MKT 3360 Chapt 6/7/8/10/12

What is the net present value (NPV) of a project if the present value of cash inflow is $10,000 and the present value of cash outflows is $5,000?

$5,000

Which of the following statements is true of core competencies?

A firm's core competency is more than just a core technology.

The Corner Shop Corp. is a leading supermarket chain in Chicago. According to Michael Porter's model of a value chain, which of the following activities of the firm is a primary activity?

An advertising campaign for a new The Corner Shop outlet

Which of the following would be an example of a tacit resource?

An oddsmaker who works for a large casino in Las Vegas and is correct 95 percent of the time

Noah owns a firm that sells furniture at an affordable cost. As most of the products he sells need to be assembled by the customer, he is able to sell them at prices lower than most competitors. His marketing strategy focuses on providing lower prices for good-quality products. He has also marketed the fact that assembling the products is very easy if the customer follows the instructions and demos given on the firm's website. Considering that most of the customers used to buy furniture from out of town at higher prices, Noah's self-assembled furniture business has become quite successful in his town and he has managed to create and capture this demand in an uncontested market space. Which of the following strategies was used by Noah in his business?

Blue ocean strategy

Fabmark Consultancy was asked by a client to evaluate the attractiveness of a potential project to develop a new product line. The data provided by the client included cash flow estimates (in dollars), ranking of marketability by the sales force, and ranking of different product attributes from a potential customer focus group. Which of the following methods would allow Fabmark Consultancy to combine this information and analyze it?

Breakeven analysis

_____ refers to the allocation of a finite quantity of resources over different possible uses.

Capital rationing

A derivative project is designed to serve a core group of consumers, whereas platform projects represent modifications of the basic platform design to appeal to different niches within that core group.

False

A firm cannot collaborate with its competitor.

False

A firm's effectiveness at managing its collaborations will increase with the number of collaborations to which it is committed.

False

A strategic stakeholder analysis emphasizes the stakeholder management issues a firm ought to attend to due to their ethical or moral implications.

False

According to Porter's value chain model, firm infrastructure is a primary activity.

False

According to the net present value method of discounted cash flow analysis, the time required to break even on a project using discounted cash flows is known as period of return.

False

Breakthrough projects typically offer fundamental improvements in the cost, quality, and performance of a technology over preceding generations.

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.

False

It is unusual for a company to lack certain complementary assets required to transform a body of technological knowledge into a commercial product.

False

Joint ventures offer low potential for leveraging a firm's existing competencies because they typically entail a short-term relationship between two or more firms.

False

Licensing a technology from another firm is typically more expensive for a licensee than developing a new technology in-house.

False

Low exit barriers intensify rivalry by making firms reluctant to abandon the industry.

False

Obtaining some of the necessary capabilities or resources from a partner rather than building them in-house will increase a firm's asset commitment.

False

Path dependency refers to the abilities that make a firm more agile and responsive to change.

False

Red oceans refer to untapped market space that firms create by redefining the dimensions of competition

False

Resources of a tangible nature that can be readily codified are called tacit resources.

False

Solo internal development is, on average, a relatively fast and inexpensive way of developing a technology.

False

The allocation of a finite quantity of resources over different possible uses is known as research rationing.

False

The drawback to data envelopment analysis (DEA) is that it does not allow comparisons of projects using multiple kinds of measures.

False

The ratio of R&D expenditures to sales is known as R&D trajectory.

False

Weekly News Inc. bought the paper mill that supplied paper for printing its magazine. This is an example of horizontal integration.

False

When demand is increasing, there is less revenue to go around and firms will experience more competitive pressure.

False

Which of the following can be classified as an internal perspective and its defining measure under the balanced scorecard approach?

Having a goal such as improving the inventory management system and its defining measure such as inventory costs

Mark is a wealthy private financier who funds projects without utilizing a venture capital limited partnership structure. He typically provides funds for start-up projects that are $1 million or less. There have been instances in the past where Mark lost a huge share of money in some projects, but he also received high returns on some other projects. He is aware of the risks, but that does not stop him from funding start-ups. Which of the following would best describe Mark?

He is an angel investor.

Which of the following statements is true of outsourcing?

It carries a risk of proprietary technology being expropriated by the contract manufacturer.

Which of the following is a disadvantage of using internal rate of return for assessing a project?

It discriminates heavily against long-term and risky projects.

Which of the following statements is true of contract manufacturing?

It enables a firm to tap the greater economies of scale.

Which of the following is an advantage of collaborating?

It gives firms more flexibility.

Which of the following is a feature of a joint venture that differentiates it from other forms of alliances?

It involves a significant equity stake by the partners.

Which of the following statements is true of conjoint analysis?

It is most commonly used to assess the relative importance to customers of different product attributes.

Which of the following statements is true of Porter's five-force model?

It is often used in practice to assess a specific firm's external environment.

Which of the following is an advantage of using the real options approach of evaluating a project?

It results in better technology investment decisions than a cash flow analysis approach.

Easymake Corp. 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?

It should become a licensor of the new Web design software.

The R&D team of Zelda Technozone Inc. 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?

Joint venture

Which of the following statements is true of Michael Porter's model of a value chain?

Procurement includes activities such as the acquisition of inputs.

In the _____ method, in order to establish scales of customer preferences, individuals in a group are each given a stack of cards with an object or idea on each card.

Q-sort

In the context of a research and development (R&D) program, which of the following can be considered the exercise price?

The cost of future investment required to capitalize on the R&D program

Which of the following is a feature of the blue ocean strategy?

The strategy lays emphasis on making the competition irrelevant.

Which of the following statements is true of angel investors?

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?

They enable managers to use rigorous statistical comparisons of projects.

A firm's emphasis on a scientific discipline that is central to its core competency can make the firm less attractive to individuals from other disciplines.

True

According to 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.

True

According to Porter's five-force model, the threat of potential entrants is influenced by the height of entry barriers.

True

According to Prahalad and Hamel's model, it is possible for a firm to develop core competencies to a set of abilities that enable it to quickly reconfigure its organizational structure and routines in response to new opportunities.

True

After licensing a technology, a firm typically has limited discretion over what it can do with the technology.

True

Ammunition can be considered a complement for firearms

True

Both net present value and internal rate of return techniques provide concrete financial estimates that facilitate strategic planning and trade-off decisions.

True

Calculating the internal rate of return of a project typically must be done by trial and error.

True

Collective research organizations can take the form of trade associations.

True

Conjoint analysis enables a subjective assessment of a complex decision to be decomposed into quantitative scores of the relative importance of different criteria.

True

Data envelopment analysis (DEA) utilizes linear programming.

True

Equity ownership helps to align the incentives of the partners and provides a sense of ownership and commitment to the project that can facilitate supervision and monitoring of the alliance.

True

Firms can use strategic alliances to exploit their own capabilities by leveraging them in another firm's development efforts.

True

Formulating a technological innovation strategy first requires an accurate appraisal of where the firm currently is.

True

In general, the more firms competing that are of comparable size, the more competitive the industry will be.

True

Options are valuable when there is uncertainty, and because technology trajectories are uncertain, an options approach may be useful.

True

Product life cycles shorten with high-speed technological changes.

True

Some firms avoid collaboration for fear of giving up their proprietary technologies.

True

Standard discounted cash flow analysis has the potential to severely undervalue a development project's contribution to a firm.

True

The investor is an active driver of the value of an investment.

True

The pooling of supplementary resources can enable partners to achieve market power or economies of scale.

True

Through a strategic alliance, firms can establish a limited stake in a venture while maintaining the flexibility to either increase their commitment later or shift these resources to another opportunity.

True

While the value of a stock is independent of the call holder's behavior, the value of a R&D investment is not independent of the investor's behavior.

True

Perfecto Espresso Corp. is a chain of coffee shops in the United States. Earlier it used to source its coffee from several coffee suppliers. However, recently it started its own coffee plantation to supply its coffee shops. This is an example of:

backward vertical integration.

Scripts & Scrolls Corp. supplies printing paper to select publishing houses. When its customers asked for a discount in the cost of supplies, the company had to oblige fearing that the customers might withdraw pending contracts. This shows the increased:

bargaining power of buyers.

