Deck 4: Standards Battles and Design Dominance

Question 1

Increasing returns to adoption means that,the more a technology is adopted,the more valuable it becomes.

Answer 1

True

Question 2

Products that have a large installed base are likely to attract more developers of complementary goods.

Answer 2

True

Question 3

A large perceived installed base can lead to a large actual installed base.

Answer 3

True

Question 4

A legally induced adherence to a dominant design is not possible.

Question 5

In industries characterized by network externalities,the value of a technological innovation to users will be a function only of its stand-alone benefits and cost.

Question 6

A firm that supports a technology that is not chosen as the dominant design will have better potential to earn near-monopoly rents in the short run than a firm that develops a dominant design.

Question 7

The influence of a dominant design can extend beyond its own technology cycle.

Question 8

In industries characterized by increasing returns,the rate of return from a product or process increases with the size of its installed base.

Question 9

As firms develop complementary technologies to improve the productivity or ease of utilization of the core technology,the technology becomes less attractive to other firms.

Question 10

Technologically superior products do not always win in the market.

Question 11

Though learning curves are found in a wide range of organizational processes,there are substantial differences in the rates at which organizations learn.

Question 12

The "Buyer Utility Map" developed by Kim and Mauborgne cannot be applied to industrial products.

Question 13

In a market characterized by network externalities,the benefit from using a good decreases with an increase in the number of other users of the same good.

Question 14

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

Question 15

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

Question 16

When an industry has network externalities,the value of a good to a user is more likely to go up linearly rather than increase in an s-shape.

Question 17

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

Question 18

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

Question 19

Network externality returns refers to the value customers reap as a larger portion of the market adopts the same good.

Question 20

For a new technology to be successful in a market,it is enough for the new technology's stand-alone utility to exceed that of the incumbent standard.

Question 21

TechSense,an electronics manufacturing firm,allows its customers to resell old TechSense products at their retail outlets.The firm reuses the metal,wires,and plastic-extracted from these old products-in their new products.This way the company has been able to take waste management to a whole new level.According to the "Buyer Utility Map," the firm is applying environmental friendliness utility lever in _____ stage of buyer experience cycle.

A) supplements
B) purchase
C) use
D) disposal

Question 22

Oswen Technologies Inc.,a software developing company,spent a lot of money in advertising software products that were not in the market.However,the firm hoped to bring these products to the market at a later date.This is termed as _____.

A) puffery
B) vaporware
C) first refusal
D) advertising roll out

Question 23

The value of an electronic reader is related to the availability of books,journals,magazines,etc.in a format that can be used in the electronic reader.For an electronic reader,these are _____ goods.

A) complementary
B) substitute
C) Giffen
D) intermediate

Question 24

Arica Software Inc.is trying to estimate the "installed base" for its software.It is trying to assess the number of:

A) substitutes available for its software.
B) developers working on its software.
C) uses for which its software can be applied.
D) users of its software.

Question 25

Pizza Stop has been expanding globally,due to which the cumulative output of employees has been increasing.In the context of learning effect,Pizza Stop will typically experience a(n):

A) decrease in input costs.
B) increase in waste rates.
C) increase in direct labor hours required to produce a unit of pizza.
D) decrease in the performance levels of the employees.

Question 26

Increasing returns to adoption imply that technology trajectories are characterized by _____,meaning that relatively small historical events may have a great impact on the final outcome.

A) the ratchet effect
B) the funnel effect
C) technological trajectories
D) path dependency

Question 27

Joe's Diner,a fast food restaurant,has recently added a children's play area within its premises that allows parents to dine in peace-while their children are safe in the playing area.According to the Kim and Mauborgne's model,Joe's Diner is offering the _____ utility lever during the _____ stage of buyer experience cycle.

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

Question 28

A new technology is most likely to be successful in displacing an existing technology when:

A) its installed base is significantly less than that of the existing technology.
B) the new technology competes only on the value of its stand-alone utility.
C) it eclipses the combined value of the existing technology's stand-alone utility, its installed base, and its complementary goods.
D) the new technology's perceived and anticipated components of value are lower than its actual components of value.

Question 29

Money Club and Money ball are online platforms which allow their members to get in touch with people from various business backgrounds.They also facilitate business contracts between their members.Money Club has 6000 members,whereas Money ball has 3500 members.This indicates that:

A) Money Club has a greater network externality.
B) Money Club has a lower positive consumption externality.
C) Money ball has a larger actual installed base.
D) Money ball does not use a dominant design.

Question 30

The U.S.Postal Service now offers a "Click-N-Ship" online service,where users can buy and print postage and labels online.According to the "Buyer Utility Map," the U.S.Postal Service is offering the _____ utility lever,during the _____ stage of buyer experience cycle.

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

Question 31

Smart Space Inc.makes shoe racks that are portable and can also be dismantled.After purchasing the shoe rack,customers can visit the company's Web site to learn how to fix it,where to place it,and how to dismantle it when not required.According to the "Buyer Utility Map," Smart Space Inc.is aiming to provide simplicity and convenience in the _____ stage of buyer experience.

