Test Bank For STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION SCHILLING

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Test Bank For STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION SCHILLING

Description

WITH ANSWERS

 

STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION SCHILLING

Chapter 01

Introduction

 

True/False

 

  1. The globalization of markets and the importance of innovation are independent of one another.

 

Answer: False

Difficulty: Easy

Page: 1

 

  1. Flexible manufacturing technologies have increased the importance of production economies of scale.

 

Answer: False

Difficulty: Easy

Page: 1

 

  1. Innovation and new technology have led to longer product life cycles as better quality products are being produced.

 

Answer: False

Difficulty: Moderate

Page: 2

 

4.. The increased pace of innovation has only had a negligible effect on market segmentation and product obsolescence.

 

Answer: False

Difficulty: Easy

Page: 2

 

  1. Slow innovation results in diminishing margins and product obsolescence.

 

Answer: True

Difficulty: Moderate

Page: 2

 

  1. Technological innovation can have a positive impact on our quality of life through improved goods and services.

 

Answer: True

Difficulty: Moderate

Page: 4

 

  1. Technologys effects on society are always positive.

 

Answer: False

Difficulty: Easy

Page: 4

 

  1. Technology in its purest form is not knowledge, but rather faith that things will get better.

 

Answer: False

Difficulty: Easy

Page: 4

 

  1. Firms that charge headlong into new product development usually have short development cycles.

 

Answer: False

Difficulty: Moderate

Page: 4

 

  1. Studies have revealed that innovation is a freewheeling process that is unconstrained by rules and plans.

 

Answer: False

Difficulty: Easy

Page: 4

 

  1. The majority of effort and money invested in technological innovation comes from industrial firms.

 

Answer: True

Difficulty: Moderate

Page: 4

 

  1. GDP does relate very directly to the amount of goods consumers can purchase.

 

Answer: True

Difficulty: Easy

Page: 4

 

 

  1. Practically all innovative ideas become successful products.

 

Answer: False

Difficulty: Easy

Page: 5

 

  1. If an idea can be shown to be technologically feasible, it is guaranteed to be commercially successful.

 

Answer: False

Difficulty: Easy

Page: 5

 

  1. According to the concept of the innovation funnel, one new idea is usually responsible for several new products.

 

Answer: False

Difficulty: Moderate

Page: 5

 

 

 

Multiple Choice

 

  1. As a result of the rapid pace of innovation, the time between a products introduction and its withdrawal from the market
  2. has become shorter.
  3. has become more predictable.
  4. has become longer.
  5. has not changed at all.

 

Answer: a

Difficulty: Easy

Page: 2

 

  1. While rapid innovation often benefits society, it often makes success for companies
  2. more complicated as they strive to keep up with the latest innovations.
  3. profitable as long as they do not innovate themselves, but rather use innovations of others to their advantage.
  4. easier since innovation always makes things simpler.
  5. less likely because customers will not be willing to pay as much for goods and services.

 

Answer: a

Difficulty: Moderate

Page: 2

 

  1. After Yahoo! was introduced as an easy way to search the World Wide Web, it was followed by other search engines, some of which had improved or faster ways to search the web. This is an example of how one innovative idea can
  2. ruin the business of someone else.
  3. slow down obsolescence.
  4. stimulate more innovations and create a new market.
  5. never be truly copied.

 

Answer: c

Difficulty: Moderate

Page: 2

 

  1. The relationship between speed of innovation and product obsolescence is
  2. direct (as innovation speed increases, products become obsolete more quickly).
  3. inverse (as innovation speed increases, products become obsolete more slowly).
  4. indirect (there is an effect, but it cannot be directly determined).
  5. nonexistent (there is no relationship at all).

 

Answer: a

Difficulty: Hard

Page: 2

 

  1. Most studies suggest that
  2. technological innovation helps to increase a countrys gross domestic product.
  3. technological innovation typically decreases a countrys gross domestic product.
  4. technological innovation has no impact on a countrys gross domestic product.
  5. a countrys gross domestic product determines its rate of technological innovation.

