Deck 4: Standards Battles and Design Dominance

Question 1

A firm that develops a new technology ahead of its rivals may have an advantage in staying ahead of others.

Answer 1

True

Question 2

When a dominant design is established in an industry,manufacturers tend to turn their focus to improving efficiency.

Answer 2

True

Question 3

In some industries,multiple competing technologies can coexist peacefully while in others there will be strong pressures for only one technology to succeed.

Answer 3

True

Question 4

When comparing the value of a new technology to an existing technology,the tendency is to focus mainly on objective information.

Question 5

Due to network externalities,the benefit from using eBay to buy and sell goods decreases with the number of users of eBay.

Question 6

By choosing not to exercise its monopoly power,a firm can flatten its monopoly costs curve.

Question 7

Monopoly costs take the form of an s-shape.

Question 8

The learning curve indicates that the more units a company produces of an item,the more each unit will cost.

Question 9

If a new innovation has a significant advantage in functionality,its overall value will be greater than the incumbent standard.

Question 10

The "Buyer Utility Map" developed by Kim and Mauborgne can be applied only to consumer products.

Question 11

Disetronic dominates the market for insulin pumps for diabetics.The more physicians prescribe it for patients,the more complementary goods are made for it.This is an example of "network externalities."

Question 12

The value of a good to a user increases in a linear fashion.

Question 13

Government regulation can make a technology the dominant design.

Question 14

The steepness of the monopoly cost curve is largely a function of government regulations.

Question 15

There are never any advantages to a government mandated dominant design of technology.

Question 16

The fact that there are many companies supplying high quality and inexpensive ink refill kits for inkjet printers raises the value of the inkjet printer.

Question 17

A dominant design does not influence the problem-solving techniques used in the industry.

Question 18

Network externalities cannot arise in markets that do not have physical networks.

Question 19

The ability of an organization to recognize,assimilate,and utilize new knowledge is referred to as its learning curve.

Question 20

Firms that develop technologically superior products are usually winners.

Question 21

WordPerfect Corporation noticed that the more of its word processing software packages it sold,the more customers complained or suggested improvements.In such a situation,WordPerfect Corporation has the opportunity to

A) steadily improve its word processor software.
B) be acquired by a larger company that can take over the development of the product.
C) develop a completely new program.
D) discontinue production.

Question 22

TechSense has just developed a GPS-enabled shoe that is targeted at runners,trekkers,and tourists.According to the Buyer Utility Map developed by Kim and Mauborgne,what is the value offered by the shoes in the utility lever of convenience at the use stage of the buyer experience cycle?

A) The shoes have a shelf life of four years after which the product must be disposed.
B) The shoes have to be recharged for at least an hour in order to work effectively.
C) The shoes require a specific charging dock.
D) The shoes should be kept away from wet surfaces as the GPS is not water resistant.

Question 23

Absorptive capacity

A) is the result of effective strategic decisions by a firm's upper management.
B) increases a firm's future ability to assimilate information.
C) is an essential component of a learning organization.
D) is inversely proportionate to the size of the organization.

Question 24

eBay allows shoppers to pay for purchases using an online payment system called PayPal which accepts credit cards or electronic funds transfers.According to the Kim and Mauborgne model,PayPal is offering value during the _____ stage of buyer experience.

A) purchase
B) delivery
C) use
D) maintenance

Question 25

During the 1990s more and more people started using cell phones.As a result,the cell phone

A) began to deteriorate in quality because the industry could not keep up with production.
B) became more expensive in response to increased demand.
C) became better in quality.
D) began to lose its technological utility.

Question 26

When a new technology with only a moderate functionality advantage is made compatible with an existing technology's installed base and complementary goods,then the new technology may offer _____ overall value to users.

A) lesser
B) greater
C) zero
D) limited

Question 27

A cell phone network recently called Bill and offered him a great plan.It was a low flat fee on all long distance calls with no roaming charges and unlimited hours to anyone else in the network.However,Bill discovered that so far there were only 3,000 network subscribers nationwide,so he turned down the offer.This company did not have

A) a good marketing idea.
B) enough absorptive capacity.
C) sufficient network externalities.
D) a true innovation.

Question 28

As complementary technologies develop for an innovation,that innovation will

A) become less attractive because the market is now too cluttered.
B) become more attractive to other firms.
C) decline in sales as buyers will not want to buy complementary technology due to the cost.
D) lose status because now it is easier to use.

Question 29

As the sales of a company's product increases and as the company learns from its experiences,the cost of making the product should

A) decrease.
B) increase.
C) level out
D) not be affected.

Question 30

eBay uses an online payment system called PayPal which accepts credit cards or electronic funds transfers.The payment system is heavily secured using encryption technology.According to the Kim and Mauborgne model,PayPal is offering simplicity,convenience,and _____ utility levers.

A) cost
B) fun and image
C) environmental friendliness
D) risk

Question 31

Vaporware refers to products

A) that are not available in the market or do not even exist but are advertised.
B) that enter and exit the market without attracting any customers.
C) that have a very small shelf-life.
D) whose components are entirely recyclable.

