Strategy 13

____is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance. a. Complementary strategic goals b. Shared values c. An entrepreneurial mind-set d. Compatible organizational cultures

Complementary strategic goals

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 a. intellectual capital. b. institutional capital. c. alignment of complementary assets. d. technological capital.

alignment of complementary assets.

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

false

Cross-functional work teams are best supported by vertical organizational structures. a. True b. False

false

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

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. a. True b. False

false

When used effectively, cross-functional teams will often bring about a. faster product development processes. b. an increased need for additional information. c. conflicting information about the business environment. d. future cooperative alliances.

faster product development processes

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. b. management expertise. c. research and development competencies. d. social networks.

investment capital.

Regarding partnering in cooperative alliances, entrepreneurial new companies may seek _____ while more established companies may need a. distribution channels; tacit knowledge. b. deep technological expertise; distribution channels. c. social capital; technical capital. d. investment capital; new technological knowledge.

investment capital; new technological knowledge

Innovations that involve significant technological breakthroughs and create new knowledge a. build incrementally on the firm's existing technologies and knowledge. b. are the most common type of innovation. c. involve substantial uncertainty and risk. d. typically have clear market opportunities.

involve substantial uncertainty and risk.

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. b. is encouraged by a product champion or an entrepreneur external to the organization. c. relies on internal structure or existing strategy to encourage innovation. d. is in a large or small organization.

is encouraged through a bottom-up or top-down process

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. a. incremental; radical b. radical; incremental c. concentric; radical d. radical; concentric

radical; incremental

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 a. engage in creative destruction. b. recommend that the product be sold at a loss in order to create a new market. c. turn over the product evaluation to a new product-development team which may have more passion for the product. d. recommend that the project be set aside.

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 _____ a. autonomous strategic behavior; induced strategic behavior. b. incremental innovations; radical innovations. c. bottom-up integration; top-down integration. d. shared values; effective leadership.

shared values; effective leadership.

The risks of international entrepreneurship include all the following EXCEPT a. unstable foreign currencies. b. problems with market efficiencies. c. limitations on market size. d. strong "buy-domestic" programs.

strong "buy-domestic" programs.

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. b. the communication process be highly intensive. c. the knowledge be broken into the smallest comprehensible units. d. training consultants be involved in every step of transference.

the receiving party have adequate absorptive capacity to learn

Why have large pharmaceutical companies been forming alliances with biotechnology companies? a. to evade legislative restrictions on drug research in the United States b. to develop new products and bring them to market c. because both firms had declining profitability and needed cash infusions from other firms d. in order to gain absorptive capacity

to develop new products and bring them to market

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

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 b. False

true

Entrepreneurial ventures often produce more radical innovations than do their larger, more established counterparts. a. True b. False

true

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

true

Most innovations are incremental, not radical. a. True b. False

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 b. False

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 b. False

true

Women are the fastest-growing group of entrepreneurs in Africa and Asia. a. True b. False

true

____ exist(s) when there is a need in the market that can be satisfied by new goods or services. a. Potentiality b. Market readiness c. Entrepreneurial opportunities d. Critical core competencies

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. a. Leaders b. Innovators c. Entrepreneurs d. Transformative leaders

Entrepreneurs

Which of the following is true? For firms to be entrepreneurial, they require a culture with a. an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b. an exceptionally high level of collectivism. c. a balance of individualism and collectivism. d. an exceptionally high level of individualism.

a balance of individualism and collectivism.

Value creation through internal innovation originates with a. an entrepreneurial mind-set. b. cross-product development teams. c. shared values and entrepreneurial leadership. d. innovation.

an entrepreneurial mind-set

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

false

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

false

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

false

The entrepreneurial mind-set is found primarily among managerial and scientific employees. a. True b. False

false

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

false

New entrepreneurial firms are better than larger established firms at a. implementing innovations. b. gaining competitive advantage. c. making alliances. d. identifying entrepreneurial opportunities.

identifying entrepreneurial opportunities

The three types of innovative activity include all of the following EXCEPT a. invention. b. imitation. c. implementation. d. innovation.

implementation.

