Strategic Management: Chapter 13

A large, but declining, city in the Midwest is trying to lure businesses to relocate there and to encourage local entrepreneurs to start new businesses. In order to do this, the city has changed its tax laws and regulations concerning business creation and operations. This is an example of a. institutional entrepreneurship. b. autonomous strategic behavior. c. induced strategic behavior. d. corporate entrepreneurship.

A

Blixin Concrete Products, an established firm, is seeking a technologically-advanced partner for a strategic alliance. If the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably a. investment capital. b. management expertise. c. research and development competencies. d. social networks.

A

Value creation through internal innovation originates with a. an entrepreneurial mind-set. b. cross-product development teams. c. shared values and entrepreneurial leadership. d. innovation.

A

____ is(are) critical in order for a firm to gain access to complementary resources from partners in a cooperative alliance. a. Social capital b. Shared values c. An entrepreneurial mind-set d. Compatible organizational cultures

A

The fastest growing group of entrepreneurs in the U.S. are a. Baby Boomers leaving corporate jobs. b. women. c. recent immigrants. d. ethnic minorities.

B

Why have large pharmaceutical companies been forming alliances with biotechnology companies? a. to evade legislative restrictions on drug research in the U.S. b. to develop new products and bring them to market c. because both firms had declining profitability and needed cash infusions from other firms d. in order to gain absorptive capacity

B

PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees. PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with personnel problems. This history of partnering has developed ____ capital for PracticalSolutions. a. intellectual b. institutional c. social d. technological

C

The competition for resources among those representing different organizational functions within a firm often leads to a. erosion of social capital. b. heightened communication. c. organizational politics. d. empowerment of organizational members.

C

The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation. a. time b. customer c. technological d. interpersonal

C

The firm's culture promotes unity of purpose for cross-functional work teams through a. a collectivist structure. b. an entrepreneurial mind-set. c. shared values. d. resource allocation.

C

The level of entrepreneurial activity in a nation is ____ the nation's level of economic development. a. negatively related to b. independent of c. positively related to d. weakly related to

C

The main risk in a strategic alliance is that a. the alliance will not result in a successful innovation. b. critical employees will be hired away by the strategic partner. c. one partner will use the other partner's knowledge and use it to enhance its own competitive abilities. d. the partners will lose control over their internal processes.

C

The three types of innovative activity include all of the following EXCEPT a. invention. b. imitation. c. implementation. d. innovation.

C

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in a. entrepreneurial incubation. b. creative destruction. c. internal corporate venturing. d. cooperative innovation strategies.

C

____ are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it. a. Leaders b. Innovators c. Entrepreneurs d. Transformative leaders

C

____ exist(s) when there is a need in the market that can be satisfied by new goods or services. a. Potentiality b. Market readiness c. Entrepreneurial opportunities d. Critical core competencies

C

____ is one of the reasons for the differences in rates of entrepreneurship among different countries. a. Climate b. Competitiveness c. Culture d. Constitution

C

A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of the members. Many of the strongest complaints are from the representatives of management who complain that the research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be centered around differences in a. interpersonal orientation. b. time orientation. c. goal orientation. d. formality of structure.

D

Independent frames of reference and organizational politics are the two primary barriers to cross-functional team integration. Two methods to facilitate cross-functional integration are _________ and ___________. a. autonomous strategic behavior; induced strategic behavior b. incremental innovations; radical innovations c. bottom-up integration; top-down integration d. shared values; effective leadership

D

New entrepreneurial firms are better than larger established firms at a. implementing innovations. b. gaining competitive advantage. c. making alliances. d. identification of entrepreneurial opportunities.

D

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek ____ while more established companies may need ____. a. distribution channels, tacit knowledge b. deep technological expertise, distribution channels c. social capital, technical capital d. investment capital, new technological knowledge

D

A company with a need for immediate, large returns should invest in research and development.

F

Innovations can only be produced by actions and activities within the firm.

F

Charles is a customer service representative for a home improvement store. He has creative ideas about how to increase customer satisfaction. Charles's talents will be most likely to be used in a firm that a. uses the induced strategic behavior form of internal corporate venturing. b. uses the autonomous strategic behavior form of internal corporate venturing. c. makes significant investment in research and development. d. focuses on an acquisition strategy for gaining innovative ideas.

