Configuration and Call Center Activity
Early Minor Reconfiguration and Patent Royalties
Financial Implications of No Warranty
Multiple Patent Violations
Packaging and Failure Rates of Sub-Assembly Components
Patent Royalty Payments: One-Time or Continuing?
Product Quality Perception Variations Across Regions
Raw Materials, Set-Top Box Configurations, and Product Quality
Warranties and Sub-Assembly Component Failure Rates
“How should I think about bandwidth in my set-top box product configurations? What does 'terahertz' really mean?”
Bandwidth is a 'more-is-better' product attribute. Terahertz is just a industry-specific generally-accepted metric describing the bandwidth performance of a set-top box product. Customers will always prefer more bandwidth, but they might or might not prefer it enough to offset your additional costs of engineering in higher bandwidth levels to your products. You need to conduct appropriate research to assess customer preferences for higher bandwidth levels and then compare that preference to your input costs of providing higher bandwidth.
“If we reconfigure immediately by just one "unit" (e.g., change Bandwidth by 1), what are the patent royalty implications?”
Such a minor reconfiguration would violate all other firms' existing patents (in that category), since all firms' products are initially configured identically (in each category). Thus, there would be substantial patent royalties to pay with such a minor reconfiguration. Please refer to your LINKS participant's manual for specific details about patent royalty violation costs.
“What are the financial implications associated with not offering a warranty (i.e., of setting warranty equal to zero for a product)?”
There are no financial implications associated with not offering a warranty (i.e., of setting warranty equal to zero for a product). A warranty level of zero reduces upfront product costs and also reduces the downstream costs associated with replacement parts demand. Replacement parts demand doesn’t exist if warranty equals zero. Of course, end-users might view such a product configuration as less attractive than other competing products offering warranties.
“Can we focus a product reconfiguration on the customers in a particular channel and/or region?”
Yes, you can focus a reconfiguration on a particular set of customers. However, please remember that each of your products has a single configuration across all channels and regions. By focusing your product reconfiguration on some customers, you may be providing a less desirable product configuration to other customers in other channels or regions. Each product has one and only one configuration; products do NOT have separate configurations for different channels and regions at the same time.
“Is it wise to configure in the late stage of LINKS?”
Your perspective should be long-term, continuously trying to improve the overall state of your firm. If it’s appropriate to reconfigure for business/competitive reasons, do so regardless of how "late" it seems to be in LINKS. Manage your business for the long run. Besides, you probably will be making a final presentation at the end of LINKS, and it’s always appropriate to be able to discuss how you’ve continued to improve the competitive position of your firm even in later simulation rounds.
“What happens if a reconfiguration violates more than one pre-existing patent?”
Patent royalties are paid for all patent violations at the standard rates described in the LINKS participant's manual. They are not pro-rated or shared if multiple patent violations occur.
“Does a higher "grade" of packaging reduce the failure rates of sub-assembly components?”
“Do we have to pay patent royalties of any kind if we copy a competitor’s product when we reconfigure?”
Yes, patent royalties exist in LINKS. Please refer to the LINKS participant’s manual for details about patent royalties.
“Are patent royalties payable only once, at the time of reconfiguration, or are there continuing payments as long as a patent violation exists?”
Patent royalties are payable once only, at the time of reconfiguration. There are no continuing payments.
“Why do product quality perceptions vary across regions? After all, it's the same product everywhere (i.e., same configuration and same sub-assembly component failure rates).”
You are correct that a single set-top box product only has one configuration anywhere it is sold. Failure rates for a single product should be similar across regions, subject to typical random variations. However, customer preferences may vary across regions (and, potentially, across channels too). Thus, preference for particular configurations don't have to be identical from region to region. And, customers' dispreference for failure can also vary across regions, with some regions being characterized by customers who are more or less concerned with product failures.
“Is it possible to have a region-specific configuration?”
No, a configuration is the same in all regions. Each of your brands may have only one configuration at a time. With varying customer preferences across regions, the implication is that trade-offs may be required in meeting customers' heterogeneous preferences. It is, of course, possible to target a brand's configuration toward the preferences of particular customers. But, that might be to the detriment of other customers in other regions who prefer alternate configurations.
With varying customer preferences across regions, the implication is that trade-offs may be required in meeting customers' heterogeneous preferences. It is, of course, possible to target a brand's configuration toward the preferences of particular customers. But, that might be to the detriment of other customers in other regions who prefer alternate configurations.
“Does having a warranty (i.e., warranty>0) reduce the failure rates of the gamma, delta, and epsilon sub-assembly components?”
No. Warranties exist to reduce the risks that end-users face with products that fail shortly after purchase. Warranties don't reduce the failure rates of set-top box products or of any set-top box product’s sub-assembly components.