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STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION BY SCHILLING – TEST BANK 

 

 

Chapter 01 Introduction

 

True/False

 

  1. The globalization of markets and the importance of innovation are independent of one another.

 

 

 

 

 

  1. Flexible manufacturing technologies have increased the importance of production economies of scale.

 

 

 

 

 

  1. Innovation and new technology have led to longer product life cycles as better quality products are being produced.

 

 

 

 

 

4.. The increased pace of innovation has only had a negligible effect on market segmentation and product obsolescence.

 

 

 

 

 

  1. Slow innovation results in diminishing margins and product obsolescence.

 

 

 

 

 

  1. Technological innovation can have a positive impact on our quality of life through improved goods and services.

 

 

 

 

 

  1. Technology’s effects on society are always positive.

 

 

 

 

 

  1. Technology in its purest form is not knowledge, but rather faith that things will get better.

 

 

 

 

 

  1. Firms that charge headlong into new product development usually have short development cycles.

 

 

 

 

 

  1. Studies have revealed that innovation is a freewheeling process that is unconstrained by rules and plans.

 

 

 

 

 

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

 

 

 

 

 

  1. GDP does relate very directly to the amount of goods consumers can purchase.

 

 

 

 

 

 

  1. Practically all innovative ideas become successful products.

 

 

 

 

 

  1. If an idea can be shown to be technologically feasible, it is guaranteed to be commercially successful.

 

 

 

 

 

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

 

 

 

 

 

 

 

Multiple Choice

 

  1. As a result of the rapid pace of innovation, the time between a product’s introduction and its withdrawal from the market
  2. has become shorter.
  3. has become more predictable.
  4. has become longer.
  5. has not changed at all.

 

 

 

 

 

  1. While rapid innovation often benefits society, it often makes success for companies
  2. more complicated as they strive to keep up with the latest innovations.
  3. profitable as long as they do not innovate themselves, but rather use innovations of others to their advantage.
  4. easier since innovation always makes things simpler.
  5. less likely because customers will not be willing to pay as much for goods and services.

 

 

 

 

 

  1. After Yahoo! was introduced as an easy way to search the World Wide Web, it was followed by other search engines, some of which had improved or faster ways to search the web. This is an example of how one innovative idea can
  2. ruin the business of someone else.
  3. slow down obsolescence.
  4. stimulate more innovations and create a new market.
  5. never be truly copied.

 

 

 

 

 

  1. The relationship between speed of innovation and product obsolescence is
  2. direct (as innovation speed increases, products become obsolete more quickly).
  3. inverse (as innovation speed increases, products become obsolete more slowly).
  4. indirect (there is an effect, but it cannot be directly determined).
  5. nonexistent (there is no relationship at all).

 

 

Difficulty: Hard

 

 

  1. Most studies suggest that
  2. technological innovation helps to increase a country’s gross domestic product.
  3. technological innovation typically decreases a country’s gross domestic product.
  4. technological innovation has no impact on a country’s gross domestic product.
  5. a country’s gross domestic product determines its rate of technological innovation.

 

 

 

 

 

  1. As companies adopt new technologies and increase their pace of innovation, the results may be
  2. an industry wide shift to longer production cycles.
  3. rapid product introductions.
  4. less market segmentation.
  5. slower product obsolescence.

 

 

 

 

 

  1. The Solow Residual refers to
  2. the increased amount of output achievable from a given quantity of labor and capital due to technological innovation.
  3. the less developed nations of the world being left behind due to their slower development of technology.
  4. obsolete products left in the market due to the accelerated product life cycle.
  5. the reduction in the amount of inventory needed by manufacturing firms due to technological improvements in inventory management.

 

 

 

 

 

  1. The ______ of an economy is its total annual output, measured by final purchase price.
  2. net national income
  3. gross domestic product
  4. gross national product
  5. balance of trade

 

 

 

 

 

 

  1. In a series of studies of economic growth conducted at the National Bureau of Economic Research, economists showed that the historic rate of economic growth in GDP could not be accounted for entirely by growth in labor and capital inputs. Consensus emerged later that _____ helped explain this gap.
  2. technological change
  3. measurement error
  4. inaccurate price deflation
  5. labor improvement

 

 

 

 

 

 

 

  1. Which of the following statements about being a successful innovator is most likely to be true?
  2. To innovate successfully, you should start out with only a vague idea.
  3. Your thinking should not be structured so ideas can pop into your head.
  4. You need clearly defined strategies and processes.
  5. You should have a completely open mind about how to proceed and “go with the flow.”

 

 

 

 

 

  1. Electronic waste results from the disposal of technological goods. This is an example of
  2. industrial resistance.
  3. a negative externality.
  4. shortened product life cycles.
  5. rapid innovation.

 

 

 

 

 

  1. Technology in its purest form is
  2. faith that things will get better.
  3. knowledge to solve our problems and pursue our goals.
  4. always derived from physics.
  5. pure guesswork.

 

 

 

 

 

  1. According to the text, firms that rush headlong into new product development usually
  2. initiate only those projects that they can effectively support.
  3. have short development cycles.
  4. experience low project failure rates.
  5. choose projects that are a poor fit with their resources and objectives.

 

 

 

 

 

  1. If you were the director of R&D at a large pharmaceutical company, how might you apply the concept of “the innovation funnel?”
  2. Hire more people because most of them will turn out to be mediocre.
  3. Encourage more new ideas because it takes thousands of new ideas to come up with one successful new product.
  4. Discourage more new ideas because most of them end up being useless and waste time and energy.
  5. The innovation funnel concept can not be used by a person in this position.

 

 

 

 

 

  1. A firm’s innovation projects should satisfy all of the following, except
  2. align with its resources.
  3. leverage its core competencies.
  4. help achieve its strategic intent.
  5. be able to produce immediate returns.

 

 

 

 

 

  1. A firm’s new product development process should
  2. maximize the likelihood of projects being both technically and commercially successful.
  3. eliminate the firm’s exposure to risk.
  4. utilize technology currently available within the organization, thereby reducing expenses.
  5. be patented irrespective of the success of the product.

 

 

 

 

 

  1. If an idea can be shown to be technologically feasible, its chances of commercial success
  2. are practically guaranteed.
  3. have improved.
  4. have diminished.
  5. can be exactly calculated.

 

 

 

 

 

  1. Out of all the innovative ideas that come forth, how many become successful products?
  2. Very few
  3. Most
  4. About half
  5. Seventy-five percent

 

 

 

 

 

 

 

Essay

 

  1. Explain how computer-aided design and flexible manufacturing help create small niches in the market place. Provide and example of how a market with different niches might be served.

 

 

 

  1. Explain how the globalization of markets affects the importance of innovation.

 

 

 

 

  1. What are the some of the negative impacts on society due to technological innovation? How would you answer critics of improved technology who cite these negative impacts?

 

 

 

  1. Why is it important that a company have a well-defined process for strategically managing its new product development process?

 

 

-5

 

  1. Explain how an understanding of the innovation funnel might influence a company’s view of research and development?

 

 

 

Chapter 02 Sources of Innovation

 

True/False

 

  1. Sometimes knowing a field too well can stifle creativity.

 

 

 

 

  1. The organization’s structure, routines, and incentives can thwart individual creativity, but not amplify it.

 

 

 

 

 

  1. Sometimes paying people for suggestions undermines creativity because it focuses their shift on extrinsic motivation.

 

 

 

 

 

  1. Though a generalist by nature, inventors are specialists in the field in which they invent.

 

 

 

 

 

  1. Innovation often originates with those who create solutions for their own needs.

 

 

 

 

 

  1. The qualities that make people inventive do not necessarily make them entrepreneurial.

 

 

 

 

 

  1. Manufacturers typically create new product innovations in order to profit from the sale of the innovation to customers.

 

 

 

 

 

  1. Firms consider their in-house R&D to be their least important source of innovation, but still feel it is necessary to possess.

 

 

 

Page: 25

 

  1. The most frequent collaborations are between firms and their customers, suppliers, and local universities.

 

 

 

Page: 26

 

  1. A complementor is a company or individual that produces goods or services that enhance the value of another product.

 

 

 

Page: 27

 

  1. The creation of university technology transfer offices accelerated rapidly in the United States after the Bayh-Dole Act was passed.

 

 

 

Page: 28

 

  1. The Small Business Technology Transfer (STTR) program facilitates partnerships between small businesses and nonprofit research institutions.

 

 

 

Page: 29

 

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

 

 

 

Page: 30

 

  1. Collaborative research is especially important in high-technology sectors.

 

 

 

Page: 31

 

  1. Technology clusters may span a region as narrow as a city or as wide as a group of neighboring countries.

 

 

 

Page: 32

 

  1. A cluster of firms with high innovation productivity will discourage other firms from establishing themselves in the same area.

 

 

 

Page: 33

 

  1. The degree to which innovative activities are geographically clustered does not depend on the national differences in the way technology development is funded or protected.

 

 

 

Page: 34

 

  1. The likelihood of technological spillovers varies across countries.

 

 

 

Page: 35

 

  1. A knowledge broker puts existing information to use in new and profitable ways.

 

 

 

Page: 36

 

  1. Research suggests that most innovation is due to the discovery of something fundamentally new.

 

 

 

Page: 36

 

 

Multiple Choice

 

  1. Which of the following products would be considered novel?
  2. A detergent advertises that it can remove spots.
  3. A company announces it has produced a recreational hovercraft for sale in toy stores.
  4. A cell phone company announces that it now offers text messaging.
  5. A college announces it will install artificial turf on its football field.

 

 

 

Page: 18-19

 

  1. Which of the following persons is most likely to come up with a new way of manufacturing socks for a textile company?
  2. Bill, who has been the mechanic working on the current socks manufacturing equipment for the last 15 years. He proudly states that he is a true expert on every aspect of these machines.
  3. Kate, who knows the basics of how the socks are now manufactured and how the machines work, but comes from a completely different background as far as training and experience are considered.
  4. Frank, who has been newly hired because of his mechanical knowledge, but has no real knowledge or understanding of how socks are manufactured.
  5. Lisa, who is the Plant Manager and is known as being impatient with her subordinates.

 

 

 

Page: 19

 

  1. Which of the following will probably have the least influence on organizational creativity?
  2. The creativity of the individuals in the organization
  3. The organizational structure
  4. Incentives provided for creativity
  5. Location of the organization

 

 

 

 

 

  1. The difference between Honda’s employee-driven idea system (EDIS) and a traditional suggestion box is that Honda’s system
  2. does not pay employees for ideas.
  3. screens ideas for practicality before paying employees.
  4. requires those who submit ideas to follow through with the suggestion, overseeing its progress from concept to implementation.
  5. only ends up accepting about 10 percent of the suggestions submitted.

 

 

 

 

 

  1. Southeaster Athletic Mats, Inc. produces gym mats for school and health clubs. The company recently put a metal box near the time clock and asked employees to submit ideas in writing for improved productivity. It offered $10 for every idea it implemented. This is an example of a(n)
  2. employee-driven idea system (EDIS).
  3. suggestion box.
  4. legal bribe.
  5. applied research.

 

 

 

 

 

  1. According to studies, which of the following tends to be true of prolific inventors?
  2. Inventors tend to have specialized almost solely in one field.
  3. Inventors tend to be curious, and question the assumptions made in a field.
  4. Inventors typically patent and commercialize most of their inventions.
  5. Inventors tend to interact socially and seek local solutions to problems.

