MKT 3360 Quizzes 1-13

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Walter is the new director of R&D at Good Health Inc., a pharmaceutical company. Which of the following statements by Walter would indicate that he believes in the concept of the innovation funnel?

"While there are many potential new product ideas going in the wide end, very few make it through the development process."

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

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?

2.5 years

Shirley, a U.S. citizen, has invented a solar-powered amplifier that can be used in small speakers, such as Bluetooth speakers, to increase the volume up to five times. She decides to apply for a patent for this device in the United States. If she receives approval for the patent, what would be the duration of patent protection?

20 years

Jupiter Tech Inc. has conducted a failure modes and effects analysis of a digital identification system that it developed. The scores are as follows: Severity = 4 Likelihood of occurrence = 2 Inability of controls to detect it = 3 What is the risk priority number of the digital identification system?

Which of the following statements is true of a component innovation?

A component innovation does not significantly affect the overall configuration of a system.

Which of the following statements is true of technology diffusion?

A drop in the price of a new technology can accelerate technology diffusion.

Which of the following statements is true of using marketing to shape perceptions and expectations?

A firm can signal its commitment to an industry by making substantial investments that would be difficult to reverse.

Which of the following statements is true of core competencies?

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

Which of the following can be protected by a copyright?

A novel

_____ is the ability of an organization to recognize, assimilate, and utilize new knowledge.

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.

Alliance contracts

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 is essential for a firm's new product development process to help maximize the likelihood of projects being both technically and commercially successful?

An in-depth understanding of the dynamics of innovation

Erison Group, an advertising company, wants to hire a creative head. Who among the following would be best suited for this position?

An individual who has a moderate degree of knowledge of the field but is intrinsically motivated

Which of the following statements is true of the different types of innovations?

An innovation that was once considered radical may eventually be considered incremental as the knowledge base underlying the innovation becomes more common.

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

Alpen Inc. 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?

As Alpen is the technology leader in the food processor manufacturing sector, the firm will yield sustained monopoly rents.

In the context of product development teams, which of the following statements is true?

As the size of a team increases, the potential for social loafing increases.

Which of the following is a defining characteristic of autonomous teams?

Autonomous teams often do not conform to the operating procedures of the rest of the organization.

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

Kroters Inc., a detergent manufacturing company, has built a new manufacturing plant on the outskirts of Woodsville. Since a majority of the population of Woodsville depend on agriculture for their livelihood, the management of Kroters decides to invest in a project that will most likely create a positive externality for the community members. Which of the following project plans is likely to help achieve positive externality?

By setting up an organic farm near Woodsville

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

Capital rationing

Which of the following is an advantage of making a new generation of technology backward compatible?

Consumer switching costs may be lower because they anticipate using their existing complements.

Earth Love Electronics Inc. has developed a lawn mower that runs on solar power. The lawn mowers are available in all local supermarkets and home appliances stores. Customers can also check out videos and product details and then order a lawn mower on the company's home page. According to the Buyer Utility Map, which of the following primary new value propositions is being offered by the company?

Convenience utility in the purchase stage

Which of the following statements is true of a dominant design?

Convenience utility in the purchase stage

Which of the following is a disadvantage of using online advertising such as social media?

Conversion of visitors to customers is often low

Sigma Cleaning Inc. wants to use the house of quality matrix in designing and developing a new vacuum cleaner. What is the last step that Sigma Cleaning should take?

Creation of a new design based on the design targets

Which of the following is an advantage of cross-functional teams?

Cross-functional teams allow a project to draw on a wider mix of information sources in the environment.

Electrocartonics Inc. recently approached people worldwide to come up with ideas to create a vehicle that could run on electricity or solar power, was affordable, easy to use and maintain, safe, and that could cover long distances. Millions of people shared their ideas and designs with the company. The shortlisted individuals were then invited by the company to discuss with their R&D team potential ideas, problems with the existing vehicle models, and possible solutions. These individuals were then given an exclusive tour of the manufacturing and assembly units and a preview of the models that were yet to be introduced in the market. Which of the following terms best describes the problem-solving model used in the scenario?

Crowdsourcing

Which of the following statements is true of customer preferences?

Customers can differ from producers in their understanding of a new technology.

Computer hardware has developed over the years with recent devices providing better and higher storage capacities. From the use of floppy disks, in the early days, for storing information, to the current use of CDs, portable hard disks, and pen drives, information storage capacities have improved with the invention of each new device. These days, floppy disks are seldom used and most of the latest computers do not include floppy drives. Which of the following types of technology is being described in the scenario?

Discontinuous

Magnitude Inc. was the first company to introduce a video gaming console in the market. However, consumers were uncertain about the product, and its high costs discouraged consumers from purchasing it. Eventually, Magnitude withdrew the product from the market. A few years later, Mantel Corp. and Adventura Inc. came up with their respective gaming consoles and successfully established their products. In this scenario, Mantel and Adventura would be considered:

Early followers.

Super Alarm Inc. makes customized door security systems, which it sells under its own brand name. These security systems require installation, extensive customer education, and regular services. _____ would be the most appropriate selling method for Super Alarm Inc.

Employing a direct sales force

Which of the following statements is true of a firm entering a market too early?

Enabling technologies and complements available to the firm will be immature.

Jupiter Inc., a software firm, is starting to face competition from the new entrant in its market, Coral Inc. Jupiter wants to prevent its existing customers from switching to Coral's newly developed software. Which of the following measures should Jupiter adopt to achieve its objective?

Ensuring that customers find its software simpler and more convenient to use than that of Coral's

_____ refer to the costs (or benefits) of technological innovations that are borne by individuals other than those responsible for creating them.

Externalities

Which of the following statements is true of externalities?

Externalities can be in the form of benefits reaped by individuals other than those who created them.

A center-for-global approach tends to be very responsive to the diverse demands of different markets.

A common set of international copyright laws automatically protects an author's work throughout the world.

A contract book must be developed before a project charter is written.

A cross-functional team is one that has members of different ethnic backgrounds in a single functional area.

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.

A firm cannot collaborate with its competitor.

