Christensen’sTheory – Xerox vs. Canon

Christensen’sTheory – Xerox vs. Canon.

– Sears vs. Wal-mart
Why great firms fail when confronted with radical innovation?

– – –

They listen to their customers carefully

They track competitor’s actions carefully

They invest resources to design and built higher performance, higher quality products that will yield better profits

Sustaining Technologies

  • –  Give customers something new or better in the attributes of a

product they already value

  • –  Established markets, loyal customers who are willing to pay premiums
  • –  Stay close to customers
  • –  Profit margins are high (cheap to retain loyal customers, ex:

Nike shoes)

  • –  Risk is relatively low
  • –  Fast response time
  • –  Minimal change in production processes

Disruptive Technologies

  • –  Existing customers do not value performance attributes of

the product

  • –  They perform worse on certain attributes
  • –  Financially unattractive: small markets, low profit margins
  • –  Difficult to predict the growth rate of the market
  • –  Requires new manufacturing processes
  • The slope of the technology trajectory is steeper than the slope of the trajectory of customer need.
  • – How much time customer have to learn the new technology? – Regulations
    – Life styles
  •  
  • Abernathy-Clark Model
    – Incumbents may out perform new entrants with “radical innovation”
  • • Two kinds of knowledge that underpins technology: Technological and market knowledge
  • Innovation Value-Added Chain
  • • What the innovation does to firm’s supplier ,customer  , and complementary innovators

Christensen’sTheory – Xerox vs. Canon

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