NewDigger Inc. makes backhoes for digging ditches and trenches. It has developed an environmental-friendly liquid that, when poured on the ground, reduces the time and labor required to dig trenches of various depths, depending on how much is applied. The firm has recently started using this product commercially. This would most probably be considered a(n) _____ project for NewDigger.

breakthrough

TechToTeach Co. 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.

breakthrough

Combining the capabilities and other resources of partner firms but not necessarily transferring those resources between the partners is referred to as _____.

capability complementation

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 _____.

conjoint analysis

Piezo Tech Solutions supplies hospitals with software to track insurance claims. As insurance regulations and policies are always changing, the firm's software needs to have the ability to be agile and responsive to change. In other words, the software needs:

dynamic capabilities.

If a firm has the option of investing in R&D, the cost of commercializing a new technology that is developed can be considered the:

exercise price.

Mr. Crunchy Inc. is a firm experiencing severe losses. However, with large initial investment in manufacturing equipment and infrastructure, the firm is finding it difficult to abandon the industry. According to Porter's five-force model, the company is facing a(n):

exit barrier.

Greyer Corp. 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:

find a partner to collaborate with to sell the drug.

Allure Fabrics Corp. supplies cotton, linen, and silk fabrics to various designer wear boutiques in and around Florida. The firm has recently launched a boutique in Florida under its own brand name to sell women's fashion apparel. Allure Fabrics is practicing:

forward vertical integration.

According to Porter's five-force model, if a buyer can threaten to backward vertically integrate, it will:

increase the buyer's bargaining power.

A resource can be extremely difficult to imitate if:

it arises through the complex interaction of multiple people.

llured Architecture Inc. collaborated with Maze & Matiz Corp. to form a new architecture firm called AllureAmaze Inc. Both the firms had a significant equity stake in the new entity. This collaboration would most accurately be termed a(n) _____.

joint venture

Greyer Corp. manufactures surgical instruments. Systems Medico Inc. enters into a contractual arrangement with Greyer that allows it to use Greyer manufacturing methods and management structure to produce and sell surgical instruments. Systems Medico must pay a yearly fee to Greyer for the use of its manufacturing processes. In this scenario, Systems Medico is the _____.

licensee

Allured Cosmetics Corp. enters into a contractual agreement with Pure Cosmetics Inc., a manufacturing firm in the West Coast. According to the contract, Pure Cosmetics can use the manufacturing processes of Allured Cosmetics to produce cosmetics in return for a specific fee. Pure Cosmetics is bound to use the manufacturing process only to make complementary products for the cosmetics manufactured by Allured Cosmetics. This collaborative arrangement is classified as _____.

licensing

The discounted cash inflows of a project minus the discounted cash outflows is referred to as the _____ of the project.

net present value

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 _____.

outsourcing

oolers Inc., 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 Inc.

platform project

f the net present value of a project is greater than zero, then the:

project generates wealth.

Socially complex resources are:

resources or activities that emerge through the interaction of multiple individuals.

When Faslow Medical Center in Exeter County changed its name to Faslow Hospital, it also unveiled a plan to build a medical tower that would double its physical facilities by 100 percent within the next 10 years. It also announced that its goal was to not only serve Exeter County but also serve the entire region including the five contiguous counties. This is most accurately an expression of:

strategic intent.

In the context of qualitative methods for choosing projects, screening questions are used mainly to:

structure the discussion about project details like potential costs and benefits.

Ample Espresso Corp. is a coffeehouse located across from Tian's Kitchen, a restaurant. According to Porter's five-force model, the services and products provided by both are most accurately classified as:

substitutes.

Factors that make it difficult or expensive to change suppliers or buyers are referred to as _____.

switching costs

Ceramic Customs Corp. required a specific type of ceramic to make its tiles. Since there was only one supplier for that particular ceramic, the firm was forced to source all of its supplies from it. The firm tried negotiating the price of the material but failed to get any reduction on the cost. This was because:

the supplier had more bargaining power than the firm.

According to Porter's five-force model, if suppliers of a particular good are very abundant, _____.

their bargaining power will be less

The balanced scorecard is a measurement system that encourages the firm to consider its goals from multiple perspectives (financial, customer, business process, and innovation and learning), and establish measures that correspond to each of those perspectives.

true

When technology is progressing rapidly, firms are more likely to:

use linkages with other specialized firms to access resources they do not possess.

A firm that invests heavily in derivative projects that may be immediately commercialized with little risk:

will likely be unable to compete when the market shifts to a newer technology.