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

A firm's prior success in the market increases its ability to respond to new technological generations. This is known as an Icarus Paradox.

A high degree of formalization and standardization in firms results in organic structures.

A legally induced adherence to a dominant design is not possible.

A loosely coupled structure is best suited for activities that involve exchange of tacit knowledge.

A modular innovation significantly affects the overall configuration of a system.

A sequential process has an early warning system to indicate that planned features are not manufacturable.

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

A technology diffusion curve is s-shaped because adoption is initially fast when a new technology is introduced to the market.

According to Joseph Schumpeter, small firms are likely to have better-developed complementary activities such as marketing or financial planning that enable them to be more effective innovators than larger firms.

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

According to the adopter categories proposed by Everett M. Rogers, early majority members are the first individuals to adopt an innovation and they have the greatest potential for opinion leadership.

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.

At the aggregate level, the more firms that are using a given technology and refining it, the more absorptive capacity that is being generated related to that technology, making development of that technology less effective and efficient.

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

Cannibalization is the process by which a firm's sales of one product diminish because of a substitute product offering by a competitor.

Champions are solely involved with radical innovation projects.

Collaborative research is prohibited in high-technology sectors.

Discovery of scientific principles that pertain to natural laws can be patented in all countries as they are considered to have always existed.

Failure modes and effects analysis (FMEA) was initially adopted primarily for development projects in which the risks posed by failure were minimal.

Firms cannot influence the shape of the s-curve through their development activities.

Firms intending to maximize market share typically use a market skimming pricing strategy.

Firms may seek patents just to limit the options of competitors or to earn revenues through aggressive patent lawsuits. These actions are sometimes referred to as patent thickets.

Firms try to decrease their development cycles in order to increase their timing of entry options. This move indicates that firms should always be racing to launch their products as early as possible.

For a firm to adopt a component innovation, it requires architectural knowledge about the way components link and integrate to form a whole system.

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.

Functional teams typically have a project manager or dedicated liaison personnel.

Homogeneous teams should possess more information, on average, than heterogeneous groups.

If the knowledge underlying a particular technology is tacit, competitors will typically find it very easy to duplicate.

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.

In a functional team approach to new product development, team members remain in their functional departments and may meet periodically to discuss the project.

In a loosely coupled structure, development and production activities achieve coordination through tight integration.

In a market characterized by network externalities, the benefit from using a good decreases with an increase in the number of other users of the same good.

In crafting an advertising message, firms must focus more on making the advertisements entertaining and memorable than on providing a significant quantity of informative content.

In heavyweight teams, all team members are dedicated full-time to a project even after the completion of the project. Hence, these teams are permanent in nature.

In heavyweight teams, the long-term career development of individual members rests with their project managers rather than their functional managers.

In industries characterized by network externalities, the value of a technological innovation to users will be a function only of its stand-alone benefits and cost.

In the United States, there are no laws to protect trade secrets.

In the context of s-curves in technological improvement, as a technology begins to reach its inherent limits, the cost of each marginal improvement decreases, and the s-curve flattens.

In the context of s-curves in technological improvement, performance improvement in the early stages of a technology is rapid, irrespective of how well the fundamentals of the technology are understood.

Incubators are regional districts, typically set up by government, to foster R&D collaboration between government, universities, and private firms.

Independent agents that promote and sell the product lines of one or a few manufacturers are called wholesalers.

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

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.

Knowledge brokers create breakthroughs in a single technology and seldom exploit the potential synergies of combining existing technologies.

Knowledge that cannot be readily codified is called explicit knowledge.

Knowledge that is explicit requires more frequent and close interaction to be meaningfully exchanged than knowledge that is tacit.

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

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

Modularity becomes less valuable in a product system when there are diverse technological options available to be recombined and heterogeneous customer preferences.

Network externalities seldom arise in markets that do not have physical networks.

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

Parallel development processes are universally endorsed.

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

Product innovations are more important than process innovations to organizations because they are less visible than process innovations.

Project managers of heavyweight teams are typically junior or middle management employees, who are not able to exert significant authority over team members.

Quasiformal structures foster interactions based on hierarchy rather than on interests.

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

Research targeted at increasing knowledge for a specific application or need is called basic research.

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

Small firms typically have more bureaucratic inertia due to many layers of authority and well-developed policies and procedures.

Social loafing occurs when, as the size of a team decreases, individuals perceive that they will not receive full credit for their contribution to the group effort and so they make a strong commitment to increase their efforts.

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

Technology diffusion and information diffusion take the same amount of time.

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

The degree to which innovative activities are geographically clustered is independent of the national differences in the way technology development is funded or protected.

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

The learning curve indicates that the more units a company produces of an item, the more each unit will cost.

The majority of all new product development projects result in an economic return.

The phenomenon in which firms accumulate knowledge that helps increase their future ability to assimilate information is referred to as learning trajectory.

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

The science-push approach to research and development argued that innovation was driven by the perceived demand of potential users.

The use of executive sponsors reduces the effectiveness of a development process.

The value of a technological innovation is solely determined by what the technology can do.

Three-dimensional printing and traditional methods of constructing take the same amount of time to generate a model.

Titles and names can be copyrighted.

Using computer-aided design (CAD) to build and test product design increases cycle time.

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

When an industry has network externalities, the value of a good to a user is more likely to go up linearly rather than increase in an s-shape.

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

When marketing a new product to the late majority and laggards, a company should emphasize the advanced technological features of the new product.

While mavens with a valuable piece of information are likely to expose it to a great number and diversity of people, connectors are likely to convey the information to fewer people but in more detail.

With advances in information technology, loosely coupled organizational structures are losing their popularity.

A disadvantage of using parallel development processes is that it greatly lengthens the new product development time.

False

A firm intending to refine an earlier entrant's technology should avoid fast-cycle development processes.

False

A firm's organizational structure and control systems seldom have an influence on the generation of innovative ideas.

False

According to the concept of innovation funnel, the number of successful products launched will be greater than the number of raw ideas generated.

False

According to the concept of the innovation funnel, one new idea is usually responsible for several new products.

