organizational change, and a challenge for the organizational structure and HR management fields. Most of the advice and techniques that the literature offers (flexible structure, diverse coordination devices, managerial roles, adapted culture, etc.) are closely related within the field.
In fact, all the variables of the organization must be directed towards addressing this critical dilemma; one of the first, and maybe most difficult challenges, is to convince top managers of the need to adapt their own behavior to deal with it.
There is definitively no magic recipe but a set of common-sense recommendations and tools whose wise combination leads to a correct and balanced management of the two dimensions of management: exploitation and exploration.
If an industry is accustomed to rapid change, it is very likely that managers have already moved towards these types of tools. However, improvement can still increase the "balance optimality"

Question 2

The Dyson dual cyclone bagless vacuum cleaner story describes:
A)An episodic fight against patent infringement, and the choice between internal commercialization vs. license
B)The fight of Dyson against Amway and Hoover
C)The tumultuous relationship between parent Maytag and its subsidiary Hoover
D)The courage and consistency exhibited by British inventor James Dyson

Accepted Answer

The Dyson dual cyclone bagless vacuum cleaner story focuses on the fight against patent infringement and the decision between internal commercialization vs. license. It also highlights the persistence and innovation of James Dyson as an inventor. While there were some legal battles with rivals like Amway and Hoover, the main emphasis of the story is on the development and marketing of the technology.

Question 3

How do technology-based industries reveal a fundamental dilemma that many firms are facing?

Accepted Answer

The fundamental dilemma clearly apparent in technology-based industries relies on the fact that innovation is unpredictable, and requires a nurturing organizational context to encourage and foster that innovation, whereas strategy is about resource-allocation decisions.
Strategy and management, on one hand, and innovation, on the other, necessitate different and generally antithetical attributes: respectively consensus, control, certainty, and status quo, vs. instinct, uncertainty, freedom, and iconoclasm.
Some devices and mechanisms exist to bridge these conflicting requirements, or at least, to make them as compatible as possible. Examples include cross-functional team-based approaches, parallel organizational structures, resource-based approaches, and efficiency-oriented managerial roles.
In technology-based industries, technology is the main driver of competition, and innovation the principal source of competitive advantage. Therefore, integrating technology is critical in strategic management, since speed of innovation, international competition, and turbulence of environments are on the rise.

Question 4

The Morse telegraph and compact discs are:
A)Inventions
B)Innovations
C)Both inventions and innovations
D)Improvement of existing technologies

Accepted Answer

Both the Morse telegraph and compact discs were new ideas or creations (inventions) that brought about significant changes and improvements to the way we communicate (telegraph) and listen to music (CDs). However, they also required the development and implementation of new processes and technologies (innovations) to become successful in their respective markets. Therefore, both inventions and innovations accurately describe these technologies.

Question 5

Matsushita's VHS format won against Sony's Betamax format because:
A)VHS was significantly superior to Betamax
B)VHS was slightly superior to Betamax
C)Matsushita was able to gain acceptability of its standard in the market
D)Sony opened its standard to all players too early

Accepted Answer

Matsushita was able to gain acceptability of its standard in the market. Despite the superiority of Betamax in terms of picture and sound quality, Matsushita was able to secure greater support from video rental stores and other manufacturers, allowing VHS to become the dominant video format. Additionally, VHS had longer recording times than Betamax, making it more appealing to consumers.

Question 6

How can a firm manage risks in technology-based industries?

Accepted Answer

The answer of How can a firm manage risks in...

Question 7

Traditional management of firms does not seem to be "innovation-friendly". Is a new form of management required?

Accepted Answer

The answer of Traditional management of firms does not seem...

Question 8

How can a firm create the conditions for innovation?

Accepted Answer

The answer of How can a firm create the conditions...

Question 9

Network externalities are critical phenomena because:
A)They create a positive feedback loop that leads to a winner-takes-all situation
B)They create a winner-takes-all situation which is unfair from a competition standpoint
C)Technological innovations tend to be resilient
D)Governments are more and more concerned about firms' corporate citizenship

Accepted Answer

Network externalities create a positive feedback loop where the value of a product or service increases as more people use it. This leads to a winner-takes-all situation where one dominant firm may emerge, and smaller competitors are unable to compete effectively. This is critical because it can lead to reduced competition, decreased innovation, and consumer harm.

Question 10

Why is an evolutionary strategy's backward compatibility usually an advantage over a revolutionary strategy?
A)Companies should never throw away a proven technology - it may be vital
B)Customers' and suppliers' stocks of hardware and knowledge about old products can still be useful
C)All revolutionary strategies eventually evolve into evolutionary strategies
D)Backward compatibility at this stage permits backward compatibility for ever

Accepted Answer

Maintaining backward compatibility allows for seamless integration with existing infrastructure, reducing costs and potential issues for customers and suppliers. It also allows companies to leverage existing knowledge and expertise, rather than having to start from scratch with a completely new technology.

Question 11

What role do complementary resources play with regard to innovation?

Accepted Answer

The answer of What role do complementary resources play with...

Question 12

Reputation, brand name, intellectual property rights, and control over an installed base of customers are examples of:
A)Key resources to win a standard war
B)Key capabilities to succeed in a new market
C)A list of desirable resources
D)A list of capabilities that most large firms own

Accepted Answer

These elements are considered key resources that can help a company win a standard war by leveraging its brand, reputation, and customer base.

