Configuration and Call Center Activity
Dealer Inventories When a Product Is Reconfigured
Early Minor Reconfiguration and Patent Royalties
Inventory Consequences of Reconfigurations
Multiple Patent Violations
Multiple Reconfiguration Requests
Multiple Identical Reconfiguration Requests
Old Patent Zones After Reconfiguration
Patent Royalty Payments: One-Time or Continuing?
Patents and Reconfigurations
Production Order Limits When Reconfiguring
Raw Materials, Set-Top Box Configurations, and Product Quality
Retail Channel Inventory Status With a Reconfiguration
Why Reconfigure More Than Once?
“If we reconfigure one of our set-top box products, what happens to the dealers' inventory? And, are we responsible for covering dealers' costs associated with the old product configuration?”
When retailers purchase set-top box manufacturers, they assume ownership of the inventory. Retailers don't dispose of their inventory when a reconfiguration occurs; they sell it, perhaps with some special retailer point-of-purchase merchandising efforts and incentives. All sales are final in the set-top box industry. Dealers are responsible for their own inventories, once purchased. Set-top box manufacturers do not have to pay dealers anything for their old inventories of just-reconfigured products.
All sales are final in the set-top box industry. Dealers are responsible for their own inventories, once purchased. Set-top box manufacturers do not have to pay dealers anything for their old inventories of just-reconfigured products.
“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.
“Are there first-mover advantages in LINKS?”
Many people talk about first-mover advantages as if they are the answer to everything in life. Being first certainly has some advantages if you're better than what's out there already (i.e., if your have differential advantage over existing offerings on the market) and if you continue to innovate. If there's any customer loyalty in LINKS, then early entrants continue to benefit from their earlier customer acceptance. Followers must "buy their way" into markets, to overcome the market presence and the customer acceptance of early entrants. But, first-mover advantages can be overcome with meaningful innovation that's valued by customers. Being first is good, but being better is best.
“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.
“What happens to our existing finished goods inventory when a product is reconfigured?”
When you reconfigure a set-top box product, all of its finished goods inventory is immediately liquidated at a 20% disposal cost (based on the current inventory value of the product). Raw materials and sub-assembly components inventory are not affected by reconfigurations.
When you request a reconfiguration in the LINKS Simulation Database, the beginning inventory of that product is reset to zero units within the LINKS Simulation Database, so that you won't make a mistake about available inventory during a reconfiguration. The actual finished goods inventory is not disposed until the next game run. So, if you change your mind and reset the product configuration to its previous value (so that no reconfiguration is requested), the beginning inventory displayed in the LINKS Simulation Database will revert to its current status as reported on your current financial reports.
When you request a reconfiguration in the LINKS Simulation Database, the beginning inventory of that product is reset to zero units within the LINKS Simulation Database, so that you won't make a mistake about available inventory during a reconfiguration.
The actual finished goods inventory is not disposed until the next game run. So, if you change your mind and reset the product configuration to its previous value (so that no reconfiguration is requested), the beginning inventory displayed in the LINKS Simulation Database will revert to its current status as reported on your current financial reports.
“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.
“We requested two reconfigurations in the last simulation round but only one of the reconfigurations was successful. Why weren't we successful with both of our reconfiguration requests?”
Each firm is limited to a maximum of one reconfiguration per simulation round. With multiple reconfiguration requests by a firm, only the first one will be successful.
“What happens if two (or more) products simultaneously attempt to reconfigure to the same configuration?”
Nothing special happens with multiple identical reconguration requests. The multiple identical reconfigurations will be processed by the LINKS software during the game run. No patent royalties will be exchanged among these reconfigured products. However, patent royalties may still be payable to other products who aren't reconfiguring, if patent zone violations occur.
“What happens to our old patent zone after a reconfiguration? Does our firm continue to own that old patent zone?”
Patent zones are based on current configurations of your products. After a product is reconfigured, its old patent zone no longer exists for your firm.
“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.
“Does a reconfiguration request automatically generate a patent for the reconfiguration? Or, do we have to apply for a patent separately?”
When you reconfigure, a patent is created. There’s no separate patent application step.
“When do reconfigurations occur?”
Reconfiguration requests are processed at the beginning of a simulation round, so reconfigurations occur "immediately" (i.e., before the beginning of the next simulation round).
“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.
“What happens to retailers’ inventory (in channel 1) when a manufacturer reconfigures a set-top box product?”
Retailers purchase set-top box products from manufacturers to sell to their final end-user customers. Ownership of the set-top box products transfers to the retailers with the purchase transaction. Since retailers own the set-top box products that they purchase from manufacturers, retailers are fully responsible for selling the set-top box products to final end-user customers. When a manufacturer reconfigures a product, retailers dispose of the “old”/”dated” (now reconfigured) product by whatever means they wish (e.g., by drastically reducing prices or by dumping the residual inventory into discount or gray-market channels).
“Why would we ever want to reconfigure more than once? After all, once we've locked into an 'optimal' configuration, wouldn't we want to keep it forever?”
Don't assume that everything stays the same forever. Customer preferences may change through time. In addition, cost-structure changes that occur from time to time might require adjustments in lots of decisions, including configurations. And, what about competitors' actions? Could/would competitors' reconfigurations influence your interest is reconfiguring something that had previously been reconfigured.