MKT Test 1 (1-43) Test (44-93)
A technology diffusion curve is s-shaped because adoption is initially fast when a new technology is introduced to the market. Answers: True False
False
According to Michael Porter's model of a value chain, firm infrastructure is a primary activity of the value chain. Answers: True False
False
All innovations require complementary goods, and none of them can utilize existing complementary goods. Answers: True False
False
From a real options perspective, the value of a call stock option is zero as long as the price of the stock is more than the exercise price. Answers: True False
False
Globalization of markets has reduced the importance of innovation. Answers: True False
False
If you live in a country that is a member of the Madrid Union and you register a trademark in your country, that trademark is protected throughout the world. Answers: True False
False
In industries that have increasing returns to adoption due to network externalities, allowing competitors to get a head start in building an installed base is the safest strategy. Answers: True False
False
In the United States, there are no laws to protect trade secrets. Answers: True False
False
Oligopolistic industries are industries in which there is no competition because a single company dominates the market. Answers: True False
False
Product innovations are more important than process innovations to organizations because they are less visible than process innovations. Answers: True False
False
Research targeted at increasing knowledge for a specific application or need is called basic research. Answers: True False
False
Technological innovation decreases the amount of output achievable from a given quantity of labor and capital. Answers: True False
False
The majority of effort and money invested in technological innovation comes from nonindustrial firms. Answers: True False
False
The science-push approach to research and development argued that innovation was driven by the perceived demand of potential users. Answers: True False
False
Titles and names can be copyrighted. Answers: True False
False
When demand is increasing, there is less revenue to go around and firms will experience more competitive pressure. Answers: True False
False
Work can be described as novel even if it is simply the next logical step in a series of known solutions. Answers: True False
False
Walter is the new director of R&D at Good Health Incorporated, a pharmaceutical company. Which of the following statements by Walter would indicate that he believes in the concept of the innovation funnel? Answers: "Innovation is a freewheeling process that is unconstrained by rules and plans." "While there are many potential new product ideas going in the wide end, very few make it through the development process." "I believe that Good Health should limit new idea generation to save time and other resources." "I believe that Good Health should allow all new ideas generated in the company to make it to the development process."
"While there are many potential new product ideas going in the wide end, very few make it through the development process."
According to researchers in a large-scale survey administered by the Product Development and Management Association (PDMA), in 2012, which of the following categories of project development took the least amount of time to develop a new product from initial concept to market introduction? Answers: "radical" projects "more innovative" projects "disruptive" projects "incremental" projects
"incremental" projects
A common set of international copyright laws automatically protects an author's work throughout the world. Answers: True False
False
A modular innovation significantly affects the overall configuration of a system. Answers: True False
False
Which of the following statements is true of a dominant design? Answers: It is not possible to have legally induced adherence to a dominant design. When a firm's technology is locked in as the dominant design of a market, it earns low rewards. A firm that supports a technology that is chosen as the dominant design is in a poor position to shape the evolution of the industry. A firm may find itself locked out of the market if it is unable to adopt the dominant design.
A firm may find itself locked out of the market if it is unable to adopt the dominant design.
________ is the ability of an organization to recognize, assimilate, and utilize new knowledge. Answers: Cognitive dissonance Absorptive capacity Organizational obsolescence Built-in obsolescence
Absorptive capacity
_________ are legally binding contractual arrangements to ensure that partners are fully aware of their rights and obligations in the collaboration and have legal remedies available if a partner should violate the agreement. Answers: Void contracts Alliance contracts Corporate charters Articles of association
Alliance contracts
Alpen Incorporated is a manufacturing firm that holds the patent for a new food processor that is considerably safer and more efficient than the others available in the market. Being the only firm that manufactures this product, Alpen charges a very high price for it. Based on the information provided in the scenario, which of the following statements is most likely to be true? Answers: As Alpen is the technology leader in the food processor manufacturing sector, the firm will yield sustained monopoly rents. Alpen will lose business and ultimately fail because of incumbent inertia. Since there are several food processor manufacturing firms in the market, Alpen will lose to its existing competitors and will seldom be able to make any profits.
