Lesson 3

Question 1

Value Chain

Answer 1

is a network of activities that improve the effectiveness (or value) of a good or service

Question 2

Margin

Answer 2

The difference between the price the customer is willing to pay and the cost the company incurs in moving the good (or service) through the value chain

Question 3

Porter’s 5 Forces Model

Answer 3

five competitive forces determine industry profitability:
1) bargaining power of customers,
2) threat of substitutions,
3) bargaining power of suppliers,
4) threat of new entrants
5) rivalry among existing firms.

Question 4

2 Types of technology innovations

Answer 4

1. Sustaining technologies
2. Disruptive technologies

Question 5

Diffusion of Innovation

Answer 5

“the process by which an innovation is communicated through certain channels over time among the members of a social system.”

Question 6

5 Stages of Diffusion Innovation

Answer 6

1. Knowledge - hear about it
2. Persuasion - learn more
3. Decision - reject or accept
4. Implementation - continue as is or make better
5. Confirmation - use at full potential

Question 7

Principles of Competitive Advantage

Answer 7

Product Implementations
1. Create new
2. Enhance
3. Differentiate
System Implementations
4. Lock in customers/buyers
5. Lock in suppliers
6. Raise barriers for market entry
7. Establish alliances
8. Reduce costs

Question 8

Sustained competitive advantage

Answer 8

The development of people and procedures that are well supported by the underlying technology.