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23 Cards in this Set
- Front
- Back
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Set of technical specifications that producers adhere to whenmaking the product, or a component of it. |
Technical standards QWERTY, Shipping Containers |
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Battles to control the source of differentiation, and thevalue that such differentiation can create for the customer. Example |
Format wars Blu-Ray/HD-DVD, Beta Max/VHS |
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Common set of features or design characteristics. |
Dominant design Wintel |
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Benefits of Standards (5) |
1. Guarantees compatibility between products and their complements. 2. Reduces confusion in the minds of consumers. 3. Reduces production costs and risks associated with supplying complementary products. 4.Leads to low-cost and differentiation advantages for individual companies. 5. Helps raise the level of industry profitability. |
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Establishment of Standards(3) |
1. Standards emerge in an industry when the benefits of establishing are recognized. 2. Technical standards are set by cooperation among businesses, through the medium of an industry association. 3. When the government sets standards they fall into the public domain. |
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Any company can freely incorporatethe knowledge and technology upon which the standard is based into itsproducts. |
Public domain |
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Network of complementary products as a primary determinant of the demand for an industry’s product.
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Network effects |
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Increasein demand for a technology that triggers an increase in demand for products that support it. |
Positive feedback loops |
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__________ get locked out as consumers are unwilling to bear the switching costs. |
Alternative standards |
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Strategies for Winning a FormatWar (4) |
1. Make network effects work in one’s favor and against competitors. 2. Build the installed base for the standard as rapidly as possible. 3. Ensure a supply of complements. 4. Leverage killer applications. 5. Pursue aggressive pricing and marketing. 6. Cooperate with competitors. 7. License the format. |
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Pricingthe product low to stimulate demand, and pricing complements high. |
Razor and blade strategy |
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Creationof a revolutionary product results in a __________ |
monopoly position. |
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Firmthat pioneers a particular product category or feature by being first to offerit to the market. |
first mover |
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First-mover advantage |
1. Opportunity to exploit network effects and positive feedback loops. 2. Ability to establish brand loyalty and increase sales volume ahead of rivals. 3. Ability to create switching costs for customers and accumulate knowledge. |
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First-mover Disadvantages |
1. Bear significant pioneering costs.••More prone to making mistakes. 2. Risk of building the wrong resources and capabilities. 3. Risk of investing in inferior or obsolete technology |
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Strategies for Exploiting First-Mover Advantages (3) |
1. Develop and market the innovation. 2. Develop and market the innovation jointly with other companies (Through a strategic alliance or joint venture) 3. License the innovation to others and allow them to develop the market. |
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Factors to consider when selecting a Strategy |
1. Complementary asset 2. Height of barriers to imitation 3. Capable competitors |
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Complementaryassets? |
1. Requiredto exploit a new innovation and gain a competitive advantage. 2. Helpbuild brand loyalty and achieve rapid market penetration. |
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Heightof barriers to imitation |
1. Higherthe barriers, longer it takes for rivals to imitate. 2. Givethe innovator more time to build an enduring competitive advantage. |
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Capable competitors |
1. Companiesthat can move quickly to imitate the pioneering company. 2. Competitors’capability depends on their research and development skills and access tocomplementary assets. |
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Technological paradigm shift is _________ |
Shifts in new technologies that: 1. revolutionize the structure of the industry. 2. dramatically alter the nature of competition. 3. require companies to adopt new strategies for survival. |
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Technological paradigm shift occur in an industry when ________ |
1. established technology is approaching or is at its natural limit. 2. new disruptive technology has entered the marketplace and is invading the main market. |
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Owing a standard can be a source ________ |
of sustained competitive advantage. |
