Question 1

If a firm has increasing returns, what can be expected if sales and customers increase?

Accepted Answer

A)  costs increase, prices remain constant, marginal returns decreases 
B)  cost increase, prices increase, marginal returns remain the same 
C)  costs decrease, prices decrease, marginal returns remain the same 
D)  costs decrease, prices remain constant, marginal returns increase 
A)  costs increase, prices remain constant, marginal returns decreases 
B)  cost increase, prices increase, marginal returns remain the same 
C)  costs decrease, prices decrease, marginal returns remain the same 
D)  costs decrease, prices remain constant, marginal returns increase

Question 2

A large installed base has the tendency to push you down the learning curve.

Accepted Answer

A) True 
 B)False

Question 3

What type of effect is occurring when the value of a DVD player increases with the number of movies that you can watch on it increases?

Accepted Answer

A)  direct 
B)  indirect 
C)  functional 
D)  dysfunctional 
A)  direct 
B)  indirect 
C)  functional 
D)  dysfunctional

Question 4

What is most likely to happen over time in industries based on increasing returns?

Accepted Answer

A)  need to raise large amounts of money and a decreasing ownership share 
B)  need to raise large amounts of money and an increasing ownership share 
C)  need to raise less money and a decreasing ownership share 
D)  need to raise less money and an increasing ownership share 
A)  need to raise large amounts of money and a decreasing ownership share 
B)  need to raise large amounts of money and an increasing ownership share 
C)  need to raise less money and a decreasing ownership share 
D)  need to raise less money and an increasing ownership share

Question 5

When do network externalities exits?

Accepted Answer

A)  when the purchase of a product by an existing customer creates additional value for existing customers 
B)  when the purchase of a product by an existing customer creates additional value for a new customer 
C)  when the purchase of a product by a new customer creates additional value for existing customers 
D)  when the purchase of a product by a new customer creates additional value for new customers 
A)  when the purchase of a product by an existing customer creates additional value for existing customers 
B)  when the purchase of a product by an existing customer creates additional value for a new customer 
C)  when the purchase of a product by a new customer creates additional value for existing customers 
D)  when the purchase of a product by a new customer creates additional value for new customers

Question 6

Which network had the most U.S. visitors in May 2006?

Accepted Answer

A)  Facebook.com 
B)  Myspace.com 
C)  Friendster.com 
D)  Classmates.com 
A)  Facebook.com 
B)  Myspace.com 
C)  Friendster.com 
D)  Classmates.com

Question 7

What is the reason why the drug industry is likely to show increasing returns?

Accepted Answer

A)  when upfront costs are high and marginal costs are low, unit costs drop as volume increases 
B)  network externalities allow the company to lower prices and sell more 
C)  due to a steep learning curve, as a firm produces more, its costs decrease 
D)  all of the above 
A)  when upfront costs are high and marginal costs are low, unit costs drop as volume increases 
B)  network externalities allow the company to lower prices and sell more 
C)  due to a steep learning curve, as a firm produces more, its costs decrease 
D)  all of the above

Question 8

Explain why building your installed base quickly is crucial in a business based on increasing returns.

Accepted Answer

Building your installed base quickly is

Question 9

Metcalfe's law states that the value of a telecommunications network is proportional to the cube of the number of devices on that network.

Accepted Answer

A) True 
 B)False

Question 10

What method of increasing the installed base did Microsoft use when it included its Internet software with other applications?

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 11

Explain that starting large can be effective at increasing returns.

Accepted Answer

Starting large can be effective at incre

Question 12

Describe why it's important to get customers to lock in to your product.

Accepted Answer

It's important to get customers to lock

Question 13

What condition is consistent with an indirect network effect?

Accepted Answer

A)  complementary products don't affect the focal product's functionality, but do make it more desirable 
B)  complementary products don't affect the focal product's functionality and make it less desirable 
C)  complementary products affect the focal products functionality and make it more desirable 
D)  complementary products affect the focal products functionality, but make it less desirable 
A)  complementary products don't affect the focal product's functionality, but do make it more desirable 
B)  complementary products don't affect the focal product's functionality and make it less desirable 
C)  complementary products affect the focal products functionality and make it more desirable 
D)  complementary products affect the focal products functionality, but make it less desirable

Question 14

In industries based on decreasing returns, what you earn on the marginal product increases with the volume of output

Accepted Answer

A) True 
 B)False

Question 15

What was Palm Computing attempting to exploit by working to get developers to write software for its operating system?

Accepted Answer

A)  decreasing returns 
B)  economies of scale 
C)  indirect effects 
D)  direct effects 
A)  decreasing returns 
B)  economies of scale 
C)  indirect effects 
D)  direct effects

Question 16

What advantage associated with building a large base is demonstrated by Microsoft being able to recoup its development costs faster than Apple?

Accepted Answer

A)  keeping competition in a positive feedback loop 
B)  pushing the company down the learning curve 
C)  making your product the industry standard 
D)  improving the economics of developing new technologies 
A)  keeping competition in a positive feedback loop 
B)  pushing the company down the learning curve 
C)  making your product the industry standard 
D)  improving the economics of developing new technologies

Question 17

What is usually required in industries based on increasing returns?

Accepted Answer

A)  remaining flexible 
B)  delaying action 
C)  developing core rigidity 
D)  preserving options 
A)  remaining flexible 
B)  delaying action 
C)  developing core rigidity 
D)  preserving options

Question 18

Building an installed base quickly will keep out competition by creating a positive feedback loop that is hard for competitors to break.

Accepted Answer

A) True 
 B)False

Question 19

What type of effect is occurring when the value of a video game console increases with the number of games that you can play on it?

Accepted Answer

A)  direct 
B)  indirect 
C)  functional 
D)  dysfunctional 
A)  direct 
B)  indirect 
C)  functional 
D)  dysfunctional

Question 20

What can be done to increase your installed base quickly in an industry based on increasing returns?

Accepted Answer

A)  use penetration pricing 
B)  bundling your product with other products already popular with customers 
C)  target the mass market from the start 
D)  all of the above 
A)  use penetration pricing 
B)  bundling your product with other products already popular with customers 
C)  target the mass market from the start 
D)  all of the above

If a firm has increasing returns, what can be expected if sales and customers increase?

A large installed base has the tendency to push you down the learning curve.

What type of effect is occurring when the value of a DVD player increases with the number of movies that you can watch on it increases?

What is most likely to happen over time in industries based on increasing returns?

When do network externalities exits?

Which network had the most U.S. visitors in May 2006?

What is the reason why the drug industry is likely to show increasing returns?

Explain why building your installed base quickly is crucial in a business based on increasing returns.

Metcalfe's law states that the value of a telecommunications network is proportional to the cube of the number of devices on that network.

What method of increasing the installed base did Microsoft use when it included its Internet software with other applications?

Explain that starting large can be effective at increasing returns.

Describe why it's important to get customers to lock in to your product.

What condition is consistent with an indirect network effect?

In industries based on decreasing returns, what you earn on the marginal product increases with the volume of output

What was Palm Computing attempting to exploit by working to get developers to write software for its operating system?

What advantage associated with building a large base is demonstrated by Microsoft being able to recoup its development costs faster than Apple?

What is usually required in industries based on increasing returns?

Building an installed base quickly will keep out competition by creating a positive feedback loop that is hard for competitors to break.

What type of effect is occurring when the value of a video game console increases with the number of games that you can play on it?

What can be done to increase your installed base quickly in an industry based on increasing returns?

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

If a firm has increasing returns, what can be expected if sales and customers increase?

A large installed base has the tendency to push you down the learning curve.

What type of effect is occurring when the value of a DVD player increases with the number of movies that you can watch on it increases?

What is most likely to happen over time in industries based on increasing returns?

When do network externalities exits?

Which network had the most U.S. visitors in May 2006?

What is the reason why the drug industry is likely to show increasing returns?

Explain why building your installed base quickly is crucial in a business based on increasing returns.

Metcalfe's law states that the value of a telecommunications network is proportional to the cube of the number of devices on that network.

What method of increasing the installed base did Microsoft use when it included its Internet software with other applications?

Explain that starting large can be effective at increasing returns.

Describe why it's important to get customers to lock in to your product.

What condition is consistent with an indirect network effect?

In industries based on decreasing returns, what you earn on the marginal product increases with the volume of output

What was Palm Computing attempting to exploit by working to get developers to write software for its operating system?

What advantage associated with building a large base is demonstrated by Microsoft being able to recoup its development costs faster than Apple?

What is usually required in industries based on increasing returns?

Building an installed base quickly will keep out competition by creating a positive feedback loop that is hard for competitors to break.

What type of effect is occurring when the value of a video game console increases with the number of games that you can play on it?

What can be done to increase your installed base quickly in an industry based on increasing returns?

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