Bus Strategy: MGMT 498 CH 12 Quiz

On average, approximately what percentage of corporate ventures reaches profitability within six years? A. 80 percent B. 65 percent C. 50 percent D. 35 percent

C. 50 percent

______________ refers to efforts to create designs and applications of technology to develop new products, while ______________ refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations. A. Radical innovation; incremental innovation B. Breakthrough innovation; instrumental innovation C. Product innovation; process innovation D. Product innovation; service innovation

C. Product innovation; process innovation

Which of the following statements about skunkworks is false? A. They are independent work units. B. They are used to encourage creative thinking and brainstorming. C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas. D. They help managers set aside their usual routines and practices.

C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.

Real options analysis is most appropriate when _____________. A. the total investment required is small, but the environment is uncertain B. the investment required can be justified by Discounted Cash Flow (DCF) techniques C. a small investment up front can be followed by a series of subsequent investments D. there is no prospect of obtaining additional knowledge before making subsequent investments

C. a small investment up front can be followed by a series of subsequent investments

Incremental innovations _____________. A. are usually highly disruptive B. usually represent technological breakthroughs C. are usually small improvements in products and processes D. nearly always can be patented

C. are usually small improvements in products and processes

Two common forms of a focused approach to corporate entrepreneurship include ______________ and _____________. A. internal collaboration; internal venturing B. social capital; collaboration capital C. business incubators; new venture groups D. focus groups; business incubators

C. business incubators; new venture groups

According to the text, which of the following is not one of the methods companies can use to enhance their competitive position via innovativeness? A. fostering creativity and experimentation B. investing in new technology, R and D, and continuous improvement C. copying the business practices or techniques of successful competitors D. departing from existing technologies to develop products and practices that go beyond the current state of the art

C. copying the business practices or techniques of successful competitors

The benefits gained by firms that are the first to enter new markets, establish brand identity, and/or adopt new technologies are known as _____________. A. competitive aggressiveness B. technological capabilities C. first mover advantages D. breakthrough innovations

C. first mover advantages

Creative intelligence involves the ability to see patterns in data, integrating data, and making insights. Which of the following are the four patterns of action managers should take in order to develop more creative and higher potential innovations? A. observing, experimenting, cataloging, and networking B. questioning, observing, integrating, and networking C. questioning, observing, experimenting, and networking D. observing, experimenting, cataloging, and integrating

C. questioning, observing, experimenting, and networking

Product champions _____________. A. are typically senior executives B. are usually inventors of some sort C. scavenge for resources and encourage others to back promising new ideas D. are strong supporters of the status quo

C. scavenge for resources and encourage others to back promising new ideas

McGrath and Keil researched the types of human resource management practices that effective firms use to capture value from their innovation efforts. Which of the following is not one of their findings? A. Create innovation teams with experienced players. B. Require that employees serve in the new venture group as part of their career climb. C. Transfer people to mainstream management positions after they have experience in the new venture group. D. Integrate the performance of individuals with the performance of the innovation.

D. Integrate the performance of individuals with the performance of the innovation.

Which of the following is not part of a culture of entrepreneurship? A. The search for venture opportunities permeates every part of the organization. B. Every value chain activity is viewed as a source of entrepreneurial value creation. C. Employees at every level are attuned to opportunities to help create new businesses. D. Only those directly involved in the innovation effort are attuned to new opportunities to create business.

D. Only those directly involved in the innovation effort are attuned to new opportunities to create business.

____________ produce fundamental changes that can transform a company or even revolutionize an industry, while ______________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs. A. Technological breakthroughs; product-market breakthroughs B. New technologies; new paradigms C. Incremental innovations; radical innovations D. Radical innovations; incremental innovations

D. Radical innovations; incremental innovations

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved. This can give rise to _____________. A. managerial conceit B. the illusion of control C. escalation of commitment D. agency problems

D. agency problems

The innovation dilemma known as seeds versus weeds refers to _____________. A. choosing to pursue radical rather than incremental innovations B. choosing to pursue product rather than process innovations C. promoting organizational stars onto innovation teams rather than involving all employees in innovation efforts D. choosing to pursue investment in one innovative idea over another

D. choosing to pursue investment in one innovative idea over another

Which of the following is not an advantage of collaborating with strategic partners in order to innovate? A. obtaining skills and new knowledge from outside sources B. making firms identify their own strengths and weaknesses C. managers clarifying what an innovation project requires to be successful and who will accomplish it D. decreasing economies of scale

D. decreasing economies of scale

In a typical corporation, which of the following factors does not determine how entrepreneurial projects will be pursued? A. structural features that guide and constrain action B. corporate culture C. organizational systems that foster learning and manage rewards D. number of innovation projects in the pipeline

D. number of innovation projects in the pipeline

Which of the following is not one of the dimensions of entrepreneurial orientation? A. proactiveness B. risk taking C. autonomy D. opportunism

D. opportunism

Whereas ______________ are willing to violate procedures and operate outside normal channels, ______________ gather hard data and develop a strong case for why a project should be killed. A. senior managers; entrepreneurial leaders B. strategic managers; financial managers C. exit champions; product champions D. product champions; exit champions

