Deck 10: Capturing Value From Innovation

Question 1

Most non-legal barriers to imitation are more effective at deterring innovation than legal barriers.

Answer 1

True

Question 2

R&D managers indicated that lead time was the most effective way to deter imitation of processes.

Answer 2

False

Question 3

One way to deter imitation and appropriate the returns to your investment in innovation is by obtaining control over the key resources needed to create and sell your product or service.

Answer 3

True

Question 4

Control of human resources can be one way to gain control over resources as a barrier to imitation.

Question 5

Controlling resources is most effective at deterring imitation when the key resources are abundant and also a rival good.

Question 6

Reputation as a way to deter imitation matters more in industries that serve consumers than industries that serve businesses.

Question 7

When attempting to deter imitation through exploiting economies of scale, you seek to gain control over the operation and compatibility of a product or service

Question 8

In general, economies of scale provide more of a barrier to imitation for large established firms.

Question 9

A learning curve is a graphical depiction of how well someone does at something as a function of the number of times that they have done it

Question 10

Learning that is based on tacit knowledge is less proprietary than learning that is easily codified.

Question 11

The learning curve is a much better mechanism to appropriate the returns to investment in innovation for new companies than for established ones.

Question 12

Several studies have shown that first movers often are able to obtain a higher market share and earn higher profits than later entrants.

Question 13

Being a first mover makes it more difficult to exploit switching costs.

Question 14

As a late mover, you can benefit from the ability to free ride on the investments that the first mover makes in creating supply infrastructure and distribution channels.

Question 15

As a first mover, your entry into the market is often better timed to take advantage of the development of complementary technology.

Question 16

You are better off being a first mover in advertising-intensive industries, and industries in which customer learn very little or vey slowly about new products.

Question 17

You are better off being a late mover in industries where network externalities exist.

Question 18

Teece's model is designed to help figure out when you are better off being an imitator and developing new products, and when you are better off being an innovator and letting your competitors develop them.

Question 19

Teece's model is based on the idea that imitators are more successful than innovators when innovations are easy to imitate, a dominant design has emerged in an industry, and imitators control the key complementary assets in the industry.

Question 20

To succeed in industries in which the imitation of new products and services is easy, and convergence on a dominant design has occurred, innovators need to gain control over complementary assets quickly.

Question 21

Complementary assets are specialized if they do not need to be modified to fit the innovation.

Question 22

You are better off being an innovator if a dominant design exits.

Question 23

You are better off being an imitator if complementary assets are important and specialized.

Question 24

Which of the following would be a legal way that companies appropriate the return to investment in innovation?

A) developing brand name reputation
B) developing trade secrets
C) controlling key resources
D) taking advantage of economies of scale

Question 25

Which is a reason why you would want to use a non-legal barrier to imitation?

A) legal barriers to imitation cannot be obtained for many products and services
B) most non-legal barriers to imitation are more effective at deterring innovation than legal barriers
C) the degree of protection provided by legal mechanisms in certain technical areas are uncertain
D) all of the above are reasons

Question 26

What is not a reason why you would want to use a non-legal barrier to imitation?

A) legal and non-legal barriers are mutually exclusive
B) technological change has weakened the value of the legal barriers to imitation in many high-technology industries
C) legal barriers to imitation cannot be obtained for many products and services
D) all of the above are reasons

Question 27

What is the top reason given by R&D managers why they believe that different barriers to imitation are effective for products?

A) secrecy
B) patents
C) lead time
D) complementary assets in manufacturing

Question 28

What is the top reason given by R&D managers why they believe that different barriers to imitation are effective for processes?

A) secrecy
B) patents
C) lead time
D) complementary assets in manufacturing

Question 29

What key resource are you controlling if you seek to gain control over shelf space in supermarkets?

A) manufacturing facility
B) distribution channel
C) key input
D) key output

Question 30

What key resource are you controlling if you seek to gain control over part of the communication spectrum?

A) manufacturing facility
B) distribution channel
C) key input
D) key output

Question 31

What key resource are you controlling if you seek to gain control over a billion-dollar semi-conductor lab?

A) manufacturing facility
B) distribution channel
C) key input
D) key output

Question 32

Which of the following would not be considered a key resource that could be used to control imitation?

A) natural resources
B) human resources
C) physical resources
D) all of the above could be key resources used to control imitation

Question 33

Under which situation would controlling resources be most effective at deterring imitation?

A) when the key resources are rare and also a rival good
B) when the key resources are abundant and also a rival good
C) when the key resources are rare and also a complementary good
D) when the key resources are abundant and also a complementary good

Question 34

Which is a non-legal barrier to imitation of your innovation if you were developing an embedded practice of providing high quality customer service?

A) controlling key resources
B) creating a brand name reputation
C) establishing architectural control
D) exploiting economies of scale

Question 35

In which industry would establishing a reputation work best at controlling imitation?

A) fabric manufacturer
B) lumber yard
C) toy manufacture
D) all of the above

Question 36

What non-legal barrier to imitation involves control over the operation and compatibility of a product or service?

A) controlling key resources
B) obtaining architectural control
C) moving up the learning curve
D) exploiting first mover advantage

Question 37

What non-legal barrier to imitation involves the reduction in unit costs that occurs as production volume increases?

A) exploiting economies of scale
B) controlling key resources
C) obtaining architectural control
D) moving up the learning curve

Question 38

In general, economies of scale provide more of a barrier to imitation for which type of firm?

