BASE Quiz 1
Key Stage-Gate Points
- Stage-Gate helps companies weed out the bad projects early on in the process before the level of investment is too great -learn early and learn cheap -involve the consumer throughout the process
What are the drawbacks to stage gate?
- added time, complexity and cost to manage the process; difficult for smaller organizations -process can be too "rigid"; difficult for companies to "pivot"/ be nimble -can lead to risk-adverse culture
What are the benefits of Stage gate?
- reduced risk of failure -greater cross-functional involvement -ensure all steps are completed at a high quality -increased quality of outcomes -organizational alignment on key metrics -"kill" projects early in process (before large investments are made) -While it may cost more up front, it is worthwhile if it averts failure and enhances success
Stage-Gate : Develop
-develop mfg process -develop distribution channels -develop supply chain
Stage-Gate : Design
-more rigorous analysis (financial, technical feasibility, consumer research-quantitative surveys) -develop sketches and prototypes
Stage-Gate : Scope
-narrow ideas -look at market viability (size, competition, growth) -show ideas to consumers (qualitative)
Stage-Gate : Launch
-test launch elements with consumers (advertising, promotions) -stock channels -implement launch
Stage-Gate : Scale Up
-test mfg process -validate product quality -test final product with consumers
5 CATME dimensions
1) contributing to the team's work or team meetings 2) interacting with teammates 3) keeping them on track or individual contributions 4) expecting quality 5) having relevant KSA's
In general, would you accept a longer payback period if it substantially increases your NPV? A.Yes B.No
A
In which Stage Gate phase am I most likely to calculate IRR and NPV? a.Design b.Develop c.Scope d.Scale Up Launch
A
Relative to the BCG matrix, a product with a low market share in a low growth category would be considered which of the following: A.Dog B.Cash cow C.Star D.Question mark
A
Which phase of Stage Gate involves more rigorous analysis of an opportunity? A.Design B.Scope C.Discover
A
Your company sells mountain bikes. You are considering two different designs for a new offering. Design A could command a selling price of $300. It would have a production cost of $100. Design B could command a selling price of $400. It would have a production cost of $225. Which of the following determinations could you make about the financial performance of these two options? A. Design A will have a higher gross margin percentage. B. Design B will have a higher NPV. C. Design B will have a lower NPV. D. Design B will have a higher gross margin percentage. E. None of the above.
A
If someone were to give you $1,000 two years from today, and if the discount rate was 10%, what would you estimate the NPV to be? A.$200-300 B.$750-850 C.$1,100-1,200 D.$2,000-2,500
B
Which of the following is a true statement about the Stage Gate process? A.The up front phases (Discover, Scope, Design) represent more development costs than the later phases (Develop, Scale Up, Launch). B.A company should have tested their new product ideas with consumers prior to moving into Develop. C.Every company in the US uses some form of the Stage Gate process.
B
Which of the following is a true statement? a.Cumulative net cash flows will always be greater than my initial capital investment. b.It is possible to have positive cumulative net cash flows but still have a year where I operate at a loss.
B
Your company is assessing two projects. Project A has an NPV of $3M and a payback period of 2 years. Project B has an NPV of $8M and a payback period of 4 years. Which of these projects is the better opportunity? a. Project A b. Project B.
B
Relative to the BCG matrix, a product with a high market share in a low growth category would be considered which of the following? A. Dog B. Cash Cow C. Star D. Question Mark
B. Cash Cow
Which scenario would you prefer? A. WACC> IRR B. IRR>WACC
B. IRR > WACC Because WACC is cost, IRR is the rate of return
What is the primary goal of implementing a NPD (new product development) process? A. Reduce failure rates for new products to 0% B. Reduce risk C. Reduce time to market D. Save fixed costs E. All of the above
B. Reduce Risk
Relative to the BCG matrix, what would be the most probable investment strategies for a product with a low market share in a high growth category? A.Divest or harvest B.Build or maintain C.Maintain or divest
B?