 

 

 

 

 

  1. The Smith brothers were trying to come up with a new cough drop but Alvin Smith kept saying to his brother, Frank, “I really would like to understand more about what makes a person cough in the first place.” Frank kept saying, “We need to quit worrying about theoretical stuff and just focus on how to stop the coughing.” Which of the brothers is most likely to be a successful inventor?
  2. Alvin
  3. Frank
  4. They are equally likely to be successful inventors
  5. Neither is very likely to be a successful inventor

 

 

 

 

 

  1. Which of the following is not true regarding user innovators?
  2. They have a deep understanding of their unmet needs.
  3. They have an intention to profit from the sale of their innovation.
  4. They have an incentive to create solutions for their own needs.
  5. Their innovations can lead to the development of new industries.

 

 

 

 

 

  1. Susan works for a large chemical company in the Research and Development department. Her degree was in Biology and the company is encouraging her to study the mating habits of various insects to develop a better method of controlling insect damage to crops. The type of research Susan is engaged in is called _____ research.
  2. basic
  3. applied
  4. development
  5. primary

 

 

 

Page: 25

 

  1. Which of the following is the correct sequence of steps for the science-push approach to research and development?
  2. Customers express an unmet need, R&D develops the product to meet that need, the product is produced, and the Marketing team promotes the product.
  3. Scientific discovery leads to an invention, the Engineering team designs the product, it is manufactured, and the Marketing team promotes it.
  4. Marketing does research to discover a need, R&D comes up with the product concept which is refined by engineering, the Manufacturing team produces it, and the Marketing team sells it.
  5. Manufacturing sees a way to improve a product, R&D takes the suggestions and expands on it, the Engineering team redesigns it, the Manufacturing team implements the change, and the Marketing team sells it.

 

 

 

Page: 25

 

  1. The demand-pull approach to research and development refers to
  2. research and development that focuses on developing products that are expected to increase demand in a particular market segment.
  3. research and development that begins by examining the outputs of the firm’s basic research, and considering what potential commercial applications may be constructed from those outputs.
  4. research and development that greatly overextends the development budget of the firm.
  5. research and development that originates as a response to the specific problems or suggestions of customers.

 

 

 

Page: 25

 

  1. Which of the following is not a source for successful innovation?
  2. In-house research and development.
  3. Customers.
  4. External networks of firms.
  5. Government funding

 

 

 

Page: 26

 

  1. Organizations that produce products such as light bulbs for lamps, or DVD movies for DVD players are examples of
  2. competitors.
  3. inventors.
  4. complementors.
  5. incubators.

 

 

 

Page: 27

 

  1. The president of Mountain Home University has been asked by her board of trustees to set up a mechanism for the commercialization of technology developed at the university. Such a mechanism is typically called a
  2. business department.
  3. commercialization office.
  4. technology transfer office.
  5. royalty department.

 

 

 

Page: 28

 

  1. According to the text, The Bayh-Dole Act of 1980
  2. made the transfer of technology to enemies of America illegal.
  3. allowed universities to collect royalties on inventions funded with taxpayer dollars.
  4. made it impossible to patent inventions developed at universities.
  5. made it legal for private companies to invest in research and technology.

 

 

 

Page: 28

 

  1. Regional districts that are set up by the government to foster R&D collaboration between government, universities, and private firms are typically called
  2. government alliances.
  3. research collaboration areas (RCAs).
  4. incubators.
  5. science parks.

 

 

 

Page: 28

 

  1. In 2001, Shanghai’s Municipal Government set aside 13 square kilometers area near the Huangpu River for university laboratories, and start-up firms in microelectronics, digital technology, and life sciences. It was hoped that the area would foster strong research ability, the development of an advanced technology labor pool, and foster the creation of new industries in Shanghai. This area would best be termed a(n)
  2. industry
  3. incubator
  4. science park
  5. knowledge broker

 

 

 

Page: 28

 

  1. Institutions designed to nurture the development of new business that might otherwise lack access to adequate funding or advice are called
  2. government alliances.
  3. research collaboration areas (RCAs).
  4. incubators.
  5. science parks.

 

 

 

Page: 29

 

  1. The objective of the Small Business Technology Transfer (STTR) program is to
  2. more fully leverage the innovation that takes place in research laboratories by connecting research scientists with entrepreneurs.
  3. help small businesses develop and commercialize a new innovation.
  4. to provide financial assistance to small business that have significant innovation capabilities.
  5. to aid technology entrepreneurs by offering them financial and advisory services.

 

 

 

Page: 29

 

  1. A _____ is a regional group of firms that have a connection to a common technology, and may engage in buyer, supplier, and complementor relationships, as well as research collaboration.
  2. science park
  3. regional incubator
  4. research collaboration area (RCA)
  5. technology cluster

 

 

 

Page: 32

 

  1. When companies form a technology cluster it often results in
  2. greater security among the companies to prevent industrial spying from competitors who are now located close by.
  3. less new startups because people who have interest in this industry would prefer to work for an established company.
  4. a shrinking supply of trained labor due to the competition for the skills needed by the industry among the companies in the area.
  5. the attraction of other firms to the area.

 

 

 

Page: 33-34

 

  1. Which of the following would be considered true about an agglomeration economy?
  2. Helps enhance proximity in knowledge exchange.
  3. Helps firms understand the drivers and benefits of clustering for developing a strategy.
  4. Helps overcome the market failure that can result when a new technology has the potential for important societal benefits.
  5. Helps firms reap benefits by locating them in close geographical proximity to each other.

 

 

 

Page: 34

 

  1. Which of the following would typically be considered a downside to geographical clustering?
  2. Firms may have to lower prices on their products because there are many local competitors serving the same market.
  3. Firms have to spend more on transportation costs for their inputs because suppliers are located far away.
  4. Firms in a region have lower net income because the tax rate in that region is very high.
  5. Firms may benefit by improvements in local infrastructure such as roads and utilities.

 

 

 

Page: 34

 

  1. Which of the following would not affect geographic clustering of an industry?
  2. The nature of the technology.
  3. The degree to which communication and frequent interaction is required for knowledge sharing.
  4. Population density of labor.
  5. Profit margins of a technology firm.

 

 

 

Page: 34

 

  1. 45. _____ is a positive externality of research and development efforts.
  2. Knowledge broker
  3. Agglomeration
  4. Technological spillover
  5. Technology cluster

 

 

 

Page: 35

 

 

Essay

 

  1. You have just been given an assignment within your company to design a creativity training program. Describe the elements you would include in the program and explain the rationale of each one.

 

 

 

 

  1. If you were in charge of a Research and Development (R&D) department for a large pharmaceutical company, would you encourage your researchers to do basic research or applied research? Provide the rationale for your answer.

 

 

Page: 25

 

  1. At a retreat by the Salisbury City Council, community leaders held a discussion on attracting and developing new businesses and increasing employment rates in the city. One leader suggested that the city consider sponsoring a business incubator. Explain what an incubator is and how this might help the city meet its goals.

 

 

 

Page: 28-30

 

  1. If you were looking for a location for your software development company why might you consider Silicon Valley? What are the drawbacks to that location?

 

 

  1. Explain the concept of technology spillovers.

 

 

Chapter 03 Types and Patterns of Innovation

 

True/False

 

  1. The path a technology follows through time is termed its technology map.

 

 

 

Page: 49

 

  1. Product innovation can enable process innovation.

 

 

 

Page: 50

 

  1. The radicalness of an innovation is absolute.

 

 

 

Page: 51

 

  1. Radical innovation entails changing the overall design of the system or the way that components interact with each other.

 

 

 

Page: 52

 

  1. In order to initiate a component innovation, a firm requires knowledge about the way components link and integrate to form the whole system.

 

 

 

Page: 53

 

  1. A technology’s S-curve of performance improvement is unrelated to its S-curve of diffusion.

 

 

 

Page: 53

 

 

  1. The S-curve in technological improvement is a plot of performance against effort and money invested in that technology.

 

 

 

Page: 54

 

  1. Until a new technology has established a degree of legitimacy, it may be difficult to attract other researchers to participate in its development.

 

 

 

Page: 54

 

  1. Technologies always get the opportunity to reach their performance limits before being replaced by a new technology.

 

 

 

Page: 55

 

  1. “Moore’s Law” refers to the rapidly increasing density of transistors on integrated circuits that enabled microprocessor performance to increase dramatically. This increase in density is expected to always continue at the same rate.

 

 

 

Page: 55

 

  1. To develop the technology diffusion s- curve, you need to plot the cumulative number of adopters of the technology against time.

 

 

 

Page: 56

 

  1. The adoption of new technology and the diffusion of information about it takes place at the same rate.

 

 

 

Page: 57

 

  1. Managers can almost always use the S-curve model to effectively plan their technology investment decisions.

 

 

 

Page: 59

 

  1. A firm can influence the shape of the S-curve by revamping the architecture design of the technology.

 

 

 

Page: 59

 

  1. Innovators represent the largest category of adopters according to research.

 

 

 

Page: 60

 

  1. Many companies are now coming up with better ways to make personal data assistants (PDAs) perform their functions better. This is the specific phase of the technological cycle according to Utterback and Abernathy.

 

 

 

Page: 63

 

  1. When personal data assistants (PDAs) were first introduced there was a time when there was great uncertainty about this technology and its market. This is called the fluid phase of the technological cycle according to Utterback and Abernathy.

 

 

 

Page: 63

 

  1. The first phase in the technology cycle is involves incremental improvements until one company finds a major breakthrough.

 

 

 

Page: 63-64

 

  1. In the era of ferment, firms focus on efficiency and market penetration.

 

 

 

Page: 64

 

 

  1. As a firm’s expertise becomes oriented around maximizing its ability to compete in the existing dominant design, it can become a barrier to the firm’s recognizing and reacting to a new technology architecture.

 

 

 

Page: 65

 

 

 

 

 

 

Multiple Choice

 

  1. Which of the following is most clearly an example of process innovation?
  2. A pizza chain is able to develop a method that enables pizzas to be baked in 10 minutes rather than the standard 20 minutes during the late 1980s.
  3. A potato chip company introduces a line of its potato chips with a new type of seasoning.
  4. A major motion picture studio releases a new 3D movie.
  5. A tire manufacturer develops a tire that re-inflates itself instantly when it is punctured.

 

 

 

Page: 50

 

  1. Since product and process innovations often occur in tandem, which is most likely to occur first?
  2. New processes making new products possible
  3. New products which enable new processes
  4. They are both equally likely to be developed first
  5. Process and product innovations are independent of one another.

 

 

Difficulty: Medium

Page: 50

 

  1. The CEO of an automobile manufacturer directed her R&D department to come up with a radical innovation. Which of the following ideas best fits the bill?
  2. A door that is unlocked by recognizing the fingerprints of the owner.
  3. Seats that vibrate to massage the backs of passengers.
  4. A windshield that tints in sunlight and lightens in darkness automatically.
  5. A car that drives itself to the nearest exit if the driver is incapacitated by a medical emergency.