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. b. invention. c. imitation. d. the use of social capital.

incremental innovation

A successful innovation will be less risky but less profitable than a successful innovation. a. incremental; radical b. radical; incremental c. alliance-generated; acquisition-generated d. acquisition-generated; alliance-generated

incremental; radical

The main risk in a strategic alliance is that a. the alliance will not result in a successful innovation. b. critical employees will be hired away by the strategic partner. c. one partner will use the other partner's knowledge and use it to enhance its own competitive abilities. d. the partners will lose control over their internal processes.

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

Successfully creating innovations through internal means requires a. a highly individualistic culture. b. significant spending on R&D. c. acquisitions of innovative firms. d. venture capital.

significant spending on R&D

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

true

___is one of the reasons for the differences in rates of entrepreneurship among different countries. a. Climate b. Competitiveness c. Culture d. Constitution

Culture

____involves internally developed incremental and radical innovations that result from deliberate efforts. a. Internal corporate venturing b. Autonomous strategic behaviors c. Bottom-up strategic behaviors d. Product championing

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. b. This example shows the dysfunctional aspects of unrestricted entrepreneurialism. c. This is an example of the lack of human capital hampering internal innovation. d. Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.

This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

Innovation creates a(n) a. opportunity for a new product or process. b. new product or process. c. commercial product. d. idea for potential exploitation.

commercial product.

Since it replaces existing products and methods of production, entrepreneurship is a process of a. harnessing the human potential. b. creative destruction. c. creation of opportunity. d. exploitation of innovation.

creative destruction.

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

false

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

false

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

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. a. True b. False

false

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 b. entrepreneurial mind-sets c. professional rivalries d. politicized points of view

independent frames of reference

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

true

Research suggests that is needed to encourage entrepreneurial behavior. a. individualism rather than collectivism b. a balance between individualism and cooperative behavior c. collectivism rather than individualism d. limited autonomy and incentives

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 a. immediate wealth creation. b. a long wait for an uncertain payoff. c. a long wait for a high probability payoff. d. a large payoff in the short term with rapidly decreasing wealth generation in the longer run.

a long wait for an uncertain payoff.

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 a. imitation of a competitor's product. b. a radical innovation. c. an incremental innovation. d. a(n) innovation created through a cooperative strategy.

an incremental innovation.

Induced strategic behavior is a process that fosters product innovations that a. are likely to change a firm's strategic intent and mission. b. will lead to greater financial returns. c. are aligned closely with current strategy and structure. d. will come to market in a short period of time.

are aligned closely with current strategy and structure.

Autonomous strategic behavior is a(n) process in which product champions pursue new ideas. a. top-down b. horizontal c. integrated d. bottom-up

bottom-up

The use or application of entrepreneurship within an established firm is called a. corporate emergence. b. transformational leadership. c. exceptional R&D. d. corporate entrepreneurship.

corporate entrepreneurship.

According to Peter Drucker,the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies.

create wealth.

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

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. a. True b. False

false

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

false

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

false

Innovations can only be produced by actions and activities within the firm. a. True b. False

false

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

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. a. True b. False

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. a. True b. False

false

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 a. interpersonal orientation. b. time orientation. c. goal orientation. d. formality of structure.

formality of structure

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 a. be of Hispanic descent. b. have international experience. c. possess an advanced degree in animal science. d. have a background in managing agribusiness firms.

have international experience

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital. b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack.

high absorptive capacity to learn.

In the implementation of internal innovations, formal and informal processes are best supported through ____ organizational structures. a. vertical b. horizontal c. functionally oriented d. multidivisional

horizontal

Products developed through ____ are often offered at lower prices without as many features than products developed through _____ a. innovation; imitation. b. imitation; invention. c. imitation; innovation. d. innovation; invention.

imitation; innovation.

A major barrier to the use of cross-functional teams is a. excessive individualism of creative people. b. lack of communication skills of technical people. c. independent frames of reference of team members. d. lack of social capital by team members.

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 a. entrepreneurial incubation. b. creative destruction. c. internal corporate venturing. d. cooperative innovation strategies.

internal corporate venturing

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 a. this innovation will resist competitors' attempts to imitate it. b. its investors will react positively to the introduction of the new product because of the potential for higher returns. c. its investors will react negatively because of the risk and cost entailed in introducing a new product. d. this will be recognized in the industry as a radical innovation.