As Alpen is the technology leader in the food processor manufacturing sector, the firm will yield sustained monopoly rents.
Which of the following statements is true of a firm entering a market too early? Answers: Distribution channels required for the firm's products will be well established prior to its entry. Enabling technologies and complements available to the firm will be immature. The firm's competitors would have already captured controlling shares of the market. The firm will not be able to reap the advantages of monopoly rent.
Enabling technologies and complements available to the firm will be immature.
Which of the following statements is true of externalities? Answers: All externalities are negative in nature and seldom affect the communities surrounding the area where the business is based. Externalities are solely borne by individuals responsible for creating them. Negative externalities are completely eradicated by technological innovations. Externalities can be in the form of benefits reaped by individuals other than those who created them.
Externalities can be in the form of benefits reaped by individuals other than those who created them.
After much research, Angela has designed a new automobile tire with a unique polycarbonate exterior that cannot be punctured. In the context of the U.S. patent law, which of the following statements would be true for this invention? Answers: It can be patented as it is useful, novel, and not obvious. It can only receive a plant patent. It cannot be patented because tires are intangible products. It cannot be patented as it is only eligible for a copyright protection.
It can be patented as it is useful, novel, and not obvious.
Which of the following statements is true of resource fit? Answers: It refers to the degree to which partners have compatible objectives and styles. It excludes resources that are supplementary. It seldom enables partners to achieve economies of scale by pooling of supplementary resources. It encourages collaborations based on the combination of complementary resources to access resources a firm does not possess.
It encourages collaborations based on the combination of complementary resources to access resources a firm does not possess.
Which of the following is a feature of a joint venture that differentiates it from other forms of alliances? Answers: It usually does not result in the creation of a new business entity. It increases asset commitment to products that will become rapidly obsolete. It increases cycle time of a technology. It involves a significant equity stake by the partners.
It involves a significant equity stake by the partners.
Easymake Corporation developed a new Web design software to build Web pages for its clients. However, Easymake soon realized it could make more money by selling this software to those who wish to quickly build Web pages to sell their products. Which of the following would be the most appropriate strategy for Easymake? Answers: It should not sell the Web design software as it will give rise to competition on the Internet. It should become a licensor of the new Web design software. It should become a licensee of the new Web design software. It should make the Web design software available to users as open-source software.
It should become a licensor of the new Web design software.
Which of the following is true of dominant design? Answers: It usually mimics the form of the original discontinuity. It is often at the forefront of cutting-edge technology. It destabilizes the architecture of the technology, making it difficult for firms to focus on improving incremental innovations. It tends to put together a combination of features in the way that most effectively achieves the demands of the market majority.
It tends to put together a combination of features in the way that most effectively achieves the demands of the market majority.
________ offers a fast way for a firm to extend the reach of its technology that is nearly free and offers the potential for royalties. Answers: Licensing out a technology Forming a joint venture Solo internal development Vertical integration
Licensing out a technology
Money Club and Money Ball are online platforms that allow their members to get in touch with people from various businesses. They also facilitate business contracts between their members. Money Club has 6,000 members, whereas Money Ball has 3,500 members. This indicates that Answers: Money Club has a larger installed base than Money Ball. Money Club has a lower positive consumption externality than Money Ball. Money Ball provides more complementary goods than Money Club. Money Ball does not use a dominant design.
Money Club has a larger installed base than Money Ball.
Unicorn Medicines Incorporated, a pharmaceutical company based in the United States, has its research and development units spread across the globe. Lately, these research and development units have not been receiving adequate financial support. Which of the following is most likely to cause such a situation? Answers: Technical innovation leads to lower market segmentation and slower product obsolescence. Most innovative ideas do not become successful new products. The product development cycle in the pharmaceutical industry is short. The cost associated with pharmaceutical research and development is low.