 

Answer: a

Difficulty: Easy

Page: 2

 

  1. As companies adopt new technologies and increase their pace of innovation, the results may be
  2. an industry wide shift to longer production cycles.
  3. rapid product introductions.
  4. less market segmentation.
  5. slower product obsolescence.

 

Answer: b

Difficulty: Moderate

Page: 2

 

  1. The Solow Residual refers to
  2. the increased amount of output achievable from a given quantity of labor and capital due to technological innovation.
  3. the less developed nations of the world being left behind due to their slower development of technology.
  4. obsolete products left in the market due to the accelerated product life cycle.
  5. the reduction in the amount of inventory needed by manufacturing firms due to technological improvements in inventory management.

 

Answer: a

Difficulty: Moderate

Page: 2

 

  1. The ______ of an economy is its total annual output, measured by final purchase price.
  2. net national income
  3. gross domestic product
  4. gross national product
  5. balance of trade

 

Answer: b

Difficulty: Easy

Page: 2

 

 

  1. In a series of studies of economic growth conducted at the National Bureau of Economic Research, economists showed that the historic rate of economic growth in GDP could not be accounted for entirely by growth in labor and capital inputs. Consensus emerged later that _____ helped explain this gap.
  2. technological change
  3. measurement error
  4. inaccurate price deflation
  5. labor improvement

 

Answer: a

Difficulty: Moderate

Page: 2

 

 

 

  1. Which of the following statements about being a successful innovator is most likely to be true?
  2. To innovate successfully, you should start out with only a vague idea.
  3. Your thinking should not be structured so ideas can pop into your head.
  4. You need clearly defined strategies and processes.
  5. You should have a completely open mind about how to proceed and go with the flow.

 

Answer: c

Difficulty: Moderate

Page: 4

 

  1. Electronic waste results from the disposal of technological goods. This is an example of
  2. industrial resistance.
  3. a negative externality.
  4. shortened product life cycles.
  5. rapid innovation.

 

Answer: b

Difficulty: Easy

Page: 4

 

  1. Technology in its purest form is
  2. faith that things will get better.
  3. knowledge to solve our problems and pursue our goals.
  4. always derived from physics.
  5. pure guesswork.

 

Answer: b

Difficulty: Easy

Page: 4

 

  1. According to the text, firms that rush headlong into new product development usually
  2. initiate only those projects that they can effectively support.
  3. have short development cycles.
  4. experience low project failure rates.
  5. choose projects that are a poor fit with their resources and objectives.

 

Answer: d

Difficulty: Moderate

Page: 4

 

  1. If you were the director of R&D at a large pharmaceutical company, how might you apply the concept of the innovation funnel?
  2. Hire more people because most of them will turn out to be mediocre.
  3. Encourage more new ideas because it takes thousands of new ideas to come up with one successful new product.
  4. Discourage more new ideas because most of them end up being useless and waste time and energy.
  5. The innovation funnel concept can not be used by a person in this position.

 

Answer: b

Difficulty: Easy

Page: 5

 

  1. A firms innovation projects should satisfy all of the following, except
  2. align with its resources.
  3. leverage its core competencies.
  4. help achieve its strategic intent.
  5. be able to produce immediate returns.

 

Answer: d

Difficulty: Moderate

Page: 5

 

  1. A firms new product development process should
  2. maximize the likelihood of projects being both technically and commercially successful.
  3. eliminate the firms exposure to risk.
  4. utilize technology currently available within the organization, thereby reducing expenses.
  5. be patented irrespective of the success of the product.

 

Answer: a

Difficulty: Moderate

Page: 5

 

  1. If an idea can be shown to be technologically feasible, its chances of commercial success
  2. are practically guaranteed.
  3. have improved.
  4. have diminished.
  5. can be exactly calculated.