False

All innovations require complementary goods, and none of them can utilize existing complementary goods.

False

All pioneers face customer uncertainty.

False

An organization's overall creativity level is a simple aggregate of the creativity of the individuals it employs.

False

Early followers enter the market only after a product begins to penetrate the mass market.

False

Early leaders are firms that are the first to enter a market.

False

Flexible manufacturing technologies have made longer production runs economical and have increased the importance of production economies of scale.

False

Globalization of markets has reduced the importance of innovation.

False

Gross domestic product seldom relates to the amount of goods consumers can purchase.

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.

False

Innovation and new technologies have led to longer product life cycles and slower product obsolescence.

False

Irrespective of the type of technological innovations, externalities that result from them are always positive.

False

Late entrants typically bear the bulk of the research and development expenses for their product or service technologies.

False

Technological innovation decreases the amount of output achievable from a given quantity of labor and capital.

False

Technological innovation results in complete eradication of negative externalities.

False

The innovation process is often conceived of as a funnel because most potential new product ideas make it through the development process.

False

The majority of effort and money invested in technological innovation comes from nonindustrial firms.

False

When a market is characterized by mature enabling technologies, a firm should enter the market late.

False

Which of the following statements is true of first movers in comparison with early followers and late entrants?

First movers are in a better position to exploit buyer switching costs and also to reap increasing returns advantages.

Which of the following is a characteristic of the center-for-global strategy?

Greater specialization and economies of scale in R&D activities are achieved.

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

Felix has designed a pair of sunglasses that can be folded and put into a case that easily fits into a shirt or pant pocket. Felix wants to know if he can receive a patent on this invention. Which of the following responses would be most accurate according to the U.S. patent law?

He cannot receive a patent since he is merely making the sunglasses more portable.

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 is an advantage of heavyweight teams?

Heavyweight teams have strong cross-functional coordination and communication.

In the 1980s and 1990s, Neon Corp. was the most successful firm in the television market. The firm believed that its competitors would never be able to produce televisions that compared to their products' quality and price. As a result, it was unable to compete with the newer models of televisions that its Japanese competitors had begun to infiltrate the market with. Eventually, Neon lost its market leadership to its competitors. This scenario most clearly exemplifies the _____.

Icarus Paradox

Theta Cleaning Corp. wants to use the house of quality matrix in designing and developing a new vacuum cleaner. What is the first step that Theta Cleaning should take?

Identification of customer requirements

Which of the following statements is true of the autonomous team structure?

In autonomous teams, team members are collocated with a senior project manager.

Which of the following statements is true of team leadership?

In heavyweight and autonomous teams, the project manager must act as a concept champion for the team within the organization.

Which of the following statements is true of heavyweight teams?

In heavyweight teams, members are collocated with the project manager.

Which of the following statements is true of a patent?

In the United States, an inventor can publish an invention up to a year before applying for the patent.

The vice president of Biomedics Inc. is trying to decide the composition of a new product development team. If she chooses members from multiple functional areas in the firm, which of the following disadvantages is she most likely to experience?

Increase in communication and coordination costs

Silk Work Inc., a manufacturer of silk garments, is planning to replace hand weaving with some modern machines that run on fuel. Which of the following consequences of this measure can be categorized as a negative externality?

Increased pollution as a result of the new technology

Fashion Fair Corp., the first mover in the "all-year discount" stores market, lost its market share to a late entrant, Brand Fair Inc. Brand Fair operates online discount stores, which is cost-efficient when compared to investing in a brick-and-mortar store. Fashion Fair has been unable to replicate the online store business model because of its existing contracts with suppliers and heavy investment in retail stores. This ultimately leads to the failure of the business. Which of the following can be attributed to Fashion Fair's failure?

Incumbent inertia

Which of the following is true of interfirm collaborative research and development networks?

Interfirm networks can enable firms to achieve much more than they could achieve individually.

Which of the following statements is true of the Bayh-Dole Act of 1980?

It allowed universities to collect royalties on inventions funded with taxpayer dollars.

Which of the following statements is true of a collective research organization?

It allows a firm to share the cost and risk of basic research.

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?

It can be patented as it is useful, novel, and not obvious.

Which of the following statements is true of standardization?

It can ensure that activities within a firm run smoothly and yield predictable outcomes.

Which of the following is a disadvantage of the local-for-local strategy?

It can result in significant redundancy in activities.

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 statements is true of resource fit?

It encourages collaborations based on the combination of complementary resources to access resources a firm does not possess.

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 is an advantage of lightweight teams?

It is easier to coordinate activities in lightweight teams than in functional teams.

Which of the following is a disadvantage associated with autonomous teams?

It is hard for autonomous teams to fold back into the parent organization when a project is completed.

Which of the following statements is true of a firm with a long development cycle time?

It is more likely to have a high cost of capital.

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 a limitation of a functional team?

It may have little commitment to the development project.

Under the U.S. patent law, which of the following is one of the mandatory requirements to be met by a new invention in order to be eligible for patent protection?

It must be novel.

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.

Virtual Inc., a manufacturing company, has recently entered the cell phone industry. This industry is characterized by rapid technological innovations. Which of the following is most likely to be true of Virtual Inc.?

It will face rapid product obsolescence.

Which of the following statements is true of patent trolling?

Its primary purpose in owning patents is to extort money from other firms.

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

Erik works in the R&D department of a digital appliances manufacturing company. The company recently acquired a similar company in a different state. As part of the management's plan, Erik was among the chosen few to assist the R&D teams of both the companies in the transfer of information and product knowledge. The purpose of the plan was to enable future research to be conducted by applying all the information gathered by the two teams over the years. Which of the following terms best describes Erik?

Knowledge broker

Which of the following is an advantage of being a late entrant into a market?

Late entrants often do not have to invest in exploratory research.

Iris is quite skeptical about new innovations and is most likely to adopt something new only after experiencing peer pressure. However, she is not so risk averse that she will wait until all uncertainty of a new technology has been resolved; she is willing to accept a little uncertainty if her peers already use the product. Which of the following adopter categories does Iris belong to?