Most innovative ideas do not become successful new products.
Who among the following is a user innovator? Answers: Samuel has invented a detachable bicycle, which he plans to sell to a reputed bicycle manufacturing firm in order to make profit. Sandra, an engineer, has developed a device that helps track the location of her teenage daughter's car. Jessica, an ace designer for a clothing brand, has been asked to work on a dyeing technique that changes fabric color according to the room temperature. Ivan, a scientist at a reputed pharmaceutical company, has developed an anti-inflammatory drug for the company to commercialize.
Sandra, an engineer, has developed a device that helps track the location of her teenage daughter's car.
Which of the following statements is true of science parks? Answers: Because of the vast distance between university laboratories and other research centers, science parks seldom provide ready access to scientific expertise. The formation of science parks typically leads to traffic congestion, inordinately high housing costs, and higher concentrations of pollution in the area. Even though science parks are known to assist new start-ups, they strongly prohibit collaboration activities between firms. Science parks often give rise to technology clusters that have long-lasting and self-reinforcing advantages.
Science parks often give rise to technology clusters that have long-lasting and self-reinforcing advantages.
Meghan, an R&D scientist at a reputed medical equipment manufacturing firm, realized that most studies indicate that individuals are not able to detect any variations in their blood pressure Therefore, to reduce this occurrence, she invented a device, which also functioned like a watch that could monitor the aforementioned health aspects in an individual throughout the day. The device would alert the individual using it if any of these aspects were above or below normal. Meghan's device was an instant success with several countries placing orders for the device. Which of the following characteristics of most successful inventors did Meghan exhibit in this scenario? Answers: She was curious and more interested in the solution rather than the problem. She blindly accepted the assumptions made in previous works in the same field. She sought a global solution rather than a local solution.
She sought a global solution rather than a local solution.
Susan recently broke her smartphone, which she had been using for three years. Since repairing the phone would cost more than buying a new one, her friend suggests that she check out a couple of the latest smartphones in the market. Although she comes across some new models that are well-known for their durability, Susan is skeptical because she believes all the latest models are delicate and need to be handled with care. She is concerned that the new phone will break as well. which of the following statements is true of Susan? Answers: Since Susan feels that the product will certainly not fail based on her previous use of a similar product, she can be classified as a laggard. Since Susan has reservations about the product's durability, she can be classified as a laggard.
Since Susan has reservations about the product's durability, she can be classified as a laggard.
Which of the following is a feature of the blue ocean strategy? Answers: In this strategy, the competition occurs in existing market spaces. Under this strategy, existing demand is exploited. The focus of the strategy is to make the value-cost trade-off. The strategy lays emphasis on making the competition irrelevant.
The strategy lays emphasis on making the competition irrelevant.
Which of the following statements is true of s-curves in technological improvement? Answers: They are obtained by plotting the cumulative number of adopters of the technology against time. They typically show that technology goes through initial accelerated improvement, accelerated improvement, and diminishing improvement. S-curves in technology diffusion and s-curves in technology performance are fundamentally the same processes. The s-curves flatten when the cost of each marginal improvement increases and diminishing returns to effort begin to set in.
The s-curves flatten when the cost of each marginal improvement increases and diminishing returns to effort begin to set in.
Which of the following statements is true of a monopoly cost curve? Answers: A monopoly cost to market share curve is more s-shaped than a network externality returns to market share curve. The steepness of a monopoly cost curve is largely a function of a firm's discretionary behavior. It is not possible for a network externality returns curve to cross a monopoly cost curve. A firm choosing to exploit its monopoly power is flattening its monopoly cost curve.
The steepness of a monopoly cost curve is largely a function of a firm's discretionary behavior.
Singing Cards Corporation has decided to make the technology behind its musical cards open. Which of the following is most likely to be one of the advantages associated with this decision? Answers: The technology will accrue more rapid adoptions. The price of the technology will rise exponentially. The production of complementary goods will cease. The technology's installed base will accumulate much more slowly.
