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In the business world, many tend to consider technological innovation

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In the business world, many tend to consider technological innovation  [#permalink]

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New post 30 Nov 2019, 02:43
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In the business world, many tend to consider technological innovation the main method by which a company comes to dominate a given market. Though this may seem intuitive, and though many examples can be unearthed in support of this maxim, it is not entirely true. In fact, it has often been the case that a company that has come to dominate a given market has reached that position by improving upon and rendering obsolete some existing technology. To the extent that patent law allows, a company can build upon the inventions of others—a practice resulting in a dramatic reduction of that company's development costs. In this same vein, a company can make improvements to a product that are sufficiently significant to shift the market decisively in that company's own favor.

The Alphamax video cassette recorder, a device developed by Company X in the mid 1970s, is a classic example of this phenomenon. At the time of its inception, the new recorder could boast a VHS format that was considered a revolutionary improvement over the previously ubiquitous 8mm recording devices that had been used for home movies and other amateur recordings. This new recorder enjoyed only two short years of widespread use, however, before Company Y introduced the VBD recorder—a recorder which quickly proved more profitable. Company Y's desire to introduce a product that was extremely similar to Company X's new recorder—but different enough to avoid violating any patent laws—induced Company Y to create a recorder that offered longer playback and more convenient recording than the one put forth by Company X. Company Y's recorder featured tapes with large capacities that, given the advent of full-length rental films, no longer seemed superfluous. Because Company Y was able to create a product that was both similar to and that improved upon Company X's existing product, Company X's existing product soon
became nearly obsolete.

It can be inferred from the passage that consumers came to prefer VBD tapes for which of the following reasons?

(A) They were sufficiently different from Alphamax tapes to be offered to consumers without any possible risk of patent law violation.
(B) They were introduced at a time when consumers were very fickle and eager to consume new products.
(C) More movies were available for rent in VBD format than in the Alphamax format.
(D) VBD tapes utilized a video home-recording and playback technology that offered distinct advantages when compared with Alphamax.
(E) Companies with experience in the field of video recording began to move from the Alphamax market to VBD, bringing with them technological and marketing expertise.



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Re: In the business world, many tend to consider technological innovation  [#permalink]

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New post 08 Dec 2019, 10:57
The evidence that VHS overtook the market previously dominated by Alphamax, combined with the statement that VHS offered longer playback and more convenient recording, is sufficient to allow us to infer that consumers preferred VBD technology because it was a new product that was both similar to one they had already embraced and distinct enough to offer new advantages. Note that although choice A is true according to the passage, it does not explain why consumers preferred VBD tapes to VHS (it is likely that consumers are not terribly concerned about patent law violations). Hence, D is correct.
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Re: In the business world, many tend to consider technological innovation   [#permalink] 08 Dec 2019, 10:57
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