When a First Mover Does Not Have Complementary Assets, Barriers

question 52

Multiple Choice

When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should:

• A) license the innovation to others.
• B) enter into a joint venture to protect the product.
• C) lower the barriers for imitation.
• D) sell the technology outright to another firm.
• E) wait until competitors develop an alternative product.

---

Definitions:

Working Capital Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its current assets.

Acid-test Ratio

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its current liabilities without needing to sell inventory.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.

Current Liabilities

Current liabilities are financial obligations a company is due to pay within one year, including accounts payable, short-term debts, and other similar liabilities.