Question 32

For a new technology to compete on its stand-alone utility,

A) that utility must be greater than the value of the existing technology's stand-alone utility.
B) that utility must be greater than the value of the existing technology's installed base.
C) that utility must be greater than the value of the existing technology's complementary goods.
D) that utility must be greater than the combined value of an existing technology's stand-alone utility, its installed base, and its complementary goods.

Question 33

After Acme Technologies had developed its first few R&D projects,it began to get better at subsequent development projects,even if they were not based on the same technologies.This is probably due to the principle or effect called

A) repetitive motion.
B) intelligence magnification.
C) programming simplification.
D) absorptive capacity.

Question 34

The more a technology is adopted,

A) the less valuable it becomes on account of market saturation.
B) the more susceptible it becomes to decreasing returns.
C) the more complementary goods are available for it.
D) the lesser are the possibilities for improvements in the technology.

Question 35

Most photographers,graphic designers,and other professionals who work intensely with pictures use Photoshop.To be perceived as offering better value,a new graphics program would have to offer more value than Photoshop's _____.

A) complementary goods
B) installed base
C) complementary goods and installed base
D) technological ability, complementary goods, and installed base

Question 36

Which of the following statement is true about learning curves?

A) There are substantial differences in the rates at which organizations learn.
B) The learning rate is impervious to organizational factors.
C) The learning curve is a function of number of units sold.
D) The learning curve has a specific performance measure, i.e., total cost per unit.

Question 37

The U.S.Postal Service now offers a Click-N-Ship online service so users can buy and print postage and labels online.The U.S.Postal Service is offering the utility lever(s)of _____ during the _____ stage of buyer experience.

A) risk, use
B) fun and image, maintenance
C) convenience, purchase and delivery
D) environmental friendliness, purchase

Question 38

Even though the American telecommunications company MCI had more cell phone subscribers at the time when AT&T decided to enter the cell phone market,customers were willing to sign up for AT&T's service.This is most likely due to

A) the lack of complementary goods for MCI.
B) MCI's insufficient network externalities.
C) the lack of sophistication of consumers.
D) the expectation of consumers that the installed base of AT&T will eventually increase.

Question 39

If a company is able to lock in its technology as the dominant design of the market,it

A) has a higher learning curve than other companies.
B) usually gains huge financial rewards.
C) only benefits immediately, but cannot influence the evolution of the market.
D) will suffer due to near-monopoly rents it must pay.

Question 40

QwikEats is a fast food restaurant.It has recently opened a children's play area within its premises that allows parents to dine in peace without having to worry about their children.According to the Kim and Mauborgne model,QwikEats is offering the _____ utility levers during the _____ stage of buyer experience.

A) environmental friendliness, purchase.
B) risk, supplements.
C) convenience, purchase.
D) simplicity, maintenance.

Question 41

What is vaporware what are its advantages?

Question 42

When customers attain their desired level of network externality benefits at lower levels of market share

A) it implies that only one specific technology dominates.
B) they face a relatively small indifference region.
C) the network externality curves flatten out sooner.
D) the technology has reached its optimum level of performance.

Question 43

When Disetronic,the market leader in insulin pumps for diabetics,made the decision not to charge the highest price the market would be willing to pay,it was

A) increasing the monopoly cost curve.
B) flattening the monopoly cost curve.
C) making the monopoly cost curve intersect the network externalities curve sooner.
D) not affecting the s-curve or monopoly curve at all.

Question 44

Explain what factors affect the technology trajectory and chances of success of a new technology besides its quality and technical advantage.

Question 45

Joseph had an idea that he could speed up a floor buffing machine by putting a different motor on it.After about 25 tries he was able to make a buffer run much faster with a new motor and started his own company.Other companies began making competing products that were similar to Joseph's design,but they were unable to improve their designs as fast as Joseph.Why might this be the case?

Question 46

When are winner-take-all markets good for consumers?

A) When monopoly costs exceed the value of technological utility and network externality benefits.
B) When monopoly costs exceed the value of technological utility.
C) When the value of technology utility exceeds monopoly costs.
D) When the value of technology utility and network externality benefits exceeds monopoly costs.

Question 47

Why is the installed base of users of a technology that requires complementary goods so important to a company's future success?

Question 48

Disetronic is the insulin pump market for diabetics.If Disetronic raises the cost of the pumps to a very high rate and technology development of alternative insulin delivery systems ceases,

A) consumers might complain that the company has become "too dominant."
B) consumers will experience high network externality benefits.
C) consumers will be happy because the insulin pump technology will continually be improved by Disetronic.
D) consumers will stop purchasing insulin pumps from Disetronic.

Question 49

Explain why it is considered advantageous if a company's technology is adopted by users ahead of other technologies.

Question 50

Producers can influence users' expectations of the future installed base and availability of complements

A) by providing trial offers.
B) through announcements of preorders.
C) by offering product discounts.
D) by offering freebies.