Question

According to Porter, to achieve a cost advantage by following the functional strategy of technological followership, a business unit should

A) pioneer the lowest-cost product design.
B) innovate in other activities to increase buyer value.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) be the first firm down the learning curve.

Answer 1

To achieve a cost advantage with technological followership, a business should imitate industry pioneers to save on R&D costs, while optimizing production by substituting cost-effective inputs where feasible.

Step-by-step explanation:

According to Porter, to achieve a cost advantage, businesses following the functional strategy of technological followership should avoid R&D costs through imitation, which is often cheaper than innovation. This method involves replicating the technology and processes developed by pioneers in the industry, allowing the followers to save on the research and development expenses associated with creating those technologies, while still being able to produce goods at competitive prices and quality levels. Firms can often gain competitiveness by adopting and refining the existing technologies and may even further reduce costs by finding more efficient ways to produce similar goods.

Market competition encourages technological advancement as it allows a business to optimize production costs. As companies evolve, they can substitute more cost-effective inputs for pricier ones to attain the lowest long-run average cost. Thus, technological followership does not necessarily discourage innovation; instead, it reduces initial R&D costs while still enabling a firm to benefit from technology-driven efficiencies.