A) small new firms
B) small established firms
C) large new firms
D) large established firms

Question 39

In which of the following industries would the learning curve be a stronger deterrent to imitation?

A) computer networking
B) bridge design
C) aerospace
D) computer assembly

Question 40

How can being a first mover help you to appropriate the returns to investment in innovation?

A) you are more likely to obtain control over key resources
B) you can target the best customers in a market
C) you can exploit switching costs
D) all of the above

Question 41

Which of the following is not a form of switching costs?

A) expense necessary to purchase a replacement product
B) psychological expense
C) time spent learning the new system
D) breaking contractual arrangements

Question 42

What is usually associated with being the first mover?

A) low market share and lower profits
B) low market share and higher profits
C) high market share and lower profits
D) high market share and higher profits

Question 43

What type of switching cost is restricting customers form switching from Apple to Microsoft as a supplier of graphics software?

A) expense necessary to purchase a replacement product
B) psychological expense
C) time spent learning the new system
D) breaking contractual arrangements

Question 44

What type of switching cost is being incurred when cellular telephone companies require their customers to pay stiff penalties if they change carriers?

A) expense necessary to purchase a replacement product
B) psychological expense
C) expenses of breaking contractual arrangements
D) time spent learning new systems

Question 45

What percent of first movers were successful in bringing their product to market?

A) 27 percent
B) 47 percent
C) 57 percent
D) 67 percent

Question 46

What would be considered an advantage of being the late mover into a market?

A) you benefit from the ability to free ride on the investments that the first mover makes in creating supply infrastructure and distribution channels
B) you can design products that correct the mistakes that the first mover made in meeting customer demand
C) you can leapfrog ahead of the first mover's technology
D) all of the above

Question 47

When DEKA Research developed its IBOT wheelchair, it had to create its own ball bearing because no other company could supply it. What late mover advantage could be realized after other suppliers figured out how to create the ball bearings?

A) benefit from the ability to free ride on investments that the first mover makes in creating supply infrastructure and distribution channels
B) design of products that corrects the mistakes that the first mover made in meeting customer demand
C) leapfrogging ahead of the first mover's technology
D) benefit from the investments in R&D that the first mover has made

Question 48

Which company was a first mover that was not successful?

A) IBM and the mainframe computer
B) Google and the internet search engine
C) Xerox and the fax machine
D) Canon and the 35 mm camera

Question 49

Which of the following was a successful company that was not a first mover?

A) Nintendo and the video game
B) Amazon.com and online bookselling
C) Kodak and the 8 mm video camera
D) Netscape and the Web browser

Question 50

In which situation would a first mover benefit most?

A) industries in which products and services are inexpensive and infrequently purchased
B) industries in which products require distributors to hold small stocks and few additional parts
C) in industries where network externalities exist
D) in industries were patents are ineffective

Question 51

If when selling MP3 players a company reduces its defect rate and has higher quality products than its competitors, what mechanism is being used to control the returns from investment?

A) control over resources
B) reputation
C) first mover advantage
D) learning curve

Question 52

When offering a computer operating system that allows a company to determine which products are compatible and which are not, which mechanism is being used to control the returns from investment?

A) architectural control
B) reputation
C) learning curve
D) economies of scale

Question 53

According to Teece's Model, what situation would indicate that imitators would be more successful than innovations?

A) when innovators are difficult to imitate
B) a dominant design has not emerged
C) imitators control key complementary assets in the industry
D) all of the above

Question 54

What is the first step in Teece's model?

A) look at complementary assts
B) look at patents and trade secrets
C) look at operating systems
D) look at the dominant design

Question 55

If it is very easy to get around patents in an industry, what do you need to focus on when determining to either innovate or imitate?

A) if a dominant design has been established
B) is it possible to control complementary assets
C) is it possible to improve the overall operating system
D) is it possible to control inputs

Question 56

If an industry has already converged on a dominant design and new products are easily imitated, what should you focus on to improve your chances for success?

A) patents and trademarks
B) improvement in the operating system
C) control over inputs
D) all of the above should be focused on

Question 57

When will contracting for manufacturing and marketing assets be an effective way to gain control over inputs?

A) when the assets are generic
B) when the assets are specialized
C) either type of assets will work
D) neither type of assets will work

Question 58

Under which situation would being an innovator be most successful?

A) patents and trade secrets are not effective
B) a dominant design exists
C) complementary assets are unimportant and generic
D) an innovator would be best in all these situations

Question 59

Under which situation would being an imitator work best?

A) patents and trade secrets are effective
B) a dominant design exists
C) complementary assets are unimportant and generic
D) an imitator would be best in all these situations

Question 60

Explain why both legal and non-legal barriers to imitation are important for protecting innovations.

Question 61

Explain how controlling key resources can be used as an effective way to deter imitation and appropriate the returns in innovation.

Question 62

Explain how establishing a reputation can be used as an effective way to deter imitation and appropriate the returns in innovation.

Question 63

Define economies of scale and describe how it can be used to deter imitation.

Question 64

Explain when and how moving up the learning curve will allow you to appropriate the returns to innovation.

Question 65

Define and distinguish between first mover and late mover advantages. Under what circumstance would there be an advantage to being either a first or late mover?

Question 66

Explain the main objective of Teece's Model. Explain, according to the model, when a company would be better off being an imitator or a innovator.