The technology will accrue more rapid adoptions.
Which of the following statements is true of angel investors? Answers: They are usually listed in public directories. They typically fund projects that are $50 million or more. They are often wealthy individuals who have been very successful in business. They avoid funding start-ups because of the high risks involved in these businesses.
They are often wealthy individuals who have been very successful in business.
Which of the following is true of quantitative methods of analyzing new projects, particularly in rapidly changing environments? Answers: They enable managers to use rigorous statistical comparisons of projects. Their accuracy is unquestionable. Discounted cash flow methods are the least commonly used quantitative methods. They are particularly accurate in highly uncertain or rapidly changing environments.
They enable managers to use rigorous statistical comparisons of projects.
A first mover can build brand loyalty before competitors enter the market even if the features of a technology are imitable. Answers: True False
True
A service mark distinguishes the provider of a service rather than a product. Answers: True False
True
According to Michael Porter's five-force model, the degree to which a firm relies on one or a few suppliers will influence its ability to negotiate good terms. Answers: True False
True
After licensing a technology, a firm typically has limited discretion over what it can do with the technology. Answers: True False
True
An innovation can be competence enhancing for one firm, while competence destroying for another. Answers: True False
True
Conjoint analysis enables a subjective assessment of a complex decision to be decomposed into quantitative scores of the relative importance of different criteria. Answers: True False
True
External development efforts typically lack the coordination of internal development. Answers: True False
True
In an industry where government regulation imposes a single standard for a technology design, the design of that standard necessarily dominates the other technology options available to the industry. Answers: True False
True
In general, the more firms competing that are of comparable size, the more competitive the industry will be. Answers: True False
True
In most regions, if owners of a trade secret believe that another party has stolen or improperly disclosed their trade secret, they can ask a court to issue an injunction against further use of the secrets. Answers: True False
True
Increasing returns to adoption means that the more a technology is adopted, the more valuable it becomes. Answers: True False
True
Investing in process innovation helps firms lower their costs. Answers: True False
True
Network externality returns refer to the value customers reap as a larger portion of the market adopts the same good. Answers: True False
True
Other things being equal, less customer uncertainty favors earlier timing of entry. Answers: True False
True
Products that have a large installed base are likely to attract more developers of complementary goods. Answers: True False
True
Proximity and interaction can directly influence firms' ability and willingness to exchange knowledge. Answers: True False
True
The accuracy of estimates in quantitative methods is questionable because the quality of the comparison ultimately depends upon the quality of the original estimates. Answers: True False
True
The investor is an active driver of the value of an investment. Answers: True False
True
Typically the intellectual property policies of a university embrace both patentable and unpatentable innovations, and the university retains sole discretion over the rights to commercialize the innovation. Answers: True False
True
TechToTeach Company has developed and sold a product that can be used by students to take faster notes in a classroom as the teacher speaks. The device automatically records the teacher's voice and converts it into a text format. This new technology has been widely accepted by various universities and has been appreciated by students, thus increasing the company's inflow. This technology can be most accurately described as a(n) ________ project by TechToTeach. Answers: advanced R&D platform breakthrough derivative
breakthrough
Erison Group, an advertising company, wants to hire a creative head. Who among the following would be best suited for this position? Answers: an individual who completely adheres to the existing logic and paradigms and has extensive knowledge of the field an individual who has low tolerance for ambiguity and avoids taking risks an individual who has a moderate degree of knowledge of the field but is intrinsically motivated an individual who prefers to look at problems in conventional ways
an individual who has a moderate degree of knowledge of the field but is intrinsically motivated
Which of the following would be an example of a tacit resource? Answers: an oddsmaker who works for a large casino in Las Vegas and is correct 95 percent of the time hand-woven fabrics made by local shops a chipset manufacturing machine bought by an electronics company a distiller used to make malt liquor
an oddsmaker who works for a large casino in Las Vegas and is correct 95 percent of the time
When Fun Bun Incorporated, an international fast-food chain, set up operations in China, it had to teach farmers how to grow a particular variety of potatoes, and bakers had to be taught how to make hamburger buns. This is an example of Answers: corporate social responsibility. an undeveloped supply channel. incumbent inertia. monopoly rents.
an undeveloped supply channel.
The value of an electronic reader is related to the availability of books, journals, magazines, etc. in a format that can be read by the electronic reader. For an electronic reader, these are ________ goods. Answers: complementary substitute Giffen intermediate
complementary
Organizations that manufacture products such as light bulbs for lamps or chargers for electrical vehicles are called ________. Answers: moderators lead users complementors incubators
complementors
Jack took part in a survey in which he was asked to rank the importance of certain features of the smart television he had recently purchased. The result was then used by the surveying firm to assess the different attributes of the ranking. This survey would most accurately be termed a ________. Answers: cognitive analysis transactional analysis program analysis conjoint analysis
conjoint analysis
Marine Systems was the first company to develop an inventory management software specifically for hotels and restaurants. Soon after Marine Systems launched its product, Unicorn Systems developed a similar software. The software developed by Unicorn Systems outperformed the one developed by Marine Systems, and it eventually became the market leader. In this scenario, Unicorn Systems is an example of a(n) ________. Answers: first pioneer late mover early follower eccentric laggard
early follower
In the context of s-curves in technological improvement, plotting performance against time will result in the same characteristic curve as plotting performance against effort only if Answers: speed, a function of performance, is relatively constant over time. effort is relatively constant over time. power, a function of performance, is relatively inconsistent over time. effort varies over time.
effort is relatively constant over time.
A firm that develops new technologies ahead of others often tries a number of unsuccessful techniques before finding a solution that works well. This experimentation Answers: lowers the firm's ability to recognize the value of new information. lowers the firm's ability to develop and enhance technologies. makes it difficult for the firm to develop related technologies. enables the firm to find related solutions and alternatives that work well.
enables the firm to find related solutions and alternatives that work well.
Greyer Corporation has developed a special drug that kills cancer cells. While the scientists at Greyer have the knowledge, they are short on equipment, money, and marketing know-how. In this situation, the most appropriate step for Greyer would be to Answers: give up the idea of selling the drug altogether. find a partner to collaborate with to sell the drug. forge forward and develop the drug on its own. come up with a completely new drug.
find a partner to collaborate with to sell the drug.
Doven Incorporated pioneered software development in the 1970s and introduced its range of office tools well ahead of its competitors. According to the classification scheme of entrants, Doven would be classified as a(n) ________. Answers: first mover early follower early leader laggard
first mover
Which of the following can be classified as an internal perspective and its defining measure under the balanced scorecard approach? Answers: having a goal such as meeting shareholders' expectations and its defining measure such as return on capital having a goal such as improving the inventory management system and its defining measure such as inventory costs having a goal such as accelerating and improving new product development and its defining measure such as the average length of the new product development cycle having a goal such as improving customer satisfaction and its defining measure such as customer satisfaction surveys
having a goal such as improving the inventory management system and its defining measure such as inventory costs
The tendency of existing firms to be slow to respond to changes in the industry environment due to their large size, established routines, or prior strategic commitments to existing suppliers and customers is known as ________. Answers: monopolization path dependency incumbent inertia technology trajectory
incumbent inertia
Nigel belongs to a wealthy family. He has always enjoyed trying out new gadgets and devices that are launched in the market. Since he is financially well-off, he likes to experiment with expensive products and is comfortable with the risks and uncertainties associated with these products. Based on this description, Nigel most likely belongs to the group of ________. Answers: early majority early adopters innovators laggards
innovators
A radical innovation differs from an incremental innovation in that it refers to an innovation that Answers: makes a relatively minor change from existing processes. is very new and different from prior solutions. seldom affects the overall configuration of the system. is typically competence enhancing as it builds on the firm's existing knowledge base.
is very new and different from prior solutions.