 

 

 

Page: 50-51

 

  1. During the late 1980s, a pizza chain was able to develop a pizza oven to bake pizzas in 10 minutes rather than the standard 20 minutes. This was most likely a(n) _____ innovation.
  2. competence-enhancing
  3. competence-destroying
  4. architectural
  5. radical

 

 

 

Page: 51

 

  1. Which of the following statements is true regarding the different types of innovations?
  2. Process innovations are more visible than product innovations.
  3. A radical innovation may eventually become incremental.
  4. Component innovations have far-reaching and complex influences on competitors and users.
  5. A competence-destroying innovation is one that attacks the strengths of competitors.

 

 

 

Page: 51

 

  1. Mr. Inman discovered that if he put garlic salt on a regular hamburger it made it taste more like steak. He could then use a less expensive meat for the “chuckwagon steak” sandwich he sold. This is an example of a(n) _____ innovation.
  2. radical
  3. competence destroying
  4. architectural
  5. component

 

 

 

Page: 52

 

  1. When a company that produced vinyl records for the music industry learned that music could be recorded on compact disks to sell, it was facing a competence _____ innovation.
  2. enhancing
  3. destroying
  4. rationalizing
  5. synergizing

 

 

 

Page: 52

 

  1. Which of the following describes the most typical evolution of technology’s performance if it is plotted against effort and investment?
  2. Slow initial improvement, accelerated improvement, diminishing improvement
  3. Rapid initial improvement, slowed improvement, rapid improvement
  4. Slow initial improvement, diminishing improvement, accelerated improvement
  5. Rapid initial improvement, even faster improvement, diminishing improvement

 

 

 

Page: 54

 

  1. If one plots a technology’s S-curve with performance against time rather than effort, the resulting curve
  2. will be more accurate.
  3. may obscure the true relationship if effort is not constant over time.
  4. will be the same as if it were plotted the other way around.
  5. will not be representative of a technology’s rate of performance improvement or adoption.

 

 

 

Page: 54

 

  1. When gutter shields were developed, they replaced gutter cleaning services for homeowners wishing to keep leaves and debris out of their gutters. In other words, the same need was met by an entirely new technology. This is an example of a(n) _____

technology.

  1. complementary
  2. logical extension
  3. discontinuous
  4. incremental

 

 

 

Page: 55

 

  1. The replacement of the typewriter by the word processor is an example of a
  2. incremental innovation.
  3. component innovation.
  4. discontinuous technology.
  5. process innovation.

 

 

 

Page: 55

 

  1. Handheld calculators replaced slide rules. This is an example of a(n) _____ innovation.
  2. logical extension
  3. incremental
  4. component
  5. discontinuous

 

 

 

Page: 55

 

  1. When the first personal computers were introduced, Bill started using a spreadsheet program to balance his checkbook. Bill discovered that this new method was much slower for him and that if he typed in the wrong data, it led to more mistakes. This illustrates how a(n) _____ technology may initially have lower performance than the _____ technology.
  2. incumbent, discontinuous
  3. logical extension, discontinuous
  4. discontinuous, incumbent
  5. discontinuous, modular

 

 

 

Page: 56

 

  1. Many technologies become valuable to a wide range of potential users only after a set of _____ are developed for them.
  2. substitutes
  3. complementary resources
  4. uniform features
  5. quality standards

 

 

 

Page: 57

 

  1. Which of the following statements is true regarding technology diffusion?
  2. S-curves in technology diffusion are obtained by plotting performance against time.
  3. Information diffusion is slower than technology diffusion.
  4. A drop in prices can accelerate technology diffusion.
  5. Most of the knowledge about a technology is explicitly stated and transmitted.

 

 

 

Page: 57-58

 

  1. A CEO recently asked a consultant if it was a good idea to use the S-curve model to predict when a technology would reach its limits. The wise consultant might cite as a limitation that
  2. using the S-curve would be too expensive.
  3. the perceived limitation can be extended by multiple factors.
  4. this is a highly illegal activity.
  5. the data to develop an S-curve cannot be found in the real world.

 

 

 

Page: 59

 

  1. Ron can be described as being highly skeptical about new ideas and products. He has not yet bought a satellite dish for his home because he is still unsure that it really works. Ron is also very worried about the expense of purchasing the satellite dish. According to this description, Ron is most likely a(n)
  2. member of the early majority.
  3. innovator
  4. laggard.
  5. early adopter.

 

 

 

Page: 60

 

  1. A marketing research company has just informed Jane that she can be classified as an early adopter. Which of the following characteristics will Jane most likely have?
  2. She waits until uncertainty about a new product is resolved.
  3. She is well-integrated into her social system.
  4. She has a skeptical attitude about new ideas.
  5. She makes decisions based primarily on past experience.

 

 

 

Page: 60

 

  1. Julie is somewhat skeptical about new innovations and is likely to adopt something new after getting some pressure from her peers. However, she is not so risk averse that she will wait until all uncertainty of a new technology has been resolved; she’s willing to accept a little uncertainty if her peers already use the product. Julie is most likely a(n)
  2. early adopter.
  3. early majority person.
  4. late majority person.
  5. laggard

 

 

 

Page: 60

 

  1. Susan, a highly skilled office worker, came home with a personal computer she had just purchased. Her husband Bill soon discovered that Susan did not know how to use half the features of the computer or its software. This is most likely due to the fact that
  2. the company’s market research findings are faulty.
  3. the company has added features faster than customer requirements.
  4. those features do not really work.
  5. Susan is not a part of the company’s target market.

 

 

 

Page: 62

 

  1. When hardware and software were first introduced, Bill found it to be very confusing. He heard conflicting claims about which hardware to buy and which software system to use. When he finally bought something it did not work very well. This probably illustrates which stage of the technology evolution model as described by Utterback and Abernathy?
  2. Fluid phase
  3. Dominant design phase
  4. Specific phase
  5. Incremental phase

 

 

 

Page: 63

 

  1. Once a dominant design of a new product is reached
  2. the product is no longer profitable.
  3. a new technology has already arrived.
  4. you have begun the fluid phase.
  5. companies focus on making the production more effective and efficient.

 

 

 

Page: 63

 

  1. A product design that is adopted by the majority of producers, typically creating a stable architecture on which the industry can focus its efforts is known as
  2. dominant design.
  3. design uniformity.
  4. standardization.
  5. product semblance.

 

 

 

Page: 63

 

  1. In the era of incremental change, companies
  2. abandon old technology in favor of the new.
  3. cannot find a dominant design
  4. focus on efficiency and market penetration.
  5. seldom agree about how the major subsystems of a technology should be configured.

 

 

 

Page: 64

 

  1. The Ajax Computer Company is spending heavily on R&D to develop new designs for wireless networks instead of trying to refine how well they make their current wireless network hardware components. Ajax is probably in the
  2. decline stage.
  3. era of incremental change.
  4. era of ferment.
  5. specific phase.

 

 

 

Page: 64

 

 

 

 

 

 

 

Essay

 

  1. Briefly explain the different types of innovation.

 

 

  1. Lately computer users have been using USB Jump Drives to copy and store files. These are also called “thumb drives,” “pen drives,” and other names. These are small drives you can attach to a key chain and plug into any USB port and have the utility of a hard drive. The size of their memory varies from 16 kilobytes to several gigabytes. Assume you are the CEO of the Ajax Thumb Drive Company. How might you use the S-curve model to predict when to switch to a new technology? What would be the limitations of this approach?

 

  1. If a company learns of the cost and efficiency advantages of a new technology to replace one it is currently using will it then adopt the technology as quickly as it can? Explain the reason for your answer.

 

  1. Why did Schumpeter call the technology cycle one of creative destruction? In your answer explain what is meant by this term and why it is appropriately applied to the technology cycle.

 

  1. Briefly define Roger’s five adopter categories and explain how a marketer might use this knowledge.

 

 

 

      Chapter 04 Standards Battles and Design Dominance

 

True/False

 

  1. When a dominant design is established in an industry, manufacturers tend to turn their focus to improving efficiency.

 

 

 

Page: 70

 

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

 

 

 

Page: 71

 

  1. A firm that develops a new technology ahead of its rivals may have an advantage in staying ahead of others.

 

 

 

Page: 72

 

  1. The ability of an organization to recognize, assimilate, and utilize new knowledge is referred to as its learning curve.

 

 

 

Page: 72

 

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

 

 

 

Page: 73

 

  1. Disetronic dominates the market for insulin pumps for diabetics. The more physicians prescribe it for patients, the more complementary goods are made for it. This is an example of “network externalities.”

 

 

 

Page: 73

 

  1. Due to network externalities, the benefit from using eBay to buy and sell goods decreases with the number of users of eBay.

 

 

 

Page: 73

 

  1. Government regulation can make a technology the dominant design.

 

 

 

Page: 75

 

  1. The fact that there are many companies supplying high quality and inexpensive ink refill kits for inkjet printers raises the value of the inkjet printer.

 

 

 

Page: 75

 

  1. There are never any advantages to a government mandated dominant design of technology.

 

 

 

Page: 75-76

 

  1. In some industries, multiple competing technologies can coexist peacefully while in others there will be strong pressures for only one technology to succeed.

 

 

 

Page: 76

 

  1. A dominant design does not influence the problem-solving techniques used in the industry.

 

 

 

Page: 76

 

  1. Firms that develop technologically superior products are usually winners.

 

 

 

Page: 76

 

  1. The “Buyer Utility Map” developed by Kim and Mauborgne can be applied only to consumer products.

 

 

 

Page: 77

 

  1. If a new innovation has a significant advantage in functionality, its overall value will be greater than the incumbent standard.

 

 

 

Page: 78

 

  1. When comparing the value of a new technology to an existing technology, the tendency is to focus mainly on objective information.

 

 

 

Page: 80

 

  1. The value of a good to a user increases in a linear fashion.

 

 

 

Page: 82

 

  1. Monopoly costs take the form of an s-shape.

 

 

 

Page: 84

 

  1. The steepness of the monopoly cost curve is largely a function of government regulations.

 

 

 

Page: 85

 

  1. By choosing not to exercise its monopoly power, a firm can flatten its monopoly costs curve.

 

 

 

Page: 85
Multiple Choice

 

  1. WordPerfect Corporation noticed that the more of its word processing software packages it sold, the more customers complained or suggested improvements. In such a situation, WordPerfect Corporation has the opportunity to
  2. steadily improve its word processor software.
  3. be acquired by a larger company that can take over the development of the product.
  4. develop a completely new program.
  5. discontinue production.

 

 

 

Page: 71

 

  1. The more a technology is adopted,
  2. the less valuable it becomes on account of market saturation.
  3. the more susceptible it becomes to decreasing returns.
  4. the more complementary goods are available for it.
  5. the lesser are the possibilities for improvements in the technology.

 

 

 

Page: 71

 

  1. Which of the following statement is true about learning curves?
  2. There are substantial differences in the rates at which organizations learn.
  3. The learning rate is impervious to organizational factors.
  4. The learning curve is a function of number of units sold.
  5. The learning curve has a specific performance measure, i.e., total cost per unit.

 

 

 

Page: 71

 

  1. As the sales of a company’s product increases and as the company learns from its experiences, the cost of making the product should
  2. decrease.
  3. increase.
  4. level out
  5. not be affected.

 

 

 

Page: 71

 

  1. Absorptive capacity
  2. is the result of effective strategic decisions by a firm’s upper management.
  3. increases a firm’s future ability to assimilate information.
  4. is an essential component of a learning organization.
  5. is inversely proportionate to the size of the organization.