In which phase of Stage Gate would you most likely go interview users in search of unmet needs with a goal of finding new business opportunities? A.Design B.Develop C.Discover D.Scope E. Scale Up
C
It took the Acme Company three years to recover their initial investment. The term for this occurrence is which of the following? a.The Investment Recovery Window b.Net Present Value c.Payback Period d.Cumulative Investment Recovery
C
Relative to the BCG matrix, a product with a high market share in a high growth category would be considered which of the following: A.Dog B.Cash cow C.Star D.Question mark
C
Relative to the BCG matrix, if I had a product with a low market share in a high growth category, how would I decide between a build or a maintain investment strategy? A.If I thought that I had a reasonable chance to increase my share in the category, I would invest aggressively (i.e., build). B.If I felt that it would be difficult to grow my share due to competitive intensity, I would probably invest just enough to maintain my position. C.Both A and B
C
Which of the following is a true statement about the Stage Gate process? A.Companies should always employ the full Stage Gate process regardless of the complexity of their innovation efforts. B.Companies should forego the Stage Gate process for simple innovation efforts. C.Companies should seriously consider using elements of the Stage Gate process depending upon the potential risk of their innovation efforts.
C
Relative to the BCG matrix, where do products typically enter ? A.Dog B.Cash cow C.Question mark D.Star
C?
Burton designed a new snowboard jacket. The internal Burton team was stoked about the new concepts. When Burton presented sketches to large numbers of consumers in online surveys, however, the majority of respondents indicated the designs were unattractive and they had little interest in them. Where would this product idea most likely be "killed" in the Stage Gate process? A.Gate 4, after the Develop Stage. B.Gate 5, after the Scale Up Stage. C.Gate 1, after the Discover Stage. D.Gate 3, after the Design Stage.
D
If our weighted average cost of capital goes down, which of the following is likely to happen? A.IRR will go down B.NPV will be unchanged C.Profit margins will improve D.IRR will go up E.Both A and C
D
If the technical feasibility of a new product is high, what benefit/benefits will be realized? A.Lower development costs B.Faster time to market C.Higher consumer demand D.Both a. and b.
D
Relative to the BCG matrix, a product with a low market share in a high growth category would be considered which of the following: A.Dog B.Cash cow C.Star D.Question mark
D
What's a good success rate for a company's innovation efforts if they are using Stage Gate? a.1 out of 3 ideas becomes a market success b.1 out of 6 ideas becomes a market success c.1 out of 20 ideas becomes a market success d.1 out of 100 ideas becomes a market success
D
Which of the following is true about "ideas" in the Stage Gate process? a.It is normal for 50-75% of the ideas to make it all the way through the process and to be launched into the market. b.Companies often do extensive brainstorming during "gate reviews" to generate additional ideas. c.Ideas are typically generated before exploring the market for unmet needs. d.More ideas are killed than actually survive in the Stage Gate process. e.Because of the rigor of the Stage Gate process, over 80% of all new products developed through Stage Gate will be a success in the market place.
D
Which of the following is true of payback period? A.Payback period is generally considered a more valuable financial metric than NPV. B.The payback period considers the time value of money. C.The payback period has to be a whole number (i.e., 3 years, 4 years, etc.). D.The payback period estimates when the cumulative cash flows repay the original investment. E.Both a. and b.
D?
1.Which of the following is (are) benefits of the StageGate system for new product development? A.StageGate ensures a customer-driven focus in new product development activities B.StageGate provides clear go/kill decision points and criteria C.StageGate promotes cross-functional teams with members from various business disciplines (i.e. finance and marketing) D.StageGate places emphasis on important, but often-overlooked up-front activities in the new product development process E.All of the above
E
Kelvin has a great eye and does all the graphic design work as the intern for his company. Because of his knowledge and skill in visual design, he helps his team with all of its PowerPoint presentations. In this example, which of the CATME dimensions is best represented here by Kelvin? A.Contributing to the team's work B.Interacting with teammates C.Keeping the team on track D.Expecting quality E.Having related KSAs
E
True/False : If you've put the bottom line on top (BLOT), you've nailed the introduction
False : A solid introduction includes other elements besides BLOT (namely, a hook, an introduction of the speakers, and an overview of the presentation)
Stage-Gate : Discover
Pre-step -finds unmet needs -consumer research -ID opportunities - generate ideas
What is wrong with having no question marks on the BCG matrix?
We want question marks so that we have growth opportunities
Can a project have a negative NPV? a. Yes b. No
Yes, you can but you do not want to have a negative NPV because you will be losing $
Stage Gate Process
a disciplined approach that defines specific criteria for each project stage that must be completed before proceeding to the next stage
BLOT
bottom line on top
What does KSA stand for?
knowledge, skills, aptitude