A) disposal
B) use
C) supplements
D) delivery

Question 32

Firms that develop new technologies ahead of others often try a number of unsuccessful techniques before finding a solution that works well.This experimentation:

A) lowers the firm's ability to recognize the value of new information.
B) lowers the firm's ability to develop and enhance technologies.
C) makes it difficult for the firm to develop related technologies.
D) enables the firm to find related solutions and alternatives that work well.

Question 33

eZone,an online retailer,uses an online ordering and payment system called PayPlus which accepts credit cards and electronic funds transfers.Its payment Web site has a user-friendly interface.The payment system is heavily secured using encryption technology.According to the "Buyer Utility Map," PayPlus is offering _____ utility lever in the purchase stage.

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

Question 34

Neon Inc.is an electronics manufacturing company.It has adopted a dominant design for its television audio speakers.Which of the following is the firm most likely to experience,as a result of this decision?

A) Neon Inc. will have to invest heavily in R&D to come up with new designs for the audio speakers.
B) Neon Inc. will face increasing returns to adoption.
C) Neon Inc. will have reduced opportunities to develop complementary assets.
D) The design adopted by Neon Inc. will be unpopular among most of the other manufacturers.

Question 35

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 of adoption.
C) the better are the opportunities for development of complementary assets.
D) the lesser are the possibilities for improvements in the technology and its applications.

Question 36

Which of the following is true of dominant design?

A) It is not possible to have legally induced adherence to a dominant design.
B) When a firm's technology is locked in as the dominant design of a market, it earns low rewards.
C) A firm that supports a technology that is chosen as the dominant design is in a poor position to shape the evolution of the industry.
D) A firm may find itself locked out of the market if it is unable to adopt the dominant technology.

Question 37

As firms develop complementary technologies to improve the productivity or ease of utilization of the core technology,the technology will:

A) become more attractive to other firms.
B) lose its credibility in the market.
C) lose its dominant design position in the industry.
D) experience a decrease in its installed base.

Question 38

Which of the following statements is true of learning effects?

A) There are substantial differences in the rates at which organizations learn.
B) The learning rate is impervious to organizational factors, such as firm strategy.
C) As a technology is adopted, further development and refining of the technology reduces.
D) The cost of producing a unit rises as the number of units produced increases.

Question 39

Earth Love electronics has developed a lawn mower that runs on solar power.The lawn mowers are available in all neighborhood supermarkets and several electronic stores.According to the "Buyer Utility Map," the company is trying to offer convenience utility in the _____ stage.

A) supplements
B) purchase
C) disposal
D) maintenance

Question 40

Clear Vision Inc.has been the market leader for eye-related products,such as eyeglasses and lenses.It has also most recently developed the use of laser technology to correct eye defects.Due to its prior related experiences,it has been successful in recognizing the value of new information and using it to develop new technologies ahead of others.This phenomenon is called:

A) absorptive capacity.
B) disintermediation.
C) technology determinism.
D) technology trajectory.

Question 41

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

A) When monopoly costs exceed the value of network externality returns.
B) When monopoly costs exceed the value of technological utility.
C) When the monopoly cost curve is extremely steep.
D) When the value of technology utility and network externality returns exceeds monopoly costs.

Question 42

What is absorptive capacity? Why do firms that fall behind the technology frontier find it difficult to catch up?

Question 43

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

Question 44

Which of the following is true of monopoly cost curve?

A) Monopoly costs to market share curve is more s-shaped than network externality returns to market share curve.
B) The steepness of the monopoly cost curve is largely a function of the firm's discretionary behavior.
C) It is not possible for a network externality returns curve to cross a monopoly cost curve.
D) A firm choosing to exploit its monopoly power is flattening the monopoly costs curve.

Question 45

Future Electronics' body scanning machine has been adopted by the larger portion of the healthcare market.As a result,the company charges a high price from its customers,mainly hospitals.It is not investing much on innovation and its product variety is also very low.This cost borne by the users is referred to as:

A) marginal cost.
B) social cost.
C) monopoly cost.
D) deferred cost.

Question 46

What is vaporware? What are its advantages?

Question 47

When users are comparing the value of a new technology to an existing technology,they are said to be using objective information when the comparison is based on:

A) anticipated technological benefits.
B) future prediction regarding the availability of complementary goods.
C) advertisements of vaporware.
D) actual technological benefits.

Question 48

Explain what factors characterize the technology trajectory.Discuss the factors that determine the success of a new technology,besides its quality and technical advantage.

Question 49

Between two technologies competing for dominance,when customers attain their desired level of network externality benefits at lower market share levels:

A) it implies that one specific technology clearly dominates.
B) they face a relatively small indifference region.
C) the network externality returns curves flatten out sooner.
D) it implies that both the technologies cannot successfully coexist.

Question 50

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