 

 

 

Page: 72

 

  1. After Acme Technologies had developed its first few R&D projects, it began to get better at subsequent development projects, even if they were not based on the same technologies. This is probably due to the principle or effect called
  2. repetitive motion.
  3. intelligence magnification.
  4. programming simplification.
  5. absorptive capacity.

 

 

 

Page: 72

 

  1. As complementary technologies develop for an innovation, that innovation will
  2. become less attractive because the market is now too cluttered.
  3. become more attractive to other firms.
  4. decline in sales as buyers will not want to buy complementary technology due to the cost.
  5. lose status because now it is easier to use.

 

 

 

Page: 73

 

  1. A cell phone network recently called Bill and offered him a great plan. It was a low flat fee on all long distance calls with no roaming charges and unlimited hours to anyone else in the network. However, Bill discovered that so far there were only 3,000 network subscribers nationwide, so he turned down the offer. This company did not have
  2. a good marketing idea.
  3. enough absorptive capacity.
  4. sufficient network externalities.
  5. a true innovation.

 

 

 

Page: 73

 

  1. Most photographers, graphic designers, and other professionals who work intensely with pictures use Photoshop. To be perceived as offering better value, a new graphics program would have to offer more value than Photoshop’s _____.
  2. complementary goods
  3. installed base
  4. complementary goods and installed base
  5. technological ability, complementary goods, and installed base

 

 

 

Page: 73

 

  1. During the 1990s more and more people started using cell phones. As a result, the cell phone
  2. began to deteriorate in quality because the industry could not keep up with production.
  3. became more expensive in response to increased demand.
  4. became better in quality.
  5. began to lose its technological utility.

 

 

 

Page: 76

 

  1. If a company is able to lock in its technology as the dominant design of the market, it
  2. has a higher learning curve than other companies.
  3. usually gains huge financial rewards.
  4. only benefits immediately, but cannot influence the evolution of the market.
  5. will suffer due to near-monopoly rents it must pay.

 

 

 

Page: 76

 

  1. eBay uses an online payment system called PayPal which accepts credit cards or electronic funds transfers. The payment system is heavily secured using encryption technology. According to the Kim and Mauborgne model, PayPal is offering simplicity, convenience, and _____ utility levers.
  2. cost
  3. fun and image
  4. environmental friendliness
  5. risk

 

 

 

Page: 77

 

  1. eBay allows shoppers to pay for purchases using an online payment system called PayPal which accepts credit cards or electronic funds transfers. According to the Kim and Mauborgne model, PayPal is offering value during the _____ stage of buyer experience.
  2. purchase
  3. delivery
  4. use
  5. maintenance

 

 

 

Page: 77

 

  1. QwikEats is a fast food restaurant. It has recently opened a children’s play area within its premises that allows parents to dine in peace without having to worry about their children. According to the Kim and Mauborgne model, QwikEats is offering the _____ utility levers during the _____ stage of buyer experience.
  2. environmental friendliness, purchase.
  3. risk, supplements.
  4. convenience, purchase.
  5. simplicity, maintenance.

 

 

 

Page: 77

 

  1. TechSense has just developed a GPS-enabled shoe that is targeted at runners, trekkers, and tourists. According to the Buyer Utility Map developed by Kim and Mauborgne, what is the value offered by the shoes in the utility lever of convenience at the use stage of the buyer experience cycle?
  2. The shoes have a shelf life of four years after which the product must be disposed.
  3. The shoes have to be recharged for at least an hour in order to work effectively.
  4. The shoes require a specific charging dock.
  5. The shoes should be kept away from wet surfaces as the GPS is not water resistant.

 

 

 

Page: 77

 

  1. The U.S. Postal Service now offers a Click-N-Ship online service so users can buy and print postage and labels online. The U.S. Postal Service is offering the utility lever(s) of _____ during the _____ stage of buyer experience.
  2. risk, use
  3. fun and image, maintenance
  4. convenience, purchase and delivery
  5. environmental friendliness, purchase

 

 

 

Page: 77

 

  1. For a new technology to compete on its stand-alone utility,
  2. that utility must be greater than the value of the existing technology’s stand-alone utility.
  3. that utility must be greater than the value of the existing technology’s installed base.
  4. that utility must be greater than the value of the existing technology’s complementary goods.
  5. that utility must be greater than the combined value of an existing

technology’s stand-alone utility, its installed base, and its complementary goods.

 

 

 

Page: 79

 

  1. When a new technology with only a moderate functionality advantage is made compatible with an existing technology’s installed base and complementary goods, then the new technology may offer _____ overall value to users.
  2. lesser
  3. greater
  4. zero
  5. limited

 

 

 

Page: 79

 

  1. Even though the American telecommunications company MCI had more cell phone subscribers at the time when AT&T decided to enter the cell phone market, customers were willing to sign up for AT&T’s service. This is most likely due to
  2. the lack of complementary goods for MCI.
  3. MCI’s insufficient network externalities.
  4. the lack of sophistication of consumers.
  5. the expectation of consumers that the installed base of AT&T will eventually increase.

 

 

 

Page: 80

 

  1. Vaporware refers to products
  2. that are not available in the market or do not even exist but are advertised.
  3. that enter and exit the market without attracting any customers.
  4. that have a very small shelf-life.
  5. whose components are entirely recyclable.

 

 

 

Page: 80

 

  1. Producers can influence users’ expectations of the future installed base and availability of complements
  2. by providing trial offers.
  3. through announcements of preorders.
  4. by offering product discounts.
  5. by offering freebies.

 

 

 

Page: 80

 

  1. When customers attain their desired level of network externality benefits at lower levels of market share
  2. it implies that only one specific technology dominates.
  3. they face a relatively small indifference region.
  4. the network externality curves flatten out sooner.
  5. the technology has reached its optimum level of performance.

 

 

 

Page: 83

 

  1. Disetronic is the insulin pump market for diabetics. If Disetronic raises the cost of the pumps to a very high rate and technology development of alternative insulin delivery systems ceases,
  2. consumers might complain that the company has become “too dominant.”
  3. consumers will experience high network externality benefits.
  4. consumers will be happy because the insulin pump technology will continually be improved by Disetronic.
  5. consumers will stop purchasing insulin pumps from Disetronic.

 

 

 

Page: 84

 

  1. When Disetronic, the market leader in insulin pumps for diabetics, made the decision not to charge the highest price the market would be willing to pay, it was
  2. increasing the monopoly cost curve.
  3. flattening the monopoly cost curve.
  4. making the monopoly cost curve intersect the network externalities curve sooner.
  5. not affecting the s-curve or monopoly curve at all.

 

 

 

Page: 85

 

  1. When are winner-take-all markets good for consumers?
  2. When monopoly costs exceed the value of technological utility and network externality benefits.
  3. When monopoly costs exceed the value of technological utility.
  4. When the value of technology utility exceeds monopoly costs.
  5. When the value of technology utility and network externality benefits exceeds monopoly costs.

 

 

 

Page: 85

 

Essay

 

  1. Explain why it is considered advantageous if a company’s technology is adopted by users ahead of other technologies.

 

 

  1. Joseph had an idea that he could speed up a floor buffing machine by putting a different motor on it. After about 25 tries he was able to make a buffer run much faster with a new motor and started his own company. Other companies began making competing products that were similar to Joseph’s design, but they were unable to improve their designs as fast as Joseph. Why might this be the case?

 

 

  1. Why is the installed base of users of a technology that requires complementary goods so important to a company’s future success?

 

  1. Explain what factors affect the technology trajectory and chances of success of a new technology besides its quality and technical advantage.

 

 

  1. What is vaporware what are its advantages?

 

 

 

Chapter 05 Timing of Entry

 

True/False

 

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

 

 

 

Page: 93

 

  1. Late entrants usually enter the market only once the product has been adopted by the

mass market.

 

 

 

Page: 93

 

  1. Irrespective of whether the characteristics of a technology are imitable or not, a first mover has an opportunity to build brand loyalty before the entry of other competitors.

 

 

 

Page: 94

 

  1. Once buyers have adopted a good, they can easily switch to another good.

 

 

 

Page: 94

 

  1. Although other companies in the gliding shoe market have come out with hydrogen based power units, the first company in this market, GlideShoe is sticking with the fossil fuel power units. This is likely an example of incumbent inertia.

 

 

 

Page: 96

 

  1. Early followers typically bear the bulk of the research and development expenses.

 

 

 

Page: 96

 

  1. A later entrant can produce a product that achieves a closer fit with market preferences.

 

 

 

Page: 96

 

  1. For a very new product technology, market research may be of significant help.

 

 

 

Page: 97

 

  1. If you are a first mover in the market of a new technology, you may find that your product offerings will have to be modified as consumers let their preferences be known.

 

 

 

Page: 98

 

  1. If you are certain of customer preferences and needs, you can enter the market earlier than if customer needs were unknown.

 

 

 

Page: 99

 

  1. All pioneers face customer uncertainty.

 

 

 

Page: 99

 

  1. When enabling technologies are mature, you should wait to enter the market later.

 

 

 

Page: 100

 

  1. Jackson Laboratories has come up with a new diabetic blood sugar monitoring device that does not require patients to prick their fingers. It has determined that this new technology is likely to quickly become the dominant method used by diabetics and will replace the old blood sugar monitoring devices Jackson currently sells. Hence, Jackson should enter the market quickly.

 

 

 

Page: 100

 

  1. Even though the technology for high definition DVD players is clearly superior to the old generation, it requires that users buy high definition television sets. This factor might reduce the adoption of new DVD players.

 

 

 

Page: 100

 

  1. A technology that makes a dramatic improvement over previous generations or different technologies will take time to be accepted by customers on account of its radical differences.

 

 

 

Page: 100

 

  1. In industries that have increasing returns to adoption, allowing competitors to get a head start in building installed base can be a safe strategy.

 

 

 

Page: 101

 

  1. The credibility of a firm and the rate of adoption are directly related.

 

 

 

Page: 102-103

 

  1. A firm with fast-cycle development processes has more timing of entry options.

 

 

 

Page: 103

 

  1. A firm that has very fast-cycle development processes may be able to capitalize on both first and second-mover advantages.

 

 

 

Page: 103

 

  1. If a firm intends to refine an earlier entrant’s technology and beat the earlier entrant to market with a new version of this technology, it must have enabling technologies.

 

 

 

Page: 103

 

 

 

Multiple Choice

 

  1. Intel pioneered microprocessor development in the 1970s and introduced its microprocessor well ahead of competitors. According to the classification scheme provided in the text, Intel would be classified as a(n) _____.
  2. first mover
  3. early mover
  4. late entrant
  5. premature developer

 

 

 

Page: 93

 

  1. If the aspects that customers have come to expect in a technology are difficult for competitors to imitate, a technology leader
  2. has the opportunity to earn licensing royalties.
  3. can yield sustained monopoly rents.
  4. has lower bargaining power.
  5. is more susceptible to incumbent inertia.

 

 

 

Page: 93-94

 

  1. Joan had been using WordPerfect 5.1 for DOS for several years and was quite an expert in it. When her boss wanted her to change to a Windows-based system, Joan told him that it would slow her down and it would cost a lot of money to be trained on using such a new system. The is an example of
  2. consumer irrationality.
  3. high switching costs.
  4. technical influence.
  5. early entry continuation.

