Chapter 12

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

After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, 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

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

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

Innovation involves introducing or changing to something A. less costly. B. with broader marketplace appeal. C. new. D. different.

A

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

One of the following statements about innovativeness is false. 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

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. incrementally launching a product.

A

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

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

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

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

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

A strategic decision can contain embedded options, which is a _________ of investments in which at each stage of the investment there is ______ decision. A. basket; a permanent B. series; a go/no-go C. portfolio; a final D. series; a tentative

B

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

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

Another way to evaluate a corporate venture is in terms of the four criteria from the balanced scorecard. Which of the following is not one of those criteria? A. customer perspective B. supplier perspective C. internal business perspective D. financial perspective

B

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

In 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

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

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

B

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

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

B

Whereas _________ often emerge as heroes, _________ run the risk of losing status by opposing popular projects. A. managers; employees B. product champions; exit champions C. exit champions; product champions D. shareholders; managers

B

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

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

A manager might insist that separating a decision into multiple parts will guarantee that the decisions made will turn out well. In the case of Motorola, the final exit decision came too late to save the Iridium project in spite of the _________ made at each step in the development of the program. A. investment B. illusion of control C. escalation of commitment D. analysis

C

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 & 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

Building entrepreneurial businesses within existing corporations is known as A. insourcing. B. on-shoring. C. intrapreneurship. D. entrepreneurship.

C

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

If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can, they might demonstrate ______ and trust only their own judgment rather than conduct sufficient analysis. A. agency problems B. the illusion of control C. managerial conceit D. escalation of commitment

C

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

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

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

Real options analysis (ROA) is an investment analysis tool from the field of finance. When applied to entrepreneurship, it suggests a path that companies can use to manage the _____ associated with launching ______ ventures. A. certainty; large B. risk; stable C. uncertainty; new D. interests; new

C

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

Some of the most common applications of real options are with property and insurance. A real estate option grants the holder the right to buy or sell a piece of property at an established price sometime in the future. If the price of the property goes _____, the owner of the option is likely to buy it. If the market value of the property ______ the strike price, the option holder is unlikely to execute the purchase. A. down; goes above B. down; drops below C. up; drops below D. up; goes above

C

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

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

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

______________ 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

According to Exhibit 12.1, the continuum of radical and incremental innovations, frozen yogurt represents mostly _______________ innovation, because ______________. A. incremental; it extends sales in an existing market by enabling higher margins B. radical; it is a small improvement on existing products C. radical; it is a fundamental change that evokes a major departure from existing practices D. incremental; it is a small improvement on existing products

D

Agency theory suggests that as managerial and ___________ interests ___________, managers will follow the path of their own self-interest. A. employee; coordinate B. shareholder; expand C. stakeholder; increase D. owner; diverge

D

Characteristics of the NVG that Taco Bell used to develop its Waffle Taco include all of the following except: A. They were charged to craft the next big thing in the industry. B. The team tried out new recipes daily and had a gym to keep the weight off. C. The team followed social media and tracked what rivals are doing even taking field trips. D. The team was independent and not loyal to the Taco Bell drive for taste, value, and speed.

D

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

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

D

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

Microsoft has difficulty increasing its innovativeness. One of the challenges has been that the conservatism of the culture of the firm has led to a focus on _____________ over innovation. A. long term profitability B. short term costs C. long term costs D. short term profitability

D

New technology is an important source of new ideas because it A. is seen by the customer as being important. B. provides the manpower that firms need to make new products and services. C. automatically reduces organizational waste. D. provides the raw material that firms use to make innovative products and services

D

One of the following is not a type of risks 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

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

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

The costly Motorola global satellite telecom project known as Iridium provides a useful illustration of the _________. Even though problems with the project existed during the lengthy development process, Motorola refused to pull the plug. Only after investing 5 billion USD and years of effort was the project abandoned. A. overdependence on the exit champion B. lack of a product champion C. overdependence on the product champion D. lack of an exit champion

D

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

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

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

D

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

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

D

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

______________ 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