Chapter 10 Flashcards
Which of the following statements is true of an incremental innovation?
a) It focuses on a different knowledge base to deliver value in a truly unique way.
b) It typically creates improvements based on the knowledge perceived from competitors.
c) It sustains a company’s current product offering and revenues.
d) It creates new values through a different set of resources and capabilities than that of rivals.
c) It sustains a company’s current product offering and revenues.
Which of the following statements is a characteristic of a disruptive innovation?
a) It typically offers value in a way that is easy to imitate.
b) It sustains a company’s current product offering by the firm’s established knowledge.
c) It disturbs an existing market by displacing an earlier technology.
d) It typically uses old technologies used by competitors in the market.
c) It disturbs an existing market by displacing an earlier technology.
An automobile company used its profits from the sale of motorcycles to invest in the development of cars. These cars were less expensive but technologically more advanced than those of its competitors. This is an example of ___________.
a) low-end disruptive innovations
b) disintermediation
c) standardization
d) high-end disruptive innovations
a) low-end disruptive innovations
Lila, the CEO of Purple Inc., a bag manufacturing company, observes that customers prefer some personalized features. She considers implementing a mass customization strategy, while the production manager, Steven, suggests that standardization is the best strategy. Which of the following will strengthen Lila’s decision?
a) Purple’s production facility allows for mass production and alterations at the end stage.
b) Purple’s production budget allows only mass production from start to finish.
c) Purple’s value is primarily based on it being perceived as an economical brand.
d) Purple’s customers are wholesalers who prefer bulk order of standard products.
a) Purple’s production facility allows for mass production and alterations at the end stage.
Palm’s, a new restaurant in Boston, enters the market with a new strategy. Cooking enthusiasts can co-create a dish for their family along with the in-house chefs. They also allow families to cook their meals together and dine by the poolside. None of the other restaurants in the city offers this unique service. This is an example of a ___________.
a) mass-customization strategy
b) high-end disruptive innovation
c) blue ocean strategy
d) low-end disruptive innovation
c) blue ocean strategy
Which of the following statements is true of the cross-sell strategy?
a) It requires a high conversion rate.
b) It offers premium features to free users.
c) It uses discounts to gain widespread initial use.
d) It focuses on a small product user base.
a) It requires a high conversion rate.
Lica Inc., a software company, initially offers a small percentage of its services for free. Once customers get familiar with the services, they decide to purchase them at a premium. The company makes money on the add-on services like application downloads, messenger updates, and other online services. Other companies pay Lica for advertising through these portals. Which of the following innovative strategies has been adopted by the company?
a) A combination of freemium and third-party strategies
b) A combination of high-end and low-end disruptive strategies
c) A bundling strategy
d) A cross-sell strategy
a) A combination of freemium and third-party strategies
Mel Inc., a popular cosmetics and perfume brand, delivers free samples with products worth $75 and more. This is an example of ___________.
a) a third-party pay strategy
b) a cross-sell strategy
c) a bundling strategy
d) a blue ocean strategy
c) a bundling strategy
Which of the following is true of the introduction stage of the product life cycle?
a) It tries to get early adopters to try out a new product.
b) It tries to minimize competition by forming an alliance with rivals.
c) It focuses not only on a proven concept but also a low price.
d) It emphasizes increased sales and high profits.
a) It tries to get early adopters to try out a new product.
Strategies that draw on more radical innovations ________.
a) often use new technologies to create, deliver, and capture value
b) employ a fundamentally similar business model as a firm’s rivals
c) create minor improvements to the product or service a firm offers
d) build products on a firm’s established knowledge base
a) often use new technologies to create, deliver, and capture value
Identify a true statement about the innovative strategies based on the concept of mass customization.
a) They do not need the additional costs of creating need-specific components.
b) They do not require standard core components to be produced in large scale.
c) They are the best option when products need to be customized from start to end.
d) They work best in markets where customers have a variety of different needs.
d) They work best in markets where customers have a variety of different needs.
Which of the following statements best describes third-party pay strategy?
a) It involves offering a free product with a paid product or service when the product requires ongoing maintenance.
b) It involves offering a free basic product to gain widespread initial use, after which users are offered a non-free premium version.
c) It involves providing free products to a community of product users as a method of generating revenue from a third party who pay to access those users.
d) It involves offering a free version of a product to consumers to use at home and a paid version with additional features to the third-party market.
c) It involves providing free products to a community of product users as a method of generating revenue from a third party who pay to access those users.
Which of the following statements is true of the maturity stage of an industry’s life cycle?
a) Growth starts to slow as total market penetration increases.
b) Demand increases as the early majority is convinced that the product concept works.
c) The market size of the product shrinks significantly.
d) Toward the end of this stage product innovation starts to give way to process innovation.
a) Growth starts to slow as total market penetration increases.
A radical innovative strategy in which companies in the same industry find the innovation so destructive that they can no longer do business as usual is called a(n) _______.
disruptive innovation