 

 

 

Page: 94

 

  1. Which of the following scenarios describes the benefits of being a first-mover in the market?
  2. A firm that has developed a watch that requires a microchip which is still in its nascent stage.
  3. An automobile manufacturer that must undertake the task of developing radiator caps for the engines of its cars.
  4. A maker of breakfast cereals whose customers are unaffected by switching costs.
  5. A radio station that is given authority over large portion of radio spectrum.

 

 

 

Page: 94

 

  1. Which of the following statements is true regarding first movers?
  2. First movers can build brand loyalty so long as technology characteristics are inimitable.
  3. Low switching costs work in favor of first movers.
  4. First movers are often more successful than later entrants.
  5. First movers can preemptively capture scarce resources.

 

 

 

Page: 95

 

  1. The tendency of 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:
  2. organizational passivity.
  3. organizational lethargy.
  4. incumbent inertia.
  5. incumbent apathy.

 

 

 

Page: 96

 

  1. U-Totem was one of the early entrants into the convenience market boom of the 1970s and enjoyed huge success in the Arizona market. However, these stores did not sell gasoline. When later entrants combined gasoline sales with convenience markets, U-Totem was slow to respond and lost market share. This is an example of
  2. incumbent inertia.
  3. technological retardation.
  4. an immature enabling technology.
  5. delayed market dominance.

 

 

 

Page: 96

 

  1. When McDonalds first moved into Russia, it had to teach farmers how to grow better potatoes and cattle, and bakers how to make hamburger buns. This is an example of
  2. corporate social responsibility.
  3. an undeveloped supply channel.
  4. development partnerships.
  5. late-mover manipulation.

 

 

 

Page: 96

 

  1. TechSense was the first company to introduce a GPS-enabled shoe into the market and shoe sales are rapidly increasing. Which of the following is most likely to be true for TechSense?
  2. TechSense has incurred significant research and development expenses.
  3. Consumers will be able to change to a competitor’s product relatively easily.
  4. TechSense’s product is a perfect match with customer requirements.
  5. Complementary goods producers are aplenty.

 

 

 

Page: 96

 

  1. Which of the following is an advantage of being a later entrant into a market?
  2. Firms can capture scarce resources.
  3. Firms do not have to invest in exploratory research.
  4. Firms have to develop their own supply and distribution channels.
  5. Firms are unaffected by switching costs.

 

 

 

Page: 96

 

  1. Which of the following is not true regarding first movers?
  2. They can shape customer preferences.
  3. They can exploit incumbent inertia.
  4. They bear most of the R&D expenses.
  5. They can establish the precedent for product design.

 

 

 

Page: 96

 

  1. When Fisher Athletics wanted to provide better landing mats for gymnasts, it asked its supplier—North Carolina Foam Industries (NCFI) — to come up with a higher quality foam to use in its mats. NCFI represents a(n) _____ for Fisher Athletics.
  2. complementary competitor
  3. facilitative partnership
  4. enabling technology
  5. pioneer opportunity

 

 

 

Page: 96

 

  1. If you enter the market too early, the risk is that
  2. the technology (or complements) will be underdeveloped.
  3. legal aspects related to the product do not exist.
  4. you will have large cash flow initially but it will deplete faster.
  5. consumers will lock you out of the market.

 

 

 

Page: 97

 

  1. In the video game console industry, Magnavox was the first mover but was not the winner. Atari and Nintendo came up with their respective gaming consoles soon afterwards. They were
  2. also first movers.
  3. early movers
  4. laggards.
  5. late movers.

 

 

 

Page: 98

 

  1. In the personal computer operating system market Microsoft, who was a(n) _____ became the winner in the market place.
  2. first mover
  3. late mover
  4. follower
  5. laggard

 

 

 

Page: 98

 

  1. Which of the following statements is true regarding customer preferences?
  2. The importance of technological features to customers stays constant over time.
  3. Customers themselves are unsure about the importance of different features offered by a technology.
  4. All pioneers have faced customer uncertainty.
  5. Established customer preferences are undesirable by producers.

 

 

 

Page: 99

 

  1. A delayed entry into the market is preferred when
  2. complementary goods are available.
  3. enabling technologies have matured.
  4. customer preferences are unknown.
  5. the ability to withstand early losses is high.

 

 

 

Page: 99

 

  1. A technology that makes a dramatic improvement over previous generations or different technologies that serve similar functions will
  2. not be easily accepted by customers.
  3. more rapidly gain customer acceptance.
  4. not be accepted by customers at all.
  5. experience lesser customer acceptance.

 

 

 

Page: 100

 

  1. In which of the following scenarios would an earlier entry into the market be beneficial?
  2. A firm that has developed a new line of video games for which the required graphics card is yet to become mainstream.
  3. A cell phone manufacturer who has developed a touch phone without conducting any market research.
  4. A firm that has developed a new line of vacuum cleaners that can be preprogrammed to function automatically without any user involvement.
  5. A firm that has patented its technological innovation.

 

 

 

Page: 100

 

  1. Jackson Laboratories has come up with a new diabetic blood sugar monitoring device that does not require patients to prick their fingers. It has determined that this new technology will offer a great advantage to customers, that no other competitors possess the capabilities to deliver it, and that the product will not be easily imitated by others. Jackson should enter the market
  2. early.
  3. late.
  4. in the middle of the pack.
  5. whenever it wants to.

 

 

 

Page: 101

 

  1. Jackson Laboratories has come up with a new diabetic blood sugar monitoring device that does not require patients to prick their fingers. It has determined that this new technology will quickly become the dominant method used by diabetics and will replace the old blood sugar monitoring devices Jackson currently sells. However, competitors might be able to easily imitate the device. Jackson should enter the market
  2. early.
  3. late.
  4. in the middle of the pack.
  5. whenever it wants to.

 

 

 

Page: 101

 

  1. Lee Peterson has invented a new product that detects water leaks due to broken pipes and sends out an alarm similar to a smoke alarm. However, Lee has very little personal money to invest in improving this new product. Seeing his initial technical success, major corporations have now entered the market with competing products. What will be the probable destiny of Lee Peterson’s company?
  2. His company will most likely be overtaken by a larger company or it will go out of business.
  3. His company will remain in the top spot due to its head start.
  4. His company will enjoy commercial success because the entry of other companies will add more legitimacy to the product.
  5. His company will grow rapidly introduce several other related products.

 

 

 

Page: 102

 

  1. Acme Products was late to enter the desk height adjuster market. However, Acme has vast financial resources compared to the 2 other small companies in this new market. Which of the following best represents Acme’s chances of success?
  2. Slim because it is a late entrant into the market.
  3. Excellent because it can outspend the other companies in further development and marketing of the product.
  4. Acme’s chances of success cannot be determined.
  5. Acme’s chances of success are exactly equal to those of the other companies.

 

 

 

Page: 102

 

  1. When S.C. Johnson Company came up with a new hair care product that repaired split ends, it spent money on market education and provided incentives to wholesalers and retailers to sell the product. This strategy will _____ the early adoption of this innovative product.
  2. hinder
  3. have no effect on
  4. accelerate
  5. delay

 

 

 

Page: 102

 

  1. In the past, Apex Systems had successfully released 10 new products in the shoe gliding market. Today it is recognized as the market leader. It has just released a new shoe glider called SmoothShoe. How difficult will it be for Apex to get distributors to take on this new product?
  2. Very difficult because they will be reluctant to carry so many products of the same company.
  3. Somewhat difficult because it will just cannibalize current products.
  4. Not very difficult because they will trust in Apex’s past record.
  5. Cannot be determined.

 

 

 

Page: 102

 

  1. Apex is the leader in the shoe glider market while Summit is a new startup company. Both have just released new generation shoe gliders. Which entry is likely to be adopted more quickly?
  2. Apex
  3. Summit
  4. Both will be adopted at the same rate
  5. Neither

 

 

 

Page: 102

 

  1. A firm with fast cycle development processes
  2. can introduce a refined version of a competitor’s technology.
  3. is susceptible to more quality problems.
  4. can exit the market sooner.
  5. has only a first mover advantage.

 

 

 

Page: 103

 

Essay

 

  1. Explain the reasons why more efficient keyboards were not able to replace the QWERTY keyboard. Which principle is illustrated in this scenario?

 

 

  1. Explain why sometimes the follower and not the first mover of a new technology is more successful in the market place.

 

 

  1. Lee Peterson has invented a new product that detects water leaks due to broken pipes and sends out an alarm similar to a smoke alarm. However, Lee has very little personal money to invest in this new product. He finally raised enough money to enter the market and began to experience some success. The product was not patentable because it was too similar to other existing technologies. Major corporations saw his success and have now entered the market with competing products. What will be the probable destiny of Lee Peterson’s company?

 

 

  1. Since SmoothShoe Inc. is the market leader in the gliding shoe industry, it enjoys an excellent reputation. It was the pioneer of this new market and currently holds 40 percent market share. Now SmoothShoe wants to introduce a new gliding shoe. Discuss how its reputation will affect its acceptance among distributors and consumers.

 

 

  1. The text talks about the timing of entry strategies into the market for new products. What assumptions underlie the use of such strategies?

 

Chapter 06 Defining the Organization’s Strategic Direction

 

True/False

 

  1. In formulating a technological innovation strategy, the first step first involves an accurate appraisal of where the firm currently is followed by the articulation of its strategic direction.

 

 

 

Page: 113

 

  1. When using the five-force model to assess industry attractiveness, the analysis is focused at the firm level, treating all competitors as unique, and its objective is to ascertain whether the firm can survive within the industry.

 

 

 

Page: 114

 

  1. In Canada, the wireless market is dominated by three main players—Rogers Wireless, Bell Mobility, and Telus. This is an example of an oligopolistic industry.

 

 

 

Page: 115

 

  1. Since the commercial aircraft industry is oligopolistic, one would expect the rivalry to be modest to low.

 

 

 

Page: 115

 

  1. A firm’s intellectual property can act as an entry barrier for other firms.

 

 

 

Page: 116

 

  1. Firms may utilize the capabilities of other firms in order to overcome certain entry barriers.

 

 

 

Page: 116

 

  1. The Saturday Evening Post bought the paper mills that supplied the paper for printing the magazine. This is an example of horizontal integration.

 

 

 

Page: 116

 

  1. A music downloading software and an MP3 player are substitutes for one another.

 

 

 

Page: 117

 

  1. Ammunition can be considered a complement for the companies who make firearms.

 

 

 

Page: 117

 

  1. If a firm’s product is undifferentiated, buyers will typically experience lesser bargaining power.

 

 

 

Page: 117

 

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

 

 

 

Page: 117

 

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

 

 

 

Page: 118

 

  1. Kingsize Burgers says it will develop a core competence in good tasting French fries. This is a core competency that is unlikely to give the company a sustainable competitive advantage.

 

 

 

Page: 119

 

  1. The Friedman Clinic in Switzerland is said to have the best cosmetic surgeon in the world for rhinoplasty, so many people travel from all over the world for this service. This is a core competency of the clinic that can easily be copied.

 

 

 

Page: 122

 

  1. The Zippo Company has identified 30 capabilities so it now knows its core competencies.

 

 

 

Page: 124

 

  1. Organizational aptitude refers to those abilities that make a firm more agile and responsive to change.

 

 

 

Page: 124

 

  1. The Adamus Corporation was the maker of the best metal pole for pole vaulters. It hired metallurgists and encouraged the study of metals within the company. When fiberglass poles hit the market and Adamus sales plummeted, it realized it suffered due to core rigidities.

 

 

 

Page: 124

 

  1. The balanced scorecard emphasizes measuring performance from primarily a financial perspective.

 

 

 

Page: 127

 

  1. The percentage of repeat purchases can be used to measure organizational performance from the internal perspective.

 

 

 

Page: 128

 

  1. The goal of reducing employee accidents by 5% would reflect the innovation and learning perspective of the balanced scorecard.

 

 

 

Page: 128

 

 

 

 

 

 

Multiple Choice

 

  1. Pine Street Knitting Mill was not making a profit on its textile lines, but was reluctant to withdraw from textile manufacturing because it had so many sewing machines and workers who knew how to use them. Pine Street was suffering from
  2. creeping obsolescence.
  3. exit barriers.
  4. sentimental proclivity.
  5. attitudinal cohesiveness.

 

 

 

Page: 116

 

  1. Many people dream of opening their own restaurant someday and restaurant supply houses provide easy financing for equipment. This is one of the reasons why the _____ in this industry is so high.
  2. failure rate
  3. exit barrier
  4. threat of entry
  5. technological breakthrough

 

 

 

Page: 116

 

  1. Other things being equal, the more suppliers there are providing similar supplies to a particular industry,
  2. the less powerful those suppliers will be.
  3. the more powerful those suppliers will be.
  4. the more competitors there will be in the industry.
  5. the less powerful buyers will be.

 

 

 

Page: 116

 

  1. Other things being equal, if a buyer can threaten to vertically integrate backwards, this will
  2. decrease the buyers bargaining power.
  3. increase the buyers bargaining power.
  4. have no effect on the buyers bargaining power.
  5. lower the threat of entry into the industry.

 

 

 

Page: 116

 

  1. Dr. Stone wanted to get a good deal on a laser which would help him in providing sight-correcting surgeries. He soon found out that prices were not very negotiable. This might be due to the fact that
  2. the bargaining power of suppliers is high because there are so few of them.
  3. the industry is heavily regulated by the government.
  4. supply exceeds demand.
  5. laser manufacturing companies are not allowed to discount their products.

 

 

 

Page: 116

 

  1. For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University’s labs; however Mountain Home did not buy them because the _____ costs were too high.
  2. transactional
  3. opportunity
  4. marginal
  5. switching

 

 

 

Page: 116

 

  1. When the Arizona grocery store chain, Smitty’s, told Associated Grocers (AG) to give them a bigger price discount or they would open their own warehouse and distribution center, AG listened because Smitty’s was a big customer. This is an example of the
  2. bargaining power of buyers.
  3. bargaining power of sellers.
  4. threat of substitutes.
  5. technological substitution.

 

 

 

Page: 117

 

  1. Mountain Home University realized that due to the “war on terrorism” some potential students were joining the military while others were choosing technical training. It could be said that the military and technical training were _____.
  2. opposites.
  3. imitations.
  4. substitutes.
  5. complements.

 

 

 

Page: 117

 

  1. Which of the following would describe a primary activity according to Michael Porter’s model of the value chain?
  2. The human resource activities of Wal-Mart
  3. A Wal-Mart advertising campaign
  4. The accounting function at Wal-Mart
  5. The development of new scanning equipment at Wal-Mart

 

 

 

Page: 118

 

  1. Which of the following strengths would competitors least likely be able to copy?
  2. Mountain Home University begins an evening program for adults in which students take one class two nights per week for one month.
  3. Measurement Systems comes out with a blood sugar monitoring device that works with an insulin pump that diabetics already use.
  4. Kingdom Investments’ chief stock analyst has been able to provide investors with a 20% return on investment for the last 10 years.
  5. Choice Brands introduces a new cereal with dried fruit.

 

 

 

Page: 121

 

  1. Which of the following would be an example of a tacit resource?
  2. An odds maker who works for a large casino in Las Vegas and is correct 95 percent of the time.
  3. A highly effective and efficient distribution network throughout the continental U.S.
  4. A retail shoe chain that has prime locations in 200 malls across the country.
  5. A flashy ad campaign for a malt liquor.

 

 

 

Page: 121

 

  1. The teamwork of the Super Bowl champions in the National Football League is an example of a(n) _____ resource.
  2. imitable
  3. socially complex
  4. causally ambiguous
  5. durable

 

 

 

Page: 121

 

  1. Socially complex resources refer to
  2. resources or activities that emerge through the interaction of multiple individuals.
  3. resources that cannot be defined in terms of a numerical value.
  4. resources that require public sanction in order to be utilized for profit-making purposes.
  5. resources that are shared by different parties thereby necessitating the need for legal intervention.

 

 

 

Page: 121-122

 

  1. Xerox is noted for the quality of its copy machines and service. This can be considered as Xerox’s
  2. strategic intent.
  3. core competency.
  4. core rigidity.
  5. external opportunity.

 

 

 

Page: 122

 

  1. Honda’s core competencies lie in manufacturing and innovation which it has used to create its world renowned engines. These engines are also used in Honda’s portable generators, lawn mowers, motorcycles, automobiles, and several other products. According to the comparison made by Prahalad and Hamel, Honda’s portable generators are
  2. the fruits.
  3. the trunk of the tree.
  4. the branches.
  5. the roots.

 

 

 

Page: 122-123

 

  1. At a strategic management retreat, Pentel Corporation discussed questions such as “Does this ability make us unique?”, “Does it cove a range of businesses?”, and “Is it hard to imitate?”. It would seem that Pentel is trying to
  2. figure out what it does.
  3. change strategic directions.
  4. identify its core competencies.
  5. discover its threats and opportunities.

 

 

 

Page: 123-124

 

  1. Pacer Corporation had formed a steering committee that had gathered a list of capabilities within the company. The list was analyzed and candidates’ core competencies were identified. Next, Pacer should
  2. communicate these competencies throughout the company to engender loyalty to them.
  3. test the candidates’ core competencies with the Prahalad and Hamel criteria.
  4. align its strategy in accordance with this list.
  5. ask the entire company to vote on the list.

 

 

 

Page: 123-124

 

  1. Apex Corporation supplies hospitals with software to track insurance claims. Since insurance regulations and policies are always changing, Apex needs to have the ability to be agile and responsive to change. In other words it needs
  2. dynamic capabilities.
  3. shifting competencies.
  4. respondent capability.
  5. floating capabilities.

 

 

 

Page: 124

 

  1. When Western Franchise Services announced is plans to go international in the next 15 years, it was expressing its
  2. core competence.
  3. future business model.
  4. strategic intent.
  5. core capability.

 

 

 

Page: 125

 

  1. When Poduck Memorial Hospital changed its name to Poduck Regional Medical Center, it also unveiled a plan to build a medical tower doubling its physical facilities by 100% within the next 10 years. It announced that its goal was to not only serve Exeter County, but the entire region including the 5 contiguous counties. This is an expression of
  2. progressive competitiveness.
  3. strategic intent.
  4. core competencies.
  5. alliance building.

 

 

 

Page: 125

 

  1. Mountain Home University has announced a plan to begin offering more graduate programs and off-site classes in nearby cities in order to become the largest provider of such programs in the region. This is their strategic intent. What should the university do next?
  2. Identify resources and capabilities to make this happen.
  3. Petition government agencies for permission to spread beyond its traditional markets.
  4. Reduce on-campus and undergraduate enrollments to divert resources to this new strategic initiative.
  5. Hire a new vice-president to head up the new effort.

 

 

 

Page: 126

 

  1. The balanced scorecard
  2. is an alternative accounting technique.
  3. is a method for balancing assets with liabilities and equity.
  4. emphasizes four perspectives the firm should take in formulating goals.
  5. helps managers evaluate all aspects of an employee’s performance.

 

 

 

Page: 127

 

  1. Go Systems set a goal to double its corporate value in seven years. This is a goal from the_____ perspective of the balanced scorecard.
  2. operational
  3. financial
  4. technical
  5. internal

 

 

 

Page: 127

 

  1. The Food Baskets grocery chain set a goal to reduce their stock out rates by 20 percent. This is a goal according to the _____ perspective of the balanced scorecard.
  2. internal
  3. logistics
  4. operational
  5. learning

 

 

 

Page: 128

 

  1. Which of the following goals best represents the business process perspective of the balanced scorecard?
  2. Improve customer loyalty by 50%
  3. Develop five new products
  4. Double net worth
  5. Reduce excess inventory

 

 

 

Page: 128

 

  1. Which of the following goals best represents the learning perspective of the balanced scorecard?
  2. Improve customer loyalty by 50%
  3. Improve new product development
  4. Double net worth
  5. Reduce excess inventory

 

 

 

Page: 128

 

 

 

 

 

 

 

Essay

 

  1. Even though many aerospace manufacturing firms are very profitable, there are very few upcoming firms. Explain the reason for using at least one force from Porter’s Model.

 

 

  1. Recently, three cell phone companies announced the addition of a nationwide “walkie-talkie” service to supplement their regular cell phone service. Will this be a sustainable competitive advantage? Justify your answer.

 

 

  1. Explain why Prahalad and Hamel compare core competencies to roots.

 

 

  1. Explain the advantages and disadvantages of rewarding and promoting development of the core competency.

 

  1. What is the danger of not having a strategic intent? In your answer assume you are a hospital in a city with a population of 30,000 people, located about 50 miles away from a large city.

 

 

Chapter 07 Choosing Innovation Projects

 

 

True/False

 

  1. When Media Enterprises was faced with 5 different options for its research and development efforts, it looked at its budget and then ranked the projects to be funded. This is what is known as research rationing.

 

 

 

Page: 136

 

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

 

 

 

Page: 136

 

  1. Qualitative methods of analyzing new projects usually entail converting projects into some estimate of future cash returns from a project.

 

 

 

Page: 137

 

  1. Fred Stanley, a retired millionaire, invests in startup business projects that are under $1 million. Fred is an angel investor.

 

 

 

Page: 138

 

  1. The Small Business Administration fosters entrepreneurship and innovation by administering grants, loans, and venture capital programs from different federal agencies.

 

 

 

Page: 138

 

  1. The time required to break even on a project using discounted cash flows is known as period of return.

 

 

 

Page: 140

 

  1. The internal rate of return will always give a precise solution to whether or not to invest.

 

 

 

Page: 141

 

  1. Discounted cash flow estimates are only as accurate as the original estimates of profits, time, risk, and cost.

 

 

 

Page: 141

 

  1. The internal rate of return of a project is the discount rate that minimizes the net present value of the investment.

 

 

 

Page: 141

 

  1. Calculating the IRR of a project must be done by trial and error.

 

 

 

Page: 141

 

  1. The value of a call stock option is zero as long as the price of the stock is more than the exercise price.

 

 

 

Page: 142

 

  1. The real options approach is valuable when there is uncertainty and there is some evidence that it might work better than cash flow analysis for technology decisions.

 

 

 

Page: 142-143

 

  1. From a real options perspective, the exercise price associated with commercializing a new technology would be the costs of manufacturing, marketing, and distributing the technology.

