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Updated on: 09 Sep 2019, 05:53
Originally posted by Nikhil on 14 Oct 2018, 19:30.
Last edited by Sajjad1994 on 09 Sep 2019, 05:53, edited 1 time in total.
Last edited by Sajjad1994 on 09 Sep 2019, 05:53, edited 1 time in total.
Updated - Complete topic (472).
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Question 1
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
85%
(hard)
Question Stats:
35% (03:10) correct
65%
(03:11) wrong
based on 664
sessions
History
Date
Time
Result
Not Attempted Yet
Question 2
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
57% (00:50) correct 43%
(00:53) wrong
based on 663
sessions
History
Date
Time
Result
Not Attempted Yet
Question 3
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
65% (01:16) correct 35%
(01:26) wrong
based on 657
sessions
History
Date
Time
Result
Not Attempted Yet
As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually overly sophisticated, extremely expensive, and rather complicated for many customers in their market. These innovations fall under the category of sustaining innovations, innovations that simply improve existing products. Companies pursue sustaining innovations at the higher tiers of their markets because this is what has historically helped them succeed: by charging the highest prices to their most demanding and sophisticated customers at the top of the market, companies achieve the greatest profitability. However, by doing so, companies unwittingly open the door to another category of innovations - “disruptive innovations”. In contrast to sustaining innovations, disruptive innovations lie at the bottom of the market. They are made not only by harnessing new technologies but also by developing new business models and exploiting old technologies in new ways.
An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. Personal computers, for instance, were disruptive innovations because they created a new mass market for computers - previously, expensive mainframe computers were sold only to big companies and research universities. Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge.
An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. Personal computers, for instance, were disruptive innovations because they created a new mass market for computers - previously, expensive mainframe computers were sold only to big companies and research universities. Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge.
1. Which of the following statements is supported by the information given in the passage?
A. A disruptive business is less likely to face competition in the market than a business pursuing sustaining innovations.
B. Companies following innovations that are improvements of existing products do not knowingly leave market space for disruptive businesses to emerge.
C. Most technological innovations can be considered disruptive innovations.
D. It is likely that to produce products, disruptive businesses engage more in using old technologies in new ways than using new technologies.
E. Companies typically pursuing sustaining innovations do not find disruptive products attractive since these products are typically not profitable.
A. A disruptive business is less likely to face competition in the market than a business pursuing sustaining innovations.
B. Companies following innovations that are improvements of existing products do not knowingly leave market space for disruptive businesses to emerge.
C. Most technological innovations can be considered disruptive innovations.
D. It is likely that to produce products, disruptive businesses engage more in using old technologies in new ways than using new technologies.
E. Companies typically pursuing sustaining innovations do not find disruptive products attractive since these products are typically not profitable.
2. The author’s primarily concerned with
A. differentiating between two kinds of innovations
B. explaining two kinds of innovations while focusing more on one
C. explaining how different kinds of innovations roll out different kinds of products in the market
D. describing how newer needs are created in the market even with the same old technology
E. Highlighting the difference in the profits that companies can gain from two different kinds of innovations
A. differentiating between two kinds of innovations
B. explaining two kinds of innovations while focusing more on one
C. explaining how different kinds of innovations roll out different kinds of products in the market
D. describing how newer needs are created in the market even with the same old technology
E. Highlighting the difference in the profits that companies can gain from two different kinds of innovations
3. The passage supports which of the following statements about disruptive innovations?
A. They are not expensive to produce.
B. They do not add as much research value as sustaining innovations do.
C. Because they are targeted at smaller market, they never become mass scale products.
D. They make a service easier to consume for consumers who possess limited specialized knowledge in the field the innovations are made in.
E. The products under them gradually move to sustaining innovations.
A. They are not expensive to produce.
B. They do not add as much research value as sustaining innovations do.
C. Because they are targeted at smaller market, they never become mass scale products.
D. They make a service easier to consume for consumers who possess limited specialized knowledge in the field the innovations are made in.
E. The products under them gradually move to sustaining innovations.
+1 kudos to the posts containing answer explanations of all questions
I will provide OE after a few responses.
1. Which of the following statements is supported by the information given in the passage?
A. A disruptive business is less likely to face competition in the market than a business pursuing sustaining innovations.
Incorrect: Out of Scope
There is no information given in the passage to support any comparative analysis regarding the level of competition faced by companies pursing sustaining innovations and those pursuing disruptive ones.
B. Companies following innovations that are improvements of existing products do not knowingly leave market space for disruptive businesses to emerge.
