Technological factors

Question 1

what is technology

Answer 1

• equipment and material advancements

- information technology advancements

Question 2

equipment and material advancements

Answer 2

• assembly lines and being able to mass product
• swiffer dust cloth vs ordinary cloths
• reduce costs and improves perfomance –> robots

Question 3

information technology advancements

Answer 3

• devices and software

- cloud, data analytics, video calls

Question 4

elements

Answer 4

• internent
• information technologies
• materials and equipment

Question 5

internet

Answer 5

• affects buying, selling, communication

Question 6

information technologies

Answer 6

affect information access, inter-firm cycle times

Question 7

materials and equipment

Answer 7

• not limited to computers and information (swiffer jest jet vs mopping)

Question 8

significance (technological factors)

Answer 8

• demands constant scanning and learning
• changes sources of competitive advantage and barriers to entry
• creates opportunities for new products and efficiencies
• legacies/ compatibility make change challenging (the tech you already have needs to be compatible–> game systems)

Question 9

key technology concepts

Answer 9

• lock-in
• installed base
• switching costs
• complementary goods
• technology standards
• network effects

Question 10

lock-in

Answer 10

extent to which a customer is “committed” to a product or service
Larger = greater resistance to switch

Causes: habit (knows how to use it) or system(apple ecosystem), learning, (resistance to new learning) investment (game systems are a lot of money), switching costs
Size if investment
5 forces collaborate to increase profitability

Solution: lower switching costs, offer leap in performance

Question 11

installed base

Answer 11

• the number of users

Question 12

switching costs

Answer 12

Entry barrier- makes lock-in worse
Switching costs occur when you walk away from an investment (that value) and how much the new investment is worth
Ex- Video game console
Have to buy the specific games that are compatible
Would have to purchase a whole new system which is expensive

Solution
Lower switching costs, offer leap in performance
Offer switch in → bring old product and get a discount
Ex- old cell phone to new provider
Lending products (renting/leasing) → makes switching costs lower

Porter’s 5 forces link
Locking switching costs - substitute lock in otherwise customer will go toward the cheaper product or harder to switch

Question 13

complementary goods

Answer 13

Needed for value/ they add value
Software = complement of a computer
Computer and the apps→ it is only as good as the apps it is compatible with
Creates vicious or virtuous cycle

Question 14

technology standards

Answer 14

enables compatibility of complementary goods
“Think” what can I do with that product → what other services can I access through that device”
Ex- mobile app platforma working for iOs and Android

Question 15

network effects

Answer 15

Value increases as user base grows
Ex- any social media platform
Bars and parties

Question 16

vicious/ virtuous cycle

Answer 16

• availability of complementary goods
• attractiveness to users
• number of users (installed base)
• attractiveness to producers of complementary goods

Question 17

vicious cycle

Answer 17

Vicious- does not work in your favour

Few compliments, not appealing, small installed base

Question 18

virtuous

Answer 18

does work in your favour
A lot of complementary goods, increase the value (increase attractiveness to users), increase installed base

Ex- apple
Mobile platforms, cell phone networks that it is compatible with, apps (more complementary goods for particular tech
product the more attractive the product will be to users, since there is more value
number of users increases the installed base, larger market
producers of complementary goods, bigger the market the more attractive

Question 19

opportunities

Answer 19

• Products- innovation, uniqueness, value
• Improved information use, access and sharing
• Competitive advantage; barriers to entry (air bnb, uber)
• Customization

Question 20

threats

Answer 20

• Imitation –> Information costly to develop bur cheap to share
• New technologies and new entrants in unfamiliar areas –> Need new capabilities, resources and learning
• Information overload and security
• Disconnected employees and customers (harder to build opportunities)

Question 21

ksf

achieving financial performance

Answer 21

o-
-Leaner organizations; do more with less
- Increase productivity 
- Lower costs
t
-Imitation: information = costly to create and cheap to imitate

Question 22

meeting customer needs

Answer 22

o
-Decreases cycle time
- Faster and cheaper delivery 
- Increased efficiency
t
- Unpredictable evolution 
- Blockbuster and netflix

Question 23

building quality products and services

Answer 23

o
-Valuable mass customization
t
-New tech in unfamiliar areas can undermine your product’s value as they are a disruptive technology

Question 24

encouraging innovation and creativity

Answer 24

o
- Increased workplace independence
- travel/ more ideas
t
When you aren’t constantly learning and scanning (kodak)

Question 25

gaining employees commitment

Answer 25

o -Increased organizational comm​​itment (flexible hours, better work life balance) t -Lack of employee supervision/ oversight

Question 26

competitive advantage

Answer 26

``` o -Efficiency and unique Innovative products t - imitation ```

Question 27

4 types of innovation and challenges

Answer 27

- radical/ disruptive - architectural - modular - incremental/sustaining

Question 28

radical/ disruptive

Answer 28

- significant structural challenge - significant knowledge and capabilities challenge - small firms have the advantage (since a lot of change needs to happen) - calculator compares to the slide rule

Question 29

architectural

Answer 29

- easy knowledge/capabilities challenge - significant structural change - challenges the operations of the product --> not the knowledge - desktop computers compared to IBM mainframes

Question 30

modular

Answer 30

- significant knowledge/ capabilities challenge - easy structural challenge - digital camera compared to film camera

Question 31

incremental/ sustaining

Answer 31

- easy knowledge and capabilities challenge - easy structural challenge - image stabilizing feature added to digital cameras

Question 32

sustaining innovation | what they offer

Answer 32

- improves products in expected ways

Question 33

sustaining innovation | example

Answer 33

- Computer chips getting faster, more processing power | - updating smartphones every year

Question 34

sustaining innovation | - who they serve

Answer 34

mainstream, high-margin customers with enhancements in product functionality Focus on meeting customer needs

Question 35

sustaining innovation | - who usually wins

Answer 35

Incumbents usually win (established companies) Already have most of the knowledge needed to capitalize on the information Already have the structure, brand name, assembly line, distribution channels

Question 36

disruptive innovations | - what they offer

Answer 36

Different performance attributes not valued by mainstream When air bnb entered the hotel industry Starts in lower performance segments, improves rapidly; enters the mainstream market

Question 37

disruptive innovations | - who they serve

Answer 37

- new niche market

Question 38

disruptive innovations | - examples

Answer 38

- Netflix | - block buster did not see it coming

Question 39

disruptive innovations | - cause large firms to fail

Answer 39

- Starts in lower performance segments, improves rapidly; enters the mainstream market - Large companies do not pay attention in the beginning - Once incumbent firms notice, it is too late for them to do anything - New disrupting firms often win because it is difficult from incumbent firms to react because it is expensive for them to change their capabilities and knowledge

Question 40

why large firms sometimes fail

Answer 40

- Organization structure and capabilities slow response time/ability to influence choice - Organizational processes weed out ideas that do not address current customer needs (Focus on satisfying mainstream customers Ignore new technologies Move to higher margin opportunities) Avoid small, uncertain, unfamiliar markers (managerial preferences→ usually avoid risk) (Niche markets that are small and financially unattractive Growth potential uncertain Lower profit margins Risk of being criticized if you fail)

Question 41

how large firms can avoid failure

Answer 41

- Monitor outside your industry - Partner with young firms - Establish venture units - Design by JOB and not customer

Question 42

how small firms compete

Answer 42

- Enter with a product or market that large firms do not care about - If it is not their mainstream- they are not interested or motivated - Do not do something that they are good at or can easily adjust to - Margins are too small or market is too small - Once you have generated more revenues, and are stronger they can take on the incumbents and move up in the market