B

GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that a. this innovation will resist competitors' attempts to imitate it. b. its investors will react positively to the introduction of the new product because of the potential for higher returns. c. its investors will react negatively because of the risk and cost entailed in introducing a new product. d. this will be recognized in the industry as a radical innovation.

B

In the implementation of internal innovations, formal and informal processes are best supported through ____ organizational structures. a. vertical b. horizontal c. functionally-oriented d. multidivisional

B

Induced strategic behavior as a form of internal innovation is a(an) ____ process. a. bottom-up b. top-down c. free-flowing d. external

B

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect a. immediate wealth creation. b. a long wait for an uncertain payoff. c. a long wait for a high probability payoff. d. a large payoff in the short-term with rapidly decreasing wealth generation in the longer run.

B

Research shows that internationally diversified firms tend to be ____ than domestic-only firms. a. less profitable b. more innovative c. less technologically advanced d. more likely to have an individualistic culture

B

Research suggests that _________ is needed to encourage entrepreneurial behavior. a. individualism rather than collectivism b. a balance between individualism and cooperative behavior c. collectivism rather than individualism d. limited autonomy and incentives

B

Since it replaces existing products and methods of production, entrepreneurship is a process of a. harnessing the human potential. b. creative destruction. c. creation of opportunity. d. exploitation of innovation.

B

Successfully creating innovations through internal means requires a. a highly individualistic culture. b. significant spending on R&D. c. acquisitions of innovative firms. d. venture capital.

B

The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation. a. incremental; radical b. radical; incremental c. concentric; radical d. radical; concentric

B

Through the work of cross-functional teams, product development stages are grouped into ____ processes. a. short-term and long-term b. parallel or overlapping c. serially ordered d. complementary

B

A major barrier to the use of cross-functional teams is a. excessive individualism of creative people. b. lack of communication skills of technical people. c. independent frames of reference of team members. d. lack of social capital by team members.

C

According to Peter Drucker, the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies.

C

Commercialization of ideas is more difficult than idea creation as suggested by the fact that ____ percent of R&D occurs in large firms, yet the same firms produce fewer than ____ percent of patents. a. 50; 50 b. 50; 80 c. 80; 50 d. 80; 80

C

Entrepreneurs tend to have all the following characteristics EXCEPT a. willing to take responsibility for projects. b. passionate. c. prefer certainly about projects. d. optimistic.

C

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital. b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack.

C

Induced strategic behavior is a process that fosters product innovations that a. are likely to change a firm's strategic intent and mission. b. will lead to greater financial returns. c. are aligned closely with current strategy and structure. d. will come to market in a short period of time.

C

Innovation creates a(an) a. opportunity for a new product or process. b. new product or process. c. commercial product. d. idea for potential exploitation.

C

Innovations that involve significant technological breakthroughs and create new knowledge a. build incrementally on the firm's existing technologies and knowledge. b. are the most common type of innovation. c. involve substantial uncertainty and risk. d. typically have clear market opportunities.

C

Internal corporate venturing does NOT involve a. autonomous strategic behavior. b. induced strategic behavior. c. strategic alliances. d. product champions.

C

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore a. increasing its costs and reducing its potential to succeed. b. engaged in internal corporate venturing. c. pursuing innovation through both internal and cooperative strategies. d. not an innovative company.

C

Products developed through ____ are often offered at lower prices without as many features than products developed through ____. a. innovation, imitation b. imitation, invention c. imitation, innovation d. innovation, invention

C

Which of the following is true? For firms to be entrepreneurial, they require a culture with a. an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b. an exceptionally high level of collectivism. c. a balance of individualism and collectivism. d. an exceptionally high level of individualism.

C

A cross-functional product development team has been examining a proposed new product intensively for six months. The team has decided that although the product is unique and technologically-advanced, the cost of production will exceed the price that the consumer would be willing to pay. At this point, the product development team should a. engage in creative destruction. b. recommend that the product be sold at a loss in order to create a new market. c. turn over the product evaluation to a new product-development team which may have more passion for the product. d. recommend that the project be set aside.

D

Autonomous strategic behavior is a(an) ____ process in which product champions pursue new ideas. a. top-down b. horizontal c. integrated d. bottom-up

D

Entrepreneurial opportunities a. present the potential for a firm to leverage existing products or services into new markets. b. present risk to the firm and should be avoided. c. are conditions contrary to a firm's established strategy and segments served. d. are conditions in which new goods or services can satisfy a need in the market.

