The Abernathy Utterback model provides insight into when new and established

The abernathy utterback model provides insight into

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The Abernathy-Utterback model provides insight into when new and established firms are most successful in technology-intensive industries. In general, the fluid phase download instant at 18
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download instant at of an industry is the most favorable to new firms, while the specific phase is most favorable to incumbent firms. Several factors account for this pattern. The number of firms in an industry also tends to change over the different phases of industry evolution. In almost all cases, during the fluid phase, there is a high rate of new firm entry and a low rate of new firm exit, leading to a large increase in the number of firms in the industry. While the Abernathy-Utterback model is quite useful, it does not predict the patterns of industry evolution equally well in all manufacturing industries. It appears to work best in assembled products in which customer tastes are homogenous, and worst in non-assembled products, like rayon or glass, or in products that involve non-assembled components, like integrated circuits. With these technologies, firms engage in less product innovation and more process innovation, altering how innovation and competition change as industries transition from the fluid phase to the specific phase of industry evolution. Perhaps more importantly, the model is not very effective in predicting patterns of industry evolution in service business, a point discussed in more detail below. Reverse Product Cycle Theory After Abernathy and Utterback introduced their model, researchers wondered if it applied to service businesses as well as to the manufacturing businesses on which it had been developed and tested. When Richard Barras, a London-based researcher, looked at this question, he concluded that the answer was “no,” a different model operated in service industries, which he called the “reverse product cycle.” download instant at 19
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download instant at According to Dr. Barras, service industries typically adopt new technologies that are first developed in a goods industry. This adoption of technology from a goods industry leads to the first stage of the reverse product cycle. The adopted technology is employed to make existing services more efficient, thereby reducing costs. These initial innovations are typically incremental improvements. In the second stage of the reverse product cycle, the new technology is used to make the service more effective. The innovations that are introduced at this stage tend to focus on changing the processes used to serve customers, thereby enhancing quality. In the third stage of the reverse product cycle, the technology is used to create new services, making changes at this stage radical.
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