Question 13

A self-fulfilling prophecy is:
A)A tautological statement that is always true by definition
B)A statement that becomes true by coincidence
C)A prediction that a player makes for itself
D)A prediction that becomes true because the enunciation and communication of the statement leads to the predicted outcome

Accepted Answer

A self-fulfilling prophecy is a prediction that becomes true because the enunciation and communication of the statement leads to the predicted outcome. It is a phenomenon in which people's beliefs or expectations about a situation affect their behavior in such a way that they bring about the predicted result. This can happen because people tend to act in accordance with their beliefs, attitudes, and expectations. As a result, a self-fulfilling prophecy can lead to positive or negative outcomes, depending on the nature of the prediction.

Question 14

To win a standard war, a firm has to:
A)First identify the future standard and then assemble allies to win
B)First recognize that the industry is coalescing around a single standard and then build a "bigger bandwagon"
C)Wait, and try to network and lobby the Federal authorities
D)Increase marketing and outreach

Accepted Answer

To win a standard war, a firm must first recognize that the industry is coalescing around a single standard and then build a "bigger bandwagon". This involves convincing more and more companies to join their side and adopt their standard to gain dominance in the market. It is also important to have a strategy in place to maintain that dominance once it is achieved. Identifying the future standard may not be effective as the market and preferences of consumers can change. Waiting and lobbying may also not be effective as it does not actively address the issue at hand. While increasing marketing and outreach can be helpful, it may not address the need for a standard within the industry.

Question 15

Is innovation profitable?

Accepted Answer

The answer of Is innovation profitable?...

Question 16

Network externalities are fueled by three sources:
A)Minimizing switching costs, the existence of a natural network in an industry, and the availability of complementary products or services
B)The existence of a natural network, the extent to which the government allows firms in an industry to externalize their costs, and the level of innovation in this industry
C)The availability of complementary products or services, the importance of barriers to entry, and the level of innovation in an industry
D)The level of innovation in an industry, the nature of the fundamental knowledge involved in this industry, and the availability of complementary products or services

Accepted Answer

Network externalities are fueled by minimizing switching costs, the existence of a natural network in an industry, and the availability of complementary products or services. The other options do not accurately describe the sources of network externalities.

Question 17

The examples of xerography, jet engines, mathematics of fuzzy logic, and MP3 format illustrate that:
A)Invention always precedes innovation
B)Financial resources are critical to introduce successful innovations
C)The innovation cycle has speeded up over time
D)Innovation never stops over time

Accepted Answer

The examples provided illustrate that the innovation cycle has speeded up over time. Xerography was developed in the 1930s but was not widely adopted until the 1960s, whereas the MP3 format was developed in the 1990s and became popular within a few years. Fuzzy logic was developed in the 1960s, but its practical applications have only increased in recent years. Jet engines were invented in the 1930s, but their continual improvement and innovation has resulted in their widespread use today. The examples show that innovations are being developed and adopted at a faster pace than in the past.

Question 18

How and why should a firm try to win a war over standards?

Accepted Answer

The answer of How and why should a firm try...

Question 19

Microsoft's war against Netscape in the browser industry, and GE's lead over EMI in the CT scanner industry show that:
A)Size matters
B)First movers always win the battle
C)No real outcome can be predicted
D)Existing resources and capabilities are critical in a competition between high technology products

Accepted Answer

The examples of Microsoft and GE show that the competition between high technology products is heavily influenced by the existing resources and capabilities of the competing firms. Microsoft's success over Netscape was largely due to its ability to leverage its existing market position and resources (such as its dominant Windows operating system) to gain an advantage in the browser industry. Similarly, GE's lead over EMI in the CT scanner industry was due to its superior R&D capabilities and ability to innovate new products. Size and being a first mover may provide advantages, but they are not the only factors that determine the outcome of a competition between high technology products.

Question 20

Monsanto's Nutrasweet artificial sweetener, Pzifer's Viagra, and Pilkington's float glass process are examples of:
A)Weak regimes of appropriability
B)Strong regimes of appropriability
C)Technological inventions that were not successful
D)Technological innovations sharing inventions in the field of chemistry

Accepted Answer

Strong regimes of appropriability refer to the ability of a company to protect its intellectual property through patents, trademarks, and trade secrets. Monsanto with Nutrasweet, Pfizer with Viagra, and Pilkington with float glass process were successful in creating strong barriers to entry, making it difficult for competitors to mimic or replicate their products.

Quiz 12: Technology-Based Industries and the Management of Innovation

In fast changing industries, firms have to maintain market share, efficiency, and simultaneously commit to new technologies and standards for their future. How can they achieve this?

The Dyson dual cyclone bagless vacuum cleaner story describes:

How do technology-based industries reveal a fundamental dilemma that many firms are facing?

The Morse telegraph and compact discs are:

Matsushita's VHS format won against Sony's Betamax format because:

How can a firm manage risks in technology-based industries?

Traditional management of firms does not seem to be "innovation-friendly". Is a new form of management required?

How can a firm create the conditions for innovation?

Network externalities are critical phenomena because:

Why is an evolutionary strategy's backward compatibility usually an advantage over a revolutionary strategy?

What role do complementary resources play with regard to innovation?

Reputation, brand name, intellectual property rights, and control over an installed base of customers are examples of:

A self-fulfilling prophecy is:

To win a standard war, a firm has to:

Is innovation profitable?

Network externalities are fueled by three sources:

The examples of xerography, jet engines, mathematics of fuzzy logic, and MP3 format illustrate that:

How and why should a firm try to win a war over standards?

Microsoft's war against Netscape in the browser industry, and GE's lead over EMI in the CT scanner industry show that:

Monsanto's Nutrasweet artificial sweetener, Pzifer's Viagra, and Pilkington's float glass process are examples of: