Question 1

What strategic issue associated with network effects is exemplified by Apple and the Macintosh computer?

Accepted Answer

A)  maintenance of the network 
B)  the possibility of sustaining more than one network 
C)  use of strategic action to exploit network effects 
D)  all of the above 
A)  maintenance of the network 
B)  the possibility of sustaining more than one network 
C)  use of strategic action to exploit network effects 
D)  all of the above

Question 2

Why is it important to build a large installed base quickly in an industry based on increasing returns?

Accepted Answer

A)  more likely to make the product the industry standard 
B)  more likely to make the product more attractive to the providers of complementary products 
C)  pushes the company down the learning curve 
D)  all of the above 
A)  more likely to make the product the industry standard 
B)  more likely to make the product more attractive to the providers of complementary products 
C)  pushes the company down the learning curve 
D)  all of the above

Question 3

Explain what is necessary to do to be a first mover in an industry based on increasing returns.

Accepted Answer

Being a first mover in an industry based

Question 4

In order to be a first mover in an industry with increasing returns, you need to use contractual mechanisms to create the business's value chain.

Accepted Answer

A) True 
 B)False

Question 5

Indirect networks are often complex because network effects can influence suppliers as well as customers.

Accepted Answer

A) True 
 B)False

Question 6

Network externalities that develop when the presence of complementary products are called:

Accepted Answer

A)  direct network effects 
B)  indirect network effects 
C)  complementary products 
D)  substitute products 
A)  direct network effects 
B)  indirect network effects 
C)  complementary products 
D)  substitute products

Question 7

In an industry based on increasing returns, starting large and targeting a large market creates huge core rigidities for a company.

Accepted Answer

A) True 
 B)False

Question 8

Compare and contrast direct and indirect network effects.

Accepted Answer

Direct network effects occur when the va

Question 9

What is it called when you create a unique system composed of a base product and additional components that are not compatible with your competitor's base product?

Accepted Answer

A)  customer lock in 
B)  razor-razor blade pricing 
C)  penetration pricing 
D)  bundling 
A)  customer lock in 
B)  razor-razor blade pricing 
C)  penetration pricing 
D)  bundling

Question 10

Although building a large installed base can be effective, it has the tendency to make your product less attractive to the providers of complementary products.

Accepted Answer

A) True 
 B)False

Question 11

Networked industries account for the majority of the revenue from 60 of the top 100 companies.

Accepted Answer

A) True 
 B)False

Question 12

In a business with decreasing returns, you initially get a high return on the marginal product produced but, as time passes, your costs increase with the volume you produce, leading to decreasing marginal returns.

Accepted Answer

A) True 
 B)False

Question 13

What type of returns would you expect from an Internet auction house like eBay?

Accepted Answer

A)  constant returns 
B)  increasing returns 
C)  decreasing returns 
D)  impossible to tell 
A)  constant returns 
B)  increasing returns 
C)  decreasing returns 
D)  impossible to tell

Question 14

What tends to happen in industries based on increasing returns?

Accepted Answer

A)  monopolies develop 
B)  perfect competition develops 
C)  oligopolies develop 
D)  impossible to tell 
A)  monopolies develop 
B)  perfect competition develops 
C)  oligopolies develop 
D)  impossible to tell

Question 15

What is usually required in industries based on increasing returns?

Accepted Answer

A)  attract customers and profits first 
B)  attract customers first and profits later 
C)  make profits first and attract customers later 
D)  make profits later and attract customers later 
A)  attract customers and profits first 
B)  attract customers first and profits later 
C)  make profits first and attract customers later 
D)  make profits later and attract customers later

Question 16

According to Metcalfe's law, the value of a telecommunications network is proportional to the ___________ of the number of devices on that network.

Accepted Answer

A)  equivalent 
B)  square root 
C)  square 
D)  cube 
A)  equivalent 
B)  square root 
C)  square 
D)  cube

Question 17

What is called when customers view the costs of switching suppliers as too high to justify doing so?

Accepted Answer

A)  penetration pricing 
B)  bundling 
C)  targeting the mass market 
D)  customer lock in 
A)  penetration pricing 
B)  bundling 
C)  targeting the mass market 
D)  customer lock in

Question 18

Customer lock-in occurs when customers view the costs of switching supplies as too high to justify doing so.

Accepted Answer

A) True 
 B)False

Question 19

When a network is shared, maintaining the platform is easier than if it's maintained by one firm.

Accepted Answer

A) True 
 B)False

Question 20

What is Microsoft using when it sells its Xbox consoles at below cost in order to make profits on game software?

Accepted Answer

A)  razor-razor blade pricing 
B)  bundling 
C)  customer lock in 
D)  penetration pricing 
A)  razor-razor blade pricing 
B)  bundling 
C)  customer lock in 
D)  penetration pricing

What strategic issue associated with network effects is exemplified by Apple and the Macintosh computer?

Why is it important to build a large installed base quickly in an industry based on increasing returns?

Explain what is necessary to do to be a first mover in an industry based on increasing returns.

In order to be a first mover in an industry with increasing returns, you need to use contractual mechanisms to create the business's value chain.

Indirect networks are often complex because network effects can influence suppliers as well as customers.

Network externalities that develop when the presence of complementary products are called:

In an industry based on increasing returns, starting large and targeting a large market creates huge core rigidities for a company.

Compare and contrast direct and indirect network effects.

What is it called when you create a unique system composed of a base product and additional components that are not compatible with your competitor's base product?

Although building a large installed base can be effective, it has the tendency to make your product less attractive to the providers of complementary products.

Networked industries account for the majority of the revenue from 60 of the top 100 companies.

In a business with decreasing returns, you initially get a high return on the marginal product produced but, as time passes, your costs increase with the volume you produce, leading to decreasing marginal returns.

What type of returns would you expect from an Internet auction house like eBay?

What tends to happen in industries based on increasing returns?

What is usually required in industries based on increasing returns?

According to Metcalfe's law, the value of a telecommunications network is proportional to the ___________ of the number of devices on that network.

What is called when customers view the costs of switching suppliers as too high to justify doing so?

Customer lock-in occurs when customers view the costs of switching supplies as too high to justify doing so.

When a network is shared, maintaining the platform is easier than if it's maintained by one firm.

What is Microsoft using when it sells its Xbox consoles at below cost in order to make profits on game software?

Introduction

Technology Evolution

Technology Adoption and Diffusion

Sources of Innovation

Selecting Innovation Projects

Customer Needs

Product Development

Patents

Trade Secrets, Trademarks, and Copyrights

Capturing Value From Innovation

Competitive Advantage in High-Tech Industries

Technical Standards

Collaboration Strategies

Strategic Human Resource Management of Technical Professionals

Organization Structure for Technology Strategy

Filters

Exam 13: Strategy in Networked Industries

What strategic issue associated with network effects is exemplified by Apple and the Macintosh computer?

Why is it important to build a large installed base quickly in an industry based on increasing returns?

Explain what is necessary to do to be a first mover in an industry based on increasing returns.

In order to be a first mover in an industry with increasing returns, you need to use contractual mechanisms to create the business's value chain.

Indirect networks are often complex because network effects can influence suppliers as well as customers.

Network externalities that develop when the presence of complementary products are called:

In an industry based on increasing returns, starting large and targeting a large market creates huge core rigidities for a company.

Compare and contrast direct and indirect network effects.

What is it called when you create a unique system composed of a base product and additional components that are not compatible with your competitor's base product?

Although building a large installed base can be effective, it has the tendency to make your product less attractive to the providers of complementary products.

Networked industries account for the majority of the revenue from 60 of the top 100 companies.

In a business with decreasing returns, you initially get a high return on the marginal product produced but, as time passes, your costs increase with the volume you produce, leading to decreasing marginal returns.

What type of returns would you expect from an Internet auction house like eBay?

What tends to happen in industries based on increasing returns?

What is usually required in industries based on increasing returns?

According to Metcalfe's law, the value of a telecommunications network is proportional to the ___________ of the number of devices on that network.

What is called when customers view the costs of switching suppliers as too high to justify doing so?

Customer lock-in occurs when customers view the costs of switching supplies as too high to justify doing so.

When a network is shared, maintaining the platform is easier than if it's maintained by one firm.

What is Microsoft using when it sells its Xbox consoles at below cost in order to make profits on game software?

Introduction

Technology Evolution

Technology Adoption and Diffusion

Sources of Innovation

Selecting Innovation Projects

Customer Needs

Product Development

Patents

Trade Secrets, Trademarks, and Copyrights

Capturing Value From Innovation

Competitive Advantage in High-Tech Industries

Technical Standards

Collaboration Strategies

Strategic Human Resource Management of Technical Professionals

Organization Structure for Technology Strategy

Filters