Question 1

Not all innovations require complementary goods.

Accepted Answer

It is possible for innovations to stand alone and not require any additional complementary goods to be successful. Examples of such innovations include new software or app technologies that are self-sufficient and do not require any other hardware or software to be used.

Question 2

A firm intending to refine an earlier entrant's technology should avoid fast-cycle development processes.

Accepted Answer

Fast-cycle development processes can be advantageous for firms refining an earlier entrant's technology as they allow for rapid iteration and improvement, enabling the firm to quickly adapt and potentially surpass the original technology.

Question 3

Doven Inc.pioneered software development in the 1970s and introduced its range of office tools well ahead of its competitors.According to the classification scheme of entrants,Doven would be classified as a(n)_____.
A) first mover
B) early follower
C) early leader
D) laggard

Accepted Answer

Doven Inc. is described as having pioneered software development and introducing its range of office tools before its competitors. This indicates that Doven was a first mover in the industry.

Question 4

All pioneers face customer uncertainty.

Accepted Answer

The answer of All pioneers face customer uncertainty....

Question 5

Late entrants typically bear the bulk of the research and development expenses for their product or service technologies.

Accepted Answer

Late entrants do not necessarily bear the bulk of the research and development expenses as they can learn from the mistakes and successes of early entrants and invest in more efficient and cost-effective R&D. Early entrants, however, may have had to invest significant resources to develop and perfect their technology, giving them a first-mover advantage.

Question 6

Many start-up firms demise because new innovations tend to be adopted very slowly at first.

Accepted Answer

This statement is true. Many start-up firms have failed because they were not able to sustain themselves during the slow adoption phase of their new innovation. It takes time and effort for new ideas to gain traction and become widely accepted.

Question 7

Marine Systems was the first company to develop an inventory management software specifically for hotels and restaurants.Soon after Marine Systems launched its product,Unicorn Systems developed a similar software.The software developed by Unicorn Systems outperformed the one developed by Marine Systems,and it eventually became the market leader.In this scenario,Unicorn Systems is an example of a(n)_____.
A) first pioneer
B) late mover
C) early follower
D) eccentric laggard

Accepted Answer

Unicorn Systems is an example of an early follower because it developed a similar software shortly after Marine Systems, improving upon the original idea and eventually becoming the market leader.

Question 8

Early followers enter the market only after a product begins to penetrate the mass market.

Accepted Answer

Early followers enter the market after the product has been introduced by innovators and adopted by early adopters, but before it becomes widely adopted by the mass market.

Question 9

In industries that have increasing returns to adoption due to network externalities,allowing competitors to get a head start in building an installed base is the safest strategy.

Accepted Answer

In industries with network externalities, there are increasing returns to adoption, which means that the value of a product or service increases as more people use it. Therefore, allowing competitors to get a head start can be risky, as they can build a large installed base and create a barrier for entry. It may be safer to invest in building an installed base early on to gain a competitive advantage.

Question 10

Early leaders are firms that are the first to enter a market.

Accepted Answer

The answer of Early leaders are firms that are the...

Question 11

If the aspects that customers have come to expect in a technology are difficult for competitors to imitate,being the technology leader will:
A) result in an inability to preemptively capture scarce assets.
B) enable it to yield sustained monopoly rents.
C) result in lower bargaining power over suppliers.
D) mean negligible research and development costs.

Accepted Answer

Being the technology leader and having aspects that are difficult to imitate will enable a company to maintain a sustained competitive advantage and charge premium prices, resulting in sustained monopoly rents. This is a desirable outcome for the company.

Question 12

In an industry characterized by increasing returns to adoption,there can be powerful advantages to being an early provider.

Accepted Answer

Increasing returns to adoption refer to a situation in which the value of a product or service increases as more people adopt it. Therefore, being an early provider can give a competitive advantage as there will be more opportunity to capture market share before competitors enter, and there is potential for network effects to kick in.

Question 13

The first entrants to sell in a new product or service category are referred to as _____.
A) pioneers
B) early leaders
C) early followers
D) laggards

Accepted Answer

Pioneers are the first entrants to sell a new product or service category. Early leaders are not a commonly used term in the context of new product categories, early followers come after pioneers, and laggards are the last to adopt a new product or service.

Question 14

Other things being equal,less customer uncertainty favors earlier timing of entry.

Accepted Answer

When customers are less uncertain, they are more likely to make a purchase decision sooner, which makes earlier entry into the market more favorable. This is because there is a greater likelihood of establishing brand loyalty and capturing market share before competitors enter the market.

Question 15

The initial cost of a good itself can be a switching cost.

Accepted Answer

The initial cost of a good can be considered a switching cost if a consumer must pay a fee or cost to switch to a different brand or product. This cost can deter consumers from switching to a different option, making it a switching cost.

Question 16

Other things being equal,an entrant with a strong reputation can attract adoptions earlier than entrants without strong reputations.

Accepted Answer

A strong reputation can enhance a new entrant's credibility and trustworthiness, making it easier for potential adopters to try their product or service. This can give them an advantage over competitors without established reputations.

Question 17

Magnitude Inc.was the first company to introduce a video gaming console in the market.However,consumers were uncertain about the product,and its high costs discouraged consumers from purchasing it.Eventually,Magnitude withdrew the product from the market.A few years later,Mantel Corp.and Adventura Inc.came up with their respective gaming consoles and successfully established their products.In this scenario,Mantel and Adventura would be considered:
A) pioneers.
B) early followers.
C) laggards.
D) late movers.

Accepted Answer

Mantel and Adventura came up with their respective gaming consoles after the withdrawal of the console by Magnitude Inc. They were not the first movers in the market but still managed to launch and establish their products successfully, hence they can be considered as early followers.

Question 18

First movers typically invest more in exploratory research than late entrants.

Accepted Answer

First movers have to invest more in exploratory research to identify market needs, uncover potential barriers to entry, and develop novel technologies that can differentiate their products from existing alternatives. Late entrants can leverage the knowledge and insights already produced by first movers, reducing the need for costly experimentation and trial-and-error learning.

Question 19

A disadvantage of using parallel development processes is that it greatly lengthens the new product development time.

Accepted Answer

Parallel development processes can actually shorten the new product development time by allowing different teams to work on different parts of the project simultaneously. However, it can also increase the complexity of the project and require more coordination and communication between teams.

Question 20

When a market is characterized by mature enabling technologies,a firm should enter the market late.

Accepted Answer

When a market is characterized by mature enabling technologies, it is usually advantageous to enter the market early to establish a brand and market position before competitors. Waiting too long to enter the market may result in missed opportunities and an inability to capture a significant share of the market.

Quiz 5: Timing of Entry