 

Answer: b

Difficulty: Easy

Page: 5

 

  1. Out of all the innovative ideas that come forth, how many become successful products?
  2. Very few
  3. Most
  4. About half
  5. Seventy-five percent

 

Answer: a

Difficulty: Easy

Page: 5

 

 


Essay

 

  1. Explain how computer-aided design and flexible manufacturing help create small niches in the market place. Provide and example of how a market with different niches might be served.

 

Answer: Computer-aided design and flexible manufacturing help create small niches in the market place by allowing firms to develop and produce a greater number of versions of their products. This means that companies can now tailor their offerings to small niches in the market place. For example, if a company manufactures basketballs, it can produce different sizes and colors of basketballs for children, teens, males, and females. It can also produce different basketballs for outdoor courts and for gymnasiums. Different qualities of balls can be produced to meet price levels consumers are willing to pay.

 

Difficulty: Hard

Page: 1

 

  1. Explain how the globalization of markets affects the importance of innovation.

 

Answer: As markets become more global, increased competition from foreign competitors puts pressure on firms to innovate. Domestic companies may need to come up with more efficient means of production, and will also tend to compete through innovation to differentiate their goods and services. As communication increases through the internet and global media, consumers will have more choices in making purchase decisions. Competition will become fiercer and companies will need to find a competitive advantage through innovative processes and products.

 

Difficulty: Moderate

Page: 1

 

  1. What are the some of the negative impacts on society due to technological innovation? How would you answer critics of improved technology who cite these negative impacts?

 

Answer: Some of the negative impacts on society due to technological innovation are increased pollution and erosion as well as reduction of natural habitats and ocean stocks. Medical innovations can result in unanticipated consequences. To answer critics of improved technology who cite these negative impacts, you might point out how technology is essentially the application of knowledge to solve practical problems. If we have created problems with our technology, the answer is not to go back to more primitive lifestyles, but rather to develop knowledge leading to better technology to solve these problems. For example, rather than abandoning the automobile due to pollution, we should develop new technologies that curb or eliminate pollution. Cleaner fuels or alternate power sources for automobiles are possible technological innovations to solve this problem.

 

Difficulty: Hard

Page: 4

 

  1. Why is it important that a company have a well-defined process for strategically managing its new product development process?

 

Answer: The new product development process is highly riskymost new product development ideas and projects fail. Since many firms now focus on innovation as a competitive lever, firms who innovate more effectively and efficiently will tend to outperform firms who innovate in a haphazard fashion. This means, among other things, that to be competitive firms must be able to:

-choose projects that better match their objectives, internal competencies, and competitive environment,

-manage the development of those projects in a way that ensures the products meet or exceed customer requirements while keeping the development cycle short and development costs in check,

-launch their new products in a way that astutely takes into account timing effects, makes good choices about licensing and compatibility, and utilizes advertising and distribution channels that target the appropriate market segments.

A firm could have great new product ideas yet fail miserably in the marketplace if it does not achieve the above.

 

Difficulty: Moderate

Page: 4-5

 

  1. Explain how an understanding of the innovation funnel might influence a companys view of research and development?

 

Answer: If a company truly understands the innovation funnel concept, it will know that often at least 3,000 raw ideas are needed for one successful product. The company can then encourage its R&D staff as well as the rest of the company to come up with and submit new ideas. It will also develop ways of evaluating large numbers of ideas, setting up screening criteria that help the firm decide which ideas to elevate to the next level of attention.

 

Difficulty: Moderate

Page: 5

 

Chapter 03

Types and Patterns of Innovation

 

True/False

 

  1. The path a technology follows through time is termed its technology map.

 

Answer: False

Difficulty: Easy

Page: 49

 

  1. Product innovation can enable process innovation.

 

Answer: True

Difficulty: Easy

Page: 50

 

  1. The radicalness of an innovation is absolute.

 

Answer: False

Difficulty: Moderate

Page: 51

 

  1. Radical innovation entails changing the overall design of the system or the way that components interact with each other.

