Traditionally, the first firm to commercialize a new technology has benefited from the unique opportunity to shape product definitions, forcing followers to adapt to a standard or invest in an unproven alternative. Today, however, the largest payoffs may go to companies that lead in developing integrated approaches for successful mass production and distribution.
Producers of the Beta format for videocassette recorders (VCRs), for example, were first to develop the VCR commercially in 1975, but producers of the rival VHS (Video Home System) format proved to be more successful at forming strategic alliances with other producers and distributors to manufacture and market their VCR format. Seeking to maintain exclusive control over VCR distribution, Beta producers were reluctant to form such alliances and eventually lost ground to VHS in the competition for the global VCR market.
Despite Beta's substantial technological head start and the fact that VHS was neither technically better nor cheaper than Beta, developers of VHS quickly turned a slight early lead in sales into a dominant position. Strategic alignments with producers of prerecorded tapes reinforced the VHS advantage. The perception among consumers that prerecorded tapes were more available in VHS format further expanded VHS's share of the market. By the end of the 1980s, Beta was no longer in production.
The author implies that one way that VHS producers won control over the VCR market was by
A) carefully restricting access to VCR technology
B) giving up a slight early lead in VCR sales in order to improve long-term prospects
C) retaining a strict monopoly on the production of prerecorded videotapes
D) sharing control of the marketing of VHS format VCRs
E) sacrificing technological superiority over Beta format VCRs in order to remain competitive in price
According to the passage, today's successful firms, unlike successful firms in the past, may earn the greatest profits by
(A) investing in research to produce cheaper versions of existing technology
(B) being the first to market a competing technology
(C) adapting rapidly to a technological standard previously set by a competing firm
(D) establishing technological leadership in order to shape product definitions in advance of competing firms
(E) emphasizing the development of methods for the mass production and distribution of a new technology
The passage is primarily concerned with which of the following?
A) Evaluating two competing technologies
B) Tracing the impact of a new technology by narrating a sequence of events
C) Reinterpreting an event from contemporary business history
D) Illustrating a business strategy by means of a case history
E) Proposing an innovative approach to business planning
The alignment of producers of VHS format VCRs with producers of prerecorded videotapes is most similar to which of the following?
A) The alignment of an automobile manufacturer with another automobile manufacturer to adopt a standard design for automobile engines
B) The alignment of an automobile manufacturer with an automotive glass company whereby the manufacturer agrees to purchase automobile windshields only from that one glass company
C) The alignment of an automobile manufacturer with a petroleum company to ensure the widespread availability of the fuel required by a new type of engine developed by the manufacturer
D) The alignment of an automobile manufacturer with its dealers to adopt a plan to improve automobile design
E) The alignment of an automobile dealer with an automobile rental chain to adopt a strategy for an advertising campaign to promote a new type of automobile