 

 

 

Page: 143

 

 

  1. Many factors in the choice of development projects are quantifiable.

 

 

 

Page: 144

 

  1. “Are there already appropriate suppliers and distribution channels?” is a screening question related to the role of capabilities.

 

 

 

Page: 147

 

 

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

 

 

 

Page: 147

 

  1. Fredricks Technologies made the strategic decision to invest heavily in the development of derivative projects. This is likely to make its returns on R&D look good in the short run only.

 

 

 

Page: 148

 

  1. The most common use of conjoint analysis is to assess the relative importance of different product attributes to customers.

 

 

 

Page: 149

 

  1. Data envelopment analysis (DEA) utilizes linear programming.

 

 

 

Page: 151

 

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

 

 

 

Page: 152

 

 

 

 

 

Multiple Choice

 

  1. _____ refers to the allocation of a finite quantity of resources over different possible uses.
  2. Systematic allotment
  3. Corporate funding
  4. Organizational appropriation
  5. Capital rationing

 

 

 

Page: 136

 

  1. Using quantitative methods for choosing which R&D projects to pursue _____ in a rapidly changing environment.
  2. will lead to highly accurate results
  3. could lead to questionable results
  4. are the recommended methods
  5. is considered politically correct

 

 

 

Page: 137

 

  1. When Ralph Ketner wanted to start the Food Lion grocery store business, he and his brother called 100 friends to each invest $1,000 in his business. This source had to be used probably because
  2. as a new business, the risk was high.
  3. banks are not allowed to lend to startups.
  4. it was the only legal way to proceed.
  5. selling stock is impossible for new startups.

 

 

 

Page: 138

 

  1. Sheila Kessler is a retired millionaire who still likes to invest in new businesses and help other people get started in business. She would be called a(n)
  2. loan shark.
  3. angel investor.
  4. first generation mentor.
  5. venture investor.

 

 

 

Page: 138

  1. Venture capitalists are most likely to provide funding
  2. if foreign companies are involved with the project.
  3. before a new business begins so they can have inputs.
  4. when there is only a small return on investment projected.
  5. after the new business has already begun operations rather than before it begins.

 

 

 

Page: 139

 

  1. In trying to decide on whether or not to invest in a new project, the CEO of Foxeye Limited said she wanted to consider how long it takes to recover the investment, the risk, and the time value of money. It sounds like she should use
  2. real options.
  3. a portfolio analysis.
  4. Q-sort.
  5. a discounted cash flow method.

 

 

 

Page: 139

 

  1. When Susie calculated the Net Present Value (NPV) of a project, the value came out to be -$2,000,0000. If this is the only information she has, Susie should recommend
  2. the project be accepted.
  3. the project be rejected.
  4. the NPV be recalculated using a higher discount rate.
  5. the NPV be recalculated using a lower discount rate.

 

 

 

Page: 140

 

  1. According to the Net Present Value (NPV) method of evaluation of projects, if there are cash outflows for multiple periods
  2. only the cash outflows for the first five years will have to be discounted back to the current period.
  3. the NPV of the project will definitely be positive.
  4. the discount rate will need to be altered.
  5. those cash outflows will have to be discounted back to the current period.

 

 

 

Page: 140

 

  1. Natal Technologies is developing a superior ultrasound machine for which it is required to invest $800,000. Based on the company’s analysis, the product will generate $200,000 from the first year till perpetuity. According to this, the payback period is
  2. 10 years.
  3. 6 years.
    c. 3 months.
  4. 4 years.

 

 

 

Page: 140-141

 

  1. Stan calculated that the net present value of his investment would be zero with a 15 percent internal rate of return. This means that
  2. the project has no value.
  3. 15 percent can be compared to the required rate of return to determine if the project should be accepted.
  4. the project requires an additional 15 percent investment on the part of the company.
  5. the project will pay back the investment in 15 years.

 

 

 

Page: 141

 

  1. Discounted cash flow estimates are only accurate if
  2. calculations are made correctly.
  3. the original estimates of profits are accurate.
  4. management has instituted sufficient financial control systems.
  5. they are made in a timely fashion.

 

 

 

Page: 141

 

  1. Using the real options approach, if the cost of future investments to capitalize on the R&D program is less than the returns from this investment, then
  2. the program should be abandoned.
  3. the program should be pursued.
  4. further calculations should be made.
  5. the exercise price should be determined.

 

 

 

Page: 142

 

  1. Which of the following is analogous to the exercise price of stock options?
  2. The cost of the R&D program
  3. The cost of future investment required to capitalize on the R&D program
  4. The returns to the R&D investment
  5. The returns to the R&D investment minus the cost of the R&D program

 

 

 

Page: 142

 

  1. If a firm has the option of investing in R&D, the cost of implementing the technology is the
  2. exercise price.
  3. nature of the option.
  4. benefit of exercising the option.
  5. the value of the option.

 

 

 

Page: 143

 

  1. Screening questions are used mainly to
  2. involve people the decision.
  3. structure the discussion of project ideas.
  4. weed out illegal ideas.
  5. choose the best consulting firm to analyze a potential project.

 

 

 

Page: 144

 

  1. Which of the following is an example of a distribution screening question for a new product?
  2. How will customers use the product?
  3. Is this project a platform that will lead to a family of new products?
  4. Where will the customer buy the product?
  5. How big is the market?

 

 

 

Page: 145

 

  1. Ditch Witch makes backhoes for digging ditches and trenches. Recently it began a project to develop an acid which when poured on the ground digs trenches of various depths depending on how much is applied. This would probably be considered a(n) _____ project for Ditch Witch.
  2. derivative
  3. platform
  4. breakthrough
  5. insightful

 

 

 

Page: 146

 

  1. The registrar’s office at Mountain Home University plans to develop a computer software to allow both telephone and online course registration instead of in-person processing. Although this does not affect other departments directly, it is the next generation product for registration that would enable numerous other enhancements to be developed. This would likely be considered a(n) ____ project.
  2. derivative
  3. platform
  4. breakthrough
  5. insightful

 

 

 

Page: 147

 

  1. Mountain Home University developed a better teaching evaluation mechanism to use in its courses. This would likely be considered a(n) _____ project.
  2. derivative
  3. platform
  4. breakthrough
  5. insightful

 

 

 

Page: 147

 

  1. Ditch Witch decided to put all its efforts into breakthrough projects to be on the leading edge of technology. This could result in
  2. poor returns on R&D in the short run followed by progressively increasing returns in the long run.
  3. poor returns overall on account of the high level of risk.
  4. good returns on R&D in the short run.
  5. short run profitability followed by decreasing profits.

 

 

 

Page: 148

 

  1. As per 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.
  2. derivative
  3. conceptual
  4. DEA
  5. Q-sort

 

 

 

Page: 148

 

  1. Steve was answering questions in a telephone survey and the surveyor asked him to rank how important different cell phone features were to him on a scale of 1 to 5. Apparently, _____ analysis is planned as part of the survey analysis.
  2. attribute
  3. functional
  4. comparative
  5. conjoint

 

 

 

Page: 149

 

  1. Desco Consulting 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 (in dollars), ranking of marketability by the sales force, and ranking of different product attributes from a potential customer focus group. It sounds like Desco should use _____ to do this evaluation.
  2. conjoint analysis
  3. data envelopment analysis
  4. attribute ranking
  5. break-even analysis

 

 

 

Page: 149

 

  1. An efficiency frontier is the range of _____ that optimize a combination of features of a potential project.
  2. product features
  3. attribute arrangements
  4. hypothetical configurations
  5. conjoint dimensions

 

 

 

Page: 151

 

  1. In DEA, _____ bear the responsibility of determining which measures are most important to include and of ensuring that the measures are accurate.
  2. financial heads
  3. team members
  4. certified experts
  5. managers

 

 

 

Page: 152

 

 

 

 

 

 

 

Essay

 

  1. Advent Systems is a very successful medical instrument company. Recently the company was approached by a smaller company, New Pancreas, Inc., that is developing and selling a device that acts as an artificial pancreas for diabetics. Explain how Advent might use the corporate venture capital structure to support this company and the reasons why it would do such a thing.

 

 

  1. Explain why the cash flows (profits minus costs) for a project that are expected to continue for 20 years need to be discounted? Why not simply use the amounts as they are? Would it make a difference if 80 percent of the profits came in during the first 5 years?

 

 

  1. Explain how the real options method could apply to R&D investments in a new project. Are there any drawbacks to this method?

 

 

  1. Johnston Products has gathered data to evaluate the attractiveness of a potential project. It knows the cash flows expected under different scenarios. It has conducted a focus group that ranks various product attributes, and it has the ranking of various marketing techniques provided by a consulting company. What method should Johnston use to evaluate this project? Why is this method the best one to use?

 

 

  1. Poduck Regional Medical Center has decided to build a new wing for its outpatient services. Poduck wants to know which services are important to its patients in this new wing. Do they prefer large waiting rooms for family members or small rooms adjacent to recovery rooms? Do they prefer patient advocates to keep them informed or would nurses be better? What technique would be appropriate to come up with weights and tradeoffs for these types of services? Explain why the technique you recommend is best.

 

 

Chapter 08 Collaboration Strategies

 

True/False

 

  1. Stapler Corporation is developing a superior prosthetic leg and has world-renowned researchers on staff. It also has the financial and marketing resources to take the product to market as it has done in the past. Most likely, Stapler will not take on a partner.

 

 

 

Page: 159

 

  1. Some firms avoid collaboration as they do not wish to expose their proprietary technologies.

 

 

 

Page: 160

 

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

 

 

 

Page: 161

 

  1. The National Cooperative Research Act (NCRA) of 1984 restricted collaborative research among firms in the same industry.

 

 

 

Page: 162

 

  1. Currently, the use of strategic alliances is on the rise.

 

 

 

Page: 162-163

 

  1. A firm cannot collaborate with its competitor.

 

 

 

Page: 164

 

  1. When Dynamite Pictures formed an alliance with Independence Studios to market movies it produced, this freed up badly needed capital for Dynamite to put into other projects, exemplifying a benefit of an alliance.

 

 

 

Page: 164

 

  1. Fisher Athletics and Truly Great Deals entered into an alliance. Fisher wanted access to online sales but did not know how to do it as well as Truly Great Deals. Truly Great Deals wanted to sell Fisher exercise mats from its online website. This is an example of quadrant C—individual alliance with capability transfer.

 

 

 

Page: 165

 

  1. When two companies enter into a joint venture the result is often a new separate company that is formed.

 

 

 

Page: 166

 

  1. Hammerschmidt Copiers has developed and patented a new copy machine. It wishes to penetrate a wider market and is short on funds. A licensing arrangement would be a good way to accomplish this goal.

 

 

 

Page: 166-167

 

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

 

 

 

Page: 167

 

  1. A trade association can take the form of a collective research organization.

 

 

 

Page: 168

 

  1. Solo internal development is, on average, a relatively faster way of developing a technology.

 

 

 

Page: 169

 

  1. In licensing, a firm loses a significant amount of control over the technology.

 

 

 

Page: 170

 

  1. A strategic alliance may not offer potential for accessing another firm’s competencies.

 

 

 

Page: 170

 

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

 

 

 

Page: 171

 

  1. Strategic fit refers to the degree to which potential partners have resources that can be effectively integrated into a strategy that creates value.