The R&D team of Zelda Technozone Incorporated has developed a prototype for a two-seater car that runs primarily on solar energy. Since the firm usually manufactures household appliances, the management acknowledges that it does not have the required competencies to manufacture this car on a large scale. It decides to access another firm's manufacturing competencies. Which of the following collaborative arrangements is most appropriate in this scenario? Answers: licensing in joint venture licensing out franchising
joint venture
Future Electronics Incorporated's body scanning machine has been adopted by majority of the health-care market. As a result, the company demands a high price from its customers, which mainly include hospitals. The company has not been investing much on innovation and its product variety is low. The cost borne by the users in this case is referred to as ________. Answers: marginal cost social cost monopoly cost deferred cost
monopoly cost
Alumplus Aluminum Company has come up with a new type of metal. However, producing it would take up 75 percent of its manufacturing capacity and would hinder its ability to continue producing its other products. Alumplus Aluminum hires LM Group of Manufacturers to manufacture the new type of metal. This collaborative arrangement is most likely to be classified as ________. Answers: outsourcing disintermediation capability complementation solo internal development
outsourcing
Coolers Incorporated, a house appliances manufacturer, has upgraded its technology by making all its appliances work on voice sensors instead of remote controls or manual operations. Though the technology is new, Coolers has decided to introduce the product in the market at the same rates as its earlier technology so that its usual customers can purchase these products. This project is a(n) ________ for Coolers Incorporated. Answers: platform project derivative project breakthrough project start-up project
platform project
As a result of the rapid pace of innovation Answers: product life cycles have become shorter. product development cycles have become significantly longer. market segmentation has reduced. product obsolescence has slowed down.
product life cycles have become shorter.
Ample Espresso Corporation is a coffeehouse located across from Tian's Kitchen, a restaurant. According to Michael Porter's five-force model, the services and products provided by both are most accurately classified as ________. Answers: complements competitors substitutes intermediates
substitutes
According to Michael Porter's five-force model, if suppliers of a particular good are very abundant, Answers: their bargaining power will be less. their level of differentiation will be very high. their level of vertical integration in the industry will be high. their annual employee turnover rates will be less.
their bargaining power will be less.
If a country's GDP stands at $4,867 billion, the country's ________ will be worth $4,867 billion. Answers: total annual output investment in technological innovation savings with the World Bank negative variance in budget
total annual output
Angelo has designed a license plate holder for automobiles that makes theft of the license plate practically impossible. He has filed an application for a patent through the Patent Cooperation Treaty (PCT) office, and it has been approved. How long is this application going to protect his right to file for patent protection in the member countries of the PCT? Answers: three days six months one-and-half years two-and-half years
two-and-half years
When technology is progressing rapidly, firms are more likely to Answers: commit themselves to fixed assets that will rapidly become obsolete. avoid forming alliances for projects that are risky and complex. use linkages with other specialized firms to access resources they do not possess. avoid becoming more narrowly specialized.
use linkages with other specialized firms to access resources they do not possess.
Oswen Technologies Incorporated, a software development firm, conducted a market survey to determine its expected installed base for a product they had not released yet. The results of the survey indicated that the company would need to expand its expected installed base in order to drive adoptions once the product was released. To do this, the company began advertising the product prior to its launch in the market. This tactic is termed ________. Answers: shovelware vaporware bloatware greyware
vaporware
In which of the following instances do platforms become more desirable than a tightly integrated product in a market? Answers: when customers are similar and want the standard choices that a single firm can provide when third-party options are uniform and low quality when compatibility with third-party products can be made seamless without integration when the platform sponsor decides to share control over quality and the overall product architecture with all the third-party vendors
when compatibility with third-party products can be made seamless without integration
A firm that invests heavily in derivative projects that may be immediately commercialized with little risk Answers: will have greater long-term strategic momentum. will be on the leading edge of technology. will likely be unable to compete when the market shifts to a newer technology. will have poor returns on its R&D investment in the short run.
will likely be unable to compete when the market shifts to a newer technology.