D. product champions; exit champions

One of the following is not a type of risk that executives must address. Which is it? A. business risk taking B. financial risk taking C. personal risk taking D. product-market risk taking

D. product-market risk taking

Strategic reasons for undertaking a corporate venture do not include _____________. A. entering into new markets B. expanding capabilities by acquiring new knowledge C. building the base of corporation resources D. reducing stakeholder commitment

D. reducing stakeholder commitment

Which of the following do corporate business incubators typically not provide? A. physical space B. mentoring C. funding D. student interns

D. student interns

Innovations that extend sales in an existing market, usually by enabling new products or services to be sold at higher margins are known as _____________. A. radical innovations B. disruptive innovations C. technology innovations D. sustaining innovations

D. sustaining innovations

APC (formerly known as the American Productivity and Quality Center) recognizes companies for exemplary practices that increase entrepreneurship as was demonstrated by awardee Air Products and Chemicals, Inc. who was recognized for the importance of staffing for achieving success.

FALSE

According to Peter Drucker, successful entrepreneurs typically are risk takers.

FALSE

As an industry matures, there are greater opportunities for change and so innovations tend to be more radical

FALSE

Corporate business incubators often provide physical space and business services to internal ventures, but not funding.

FALSE

Corporate venturing that is focused permeates all parts of the organization and involves every member of the organization.

FALSE

Crowdsourcing technologies, such as used by IBM when it hosted an Innovation Jam, do not foster collaboration between employees, customers, suppliers, and other stakeholders in their efforts to enhance innovation.

FALSE

Exit champions are often reluctant to gather hard data about a venture because it might kill the project.

FALSE

Financial risk taking involves the risk an executive assumes in taking a stand in favor of a strategic course of action.

FALSE

First movers in an industry often capture above-average profits, but usually find it difficult to maintain early market share gains

FALSE

Innovation efforts of the firm rarely benefit from partnering with non-business entities such as universities and government agencies.

FALSE

Proctor and Gamble is centralizing twenty to thirty percent of its research efforts in a new corporate-level business creation and innovation unit. They believe that this will assist them only with developing incremental innovations that will help the overall bottom line.

FALSE

Product champions are the employees who identify new product ideas or services.

FALSE

Radical innovations are evolutionary applications of novel ideas within existing paradigms.

FALSE

Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources.

FALSE

Real options logic is useful when corporations consider stock options as a way to finance entrepreneurial ventures.

FALSE

The Dutch Boy twist and pour paint container is an example of a high tech source of innovation.

FALSE

The term innovation refers primarily to an invention that uses the latest technologies.

FALSE

The term skunkworks is used to refer to a type of in-house facility that corporations use to develop entrepreneurial ideas.

FALSE

One of the following is not a question that should be answered when evaluating the performance of corporate venturing efforts. Which is it? A. Is the venture attracting external venture funding? B. Is the venture considered to be a market success? C. Does the venture add to the worth of the firm internally? D. Does the value proposition offered by the venture insulate it from competitive attack?

A. Is the venture attracting external venture funding?

Which of the following is not characteristic of a disruptive innovation? A. It is usually more sophisticated technologically. B. It appeals to less demanding customers. C. It is typically a less expensive solution for meeting a need. D. It usually takes root in a new market or the low-end of an existing market.

A. It is usually more sophisticated technologically.

One of the following statements about innovativeness is not true. Which is it? A. It refers to making decisions and taking risks without certain knowledge of probable outcomes. B. It refers to efforts of a firm to find new opportunities and novel solutions. C. It involves creativity and experimentation. D. It is aimed at developing new products, services, and processes.

A. It refers to making decisions and taking risks without certain knowledge of probable outcomes.

Individuals with highly innovative DNA traits have the ability to connect seemingly unrelated questions, problems, and ideas from different fields that allows them the opportunity to creatively see opportunities others miss. This is referred to as _____________. A. associating B. integrating C. visioning D. allocating

A. associating

Which of the following dimensions of entrepreneurial orientation is described as an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion? A. autonomy B. innovativeness C. competitive aggressiveness D. risk taking

A. autonomy

The innovation dilemma known as building capabilities versus collaborating refers to _____________. A. developing innovation skills internally versus partnering with qualified outsiders B. building innovative products in-house versus outsourcing C. building credibility by launching products ahead of potential collaboration partners D. launching a product incrementally

A. developing innovation skills internally versus partnering with qualified outsiders

According to the text, firms that want to enhance their entrepreneurial position by being competitively aggressive should _____________. A. enter markets with drastically lower prices B. foster creativity and experimentation C. continuously seek out new products or services D. research risk factors to minimize uncertainty

A. enter markets with drastically lower prices

After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams _____________. A. often lack coordination B. never waste resources on projects with questionable feasibility C. always create inefficiencies through duplication of effort D. never duplicate efforts of the rest of the firm

A. often lack coordination

Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities? A. proactiveness B. risk taking C. autonomy D. competitive aggressiveness

A. proactiveness

Whereas ______________ are often associated with a low cost leader strategy, ______________ are frequently an important aspect of a differentiation strategy. A. process innovations; product innovations B. product innovations; service innovations C. radical innovations; instrumental innovations D. marketing innovations; management innovations

A. process innovations; product innovations

Common features of a dispersed approach to corporate entrepreneurship include all of the following except _____________. A. semi-autonomous new venture groups B. use of product champions C. a top-down approach to supporting entrepreneurial behavior D. an entrepreneurial culture

A. semi-autonomous new venture groups

According to the text, _____________, which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by _____________. A. collaboration partners; strategic partners B. business incubators; new venture groups C. product champions; corporate venture capitalists D. lower-level managers; upper-level managers

B. business incubators; new venture groups

In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an example of _____________. A. focusing on process rather than product innovation B. defining its innovation efforts within the context of its strategic envelope C. radical innovation D. public relations, since plastics are not biodegradable

B. defining its innovation efforts within the context of its strategic envelope

Project ______________ involves justifying whether an opportunity is attractive in the marketplace; project ______________ involves evaluating the strategic and economic impact of a new venture. A. impetus; definition B. definition; impetus C. reward; development D. development; focus

B. definition; impetus

Which of the following is not a dilemma faced by corporations trying to manage the innovation process? A. launching incremental rather than preemptive innovations B. emphasizing marketing over management innovations C. preferring experience over initiative D. choosing internal rather than external staffing

B. emphasizing marketing over management innovations

A manager whose role is to question the viability of corporate venture projects is known as a(n) A. product champion B. exit champion C. rising star D. mentor

B. exit champion

Which kind of risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow? A. business risk taking B. financial risk taking C. personal risk taking D. technological risk taking

B. financial risk taking

n corporations with a strong entrepreneurial culture, the willingness and ability to change _____________. A. is imposed from the top-down B. is considered a core capability C. often leads to instability D. often worries stakeholders such as suppliers and creditors

B. is considered a core capability

Financial reasons for undertaking internal corporate venturing include _____________. A. strengthening competitive position B. obtaining above average returns C. adding to the resource base of the corporation D. reducing stakeholder commitment

B. obtaining above average returns

Radical innovations _____________. A. often result in quick profits B. often represent technological breakthroughs C. usually apply to products and processes simultaneously D. usually cannot be patented

B. often represent technological breakthroughs

Amazon was able to define the online bookselling market by entering the market early and defining the user experience. This is an example of _____________. A. innovativeness B. proactiveness C. competitive aggressiveness D. autonomy

B. proactiveness

Options exist when the owner of the option has _____________. A. the obligation, but not the right to engage in a transaction B. the right, but not the obligation to engage in a transaction C. the right and obligation to engage in a transaction D. neither the right, nor the obligation to engage in a transaction

B. the right, but not the obligation to engage in a transaction

According to the text, new venture ideas must pass through two critical stages to be implemented by corporations: project definition and project impetus.

TRUE

Aereo enters the broadcasting market with a new offer that streams the local broadcast signals to customers so that they can watch content on their PCs or tablet computers in real time or save for another viewing time. This is an example of disruptive innovation.

TRUE

Business incubators are designed to support fledgling entrepreneurial ventures until they can operate as stand-alone businesses.

TRUE

Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies.

TRUE

Collaborating with innovation partners can provide missing resources necessary to make innovation projects successful, such as the Coca-Cola and DEKA partnership to produce the Slingshot water purification system.

TRUE

Competitive aggressiveness is a response to threats whereas proactiveness is a response to opportunities.

TRUE

Corporate entrepreneurship is sometimes called intrapreneurship.

TRUE

Corporate ventures that use real options logic in decision making tend to keep total investment low in order to minimize the downside risk of a project.

TRUE

Dispersed approaches to corporate entrepreneurship are often found in organizations with a strong spirit of entrepreneurship.

TRUE

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs.

TRUE

Firms using a focused approach to corporate entrepreneurship typically separate corporate venturing activities from ongoing operations of the firm.

TRUE

For innovation team members to work enthusiastically on innovation projects, it is important to separate the performance of individual team members from the performance of the innovation itself.

TRUE

One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to game the system.

TRUE

Only about fifty percent of corporate venturing efforts reach profitability within six years of their launch.

TRUE

Process innovations are often associated with a low cost leadership strategy.

TRUE

Product champions are critical during the period after a new venture project has been defined but before it has gained momentum and achieved project impetus.

TRUE

Product innovations are commonly associated with a differentiation strategy.

TRUE

Radical innovation often involves open-ended experimentation which can be very time consuming.

TRUE

Research indicates that leaders of innovative firms spend fifty percent more time on discovery activities than the leaders of less innovative firms.

TRUE

Risk taking can lead to competitive advantage, but it needs to be managed carefully.

TRUE

Strategic renewal and the pursuit of new venture opportunities are the two primary aims of corporate entrepreneurship.

TRUE

The strategic goals of corporate entrepreneurship are often just as important as the financial goals.

TRUE

The term strategic envelope refers to the scope of innovation efforts of a firm.

TRUE