When a First Mover Does Not Have Complementary Assets, Barriers

question 20

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 finn.
• E)wait until competitors develop an alternative product.

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Real-options Analysis

A financial modeling technique for valuing flexibility and decision-making in investment under uncertainty.

Incremental Analysis

The examination of the additional costs and benefits of certain decisions, focusing on the changes that would occur from choosing one alternative over another.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment.