Industry Life Cycle and Strategy Quiz

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Questions and Answers

What is the first step in Williamson's description of the Industry Life Cycles?

Equilibrium in producer number

Market becomes more refined

Supply of new product of primitive design (correct)

Interval for takeoff and decelerating net entry

In which stage of the Industry Life Cycle does market definition become sharpened?

Third stage

Last stage

First stage

Second stage (correct)

What characterizes the market in the third stage of the Industry Life Cycles according to Williamson?

Negative net entry

Low volumes and high uncertainty

Relatively unproductive/unspecialized techniques

Mature industry (correct)

Which stage of the Industry Life Cycle involves high but somewhat lesser degree of uncertainty?

Second stage Signup and view all the answers

What does the first step of Williamson's description of Industry Life Cycles involve?

Use of exploring techniques Signup and view all the answers

At what point does equilibrium in producer number coincide with maturity of product market?

Stage 4 Signup and view all the answers

Which stage of the Industry Life Cycle involves a small market?

First stage Signup and view all the answers

During the 'specific' period in the A-U model, which of the following is true?

Technological diversity is replaced by standardization Signup and view all the answers

According to Mueller and Tilton, what happens as managers stay longer in the market?

Know-how and barriers to entry both increase Signup and view all the answers

Why do firms tend to leave the market during the shakeout period according to Abernathy & Utterback?

Inability to compete on product innovation Signup and view all the answers

What is one of the main theories of shakeout according to Klepper and Mueller?

Firms facing continuous opportunity for product innovation Signup and view all the answers

According to Stigler's theory, why do companies outsource certain activities over the industry life cycle?

To lower average costs Signup and view all the answers

What does Utterback and Suarez's Dominant Design Theory suggest?

Dominant design alters innovation and competition in a firm and industry Signup and view all the answers

'Specialization over the industry life cycle' theory suggests that:

'Vertical chain' activities can lower average costs over time Signup and view all the answers

'Theories of Shakeout' proposed by Abernathy & Utterback involves:

'Product innovation slows as process innovation rises' Signup and view all the answers

'Survival strategies' mentioned by Utterback and Suarez focus on:

'Seeking continuous opportunities for product process innovation' Signup and view all the answers

'Theories of Shakeout' proposed by Klepper (1996) and Mueller focus on:

'Larger firms profiting more from process R&D' Signup and view all the answers

What is the role of a dominant design in an industry, according to the text?

Encouraging standardization and reducing the number of firms Signup and view all the answers

According to Utterback and Suarez (1993), what does the Dominant Design Theory suggest about firms incorporating dominant design elements?

They have a lower probability of failure Signup and view all the answers

What advantage do firms entering an industry early, according to Mueller and Tilton (1969) and Klepper (1996), have?

Survival benefit due to scale economies in R&D Signup and view all the answers

What concept is introduced by Christensen, Suarez, and Utterback (1998) related to entering an industry?

Window of Opportunity Signup and view all the answers

What implication arises from the rapidly changing technology in fast-paced industries?

Knowledge and capabilities become liabilities over time Signup and view all the answers

Which strategy is NOT suggested for survival in fast-paced industries based on the text?

Firms launching new technologies in existing markets have better survival rates Signup and view all the answers

What characteristic defines 'First Mover Advantages' in an industry?

Survival benefit of entering early Signup and view all the answers

Why do firms that produce the dominant design tend to survive longer, as per the text?

'Window of opportunity' for learning opens up for them Signup and view all the answers

Study Notes

Industry Life Cycles Overview

The first step in Williamson's description of Industry Life Cycles involves defining the industry and its boundaries.
Market definition sharpens during the growth stage of the Industry Life Cycle.
The third stage, maturity, is characterized by established competition and market saturation, leading to stable demand.
The shakeout stage involves high uncertainty, but not as high as in the initial stages of the life cycle.

Stages and Dynamics

Equilibrium in producer numbers coincides with the maturity stage of the product market.
The introduction stage features a small market with limited consumer awareness and demand.

Managerial Behavior and Market Dynamics

As managers remain longer in the market, they develop deeper industry knowledge and strategic insights.
Firms typically exit during the shakeout period due to increased competition and decreasing profitability, as noted by Abernathy & Utterback.

Theories and Concepts

Klepper and Mueller propose theories of shakeout that focus on the competitive dynamics and resource allocation during market transitions.
Stigler's theory suggests companies outsource specific activities to optimize costs and focus on core competencies as they grow.

Dominant Design Theory

Utterback and Suarez's Dominant Design Theory posits that industries tend to evolve toward a dominant design that firms must incorporate to remain competitive.
The dominant design plays a crucial role in standardizing production and consumer expectations within an industry.

Early Entry Advantages

Firms entering an industry early can acquire market share and establish brand loyalty, leading to long-term competitive advantages.
Christensen, Suarez, and Utterback introduce the concept of 'disruptive innovation,' highlighting challenges for established firms when new players enter.

Industry Characteristics and Strategies

Rapidly changing technology in fast-paced industries implies a need for continuous innovation and adaptation among firms.
Strategies not suggested for survival in fast-paced industries include complacency or ignoring technological advancements.

First Mover Advantages

First Mover Advantages characterize a firm's capability to secure early market share, establish brand recognition, and leverage initial resources effectively.
Firms that produce the dominant design are likely to survive longer, as they align closely with market demands and consumer expectations.

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Description

Test your knowledge on the industry life cycle and strategy with questions covering the five stages of industry evolution, along with insights from Williamson's three stages model. Includes concepts like market equilibrium, net entry, and market disturbances.