Chapter 4: Standards Battles And Design Dominance Flashcards
Define learning curve
The learning curve depicts the impact of cumulative production on cost (which drops) and productivity (which increases).
Define dominant design
A single product or process architecture that dominates a product category - usually 50% or more of the market. A dominant design is a de-facto standard meaning that while it may not be officially enforced work acknowledged it has become the standard for the industry.
What is the standard form of the learning curve equation?
Y = ax^-b
Y is the number of direct labour hours required to produce the xth unit
A is the number of direct labour hours required to produce the first unit
X is the cumulative number of units produced
B is the learning rate
Define absorptive capacity
The ability of an organization to recognize, assimilate, and utilize new knowledge.
Define network externalities
Network externalities (also known as positive consumption externalities) occur when the value of a good to a user increases with the number of other users of the same or similar good. (BBM)
What is an installed base?
An installed base is the number of users of a particular good. (Number of video game consoles installed in people’s homes)
Give some examples of legally induced adherence to dominant design
Utilities, telecommunications, and television industries
What are the components of value?
Technological utility: product features
Installed base: number of people using the product or service
Complementary goods availability
What is vaporware?
Vaporware is a tactic whereby products that are not actually on the market and may not even exist but are advertised.
What are increasing returns to adoption?
The more they are adopted, the more valuable they become
What are network externality effects?
Network externality effects arise when the value of a good to a user increases with the size of the installed base