D

Firms develop innovations in all the following ways EXCEPT a. Through autonomous or induced strategic behavior. b. By acquiring other companies. c. Through cooperative strategies. d. Via divestiture of low-performing units.

D

Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After six months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is a. the ability to identify opportunities. b. a corporate sponsor. c. financial slack. d. passion for his invention.

D

The number of patents held by an organization is a rough guide to the a. effective use of organizational politics. b. future success of an initial public offering. c. amount of venture capital a firm will be able to attract. d. level of innovation in a firm.

D

The risks of international entrepreneurship include all the following EXCEPT a. unstable foreign currencies. b. problems with market efficiencies. c. limitations on market size. d. strong "buy-domestic" programs.

D

The use or application of entrepreneurship within an established firm is called a. corporate emergence. b. transformational leadership. c. exceptional R&D. d. corporate entrepreneurship.

D

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? a. dissension within the top management team b. informal organizational processes within the firm c. the firm's strategic orientation d. organizational politics

D

A firm that innovates through imitation can expect to produce a product for a niche market, since the general market for the standardized product will be dominated by early adopters.

F

A product champion should come from outside the organization in order to ensure that the entrepreneurial vision has the objective support it needs.

F

Acquisitions are a low risk approach to producing and managing innovation.

F

Autonomous strategic behavior results in internal innovations that are highly consistent with the firm's current strategy.

F

Bill Kroganski is the owner of a moderately successful industrial services firm. His reaction to the introduction of a new process technology that could be a direct competitor to the process his firm utilizes is fear. He spends his time considering ways to isolate his firm from this new technology. Bill has characteristics consistent with the entrepreneurial mind-set.

F

Corporate entrepreneurship describes the opportunity seeking and exploitation of innovations in new start-up enterprises.

F

Cross-functional work teams are best supported by vertical organizational structures.

F

Evidence demonstrates that large firms with well-funded R&D operations are more effective at innovation than are smaller firms.

F

Firms that continually change their strategic context and strategies because of the continuous changes in the current competitive landscape are in danger of losing sight of their main competitive strengths.

F

For firms to be entrepreneurial, they must stress individualism in their employees above all other characteristics.

F

Given the rapid rate of technological change, patents are not a useful gauge of a firm's entrepreneurial prowess.

F

In order to be successful, a new entrepreneurial enterprise should be sheltered from the global environment until it is firmly established in domestic markets.

F

Induced strategic behavior does not result in true innovation because it is a top-down process rather than a bottom-up process.

F

Invention is defined as the adoption of a similar innovation by different firms.

F

Larger and well-established firms often have more resources and capabilities to produce more radical innovations than do smaller entrepreneurial firms.

F

Most large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal activities.

F

The entrepreneurial mind-set is found primarily among managerial and scientific employees.

F

The essence of entrepreneurship is to capture most of the existing markets from less aggressive and innovative competitors.

F

While both incremental and radical innovations can create value, incremental innovations have the potential to contribute more significantly to a firm's efforts to earn above-average returns.

F

While smaller firms must use cooperative strategies as a means of producing innovations, larger firms with large R&D units such as P&G and 3M can produce most if not all innovations internally.

F

3M's new abrasive, Cubitron II, was created through a process of induced strategic behavior involving cooperation among 3M business units.

T

A innovation developed through autonomous strategic behavior will probably take the firm into new markets not addressed by its current strategy.

T

A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce innovations internally.

T

A society's cultural characteristics influence a nation's rate of entrepreneurship and its related practices.

T

Acquisitions are a means of extending the company's product line and increasing revenues. The capital market values growth. Therefore, some firms make acquisitions to improve their standing in the capital markets.

T

An entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three ways that firms implement internal innovations.

T

An organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit through innovations.

T

As a process, entrepreneurship results in the "creative destruction" of existing products (goods or services) or methods of producing them and replaces them with new products and production methods.

T

Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market.

T

Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of production.

T

Entrepreneurial ventures often produce more radical innovations than do their larger, more established counterparts.

T

Entrepreneurship is the economic engine driving national economic growth in many nations.

T

If the company's workers have scant existing knowledge, their "absorptive capacity" to learn new knowledge will be limited.