Correct
This choice can be inferred from the following statement made in the passage:
However, by doing so, companies unwittingly open the door to “disruptive innovations” at the bottom of the market
C. Most technological innovations can be considered disruptive innovations.
Incorrect: Out of Scope
Although the author does cite the example of personal computers to explain the concept of disruptive innovations, it does not provide any basis to conclude that majority of such innovations deal with technology.
D. It is likely that to produce products, disruptive businesses engage more in using old technologies in new ways than using new technologies.
Incorrect: Inconsistent
All that the author states is that such businesses make use of both new technologies and old technologies in new ways. There is no information given to support which of the two is used more.
E. Companies typically pursuing sustaining innovations do not find disruptive products attractive since these products are typically not profitable.
Incorrect: Inconsistent
We are told that such companies do not find disruptive innovations attractive because these innovations offer “lower” gross margins and not that they are not profitable at all.
2. The author’s primarily concerned with
A. differentiating between two kinds of innovations
Incorrect: Partial Scope
The author does briefly touch on a difference between SI and DI, but the whole passage is not written from the point of view of highlighting their difference. The focus is on explaining the two kinds of innovations, particularly disruptive innovations.
B. explaining two kinds of innovations while focusing more on one
Correct
C. explaining how different kinds of innovations roll out different kinds of products in the market
Incorrect: Out of Context
Yes, the author does mention the kind of products sustaining and disruptive innovations generate, but the purpose of the passage is not to explain this point. This information is given for achieving the broader purpose of explaining the concept of disruptive innovations.
D. describing how newer needs are created in the market even with the same old technology
Incorrect: Out of Context
The author briefly touches on how disruptive innovations grant access of historically extremely expensive or overly sophisticated (skill-wise) products and services to a wide number of bottom tier customers. The author also says that such innovations also use old technologies in new ways. However, all this discussion does not form part of a broader discussion on need-creation in the market.
E. Highlighting the difference in the profits that companies can gain from two different kinds of innovations
Incorrect: Partial Scope
The mention of differences in profitability is not the highlight of the passage. Yes, the author does mention it, but it is to explain the conditions conducive to the emergence of disruptive businesses.
3. The passage supports which of the following statements about disruptive innovations?
A. They are not expensive to produce.
Incorrect: Out of Scope
There is no mention of any kind of production cost in the passage.
B. They do not add as much research value as sustaining innovations do.
Incorrect: Out of Scope
There is no mention of any kind of research value added by either of the kinds of innovations.
C. Because they are targeted at smaller market, they never become mass scale products.
Incorrect: Inconsistent
The author does state that at least initially they are targeted at smaller markets, but there is no mention of this aspect affecting their eventual scalability.
D. They make a service easier to consume for consumers who possess limited specialized knowledge in the field the innovations are made in.
Correct
In the first sentence of the second paragraph, we are told that disruptive innovations provide access to those products and services for which one historically needed a lot of money or a lot of skill, characteristics compatible with sustaining innovations. Hence, we can infer statement given in this choice.
E. The products under them gradually move to sustaining innovations.
Incorrect: Opposite
The information given in the passage supports an inference opposite to this choice, as seen in the answer explanation for choice D.
General Discussion
14 Oct 2018, 20:58
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1. Which of the following statements is supported by the information given in the passage?
B. Companies following innovations that are improvements of existing products do not knowingly leave market space for disruptive businesses to emerge.
2. The author’s primarily concerned with
Para 1 deals with explaining 2 kinds of innovation(sustaining and disruptive).
Para 2 explains disruptive in detail.
Option B is a clear winner here.
B. explaining two kinds of innovations while focusing more on one
3. The passage supports which of the following statements about disruptive innovations?
From the bolded part in above, we can infer option D.
D. They make a service easier to consume for consumers who possess limited specialized knowledge in the field the innovations are made in.
Hope this helps!
Quote:
Above is an excerpt from para 1, based on this we can narrow it down to option B
B. Companies following innovations that are improvements of existing products do not knowingly leave market space for disruptive businesses to emerge.
2. The author’s primarily concerned with
Para 1 deals with explaining 2 kinds of innovation(sustaining and disruptive).
Para 2 explains disruptive in detail.
Option B is a clear winner here.
B. explaining two kinds of innovations while focusing more on one
3. The passage supports which of the following statements about disruptive innovations?
Quote:
From the bolded part in above, we can infer option D.
D. They make a service easier to consume for consumers who possess limited specialized knowledge in the field the innovations are made in.
Hope this helps!
