chapter 4 Flashcards
dominant design
a single product or process architecture that dominates a product category, usually 50% or more of the market. it is the “de facto standard”, meaning that while it may not be officially enforced or acknowledged, it has become a standard for the industry.
learning curve
indicates that as individuals and producers repeat a process, they learn to make it more efficient, often producing new technological solutions that may enable them to reduce input costs or waste rates.
learning rate
can be influenced by factors such as the nature of the task, firm strategy, and the firm’s prior experience.
standard form of the learning curve
y = ax^-b, where y = number of direct labour hours required to produce the xth unit, a = number of direct labour hours required to produce the first unit, x = cumulative number of units produced, and b = learning rate.
absorptive capacity
refers to the ability of an organisation to recognise, assimilate, and utilise new knowledge. it can accelerate its rate of future learning. a firm’s prior related experience shapes its ability to recognise the value of new information and to use that information effectively. the effect of absorptive capacity suggests that firms that develop new technologies ahead of others may have an advantage in staying ahead.
learning effects
suggest that early technology offerings often have an advantage because they have more time to develop and become enhanced than subsequent offerings.
network externalities
also termed as positive consumption externalities. when the value of a good to a user increases with the number of other users of the same or similar good, eg. railroads or telecommunications. they can also arise in (1) markets that do not have physical networks and (2) when complementary goods are important.
installed base
the number of users of a particular good, eg. number of consoles installed in homes for a video game console.
complementary goods
additional goods and services that enable or enhance the value of another good, eg. the value of a video console is directly related to the availability of video games, etc.
path dependency
occurs when end results depend greatly on the events that took place leading up to the outcome. it is often impossible to reproduce the results that occur in such a situation. path dependency is created by a dominant design since all future actions rely on decisions being made in the past. the dominant design is likely to influence the nature of the technological discontinuity that will eventually replace it.
increasing returns
occurs when the rate of return (not just gross returns) from a product or process increases with the size of its installed base.
buyer utility map
helps managers identify the different aspects of utility a new technology offers to customers. it considers six utility levels and six stages of buyers’ experience. each cell provides an opportunity to offer a new value proposition to a customer. a new technology may offer a change in value in one sell or in a combination of cells.