T

Innovation is the means by which the entrepreneur creates wealth.

T

Joseph Schumpeter suggested that firms engage in three types of innovative activity when managing the innovation process: imitation, invention, and innovation.

T

Larger, established firms, mainly those competing globally, use their R&D labs to create competence-destroying new technologies and products.

T

Most innovations are incremental, not radical.

T

Political activity that is centered on the allocation of resources to the different functions may limit the effective use of cross-functional teams.

T

Research has shown that internationally diversified firms are generally more innovative.

T

Rosalie has become totally preoccupied by her idea for creating a business leasing horses to riders on the same principle as time-shares on condominiums. Rosalie is researching the legal, financial, and insurance aspects of her idea and is preparing a prospectus to take to banks to ask for a business loan. Rosalie's significant other is complaining that she "sleeps, eats, and drinks" this concept. Rosalie has the entrepreneurial characteristic of passion.

T

Some of the new products to be produced by the joint venture between Intel and Nokia integrating smartphones and computers would be considered radical innovations.

T

The fastest-growing group of entrepreneurs in the U.S. is women.

T

The iPod likely resulted from autonomous strategic behavior at Apple, though the iPhone was more the result of induced strategic behavior.

T

The network of strategic alliances built by an organization is a form of intellectual capital from which the organization can draw to develop innovations.

T

Toyota's Prius, the first mass-produced hybrid-electric car is an example of a radical innovation as changed the industry by providing new functionalities for users.

T

A successful ____ innovation will be less risky but less profitable than a successful ____ innovation. a. incremental, radical b. radical, incremental c. alliance-generated, acquisition-generated d. acquisition-generated, alliance-generated

A

Cross-functional teams are useful in developing and commercializing new products because each team member brings his or her special competencies to the project. Each team member brings his/her point of view from his/his experience and background. On the other hand, these ____ may cause barriers to effective communication among team members. a. independent frames of reference b. entrepreneurial mind-sets c. professional rivalries d. politicized points of view

A

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control. a. opportunities; resources b. opportunities; core competencies c. threats; resources d. threats; core competencies

A

Innovation by imitation usually leads to _________ and products based on imitation are usually offered at ________. a. product or process standardization; lower prices b. product or process dedifferentiation; higher prices c. product or process standardization; higher prices d. product or process dedifferentiation; lower prices

A

A negative effect of acquiring other firms for the purpose of innovation is a. innovations cannot be transferred between organizations. b. the effect it can have on the firm's own ability to produce innovations. c. innovations may not actually be present in the firm after the purchase is completed. d. the acquired firm's employees usually leave.

B

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next two years. To maximize the chances of success it is critical that the new executive a. be of Hispanic descent. b. have international experience. c. possess an advanced degree in animal science. d. have a background in managing agribusiness firms.

B

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees. a. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship. b. This example shows the dysfunctional aspects of unrestricted entrepreneurialism. c. This is an example of the lack of human capital hampering internal innovation. d. Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.

A

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that a. the receiving party have adequate absorptive capacity to learn. b. the communication process be highly intensive. c. the knowledge be broken into the smallest comprehensible units. d. training consultants be involved in every step of transference.

A

One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process a. is encouraged through a bottom-up or top-down process. b. is encouraged by a product champion or an entrepreneur external to the organization. c. relies on internal structure or existing strategy to encourage innovation. d. is in a large or small organization.

A

Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of a. incremental innovation. b. invention. c. imitation. d. the use of social capital.

A

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild to moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of a. taking advantage of a need in the marketplace. b. creative destruction of existing services for pet boarding. c. institutionalized entrepreneurship. d. internal corporate venturing.

A

The idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of a. product champions. b. joint ventures. c. strategic leadership. d. cross-functional teams.

A

To be successful, an autonomous process for developing new products relies on a. the diffusion of tacit knowledge. b. the acquisition of innovative firms. c. strategic alliances with other firms. d. internal corporate venturing.

A

When used effectively, cross-functional teams will often bring about a. faster product development processes. b. an increased need for additional information. c. conflicting information about the business environment. d. future cooperative alliances.

A

____ involves internally developed incremental and radical innovations that result from deliberate efforts. a. Internal corporate venturing b. Autonomous strategic behaviors c. Bottom-up strategic behaviors d. Product championing

A