Late majority

Zach has invented a device, which when plugged to household appliances, such as televisions, vacuum cleaners, sound systems, and mixer grinders, will operate them using solar power. The device also works as a battery and converts solar power into energy that can be used during the night. This device needs to be plugged into a port in the household appliances. Since not all appliances have this feature, Zach is of the opinion that he should delay his entry into the market. Which of the following statements supports Zach's decision?

Less mature enabling technologies may favor waiting for enabling technologies to be further developed.

_____ offers a fast way for a firm to extend the reach of its technology that is nearly free and offers the potential for royalties.

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:

Money Club has a larger installed base than Money Ball.

Unicorn Medicines Inc., 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?

Most innovative ideas do not become successful new products.

Neon Electronics Inc. is an electronics manufacturing company. It has adopted a dominant design for its television audio speakers. Which of the following statements is most likely to be true in this scenario?

Neon Electronics will have increased opportunities to develop complementary assets.

Which of the following is a reason attributed to the failure of start-up firms?

New innovations typically tend to be adopted very slowly at first.

_____ require multiple stages of a new product development process to occur simultaneously.

Parallel development processes

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.

Which of the following statements is true of geographical clustering?

Proximate firms have an advantage in sharing information that can lead to greater innovation productivity.

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

Which of the following measures assesses the ratio of a firm's total profits from new products to its total expenditures?

Return on innovation

In the context of failure modes and effects analysis, which of the following formulas is used to calculate the risk priority number?

Risk priority number = severity × likelihood of occurrence × inability of controls to detect

Who among the following is a user innovator?

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?

Science parks often give rise to technology clusters that have long-lasting and self-reinforcing advantages.

Which of the following is the correct sequence of steps for the science-push approach to research and development?

Scientific discovery leads to an invention, the engineering team designs the product, it is then manufactured, and finally the marketing team promotes it.

Alex Richards is the owner of a pesticide manufacturing company. He is aware of the risks that the residents of a nearby community will face because of the liquid pollutants released from the manufacturing unit. In order to counter the risks, he decides to invest in a plan that will create positive externality. Which of the following plans should Alex invest in to accomplish his mission?

Setting up a water treatment plant in the vicinity

A marketing research company categorized Jane as an early adopter. Which of the following would be true of Jane in this context?

She is well integrated into her social system.

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, blood glucose levels, heartbeat, and pace of breathing as they do not monitor these aspects on a regular basis. These variations lead to further complications in most individuals. 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?

She sought a global solution rather than a local solution.

Susan recently dropped her smartphone, which she had been using for three years, and as a result, the phone broke. She had won this phone as a prize in a competition. Since repairing the phone would cost more than buying a new one, her friend suggests that she check out a couple of latest smartphones in the market. Susan has always been skeptical about buying a new smartphone as she thinks the latest phones are quite delicate and need to be handled with care. She researches about the latest phone models on the Internet but is still not convinced about going ahead with the purchase. She is concerned that even if she goes ahead with the purchase and if she drops the phone again, her phone would end up in a similar state as her previous one. Based on the information provided in the scenario, which of the following statements is true of Susan?

Since Susan has reservations about the product's durability, she can be classified as a laggard.

When Green Water Publication publishes academic books or revises previous editions of its books, it donates or sends a number of these new books to university libraries and professors. Its intention is that the professors and students would use those books for their courses and also recommend those books to their colleagues and fellow students in other universities. Which of the following strategies is the firm using to accelerate distribution?

Sponsorship

_____ refers to the degree to which partners have compatible objectives and styles.

Strategic fit

A company with a short development cycle can quickly revise or upgrade its offering as design flaws are revealed or technology advances.

A contract book is an important mechanism for establishing team commitment to a project and a sense of ownership over the project.

A firm can benefit from developing "antichampions."

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.

A lack of cross-functional communication can lead to a poor fit between product attributes and customer requirements.

A service mark distinguishes the provider of a service rather than a product.

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.

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

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.

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

Ammunition can be considered a complement for firearms.

An innovation can be competence enhancing for one firm, while competence destroying for another.

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

Bundling arrangements have proven to be a very successful way for firms to build their installed base and ensure provision of complementary goods.

Bundling enables a new technology to piggyback on the success of another product that already has a large installed base.

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

Collective research organizations can take the form of trade associations.

Computer-aided manufacturing (CAM) is faster and more flexible than traditional methods of manufacturing.

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

Data envelopment analysis (DEA) utilizes linear programming.

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.

External development efforts typically lack the coordination of internal development.

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

Firms in industries characterized by increasing returns will often use the objective of maximizing market share and a penetration pricing strategy.

Firms often form alliances with competitors to jointly work on an innovation project or to exchange information in pursuit of innovation.

For technologies in which standardization and compatibility are important, maintaining the integrity of the core product is absolutely essential, and external development can put it all at risk.

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

Heavyweight teams are typically considered appropriate for platform projects.

If a firm codifies all of its activities with detailed procedures, it may stifle employee creativity.

If a firm wishes to avoid giving away its own installed base or complementary goods advantages to others, it may protect them by ensuring its products are incompatible with those of future entrants.

If a firm's objective is maximum market skimming, it will initially set a high price on new products.

If an individual knows a field too well, it can stifle his or her ability to come up with solutions that require an alternative perspective.

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

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.

In the context of design rules for fabricated assembly products, minimizing the number of parts for a product reduces direct labor and material handling costs.

In the product development process, go/kill gates act as funnels that cull mediocre projects.

Increasing returns to adoption means that the more a technology is adopted, the more valuable it becomes.

It is possible for a firm that follows an s-curve model too closely to end up switching technologies later than it should.

Large firms often make greater use of formalization and standardization because as the firm grows it becomes more difficult to exercise direct managerial oversight.

Lightweight teams are appropriate for derivative projects in which low levels of coordination and communication are required.

Managers of lightweight teams are normally junior or middle management employees, who are not able to exert significant authority over team members.

Many firms use beta testing to get customer input early in the development process.

Marketing channels that enable high content and selective reach are appropriate for innovators and early adopters.

