Calculator Allowed: Yes



Transcription of this question: 3.Davenport Electronics (DE)Davenport Electronics (DE) is a small company that manufactures remote control electronicdevices that open garage doors. The devices are kept in owners’ cars. For years, DE devicesoperated in a fashion similar to those of its three competitors. When an owner activated theremote control, a unique passw’ord was transmitted and the garage door opened.Unit sales and revenue had not grown for several years until, four years ago, some computerhackers discovered how to steal passwords when remote controls are activated. With thepasswords, hackers could later open garage doors and steal their contents. For DE and itscompetitors (whose products operated in a similar manner), sales began to decline.DE responded by developing a way to change the unique password every time a remote controlis activated. Thus, by the time a hacker successfully steals a password, the password no longerworks. DES innovation significantly enhanced the security of a DE remote control.The three competitors are all larger than DE.Company ACompany BCompany CDEPrice of remotecontrolHighMediumLowMediumQualityperceptionMediumMediumMediumHighAs a result of this innovation, DES market share and scale of operation have increased. However,DE is now experiencing diseconomies of scale. Some managers also worry that, with the pressureto meet increased orders, the company will lose its focus on quality. Other managers believe thatfuture success in the industry will depend on frequent innovation.(a)(b)(c)(d)Define the term diseconomy of scale.Using the table, construct a product position map/perception map for allfour companies.(i) Draw and label a product life cycle curve.(ii) Explain how DES innovation is an extension strategy.With reference to DE, discuss the merits of small organizations compared to largeorganizations.[2][2][2][10]

Leave a Reply