Lecture 5

Question 1

Why do firms with more resources often get eroded by firms with less?

Answer 1

Smaller firms are more flexible and ignore; also incumbents have an issue with sunk costs

Question 2

What is the replacement effect about?

Answer 2

How a new entrant is more likely to pursue disruptive tech than a monopolist becuase it has more to gain

Question 3

How does the process of disruptive innovation by christensen look

Answer 3

Entrants move from low-market segments where profit margins are worst to upmarket segments where incumbents reside. This activity is overlooked by larger firms and they do not respond vigorously. Entrants should not attempt to enter the segments dominated by incumbents immediately as they will be wiped from the surface of the planet

Question 4

How should incumbents react to disruptive innovation?

Answer 4

do not dismantle a profitable business

Question 5

Blue Ocean vs Disruptive innovation?

Answer 5

Bo is value-driven and target the mass market, can be used by both entrants and incumbents. Disruptive iunnovation is tech driven, targets the lower end and can be only used by entrants

Question 6

Pioneering disadvantages

Answer 6

Cost of r&d, no infrastructure/ecosystem, positioning and pricing mistakes, adopting losing standard, uncertainty

Question 7

Pioneering advantages

Answer 7

Quicker econs of scale, access to scarce resources, switching costs, brand loyalty

Question 8

Follower advantages

Answer 8

lower uncertainty, investments made by leader, fine-tuning, benfitnig from poor intellectual property