©THEBRIGHTSTARS 2024
SGMA 591 Chapter 5 Exam Questions
With Correct Answers
Product lifecycle stages - answer✔introduction, growth, maturity, decline
introduction/emergence - answer✔sales are small and the rate of market penetration is low
because the industry's products are little known and customers are few. High cost, low quality.
Technology advance rapidly. Wide variety of products that reflect diversity of tech and design.
Competition is primarily between alternative technologies and design configurations.Customer
innovation oriented and risk tolerant
start up
de alio entrants
born global companies
De alio entrants - answer✔= established firms diversifying from related industries
born-global companies - answer✔companies that operate internationally from their inception.
Derive significant competitive advantage from the use of resources and the sale of output in
multiple countries.
how to be successful in introduction - answer✔nvestment requirements grow and financial
resources become increasingly important. Capabilities in product development also need to be
supported by capabilities in manufacturing, marketing and distribution.
growth stage - answer✔accelerating market penetration as technical improvements and
increased efficiency open up the mass market.
Dominant design
Overseas demand may be serviced initially by exports, but the drive to reduce cost and
associated changes in production processes reduces the need for sophisticated labour skills and
makes production attractive in newly industrialized countries. Eventually, production and
assembly may shift away from the advanced countries and these countries may start to import.
, ©THEBRIGHTSTARS 2024
dominant design - answer✔a product architecture that defines the look, functionality and
production method for the product and becomes accepted by the industry as a whole. defines
product and its core feature iphone
how to be successful in growth stage - answer✔SCALING UP As the market expands, the firm
needs to adapt its product design and its manufacturing capability to large-scale production. To
utilize increased manufacturing capability, access to distribution becomes critical.
maturity - answer✔demand is wholly for replacement.
Cost efficiency through scale economies, low wages and low overheads become the key success
factors
shakeout' phase'
shake out phase - answer✔rate of firm failure increases sharply. Depends a great deal on the
capacity/demand balance and the extent of international competition.
commoditization and de-skilling of production processes, and production eventually shifts to
developing countries where labour costs are lowest
how to be successful during maturity phase - answer✔competitive advantage is increasingly a
quest for efficiency, particularly in industries that tend towards commoditization. Cost efficiency
through scale economies, low wages and low overheads become the key success factors
decline - answer✔industry becomes challenged by new industries that produce technologically
superior substitute products. Technical substitution, change in consumer preference,
demographic shifts, foreign competition.
Determine whether declining industry becomes a competitive bloodbath: the balance between
capacity and output and the nature of the demand for the product.
excess capacity;
lack of technical change (reflected in a lack of new product introduction and stability of process
technology);
a declining number of competitors, but some entry as new firms acquire the assets of exiting
firms cheaply;
high average age of both physical and human resources;
aggressive price competition.
how to be successful during decline - answer✔intensifies pressures for cost cutting. It also
requires maintaining stability by encouraging the orderly exit of industry capacity and capturing
residual market demand. If product lifecycles are becoming shorter, systematic disengagement
from product markets that are entering their decline phase is likely to become of increasing
SGMA 591 Chapter 5 Exam Questions
With Correct Answers
Product lifecycle stages - answer✔introduction, growth, maturity, decline
introduction/emergence - answer✔sales are small and the rate of market penetration is low
because the industry's products are little known and customers are few. High cost, low quality.
Technology advance rapidly. Wide variety of products that reflect diversity of tech and design.
Competition is primarily between alternative technologies and design configurations.Customer
innovation oriented and risk tolerant
start up
de alio entrants
born global companies
De alio entrants - answer✔= established firms diversifying from related industries
born-global companies - answer✔companies that operate internationally from their inception.
Derive significant competitive advantage from the use of resources and the sale of output in
multiple countries.
how to be successful in introduction - answer✔nvestment requirements grow and financial
resources become increasingly important. Capabilities in product development also need to be
supported by capabilities in manufacturing, marketing and distribution.
growth stage - answer✔accelerating market penetration as technical improvements and
increased efficiency open up the mass market.
Dominant design
Overseas demand may be serviced initially by exports, but the drive to reduce cost and
associated changes in production processes reduces the need for sophisticated labour skills and
makes production attractive in newly industrialized countries. Eventually, production and
assembly may shift away from the advanced countries and these countries may start to import.
, ©THEBRIGHTSTARS 2024
dominant design - answer✔a product architecture that defines the look, functionality and
production method for the product and becomes accepted by the industry as a whole. defines
product and its core feature iphone
how to be successful in growth stage - answer✔SCALING UP As the market expands, the firm
needs to adapt its product design and its manufacturing capability to large-scale production. To
utilize increased manufacturing capability, access to distribution becomes critical.
maturity - answer✔demand is wholly for replacement.
Cost efficiency through scale economies, low wages and low overheads become the key success
factors
shakeout' phase'
shake out phase - answer✔rate of firm failure increases sharply. Depends a great deal on the
capacity/demand balance and the extent of international competition.
commoditization and de-skilling of production processes, and production eventually shifts to
developing countries where labour costs are lowest
how to be successful during maturity phase - answer✔competitive advantage is increasingly a
quest for efficiency, particularly in industries that tend towards commoditization. Cost efficiency
through scale economies, low wages and low overheads become the key success factors
decline - answer✔industry becomes challenged by new industries that produce technologically
superior substitute products. Technical substitution, change in consumer preference,
demographic shifts, foreign competition.
Determine whether declining industry becomes a competitive bloodbath: the balance between
capacity and output and the nature of the demand for the product.
excess capacity;
lack of technical change (reflected in a lack of new product introduction and stability of process
technology);
a declining number of competitors, but some entry as new firms acquire the assets of exiting
firms cheaply;
high average age of both physical and human resources;
aggressive price competition.
how to be successful during decline - answer✔intensifies pressures for cost cutting. It also
requires maintaining stability by encouraging the orderly exit of industry capacity and capturing
residual market demand. If product lifecycles are becoming shorter, systematic disengagement
from product markets that are entering their decline phase is likely to become of increasing
