Exam 7: Strategy and Technology

Microsoft Word, the word-processing software, was so easy to use and had so many useful features, that no other software could compete with it. Therefore, at the time of its introduction, Microsoft Word could be described as a killer application.

Consumers will bear the costs of switching technologies if:

A razor-and-blade strategy refers to lowering a company's cost structure.

There is a set of fixed specifications for turbine blades for jet engines. The specifications include the material that needs to be used to manufacture the blades and also the specific dimensions that they need to have; the same specifications are used by all manufacturers. In this scenario, the specifications for jet blades can be referred to as:

Describe the advantages and disadvantages of being a first mover or a follower in a high-tech industry. In your opinion, which strategy is preferable, and why?

An adequate supply of complements to a product results in:

Marginal costs in high-technology industries tend to stay very low as production rises.

When a company is trying to win a format war, it should license its format for a low fee rather than a high fee.

In many high-tech industries, the fixed costs of developing a product are very high, but the costs of producing one extra unit of the product are very low.

Technical standards do not play any role in product differentiation.

Format wars, in the context of high-technology industries, refer to:

Which of the following statements is true of technology in industries?

Which of the following statements is true about technological paradigm shifts?

Cellular phone service providers often sell the phone itself at very low prices and then charge a relatively high fee for usage. This illustrates:

The law of diminishing returns states that marginal costs fall as a company tries to expand output.

Which of the following statements is true about marginal costs in high-technology industries?

Give an example of an industry that has recently undergone a technological paradigm shift. What impact did the shift have on established companies and on new entrants to the industry?

When two or more companies are competing with each other to get their technology adopted as a standard in an industry, and when network effects and positive feedback loops are important, the company that wins the format war will be the one whose strategy best exploits positive feedback loops.

What are technical standards, why are they important, and how are they established?

When standards are part of the public domain, they can be used: