MGT 4893 - Ch 12 SmartBook

True or false: Real options analysis is suitable for strategic decisions for investments that give a company the right, but not the obligation, to make subsequent investments.

True

Which of the following statements about an entrepreneurial culture are true? (Check all that apply.)

-Everyone in the organization is on the lookout for new opportunities. -Senior managers must support programs and provide incentives that foster an entrepreneurial climate. -Many of the best ideas for new ventures come from functional-level employees.

Which of the following statements about innovativeness are correct? (Check all that apply.)

-Innovative companies continuously seek out new product or service offerings. -It fosters creativity and experimentation. -It requires companies to venture beyond the current state of the art.

Which of the following statements about autonomy are correct? (Check all that apply.)

-It empowers employees to identify and leverage entrepreneurial opportunities. -It applies to both dispersed and focused entrepreneurial efforts. -It refers to both individuals and teams that operate outside an organization's existing norms and strategies.

Which of the following explain when managerial conceit occurs? (Check all that apply.)

-It happens when decision makers who have made successful choices in the past believe they have superior expertise for managing uncertainty. -It happens when managers pay less attention to small decisions because they assume real options will alert them to any potential problems.

Which of the following statements about entrepreneurial orientation are correct? (Check all that apply.)

-It has five dimensions that permeate the decision-making styles and practices of firm's members. -Its dimensions are autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. -The five factors work together to enhance a firm's entrepreneurial performance.

Which of the following are the aims of corporate entrepreneurship (CE)? (Check all that apply.)

-Strategic renewal within the company -The pursuit of new venture opportunities

Which of the following statements about innovation are true?

-There can be innovation made to human resources, marketing, and a firm's infrastructure. -It must involve using new knowledge. -New technology is among the most important sources for innovation.

Which of the following are true about managing the pace of radical innovation? (Check all that apply.)

-There is often open-ended experimentation with time-consuming mistakes. -It has long periods of exploration in which experimentation makes strict timelines unrealistic. -The project timeline is typically as long as 10 years or more.

Which of the following statements about disruptive innovations are true? (Check all that apply.)

-They appeal to less demanding customers who are seeking more convenient, less-expensive solutions. -They are technologically simpler and less sophisticated than currently available products or services. -They take time to take effect and only become disruptive once they have taken root in a new market or low-end part of an existing market.

Which of the following statements about process innovation are correct? (Check all that apply.)

-They are associated with an overall cost leadership strategy. -Process innovation is likely to occur during later stages of the industry life cycle. -Firms can often improve by drawing on new technologies and the organization's experience.

Which of the following statements about product champions are true? (Check all that apply.)

-They are often needed to take charge of internally generated ideas. -They help promote the concept to upper management. -They help find resources for new product ideas.

Which of the following are true about sustaining innovations? (Check all that apply.)

-They extend sales in an existing market. -They often enable new products or services to be sold at higher margins. -They include either incremental or radical innovations.

Which of the following statements about business incubators are correct? (Check all that apply.)

-They provide some or all of the following functions: funding, physical space, business services, mentoring, and networking. -They are a type of corporate new venture group that has a specialized purpose. -They are designed to hatch new businesses.

Which of the following statements about new venture groups are correct? (Check all that apply.)

-They typically have a larger mandate than an R&D department. -They are usually semiautonomous units with little formal structure. -Their goal is to identify, evaluate, and cultivate venture opportunities.

Which of the following are strategic reasons for undertaking a corporate venture? (Check all that apply.)

-To strengthen the firm's competitive position -To enter into new markets -To build the firm's base of resources and experience -To expand the firm's capabilities by learning and acquiring new knowledge

Which of the following are resources or services that business incubators provide start-up companies? (Check all that apply.)

-business services -physical space -funding

Which of the following are among the challenges to innovation?

-experience versus Initiative -internal versus external staffing -seeds versus weeds

Which of the following are potential pitfalls of real options analysis? (Check all that apply.)

-overconfidence and the illusion of control -back-solver dilemma -irrational escalation of commitment

Which of the following is a service or function that business incubators provide? (Check all that apply.)

-providing access to senior executives and technical personnel who provide coaching -setting up facilities that have phone systems, computer networks, copy services, and receptionists -connecting tenants with industry experts, potential customers, and suppliers

_____ is an intense effort to outperform industry rivals characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace.

Competitive aggressiveness

_____ is the creation of new value for a company through investments that create either new sources of competitive advantage or renewal of the value proposition.

Corporate entrepreneurship

_____ is the tendency for managers to irrationally stick with an investment even when investment criteria are not being met.

Escalation of commitment

True or false: A sustaining innovation is a type of disruptive innovation.

False

______ is the use of new knowledge to transform organizational processes or create commercially viable products and services.

Innovation

Which of the following are risks that executives and business organizations face? (Check all that apply.)

-Financial risk taking -Personal risk taking

Which of the following statements regarding collaborating with innovation partners are correct? (Check all that apply.)

-Firms must identify their strengths and weaknesses to ensure they select a partner that is complementary. -Networks of partners can result in increased speed and ease when innovation is conducted. -Innovation partners may come from many sources, including research universities.

Which of the following questions would help assess the effectiveness of a corporation's venturing initiatives? (Check all that apply.)

-Is the venture able to sustain its basis of competitive advantage? -Are the products or services a market success? -Does the venture add to the company's internal competencies in a valuable way?

Which of the following statements about incremental innovations are correct? (Check all that apply.)

-It enhances existing practices. -It can be a source of competitive advantage. -It often extends or expands the firm's product line or manufacturing skills.

Which of the following statements about radical innovation are true? (Check all that apply.)

-It is usually due to technological change. -It tends to be highly disruptive. -It may lead to products or processes that can be patented.

Which of the following statements regarding the application of real options analysis to strategic decision making are true? (Check all that apply.)

-It works when companies are not obligated to make additional investments in a project. -It can be applied to decisions where managers have flexibility in their decisions. -There are key points where managers decide whether to provide additional funding, delay, or kill the project.

Which of the following are considered focused approaches to corporate entrepreneurship? (Check all that apply.)

-New venture groups -Business incubators

Innovation by managers requires creative intelligence, which is driven by which of the following?

-Observing -Experimenting -Associating

Which of the following statements about competitive aggressiveness are correct? (Check all that apply.)

-One technique is to enter markets with drastically lower prices. -One technique is to find successful business models and copy them. -It is a strategy best used in moderation.

Which of the following are the two stages new venture concepts must pass in order to get off the ground? (Check all that apply.)

-Project definition or justification in terms of its attractiveness in both the marketplace and fit to the firm's strategy. -Project impetus or support for the project by senior managers who have experience with similar projects.

Which of the following statements regarding the internal versus external staffing challenges to innovation are correct? (Check all that apply.)

-Project managers must be able to justify the time required to hire, train, and help with relationship building for new personnel. -People within the firm may have greater social capital and know the organization's culture and routines. -Internal personnel may be inhibited from thinking outside the box due to their knowledge of their organization's culture and routines.

Which of the following statements about managers being able to develop innovative products and services are correct? (Check all that apply.)

-Questioning, observing, experimenting, and networking play important roles in the innovative process. -Practicing questioning, observing, experimenting, and networking will make managers more innovative thinkers. -Creative intelligence is the key attribute that firms need to develop in their managers.

Which kinds of goals need to be met for a successful venture in corporate entrepreneurship? (Check all that apply.)

-Strategic -Financial -Internal learning

Which of the following statements about exit champions are true? (Check all that apply.)

-They put their reputations on the line. -They reduce ambiguity by gathering hard data and develop a strong case for why the project should be ended. -They must stand up for what they believe.

Which factors determine the way a company approaches entrepreneurial ventures? (Check all that apply.)

-Whether it is product- or service-oriented -Whether it bases innovations on products or process -Whether it uses teams in strategic decision making

What is the purpose of real options analysis in entrepreneurship?

It is used to suggest a path that companies can use to manage the uncertainty associated with launching new ventures.

_____ are groups of individuals or a division within a corporation that identifies, evaluates, and cultivates venture opportunities.

New venture groups

_____ is a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand.

Proactiveness

_____ innovation refers to efforts to improve the efficiency of organizational processes, especially manufacturing systems and operations.

Process

_____ innovation involves efforts to create product designs and applications of technology to develop new products for end users.

Product

_____ innovation is an innovation that fundamentally changes existing practices.

Radical

_____ is an investment analysis tool that suggests a path that a company can follow to manage the uncertainty of launching a new venture.

Real options analysis

_____ is a problem with investment decisions in which managers "game the system" to have a project meet investment approval criteria, even though the investment may not enhance firm value.

The back-solver dilemma

Product innovation tends to be more common during which stage of the industry life cycle?

The introduction stage

True or false: Companies are often reluctant to invest time and other resources into activities with an unknown future.

True

True or false: Disruptive innovations appeal to less demanding customers who want more convenient and less expensive solutions.

True

What do companies gain when they use real options logic to invest in promising start-ups?

access to emerging technology

In successful CE, which of the following often provide the greatest returns?

breakthrough opportunities

The tendency for managers to continue an existing project even though it should be ended is called escalation of

commitment

The two critical stages through which a concept for a new venture must pass are project ______ and project impetus.

definition

Corporate entrepreneurship in which a dedication to the principles and policies of entrepreneurship is spread throughout the organization is known as the ______ to corporate entrepreneurship.

dispersed approach

Business risk taking of an organization involves ______.

entering untested markets or committing to unproven technology

Which of the following refers to a willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes?

innovativeness

Collaborating on innovation projects with other companies is ______.

often the best means to achieve success, since new skills and insights are needed.

A(n) ______is an individual working within a corporation who brings entrepreneurial ideas forward, identities what kind of market exists for the product or service, finds resources to support the venture, and promotes the venture concept to upper management.

product champion

Financial risk taking in business organizations ______.

requires that the company commit a large portion of its financial resources in order to grow

In companies with many innovative ideas, deciding which ideas to cultivate and which to cast aside is known as ______.

seeds versus weeds

Firms that use a focused approach to entrepreneurship typically

separate the venturing activities from the rest of the ongoing operations

Which of the following refers to a firm-specific view of innovation that defines how a firm can create new knowledge and learn from an innovation initiative even if the project fails?

strategic envelope

What is the goal of redefining a particular competency or technology?

to broaden its possible applications

Companies can use real options logic to invest in young firms using funds called corporate ______ capital that are earmarked for such investments.

venture

Which of the following statements regarding the incremental versus preemptive launch challenges to innovation are correct? (Check all that apply.)

-A preemptive launch requires more resources. -An incremental launch may allow competitors to respond. -An incremental launch is less risky because it requires fewer resources.

Which of the following are examples of staffing practices for innovation that are counterproductive? (Check all that apply.)

-A team consisting of strong employees taken from the company's core business -A climate where innovation teams are treated as second-class citizens -A team consisting of volunteers who want to work on projects they find interesting

Guidelines for competing in a dynamic, innovative market in which a winning technology has not yet become dominant include which of the following? (Check all that apply.)

-Apply knowledge gained from an innovation that has failed to new market opportunities. -Be aware that making initial correct innovation choices does not prevent later mistakes. -Be cautious about overcommitting in an attempt to be seen as a leader in the market.

Which of the following statements about corporate venturing efforts are correct? (Check all that apply.)

-Companies expect higher returns from new corporate ventures than normal operations. -Just over 50% are financially successful. -In terms of a risk-return trade-off new corporate ventures often fall short of expectations.

Which of the following are guidelines for successfully competing in dynamic markets with high technology uncertainty? (Check all that apply.)

-Consider staying in the market, even when betting on the wrong technology, so that the company does not miss out on future opportunities. -Change course quickly (pivot) once a mistake is realized. -Don't over commit, because it can lead to becoming entrenched in the technology that managers select.

Which of the following are true about managing the pace of incremental innovation? (Check all that apply.)

-Development is usually at a fast pace to get innovations out at a planned pace. -Milestones are often driven by stringent goals and deadlines. -The project time may be six months to two years.

Which of the following statements about proactiveness are correct? (Check all that apply.)

-One technique is to introduce new products or technological capabilities ahead of competitors. -It is a forward-looking strategy. -It puts competitors in the position of having to respond to successful initiatives.

Which of the following affect whether a typical company will pursue entrepreneurial projects? (Check all that apply.)

-Organizational structure -Corporate culture -Leaders' attitude

Which of the following statements regarding the building capabilities versus collaborating challenges to innovation are true? (Check all that apply.)

-Partnerships may inhibit internal skill development. -Innovation projects often require new sets of skills not found in the company. -Partners bring new skills and other resources and also share risk.

Which of the following are among the human resources management practices that help firms to capture value from innovation efforts? (Check all that apply.)

-Require employees to serve in the new venture group as part of their career ladder. -Create innovation teams with experienced members who know how to deal with ambiguity. -Separate an individual's performance from the innovation project's performance.

Which of the following regarding the challenges to innovation of experience versus initiative are correct? (Check all that apply.)

-Senior managers must determine who is best suited to lead an innovation project. -Senior managers have experience but may be too risk averse to lead an innovation product. -Mid-level employees may not have as much experience but may be able to understand how an innovation would address specific problems.

Which of the following statements about the seeds versus weeds challenge to innovation are correct? (Check all that apply.)

-Some projects require a considerable level of investment before their worth can be evaluated. -Companies need to develop a mechanism with which they can select among various opportunities.

Which of the following statements regarding dispersed approaches to corporate entrepreneurship are correct? (Check all that apply.)

-Stakeholders often bring new ideas or opportunities to anyone in the organization and expect that they will be well-received. -The entire organization is dedicated to the principles and practices of entrepreneurship. -Change is an important core capability.

Place the steps to leveraging business technologies or competencies in new markets in their correct order, with the first step at the top.

1.Redefine the technology or competency. 2.Identify new applications. 3.Select the most promising applications. 4.Choose the best mode of entry.

Which of the following refers to a willingness to act independently in order to carry forward an entrepreneurial vision or opportunity?

Autonomy

_____ are corporate new venture groups that support and nurture fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses.

Business incubators

Which of the following refers to the strategy-making practices that businesses use in identifying and launching new ventures consisting of autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking?

Entrepreneurial orientation

_____ innovation is an innovation that enhances existing practices or makes small improvements in products and processes.

Incremental

_____ is making decisions and taking action without certain knowledge of probable outcomes.

Risk taking

A(n) ______ culture is one in which change and renewal are a constant focus of attention.

entrepreneurial

Focusing a firm's innovation efforts to a strategic ______ limits the scope of the firm's efforts and helps avoid wasting resources on the project.

envelope

A(n) ______ champion is an individual working within a corporation who is willing to question the viability of a venture project by demanding hard evidence of venture success and challenging the belief system that carries a venture forward.

exit

Which of the following is the approach to corporate venturing in which corporate entrepreneurship activities are isolated from a firm's existing operations and worked on by independent work units?

focused

Personal risk taking in business organizations

is associated with the risk that executives assume in favoring a strategic course of action

Biases, blind spots, and other human frailties that lead to poor managerial decisions fall under the concept of ______.

managerial conceit