BADM-449-Class-10 - BADM 449 Class #10 Business Policy and...

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Industry Evolution and Technology-Based Competition BADM 449 – Class #10 Business Policy and Strategy
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Invention : Creation of a new product, production process, or other artifact, through creation of new or combination of old knowledge. Innovation: Initial commercialization of invention Many innovations involve little or no new technology or invention (for example, new packaging). Yet they may generate sizable returns. On the other hand, many inventors of radically new products/processes don’t benefit much from their inventions. Invention Vs . Innovation
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Typical Industry Life Cycle Introduction Low sales, low market penetration, many small firms Small scale (high cost), lack of knowledge about the product (low willingness to pay) and technology (high cost, low willingness). Growth Stage More mass production (lower cost), rapid learning about product/process, some of the small firms cannot keep up. Maturity High penetration, most of the sales are for replacement product Stabilizing industry structure, with attractive structures emerging when there are barriers to entry or fragmented in their absence. Decline Consolidation and exit of firms
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Industry Life-Cycle & Rates of Innovation* Product Innovation Process Innovation Rate of Major Innovation Fluid Phase Transitional Phase Specific Phase *Abernathy & Utterback 1978
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Industry Life Cycle: Another View Fluid Phase ” or period of ferment and search Many alternative designs (business models) are attempted, many firms enter the industry so their overall number increases rapidly. Transitional Phase A dominant design emerges around a set of features that all products must offer Some firms with “wrong designs” are forced to exit: industry shakeout. Specific Phase ” or period of incremental change Industry characterized by a fairly stable set of firms designing products following the dominant design, concentrating on efficient production (learning curve, high economies of scale, etc.)
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This note was uploaded on 04/02/2012 for the course BADM 449 taught by Professor Echambadi during the Fall '10 term at University of Illinois, Urbana Champaign.

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BADM-449-Class-10 - BADM 449 Class #10 Business Policy and...

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