Strategic Management: Chapter 13

(Refer to Case Scenario 2). The idea for the software product came about via induced strategic behavior.

False

(Refer to Case Scenario 3). Facing the risk that its technology supplier, Mats, will not renew its licensing arrangement, Bunnywac's CEO is exploring the possibility of developing its core battery technology in-house. If the license is not renewed, it is likely that the technology will be developed at Bunnywac via the autonomous strategic behavior approach.

False

(Refer to Case Scenario 2). Sharon Kline approached the CEO of CI with a business proposal to take an in-house software program and develop it as a leading-edge commercial product. There is some risk in the idea because CI has never launched a product before and software is a very different product than the clinical trials services the company currently offers. This new product, if successful, would be considered a radical innovation.

True

The likelihood of success of FearNot is increased because both Wim Vijkland and Cathy Liu to have international backgrounds.

True

____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance.

a. Complementary strategic goals

____ involves internally developed incremental and radical innovations that result from deliberate efforts.

a. Internal corporate venturing

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.

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

a. True

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

a. True

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

a. True

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.

a. True

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

a. True

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

a. True

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.

a. True

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

a. True

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

a. True

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

a. True

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

a. True

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

a. True

Innovation is the means by which the entrepreneur creates wealth.

a. True

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

a. True

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

a. True

Most innovations are incremental, not radical.

a. True

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

a. True

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

a. True

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.

a. True

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.

a. True

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

a. True

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.

a. True

Women are the fastest-growing group of entrepreneurs in Africa and Asia.

a. True

Value creation through internal innovation originates with

a. an entrepreneurial mind-set.

When used effectively, cross-functional teams will often bring about

a. faster product development processes.

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.

A successful ___ innovation will be less risky but less profitable than a successful ___ innovation.

a. incremental; radical

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

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.

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.

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control.

a. opportunities; resources

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.

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.

To be successful, an autonomous process for developing new products relies on

a. the diffusion of tacit knowledge.

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.

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

b. False

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

b. False

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

b. False

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

b. False

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.

b. False

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

b. False

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

b. False

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

b. False

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.

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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

b. False

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.

b. False

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.

b. False

Research suggests that ___ is needed to encourage entrepreneurial behavior.

b. a balance between individualism and cooperative behavior

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

b. a long wait for an uncertain payoff.

Since it replaces existing products and methods of production, entrepreneurship is a process of

b. creative destruction.

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 2 years. To maximize the chances of success it is critical that the new executive

b. have international experience.

In the implementation of internal innovations, formal and informal processes are best supported through ____ organizational structures.

b. horizontal

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

b. its investors will react positively to the introduction of the new product because of the potential for higher returns.

Research shows that internationally diversified firms tend to be ____ than domestic-only firms.

b. more innovative

Through the work of cross-functional teams, product development stages are grouped into ___ processes.

b. parallel or overlapping

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.

b. radical; incremental

Successfully creating innovations through internal means requires

b. significant spending on R&D.

A negative effect of acquiring other firms for the purpose of innovation is

b. the effect it can have on the firm's own ability to produce innovations.

The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such, Cubitron II is an example of

b. the use of induced strategic behavior.

Why have large pharmaceutical companies been forming alliances with biotechnology companies?

b. to develop new products and bring them to market

Induced strategic behavior as a form of internal innovation is a(n) ____ process.

b. top-down

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

b. uses the autonomous strategic behavior form of internal corporate venturing.

____ is one of the reasons for the differences in rates of entrepreneurship among different countries.

c. Culture

____ exist(s) when there is a need in the market that can be satisfied by new goods or services.

c. Entrepreneurial opportunities

____ 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.

c. Entrepreneurs

Which of the following is true? For firms to be entrepreneurial, they require a culture with

c. a balance of individualism and collectivism.

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 exemplifies

c. alignment of complementary assets.

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of

c. an incremental innovation.

Induced strategic behavior is a process that fosters product innovations that

c. are aligned closely with current strategy and structure.

Innovation creates a(n)

c. commercial product.

According to Peter Drucker,the primary goal of innovation is to

c. create wealth.

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have

c. high absorptive capacity to learn.

Products developed through ____ are often offered at lower prices without as many features than products developed through _____

c. imitation; innovation

The three types of innovative activity include all of the following EXCEPT

c. implementation.

A major barrier to the use of cross-functional teams is

c. independent frames of reference of team members.

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

c. internal corporate venturing.

Innovations that involve significant technological breakthroughs and create new knowledge

c. involve substantial uncertainty and risk.

The competition for resources among those representing different organizational functions within a firm often leads to

c. organizational politics.

The level of entrepreneurial activity in a nation is _____ the nation's level of economic development.

c. positively related to

Entrepreneurs tend to have all the following characteristics EXCEPT

c. preference for certainly about projects.

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore

c. pursuing innovation through both internal and cooperative strategies.

The firm's culture promotes unity of purpose for cross-functional work teams through

c. shared values.

Internal corporate venturing does NOT involve

c. strategic alliances.

The dimensions on which functional departments can vary include all the following EXCEPT _____ orientation.

c. technological

Autonomous strategic behavior is ____ a(n) process in which product champions pursue new ideas.

d. bottom-up

The use or application of entrepreneurship within an established firm is called

d. corporate entrepreneurship.

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

d. formality of structure.

New entrepreneurial firms are better than larger established firms at

d. identifying entrepreneurial opportunities.

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek _____ while more established companies may need

d. investment capital; new technological knowledge.

The number of patents held by an organization is a rough guide to the

d. level of innovation in a firm.

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions?

d. organizational politics

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 6 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

d. passion for his invention.

A cross-functional product development team has been examining a proposed new product intensively for 6 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

d. recommend that the project be set aside.

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

d. shared values; effective leadership.

The risks of international entrepreneurship include all the following EXCEPT

d. strong "buy-domestic" programs.

Firms develop innovations in all the following ways EXCEPT

d. via divestiture of low-performing units.

The main risk in a strategic alliance is that

one partner will use the other partner's knowledge and use it to enhance its own competitive abilities