 

Answer: False

Difficulty: Moderate

Page: 52

 

  1. In order to initiate a component innovation, a firm requires knowledge about the way components link and integrate to form the whole system.

 

Answer: False

Difficulty: Moderate

Page: 53

 

  1. A technologys S-curve of performance improvement is unrelated to its S-curve of diffusion.

 

Answer: False

Difficulty: Easy

Page: 53

 

 

  1. The S-curve in technological improvement is a plot of performance against effort and money invested in that technology.

 

Answer: True

Difficulty: Moderate

Page: 54

 

  1. Until a new technology has established a degree of legitimacy, it may be difficult to attract other researchers to participate in its development.

 

Answer: True

Difficulty: Easy

Page: 54

 

  1. Technologies always get the opportunity to reach their performance limits before being replaced by a new technology.

 

Answer: False

Difficulty: Moderate

Page: 55

 

  1. Moores Law refers to the rapidly increasing density of transistors on integrated circuits that enabled microprocessor performance to increase dramatically. This increase in density is expected to always continue at the same rate.

 

Answer: False

Difficulty: Easy

Page: 55

 

  1. To develop the technology diffusion s- curve, you need to plot the cumulative number of adopters of the technology against time.

 

Answer: True

Difficulty: Easy

Page: 56

 

  1. The adoption of new technology and the diffusion of information about it takes place at the same rate.

 

Answer: False

Difficulty: Hard

Page: 57

 

  1. Managers can almost always use the S-curve model to effectively plan their technology investment decisions.

 

Answer: False

Difficulty: Easy

Page: 59

 

  1. A firm can influence the shape of the S-curve by revamping the architecture design of the technology.

 

Answer: True

Difficulty: Moderate

Page: 59

 

  1. Innovators represent the largest category of adopters according to research.

 

Answer: False

Difficulty: Easy

Page: 60

 

  1. Many companies are now coming up with better ways to make personal data assistants (PDAs) perform their functions better. This is the specific phase of the technological cycle according to Utterback and Abernathy.

 

Answer: True

Difficulty: Easy

Page: 63

 

  1. When personal data assistants (PDAs) were first introduced there was a time when there was great uncertainty about this technology and its market. This is called the fluid phase of the technological cycle according to Utterback and Abernathy.

 

Answer: True

Difficulty: Moderate

Page: 63

 

  1. The first phase in the technology cycle is involves incremental improvements until one company finds a major breakthrough.

 

Answer: False

Difficulty: Moderate

Page: 63-64

 

  1. In the era of ferment, firms focus on efficiency and market penetration.

 

Answer: False

Difficulty: Moderate

Page: 64

 

 

  1. As a firms expertise becomes oriented around maximizing its ability to compete in the existing dominant design, it can become a barrier to the firms recognizing and reacting to a new technology architecture.

 

Answer: True

Difficulty: Moderate

Page: 65

 

 

 

 

 


Multiple Choice

 

  1. Which of the following is most clearly an example of process innovation?
  2. A pizza chain is able to develop a method that enables pizzas to be baked in 10 minutes rather than the standard 20 minutes during the late 1980s.
  3. A potato chip company introduces a line of its potato chips with a new type of seasoning.
  4. A major motion picture studio releases a new 3D movie.
  5. A tire manufacturer develops a tire that re-inflates itself instantly when it is punctured.

 

Answer: a

Difficulty: Moderate

Page: 50

 

  1. Since product and process innovations often occur in tandem, which is most likely to occur first?
  2. New processes making new products possible
  3. New products which enable new processes
  4. They are both equally likely to be developed first
  5. Process and product innovations are independent of one another.

 

Answer: c

Difficulty: Medium

Page: 50

 

  1. The CEO of an automobile manufacturer directed her R&D department to come up with a radical innovation. Which of the following ideas best fits the bill?
  2. A door that is unlocked by recognizing the fingerprints of the owner.
  3. Seats that vibrate to massage the backs of passengers.
  4. A windshield that tints in sunlight and lightens in darkness automatically.
  5. A car that drives itself to the nearest exit if the driver is incapacitated by a medical emergency.