Modular products become more valuable when customers have heterogeneous demands and there are diverse options for meeting them.

Network externality returns refers to the value customers reap as a larger portion of the market adopts the same good.

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

Product life cycles shorten with high-speed technological changes.

Products that have a large installed base are likely to attract more developers of complementary goods.

Proximity and frequent interaction help teams to develop shared norms and a dialect for communicating about a project.

Proximity and interaction can directly influence firms' ability and willingness to exchange knowledge.

S-curves in technology performance and s-curves in technology diffusion are fundamentally different processes.

S-curves of technology diffusion are in part a function of the s-curves in technology improvement.

Since perceived or expected installed base may drive subsequent adoptions, a large perceived or expected installed base can lead to a large actual installed base.

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

Sometimes, monetary rewards undermine creativity by encouraging employees to focus on extrinsic rather than intrinsic motivation.

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

Suppliers can contribute ideas for product improvement or increased development efficiency.

Technologically superior products do not always win in the market.

Technology trajectories are path dependent.

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.

The customization of products and processes to a local market makes them particularly difficult to transfer to divisions serving different markets.

The influence of a dominant design can extend beyond its own technology cycle.

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

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

The terms "research" and "development" represent different kinds of investment in innovation-related activities.

The transnational approach to R&D leverages resources and capabilities that exist anywhere within a firm and deploys them when and where any opportunity arises.

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.

Trademarks must be registered before a suit can be brought in federal court against an infringement of a mark.

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.

Viral marketing is based on the fact that people are more receptive to, or have greater faith in, information that comes through personal contacts.

When a technology's performance is plotted against the amount of effort and money invested in the technology, it typically shows slow initial improvement, then accelerated improvement, then diminishing improvement.

When multiple firms can produce a technology, losing money on the technology in the short term to promote it as a standard is highly risky.

While mechanistic structures are often associated with high centralization, it is also possible for organizations to have a highly decentralized mechanistic structure by using formalization as a substitute for direct oversight.

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.

Wholly open systems are usually quickly commoditized and provide little appropriability of rents to their developers.

Firms that enter the market early can preemptively capture scarce resources such as key locations, government permits, patents, access to distribution channels, and relationships with suppliers.

TRUE

Which of the following is true of technological innovations?

Technological innovations help increase a country's gross domestic product.

_____ is a positive externality from R&D resulting from the spread of knowledge across organizational or regional boundaries.

Technological spillover

_____ are regional groups of firms that have a connection to a common technology and may engage in buyer, supplier, and complementor relationships, as well as research collaboration.

Technology clusters

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

Howard, an engineer, has plans to introduce additive manufacturing in his firm. He has heard that this method can create a model in a couple of hours. His team is not aware of this method of product development and hence Howard decides to give a presentation and explain the technique of generating a model using this method. Which of the following statements would he most likely mention during his presentation?

The design is printed by laying down thin horizontal cross sections of material.

Which of the following statements is true of functional teams?

The functional team structure provides little opportunity for cross-functional coordination.

Which of the following statements is true of s-curves in technological improvement?

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?

The steepness of a monopoly cost curve is largely a function of a firm's discretionary behavior.

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

The strategy lays emphasis on making the competition irrelevant.

M&P Inc., a consumer goods manufacturing firm, has subsidiaries throughout the globe that have to respond to varying local market requirements. Therefore, the firm has planned to adopt a local-for-local approach to innovation. Which of the following statements is true in this context?

The subsidiaries of M&P and their R&D divisions will be highly autonomous.

Albert has put together a new product development team based on the functional team structure. Which of the following statements is most likely to be true about this team?

The team structure will be straightforward to implement.

Singing Cards Corp. 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?

The technology will accrue more rapid adoptions.

Mark is the CFO of a company that manufactures air conditioners and refrigerators. The management wants to diversify its list of product offerings and therefore has asked the board of members and senior management to suggest a project plan. One of their suggestions was to manufacture smart televisions. Mark believes that if the company invests in this new project plan, it will not be able to make sustainable profits for long. Which of the following statements supports Mark's argument?

The time between the television's introduction in the market and its replacement with a next-generation television is 12 to 24 months.

Which of the following statements is true of learning effects?

There are substantial differences in the rates at which organizations learn.

Which of the following statements is true of skunk works?

They are isolated from the mainstream organization to which they belong.

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 statements is true of loosely coupled organizational structures?

They coordinate development and production activities through their adherence to shared objectives.

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.

Which of the following statements is true of project charters?

They encapsulate a project's mission and articulate exact and measurable goals for the project.

Which of the following statements is true of design for manufacturing (DFM) methods?

They facilitate integration between engineering and manufacturing and bring issues of manufacturability into the design process as early as possible.

Which of the following statements is true of ambidextrous organizations?

They have a complex organizational form that is composed of multiple internally inconsistent architectures.

Which of the following is an advantage of flexible manufacturing technologies?

They have made shorter production runs economical.

Which of the following statements is true of innovators and early adopters?

They may demand considerable customization and technical support.

Which of the following statements is true of lightweight teams?

They offer a small improvement in team coordination and likelihood of success over functional teams.

Which of the following statements is true of partly parallel development processes?

They shorten overall cycle time.

First movers typically invest more in exploratory research than late entrants.

True

If a pharmaceutical company discharges untreated chemical waste into local water bodies of a community, it will impose a negative externality on the community members.

True

Many start-up firms fail because new innovations tend to be adopted very slowly at first.

True

Most innovative ideas do not become successful new products.

True

Other things being equal, an entrant with a strong reputation can attract adoptions earlier than entrants without strong reputations.

True

Other things being equal, less customer uncertainty favors earlier timing of entry.

True

Technology trajectories are most often used to represent the technology's rate of performance improvement or its rate of adoption in the marketplace.

True

The initial cost of a good itself can be a switching cost.

True

The CEO of a pharmaceutical company asked his consultant if it was a good idea to implement the s-curve model to predict when a technology would reach its limits. The consultant identified a limitation in the use of the model. Which of the following is most likely the limitation identified by the consultant?

Unexpected changes in the market can alter the shape of a technology's s-curve.

