ACCA Applied Knowledge · Business and Technology · Technological factors
A firm finds that a competitor's new technology could make its main product obsolete. Which strategic response best reflects proactive adaptation to technological change?
The best proactive response is investing in research and development or acquiring the new capability so the firm can compete as technology changes. Ignoring the threat, cutting innovation spending or simply raising prices on an obsolescent product leaves the firm exposed to losing its market.
- AIgnoring the technology until sales fall
- BInvesting in research and development or acquiring the new capabilityCorrect
- CCutting all spending on innovation to save cost
- DRaising prices on the existing product only
Explanation
Proactive adaptation means developing or acquiring the technology, for example via research or acquisition. The other options either delay action or reduce the firm's ability to compete.
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