 

Answer: d

Difficulty: Hard

Page: 50-51

 

  1. During the late 1980s, a pizza chain was able to develop a pizza oven to bake pizzas in 10 minutes rather than the standard 20 minutes. This was most likely a(n) _____ innovation.
  2. competence-enhancing
  3. competence-destroying
  4. architectural
  5. radical

 

Answer: a

Difficulty: Easy

Page: 51

 

  1. Which of the following statements is true regarding the different types of innovations?
  2. Process innovations are more visible than product innovations.
  3. A radical innovation may eventually become incremental.
  4. Component innovations have far-reaching and complex influences on competitors and users.
  5. A competence-destroying innovation is one that attacks the strengths of competitors.

 

Answer: b

Difficulty: Moderate

Page: 51

 

  1. Mr. Inman discovered that if he put garlic salt on a regular hamburger it made it taste more like steak. He could then use a less expensive meat for the chuckwagon steak sandwich he sold. This is an example of a(n) _____ innovation.
  2. radical
  3. competence destroying
  4. architectural
  5. component

 

Answer: d

Difficulty: Moderate

Page: 52

 

  1. When a company that produced vinyl records for the music industry learned that music could be recorded on compact disks to sell, it was facing a competence _____ innovation.
  2. enhancing
  3. destroying
  4. rationalizing
  5. synergizing

 

Answer: b

Difficulty: Moderate

Page: 52

 

  1. Which of the following describes the most typical evolution of technologys performance if it is plotted against effort and investment?
  2. Slow initial improvement, accelerated improvement, diminishing improvement
  3. Rapid initial improvement, slowed improvement, rapid improvement
  4. Slow initial improvement, diminishing improvement, accelerated improvement
  5. Rapid initial improvement, even faster improvement, diminishing improvement

 

Answer: a

Difficulty: Moderate

Page: 54

 

  1. If one plots a technologys S-curve with performance against time rather than effort, the resulting curve
  2. will be more accurate.
  3. may obscure the true relationship if effort is not constant over time.
  4. will be the same as if it were plotted the other way around.
  5. will not be representative of a technologys rate of performance improvement or adoption.

 

Answer: b

Difficulty: Moderate

Page: 54

 

  1. When gutter shields were developed, they replaced gutter cleaning services for homeowners wishing to keep leaves and debris out of their gutters. In other words, the same need was met by an entirely new technology. This is an example of a(n) _____

technology.

  1. complementary
  2. logical extension
  3. discontinuous
  4. incremental

 

Answer: c

Difficulty: Moderate

Page: 55

 

  1. The replacement of the typewriter by the word processor is an example of a
  2. incremental innovation.
  3. component innovation.
  4. discontinuous technology.
  5. process innovation.

 

Answer: c

Difficulty: Moderate

Page: 55

 

  1. Handheld calculators replaced slide rules. This is an example of a(n) _____ innovation.
  2. logical extension
  3. incremental
  4. component
  5. discontinuous

 

Answer: d

Difficulty: Easy

Page: 55

 

  1. When the first personal computers were introduced, Bill started using a spreadsheet program to balance his checkbook. Bill discovered that this new method was much slower for him and that if he typed in the wrong data, it led to more mistakes. This illustrates how a(n) _____ technology may initially have lower performance than the _____ technology.
  2. incumbent, discontinuous
  3. logical extension, discontinuous
  4. discontinuous, incumbent
  5. discontinuous, modular

 

Answer: c

Difficulty: Moderate

Page: 56

 

  1. Many technologies become valuable to a wide range of potential users only after a set of _____ are developed for them.
  2. substitutes
  3. complementary resources
  4. uniform features
  5. quality standards

 

Answer: b

Difficulty: Easy

Page: 57

 

  1. Which of the following statements is true regarding technology diffusion?
  2. S-curves in technology diffusion are obtained by plotting performance against time.
  3. Information diffusion is slower than technology diffusion.
  4. A drop in prices can accelerate technology diffusion.
  5. Most of the knowledge about a technology is explicitly stated and transmitted.