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

The number of patents held by an organization is a rough guide to the a. effective use of organizational politics. b. future success of an initial public offering. c. amount of venture capital a firm will be able to attract. d. level of innovation in a firm.

level of innovation in a firm.

Research shows that internationally diversified firms tend to be than domestic-only firms. a. less profitable b. more innovative c. less technologically advanced d. more likely to have an individualistic culture

more innovative

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control. a. opportunities; resources b. opportunities; core competencies c. threats; resources d. threats; core competencies

opportunities; resources

Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate organizational functions? a. dissension within the top management team b. informal organizational processes within the firm c. the firm's strategic orientation d. organizational politics

organizational politics

The competition for resources among those representing different organizational functions within a firm often leads to a. erosion of social capital. b. heightened communication. c. organizational politics. d. empowerment of organizational members.

organizational politics.

Through the work of cross-functional teams, product development stages are grouped into processes. a. short-term and long-term b. parallel or overlapping c. serially ordered d. complementary

parallel or overlapping

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 a. the ability to identify opportunities. b. a corporate sponsor. c. financial slack. d. passion for his invention.

passion for his invention

The level of entrepreneurial activity in a nation is the nation's level of economic development. a. negatively related to b. independent of c. positively related to d. weakly related to

positively related to

Entrepreneurs tend to have all the following characteristics EXCEPT a. willing to take responsibility for projects. b. passion. c. preference for certainly about projects. d. optimism.

preference for certainly about projects.

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. b. joint ventures. c. strategic leadership. d. cross-functional teams.

product champions.

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore a. increasing its costs and reducing its potential to succeed. b. engaged in internal corporate venturing. c. pursuing innovation through both internal and cooperative strategies. d. not an innovative company.

pursuing innovation through both internal and cooperative strategies.

The firm's culture promotes unity of purpose for cross-functional work teams through a. a collectivist structure. b. an entrepreneurial mind-set. c. shared values. d. resource allocation.

shared values

Internal corporate venturing does NOT involve a. autonomous strategic behavior. b. induced strategic behavior. c. strategic alliances. d. product champions.

strategic alliances.

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. b. creative destruction of existing services for pet boarding. c. institutionalized entrepreneurship. d. internal corporate venturing.

taking advantage of a need in the marketplace

The dimensions on which functional departments can vary include all the following EXCEPT orientation. a. time b. customer c. technological d. interpersonal

technological

To be successful, an autonomous process for developing new products relies on a. the diffusion of tacit knowledge. b. the acquisition of innovative firms. c. strategic alliances with other firms. d. internal corporate venturing.

the diffusion of tacit knowledge.

A negative effect of acquiring other firms for the purpose of innovation is a. innovations cannot be transferred between organizations. b. the effect it can have on the firm's own ability to produce innovations. c. innovations may not actually be present in the firm after the purchase is completed. d. the acquired firm's employees usually leave.

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 a. the use of autonomous strategic behavior. b. the use of induced strategic behavior. c. development of radical innovations. d. innovation through acquisitions.

the use of induced strategic behavior.

Induced strategic behavior as a form of internal innovation is a(n) process. a. bottom-up b. top-down c. free-flowing d. external

top-down

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 b. False

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 b. False

true

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

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 b. False

true

Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of production. a. True b. False

true

Entrepreneurship is the economic engine driving national economic growth in many nations. a. True b. False

true

Innovation is the means by which the entrepreneur creates wealth. a. True b. False

true

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

true

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

true

Research has shown that internationally diversified firms are generally more innovative. a. True b. False

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 b. False

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 b. False

true

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

true

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 a. uses the induced strategic behavior form of internal corporate venturing. b. uses the autonomous strategic behavior form of internal corporate venturing. c. makes significant investment in research and development. d. focuses on an acquisition strategy for gaining innovative ideas.

uses the autonomous strategic behavior form of internal corporate venturing.

Firms develop innovations in all the following ways EXCEPT a. through autonomous or induced strategic behavior. b. by acquiring other companies. c. through cooperative strategies. d. via divestiture of low-performing units.

via divestiture of low-performing units