Which of the following is a difference between copyrights and trademark protection?

Unlike copyrights, trademarks are indicators used to distinguish the source of a good.

Beta Cleaning Equipment Corp. has started the actual design and development of a new floor buffing machine. It has the details of manufacturing, marketing, and operations of the new product as well. According to the stage-gate process, what is the next stage of this project?

Verification and validation of the new product and its marketing and production

Meghan is a popular celebrity who mostly endorses beauty products on Instagram and Facebook. Several branded beauty product manufacturers reach out to her with free samples. She takes to social media to describe these products, their benefits, and her experiences with using the products. Since she has several followers on social media, the companies believe that they can advertise their products and reach out to several more potential customers. Which of the following marketing strategies has been described here?

Viral marketing

In which of the following instances do platforms become more desirable than a tightly integrated product in a market?

When compatibility with third-party products can be made seamless without integration

In which of the following circumstances can a firm confidently enter the market at any time?

When the product to be manufactured and sold is inimitable

Sally has come up with a unique recipe for cookies and is selling them through exclusive outlets all across Atlanta. As the sales skyrocket, her friends tell her to patent the recipe. However, she is so protective of her recipe that she does not even want to reveal her secret ingredients to a government agency. Is there anything she can do to keep the recipe legally protected?

Yes, her recipe can be considered a trade secret and she can legally prevent others from benefiting from her recipe without her permission.

BioMark Lifesystems Inc. wanted to enhance the adoption of its new diagnostic substances by medical laboratories. It made an agreement with the dominant producer of syringes and test tubes to have its diagnostic substances sold to laboratories in a package along with the syringes and tubes. Such an arrangement is known as:

a bundling relationship.

Not-invented-here syndrome occurs when:

a division of a firm is reluctant to adopt other divisions' innovations.

Electronic waste results from the disposal of technological goods. This is an example of:

a negative externality.

In the context of project development, an "antichampion" is:

a person who plays the role of "devil's advocate."

Clear Vision Inc. has been the market leader for vision care products such as eyeglasses and lenses. It has also recently developed the use of laser technology to correct eye defects. Because of its prior related experiences, it has been successful in recognizing the value of new information and using it to develop new technologies ahead of others. This phenomenon is called:

absorptive capacity.

The benefits firms reap by locating in close geographical proximity to each other are known collectively as _____.

agglomeration economies

In the _____ process, a product is divided into many smaller features or functionalities, and these are rapidly created into minimum viable products and presented to the customer for feedback, enabling rapid incremental adaptation.

agile development

When Fun Bun Inc., 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:

an undeveloped supply channel.

BioSense Prosthetics Inc. was a leader in the prosthetics market and was earning high profits. The firm developed a new computerized prosthetic arm that would render its previous models obsolete. It decided to withhold the new computerized prosthetic arm from the market. This would allow the firm to:

avoid cannibalization of the sales of its current prosthetics.

Genetech Inc. has produced a new generation of video game consoles. The new product can be used to run the games used in the previous generation of the video game console as well. In this context, Genetech is most accurately applying the concept of:

backward compatibility.

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.

Since larger companies tend to have more bureaucracy, fixed costs, and commitments to large numbers of employees, customers, and suppliers than smaller firms, you can expect it to _____.

be less responsive to technological changes

Techworld Zone Inc. is a renowned laptop and desktop manufacturer. The firm employs thousands of employees and has always followed a rigid hierarchical structure. The management of the company recently decided that it was high time the firm disaggregate in order to:

become more responsive to technological changes.

As firms develop complementary technologies to improve the productivity or ease of utilization of a core technology, the core technology:

becomes more attractive to other firms.

A _____ of a product is an early working prototype of the product released to users for testing and feedback.

beta version

Astech Inc. has been developing a new graphic design software. The firm has released a functional version of the software and has sent it to several lead users for testing. Based on the feedback from the lead users, the firm is going to improve the design of the product and begin commercial production. This initial version of the product is referred to as the _____.

beta version

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

When Pearl Love Inc. introduced its new range of body wash, consumers switched from using its soap bars, being sold under the same brand name, to using the body wash. As a result, the company experienced a sharp drop in its soap sales. This scenario represents:

cannibalization.

Tacit knowledge is best defined as the knowledge that:

cannot be readily codified or transferred in written form.

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

capability complementation

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.

complementary

Organizations that manufacture products such as light bulbs for lamps or chargers for electrical vehicles are called _____.

complementors

Nick works at a digital appliances manufacturing company. Recently, he invented an adapter for televisions, which when connected would reduce the electricity consumption by half. This adapter worked with the earlier television models that the company manufactured, so the company was able to sell this product to their existing customers and to all their new customers. This is an example of a(n) _____ innovation.

component

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

The U.S. Postal Service now offers a "Click-N-Ship" online service where users can buy and print shipping labels online. According to the Buyer Utility Map, the U.S. Postal Service is offering the _____ utility lever during the _____ stage of the buyer experience cycle.

convenience; purchase

At Tech Edge Inc., a special team is set up for designing and developing a robot capable of assisting visually impaired individuals with their daily chores. The members of the team are specialists from various divisions of the firm, including R&D, marketing, manufacturing, and distribution. The new team is put under the charge of a senior manager. This team is most accurately an example of a:

cross-functional team.

S-curves in technology diffusion are obtained by plotting the:

cumulative number of adopters of a technology against time.

According to the stage-gate process developed by Robert G. Cooper, _____ are the results of the previous stage and are the inputs for the gate review.

deliverables

Breaking Ventures Inc. realized that most parents are worried about their teenage children going out on their own. Based on this information, the company developed a device that could be fixed into teenagers' cell phones through which parents could keep track of their children's location. This is referred to as the _____ to research and development.

demand-pull approach

The time elapsed from project initiation to product launch, usually measured in months or years, is referred to as _____.

development cycle time

Blue Water Publication Corp. is planning to sell its books solely through its Web site BlueWaterbooks.com. By doing so, it ceases to require wholesalers and retailers. This is most accurately an example of:

disintermediation.

TechSense, an electronics manufacturing firm, allows its customers to resell old TechSense products at its retail outlets. The firm reuses the metal, wires, and plastic—extracted from the old products—in its new products. This way the company has been able to take waste management to a whole new level. According to the Buyer Utility Map, the firm is applying environmental friendliness utility lever in the _____ stage of the buyer experience cycle.

disposal

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.

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) _____.

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:

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:

enables the firm to find related solutions and alternatives that work well.

Component technologies that are necessary for the performance or desirability of a given innovation are referred to as _____.

enabling technologies

Pioneer Athletics Inc. wants to provide better landing mats for gymnasts. It therefore asks its foam suppliers to use a new innovative process to manufacture higher quality, durable foam in its mats. This new process used to develop the foam represents a(n) _____ for Pioneer Athletics.

enabling technology

Carl owns a software firm, and Mike owns a computer hardware manufacturing firm. They decide to create an alliance in order to manufacture laptops and desktops using the shared competencies of their respective firms. When creating the alliance, they make sure that each of them invests 50% capital and that they would each own a specified right to a percentage of the profits from the alliance. The collaborative relationship in this scenario is known as _____.

equity ownership

Alpha Information Inc. is a firm that manufactures desktop computers and wireless network hardware components. The company is spending heavily on R&D to experiment with new designs for wireless networks instead of trying to refine how well they make their current wireless network hardware components. The firm is going through a period of ambiguity and anxiety. Alpha Information Inc. is in the:

era of ferment.

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.

Pioneer Systems Inc. has a high degree of formalization. Employees in Pioneer Systems are more likely to:

face morale and motivation problems.

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.

Doven Inc. 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) _____.

first mover

According to Anderson and Tushman, in the era of incremental change, firms _____.

focus on efficiency and market penetration

Urban Fashions Corp. has become very successful in the last few years and now employs a large number of people. Serena, the owner of the firm, had been very informal in running the company. However, because of the increase in the size of the firm, she now feels that the informal ways of management have become ineffective. In order to structure the behavior of employees, Serena wants to introduce written codes of conduct and regulations into the firm. This change being introduced in the company by Serena is referred to as _____.

formalization

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.

The Rocketingbusiness.com Web site offers large volumes of business research information at no cost. If a user is interested in more comprehensive information and business consultation, the site offers these services for a premium fee. This is typically an example of a _____ pricing model.

freemium

Oxygenic Inc. is a company with major decentralized divisions in Germany, Russia, and the United States. The scientists in Russia develop cancer treatment methods. Treatment clinics are organized in Germany. The U.S. division gathers finance and markets the treatment methods. The activities of the different divisions are coordinated by the central office of the firm to meet company-wide objectives. This is most clearly an example of a _____ strategy.

globally linked

The _____ of an economy is its total annual output as measured by its final purchase price.

gross domestic product

The scientists at Brainstorm Inc., a private medical research firm, have come up with a remarkable method for curing cancer. This cancer treatment technology is well protected and cannot be easily duplicated. Based on this information, it would be most accurate to say that this technology:

has a high degree of appropriability.

Karen's supervisor, while discussing her participation in a new product development team, tells her that she has been engaging in social loafing. This means that Karen:

has not been putting much effort into the team's work.

Ruth works in the advertising department of her company. It was observed that she interacted more frequently and more intensely with team members who shared her interests and social background but ignored others. This phenomenon exhibited by Ruth is referred to as:

homophily.

LiteShoes Inc. has recently obtained architectural control for its shoe glider technology. By doing so, the company has:

improved its efficiency in controlling the rate at which the technology is upgraded or refined.

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

increase the buyer's bargaining power.

The Solow Residual refers to the:

increased amount of output achievable from a given quantity of labor and capital because of technological innovation.

Institutions designed to nurture the development of new businesses that might otherwise lack access to adequate funding or advice are called _____.

incubators

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:

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:

innovators.

Maverick Systems Inc. is a leading company in the mobile phone market, and profits from its mobile phones are very high. Maverick Systems has developed a new generation of smartphones, which is better than its existing line of smartphones and has decided to embrace cannibalization of its existing line of smartphones. This means that the company is going to:

introduce the new technology right away and increase its market lead while taking away profits from its existing line of smartphones.

Stevenson, a U.S. citizen, wrote a book called The Ten Commandments of Leadership. He gave away copies of the book to the people who attended his workshops on leadership. The copyright protection for this book:

is in effect from the time the book was created and fixed in a copy.

A radical innovation differs from an incremental innovation in that it refers to an innovation that:

is very new and different from prior solutions.

A resource can be extremely difficult to imitate if:

it arises through the complex interaction of multiple people.

A new technology is most likely to be successful in displacing an existing technology when:

it eclipses the combined value of the existing technology's stand-alone utility, its installed base, and its complementary goods.

Once a new product design becomes a dominant design, _____.

it is adopted by the majority of producers

Speeding Horse Inc., a leader in the video game console market, is making its new generation consoles backward compatible with its previous games. This means that:

it is providing a significant incentive to the owners of its previously developed consoles to buy the new console.

ErgoWorld Inc. manufactures office furniture. The company is considering adopting a modular production system. A modular system would offer greater value to ErgoWorld if:

its customers have heterogeneous demands that need to be met in a cost-effective way.

Allured 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

Customers who face the same general needs of the marketplace but are likely to experience them months or years earlier than the rest of the market and stand to benefit disproportionately from solutions to those needs are referred to as _____.

lead users

As a firm grows bigger, it becomes:

less efficient in R&D because of loss of managerial control.

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

A firm choosing to decentralize its R&D by divisions rather than centralizing it will have a greater possibility of:

matching new products to the requirements of the customers served.

Virtual teams are best defined as teams in which members:

may be situated at a great distance from each other and collaborate intensively via advanced information technologies.

The degree to which a system's components can be separated and recombined is called _____.

modularity

Future Electronics Inc.'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:

monopoly cost.

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

net present value

According to Schoonhoven and Jelinek, quasiformal structures are:

not formally indicated on the organizational chart.