 

Answer: c

Difficulty: Easy

Page: 57-58

 

  1. A CEO recently asked a consultant if it was a good idea to use the S-curve model to predict when a technology would reach its limits. The wise consultant might cite as a limitation that
  2. using the S-curve would be too expensive.
  3. the perceived limitation can be extended by multiple factors.
  4. this is a highly illegal activity.
  5. the data to develop an S-curve cannot be found in the real world.

 

Answer: b

Difficulty: Moderate

Page: 59

 

  1. Ron can be described as being highly skeptical about new ideas and products. He has not yet bought a satellite dish for his home because he is still unsure that it really works. Ron is also very worried about the expense of purchasing the satellite dish. According to this description, Ron is most likely a(n)
  2. member of the early majority.
  3. innovator
  4. laggard.
  5. early adopter.

 

Answer: c

Difficulty: Easy

Page: 60

 

  1. A marketing research company has just informed Jane that she can be classified as an early adopter. Which of the following characteristics will Jane most likely have?
  2. She waits until uncertainty about a new product is resolved.
  3. She is well-integrated into her social system.
  4. She has a skeptical attitude about new ideas.
  5. She makes decisions based primarily on past experience.

 

Answer: b

Difficulty: Moderate

Page: 60

 

  1. Julie is somewhat skeptical about new innovations and is likely to adopt something new after getting some pressure from her peers. However, she is not so risk averse that she will wait until all uncertainty of a new technology has been resolved; shes willing to accept a little uncertainty if her peers already use the product. Julie is most likely a(n)
  2. early adopter.
  3. early majority person.
  4. late majority person.
  5. laggard

 

Answer: c

Difficulty: Easy

Page: 60

 

  1. Susan, a highly skilled office worker, came home with a personal computer she had just purchased. Her husband Bill soon discovered that Susan did not know how to use half the features of the computer or its software. This is most likely due to the fact that
  2. the companys market research findings are faulty.
  3. the company has added features faster than customer requirements.
  4. those features do not really work.
  5. Susan is not a part of the companys target market.

 

Answer: b

Difficulty: Moderate

Page: 62

 

  1. When hardware and software were first introduced, Bill found it to be very confusing. He heard conflicting claims about which hardware to buy and which software system to use. When he finally bought something it did not work very well. This probably illustrates which stage of the technology evolution model as described by Utterback and Abernathy?
  2. Fluid phase
  3. Dominant design phase
  4. Specific phase
  5. Incremental phase

 

Answer: a

Difficulty: Moderate

Page: 63

 

  1. Once a dominant design of a new product is reached
  2. the product is no longer profitable.
  3. a new technology has already arrived.
  4. you have begun the fluid phase.
  5. companies focus on making the production more effective and efficient.

 

Answer: d

Difficulty: Easy

Page: 63

 

  1. A product design that is adopted by the majority of producers, typically creating a stable architecture on which the industry can focus its efforts is known as
  2. dominant design.
  3. design uniformity.
  4. standardization.
  5. product semblance.

 

Answer: a

Difficulty: Easy

Page: 63

 

  1. In the era of incremental change, companies
  2. abandon old technology in favor of the new.
  3. cannot find a dominant design
  4. focus on efficiency and market penetration.
  5. seldom agree about how the major subsystems of a technology should be configured.

 

Answer: c

Difficulty: Moderate

Page: 64

 

  1. The Ajax Computer Company is spending heavily on R&D to develop new designs for wireless networks instead of trying to refine how well they make their current wireless network hardware components. Ajax is probably in the
  2. decline stage.
  3. era of incremental change.
  4. era of ferment.
  5. specific phase.

 

Answer: c

Difficulty: Hard

Page: 64

 

 

 

 

 

 

 

Essay

 

  1. Briefly explain the different types of innovation.

 

Answer: Product innovations are embodied in the outputs of an organizationits goods or services. Process innovations are innovations in the way an organization conducts its business, such as in the techniques of producing or marketing goods or services.

 

A radical innovation is very new and different from prior solutions. An incremental innovation involves relatively minor changes from (or adjustments to) existing practices.

 

Competence-enhancing innovations build on existing knowledge and skills while competence-destroying innovations render existing knowledge and skills obsolete. Whether an innovation is competence enhancing or competence destroying depends on whose perspective is being taken.

 

Component (or modular) innovation is an innovation to one or more components that does not significantly affect the overall configuration of the system.

Architectural innovation involves changes to the overall design of a system or the way its components interact with each other.

 

Difficulty: Moderate

Page: 50-52

 

  1. Lately computer users have been using USB Jump Drives to copy and store files. These are also called thumb drives, pen drives, and other names. These are small drives you can attach to a key chain and plug into any USB port and have the utility of a hard drive. The size of their memory varies from 16 kilobytes to several gigabytes. Assume you are the CEO of the Ajax Thumb Drive Company. How might you use the S-curve model to predict when to switch to a new technology? What would be the limitations of this approach?

 

Answer: You could use your own investment and performance data or from the industry if you can get it to develop an S-curve . You could then predict when the jump drive technology is reaching its limits and know when it is time to switch to another technology or develop a new technology. However, there are many limitations to doing this. First, it is very difficult to know exactly when the limits of a technology are reached. Many factors can affect this and often the limit can be extended by market factors, your own development efforts, or other unknown factors. You may also not know what other potential new technologies are being developed and how steep their S-curve s are. Switching to a new technology is a risk and the benefits need to be weighed with those risks and costs.

 

Difficulty: Hard

Page: 54-59

  1. If a company learns of the cost and efficiency advantages of a new technology to replace one it is currently using will it then adopt the technology as quickly as it can? Explain the reason for your answer.

 

Answer: Of course, the company may adopt the new technology quickly, but this may not always be the case. There are several reasons for the delay. One reason is that this new technology may require other changes in the companys process to support it, and the company cannot afford to make those changes. The company may also not have the knowledge of experience to adopt this new technology. That knowledge may have to be gained through personal contact rather than study and therefore takes time.

 

Difficulty: Hard

Page: 57

 

  1. Why did Schumpeter call the technology cycle one of creative destruction? In your answer explain what is meant by this term and why it is appropriately applied to the technology cycle.

Answer: Creative destruction refers to the fact that as new technology is developed it replaces or destroys old technology. There is a period of turbulence as the older technology is displaced by the new one. Then those companies providing the new technology seek to make improvements to increase their competitiveness. As competitiveness increases profit margins tend to decrease. Finally, a new technological breakthrough is achieved. This is a new discontinuity that replaces the existing technology. Thus the creative process eventually develops a new technology that leads to the destruction of the existing technology.

 

Difficulty: Hard

Page: 59

 

  1. Briefly define Rogers five adopter categories and explain how a marketer might use this knowledge.

 

Answer: The first category consists of innovators who are most likely to try a new product. They can afford to take a chance financially, but are not always well-integrated into society. Next are the early adopters. They are the second group to adopt a new technology and are respected by others for their assessments of the new technology, and thus have great potential for opinion leadership. The early majority come next in adoptions. They are not opinion leaders although they do interact frequently with their peers. The late majority is more skeptical and will only adopt the product after pressure from their peers since they cannot afford to take chances. The laggards are the last group to adopt and they are highly skeptical. Their decisions are based on past experiences and they must feel certain that a new innovation will not fail before adopting it. A marketer would probably want to appeal primarily to the early adopters since they have great influence over others and can prompt the mass market (early and late majority) to purchase the product. The innovators do not have this impact and are probably more responsive to the technologies key features than marketing efforts.

 

Difficulty: Moderate

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