Software whose code is made freely available to others for use, augmentation, and resale is referred to as:

open source software.

Since much innovation arises from experimentation and improvisation, the _____ organization structure is typically considered better suited for innovation despite its possible detriment to efficiency.

organic

Gemini Car Inc. buys car components from various manufacturers and assembles them into cars, which it sells under its own brand name. From the given information, Gemini Car is most accurately an example of a(n):

original equipment manufacturer.

The demand-pull approach to research and development refers to innovation that:

originates as a response to the specific problems or suggestions of customers.

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

Increasing returns to adoption imply that technology trajectories are characterized by _____, meaning that relatively small historical events may have a great impact on the final outcome.

path dependency

The first entrants to sell in a new product or service category are referred to as _____.

pioneers

Coolers 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

If a business builds a park in a community, it will create a(n) _____ for the community members.

positive externality

A bicycle manufacturing company adopted a new type of inventory management system. This inventory system improved the productivity of its manufacturing unit and the quality of its bicycles. This is an example of _____ innovation.

process

As a result of the rapid pace of innovation:

product life cycles have become shorter.

Josh is the executive vice president of a bank. The president of the bank has recently asked Josh to use his influence to ensure that the bank's online banking project is developed and implemented. Josh has been asked to be a(n):

project champion.

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

project generates wealth.

Omega Cleaning Corp. wants to use the house of quality matrix in designing and developing a new vacuum cleaner. The use of house of quality is most likely to:

provide a common language and framework for members of a project team to use.

Wholly proprietary systems differ from wholly open systems in that wholly proprietary systems _____.

provide their developers with the opportunity to appropriate rents from the technology

Self-enforcing norms based on goodwill, trust, and reputation of partners are known as _____.

relational governance

Socially complex resources are:

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

In 2001, Shanghai's municipal government set aside 13 square kilometers of land near the Huangpu River for university laboratories and start-up firms in microelectronics, digital technology, and life sciences. The project aimed to foster research in microelectronics, the development of a technologically advanced labor pool, and the creation of new industries in Shanghai. This project would be best termed a _____.

science park

Liam, an employee of Centaurs Inc., is part of a new product development team that operates in a completely different manner from its parent organization. Within the team, there is considerable decentralization of authority and limited bureaucracy. It also has its own unique culture. Liam's team can be most accurately referred to as:

skunk works.

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.

A(n) _____ price strategy is a short-run strategy that prices goods to cover variable costs and some fixed costs, and it is used by firms in industries plagued with intense price competition.

survival

When Sports 360, a sports bar in New York, saw yet another sports bar open up across the street, it knew that it would have to lower its price again to stay in business. The city already had too many sports bars, and Sports 360 intended on being one of those left after the inevitable shake out. In this situation, the best pricing strategy for Sports 360 would be:

survival pricing.

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

switching costs

Investing in process innovation helps firms lower their costs.

June is a member of a new product development team. Her supervisor asks her about her experience in the team, and she replies, "Our team seems to be suffering from homophily." This statement means that:

team members only like other people whom they perceive as being similar to themselves.

When the first personal computers were introduced, Bill started using a spreadsheet program to maintain his accounts. Bill discovered that this new method of maintaining his accounts caused his work to become much slower and that if he typed in the wrong data, it led to more mistakes. This scenario illustrates that:

technological discontinuity may initially have lower performance than the incumbent technology.

A variety of rice created by Biocrop Inc. through recombinant DNA technology was found to be rich in both carbohydrates and proteins. After the success of this rice variety, recombinant DNA technology was implemented by less-developed countries to increase the nutrient levels of fruits, pulses, and greens in order to feed their malnourished children. This is an example of _____.

technological spillover

The path a technology follows through time is termed "_____."

technology trajectory

The president of Mountain Home University has been asked by the board members to set up a separate unit to facilitate the commercialization of technology developed by research students at the university. Such a unit is typically called a _____.

technology transfer office

The more a technology is adopted, _____.

the greater are the opportunities for development of complementary assets

Jordan, the CEO of Early Bird Corp., believes that it is important to focus on the quantity of new product ideas generated rather than the quality of ideas generated. He encourages everyone in the company to come up with product ideas, and those that seem feasible are further developed. According to him, it takes several raw ideas to develop one successful new product. Jordan's views reflect the concept of:

the innovation funnel.

To ensure that companies do not receive patents in countries where they do not intend to set up production of an invention, some countries have a "working requirement," according to which:

the invention must be manufactured in the country where the patent was granted within a specified period of time.

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 innovation process is often conceived of as a funnel because:

there are many potential new product ideas and only a few make it through the development process.

If a country's GDP stands at $4,867 billion, the country's _____ will be worth $4,867 billion.

total annual output

Joe's Burgers Corp. is a famous fast-food chain that uses a picture of a cook in a red hat as its logo. It would not be legal for a firm to sell hamburgers with the same identification picture as that of Joe's Burgers because that would be a(n):

trademark violation.

David and Sons Corp., a firm that manufactures home appliances, uses a symbol resembling a lightning strike to distinguish its products from other similar products in the market. This symbol is an example of a(n):

trademark.

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

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

Arica Software Inc. is trying to estimate the installed base for its software. It is trying to assess the number of:

users of its software.

Oswen Technologies Inc., a software development company, conducted a market survey to understand its customer base. Based on the responses, the management decided that in order to increase the size of its installed base, it will need to invest a huge amount in advertising software products that were not yet in the market. The firm hoped to bring these products to the market at a later date. The software products advertised before their availability are termed _____.

vaporware

Sanwey Inc. is a mobile phone manufacturer. In order to keep up with the competition in the market, it has decided to advertise devices that are not yet in the market. These devices are part of its future release plans but have not received approval from the board for manufacturing them. These products advertised by Sanwey Inc. are most likely _____.

vaporware

Companies that buy manufacturers' products in bulk and then resell them (often in smaller or more diverse bundles) to other supply channel members are referred to as _____.

wholesalers

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.

If aspects that customers have come to expect in a technology are difficult for competitors to imitate, being the technology leader will:

yield sustained monopoly rents.

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