 

 

 

Page: 172

 

  1. The objectives of collaboration may change over time, requiring modification of the terms of the collaboration or the termination of it.

 

 

 

Page: 173

 

  1. A periodic audit of the members of a strategic alliance may be conducted by a partner organization or a third party in order to ensure adherence to the collaboration agreement.

 

 

 

Page: 175

 

  1. Effective collaboration agreements should be flexible enough to provide a graceful exit strategy for members that no longer wish to participate in the collaboration.

 

 

 

Page: 176

 

Multiple Choice

 

  1. A firm that chooses to engage in solo development of a project usually
  2. lacks the required capabilities.
  3. can better protect its intellectual property.
  4. relinquishes some amount of control over the use of technology.
  5. lacks the opportunity to challenge the abilities of its employees.

 

 

 

Page: 160

 

  1. Gerusa is a company of former Soviet scientists who have developed a special chemical to kill cancer cells. It has decided to not take on a partner in developing Photodynamic Therapy for cancer. This will
  2. give Gerusa exclusive control over the technology.
  3. prevent Gerusa from leveraging its capabilities.
  4. reduce Gerusa’s potential profit.
  5. destroy Gerusa’s competitive advantage.

 

 

 

Page: 160

 

  1. When technology is progressing rapidly, firms are more likely to
  2. commit themselves to fixed assets.
  3. focus on developing the necessary skills in-house.
  4. use linkages with other specialized firms to access resources they do not possess.
  5. focus on broadening their capabilities.

 

 

 

Page: 161

 

  1. Gerusa is a company of former Soviet scientists who have developed a special chemical to kill cancer cells. While the scientists have the knowledge, they are short on equipment, money, and marketing know-how. It would seem that Gerusa should
  2. give up the idea altogether.
  3. find a partner with which to collaborate.
  4. forge forward and develop this technology on their own.
  5. come up with a new concept in which they possess all the necessary capabilities.

 

 

 

Page: 161

 

  1. One result of collaborative research has been
  2. more anti-trust cases being prosecuted.
  3. more legal barriers being put into place due to seepage of patented information among collaborators.
  4. more innovation than before.
  5. less individual motivation to be innovative.

 

 

 

Page: 161

 

  1. Gerusa has developed a technology called Photodynamic Therapy (PDT) for cancer treatment. The scientists who started the company want to learn how to set up clinics and actually treat patients with this technology; hence they want to begin opening clinics quickly. To meet this objective Gerusa should
  2. collaborate with a company who has gone through a similar process to learn from them.
  3. hire marketing professionals to market the product and managers to run the clinics.
  4. go ahead with the project on its own to develop the desired capabilities and skills.
  5. seek the help of consultants.

 

 

 

Page: 162

 

  1. In 1983, Niraldy Systems and Obermeir Products wanted to collaborate on research but could not. In 1985 they entered into a collaborative research arrangement. What change made this possible?
  2. Passage of the National Cooperative Research act (NCRA) of 1984
  3. Repeal of the Sherman Anti-Trust Act in 1984
  4. A Supreme Court Decision of Niraldy versus the United States
  5. The Open Mobile Architecture Act of 1984

 

 

 

Page: 162

 

  1. Red Hat Systems is a small company started by two computer programmers who have come up with a medical diagnosis software program that is truly amazing. They can try to market it themselves, but there are only two of them and they have very little money for mass marketing efforts as well as no contacts in the medical field. They have heard that other companies are developing similar products. They have decided to form an alliance with United Medical Systems. What would seem to be the major reason for doing so?
  2. To gain rapid access to the market
  3. To maintain control of the product
  4. To reduce the potential level of competition
  5. To challenge itself to develop the necessary capabilities

 

 

 

Page: 164

 

  1. Eden Enterprises and Brushco Systems formed an alliance to develop a new line of technologically advanced stoves for cooking. What outcomes can they expect from this alliance?
  2. Getting the product to the market faster
  3. Increased security of proprietary knowledge
  4. Less opportunities to pursue other projects
  5. Fewer resources to cope with contingencies

 

 

 

Page: 164

 

  1. Brintle Enterprises entered into an alliance with several other trucking companies to use high tech communications to manage its trucks across the nation more effectively. In this arrangement, firms will help each other keep track of trucks of the entire alliance, but will share no other information. This alliance would be considered in
  2. quadrant A—individual alliance with capability complementation.
  3. quadrant B—network alliances with capability complementation.
  4. quadrant C—individual alliance with capability transfer.
  5. quadrant D—network alliances with capability transfer.

 

 

 

Page: 165

 

  1. Brintle Enterprises entered into an alliance with Surry Trucking Company to use high tech communications to manage its trucks across the nation more effectively. In this arrangement, both firms will help each other keep track of trucks of the each other and will share their knowledge about other ways to make the businesses more effective and efficient. This would be consider in
  2. quadrant A—individual alliance with capability complementation
  3. quadrant B—network alliances with capability complementation
  4. quadrant C—individual alliance with capability transfer
  5. quadrant D—network alliances with capability transfer

 

 

 

Page: 165

 

  1. Fisher Athletics and Truly Great Deals entered into an alliance. Fisher wanted access to online sales but did not know how to do it as well as Truly Great Deals. Truly Great Deals wanted to sell Fisher exercise mats from its online website. This is an example of
  2. quadrant A—individual alliance with capability complementation
  3. quadrant B—network alliances with capability complementation
  4. quadrant C—individual alliance with capability transfer
  5. quadrant D—network alliances with capability transfer

 

 

 

Page: 165

 

  1. Which of the following collaborative arrangements is usually considered to be the most complex and expensive?
  2. Strategic alliance
  3. Joint venture
  4. Licensing
  5. Outsourcing

 

 

 

Page: 166

 

  1. Dreyfuss WebMakers Company developed a template for a web page that included a shopping cart and other capabilities to market its software. However, Dreyfuss soon realized it could make more money by selling this template in modules to others wishing to quickly build web pages to sell their products. Dreyfuss should
  2. forget about this idea because it will just be creating its own competition on the Internet.
  3. become a licensor of web page template modules.
  4. become a licensee of web page template modules.
  5. start a joint venture with any other company wishing to use its template.

 

 

 

Page: 166

 

  1. Glory Cosmetics wants to sell its products on the West Coast, but does not have either the manufacturing facility or the labor force to meet the increase in demand. It also is worried that building such a big facility could impose a lot of risk on the firm if it turns out that the products are not successful on the West Coast. Glory should probably
  2. outsource production by using contract manufacturing.
  3. slightly decrease the quality of the product and use the money saved to hire new workers for a second shift.
  4. use its credit cards to meet the first couple of payrolls of newly hired workers and then when profits come in from increased sales, pay off the credit cards.
  5. seek a small business development loan from the local bank.

 

 

 

Page: 167

 

  1. Contract manufacturing:
  2. enhances a firm’s in-house capabilities.
  3. allows firms to meet the scale of market demand by committing to long-term capital investments.
  4. enables a firm to tap the greater economies of scale.
  5. decreases organizational responsiveness to the environment.

 

 

 

Page: 167

 

  1. Cardoff 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. An appropriate mode of producing this new product would be
  2. outsourcing.
  3. a joint venture.
  4. licensing in.
  5. solo internal development.

 

 

 

Page: 167

 

  1. Which of the following is not true regarding outsourcing?
  2. It involves significant transaction costs.
  3. It is a way to meet market demand without a long-term commitment.
  4. It is a great way for a company to develop needed manufacturing capabilities.
  5. There is some risk of the contract manufacturer exposing the technology to other customers.

 

 

 

Page: 168

 

  1. Virtual Baskets wants to develop its technology very fast, but with low cost and medium control. It would like to leverage its existing competencies, not develop new competencies, and may need to access the competencies of other firms. Which is the best mode of development for Virtual Baskets to meet these criteria?
  2. Strategic alliance
  3. Joint venture
  4. License out
  5. Collective research organization

 

 

 

Page: 169

 

  1. Which of the following collaborative arrangements is usually thought to offer the most opportunity for firms to learn from each other?
  2. Strategic alliance
  3. Joint venture
  4. Licensing
  5. Sole internal development

 

 

 

Page: 170

 

  1. Which of the following is not true of a collective research organization?
  2. It will help the firm leverage its own competencies.
  3. A company can learn from other participating organizations.
  4. It is a great way to gain immediate returns.
  5. It allows the firm to share the cost and risk of basic research.

 

 

 

Page: 171

 

  1. Parker Computer Company is considering entering into collaboration with Sandlot Software Company, but is not sure if the resources of Sandlot are a good fit. How would you address this concern?
  2. Do not enter into the agreement until you are 100 percent sure of the fit.
  3. It may be difficult to determine the fit. Research it the best you can and then go with it.
  4. Resource fit does not matter; all that really matters is cooperativeness.
  5. Purchase insurance to cover any uncertainty you feel.

 

 

 

Page: 172

 

  1. Even though JetShoes is doing fine on the East Coast in the shoe gliding market, it has decided to collaborate with FastShoes before tackling the West Coast market and trying to compete with SunShoes who is currently the market leader on the West Coast. This is the pooling of
  2. supplementary resources.
  3. complementary resources.
  4. scarce resources.
  5. monopolistic resources.

 

 

 

Page: 172

 

  1. One way to minimize the risks associated with collaboration is to
  2. increase the number of collaborations in which the company engages in order to gain experience in managing them.
  3. use quantitative tools to screen out unsuitable partners.
  4. establish appropriate monitoring and governance mechanisms.
  5. incorporate no-liability clauses in all collaboration contracts.

 

 

 

Page: 173

 

  1. Which of the following elements would not be included in a collaboration contractual agreement?
  2. Levels of contribution
  3. Authority and control
  4. Distribution of proceeds
  5. Level of competition

 

 

 

Page: 173
Essay

 

  1. What are the advantages and disadvantages of collaborating for research and product development?

 

 

  1. Gerusa is a company of former Soviet scientists who have developed a method of killing cancer cells with light in a process called Photodynamic Therapy (PDT). While the scientists have the medical knowledge, they are short on equipment, money, and marketing know-how. As a consultant what would you advise Gerusa to do?

 

 

  1. Dreyfuss WebMakers Company developed a template for a web page that included a shopping cart and other capabilities to market its software. However, Dreyfuss soon realized it could make even more money by selling this template in modules to others wishing to quickly build web pages to sell their products. Dreyfuss is considering using licensing to distribute its templates. Discuss the advantages and disadvantages to this approach.

 

 

  1. Dr. Low, a chemistry professor at Purdue University, has been working on a new cancer treatment method. She has formed her own company to develop and market her results. She has heard about collective research organizations and is considering joining one sponsored by a medical society. Explain to her the factors she should consider in making this decision.

 

 

  1. Frantol Laboratory is planning on entering into a collaboration agreement with Acgra Pharmaceuticals but is concerned about how much effort Acgra will put into the effort. What would you suggest that Frantol do to overcome this problem?

 

Chapter 09 Protecting Innovation

True/False

 

  1. Sometimes, not vigorously protecting a technology works to the firm’s advantage.

 

 

 

Page: 188

 

  1. The degree to which a firm is able to capture the rents from its innovation is known as its monopolization potential.

 

 

 

Page: 188

 

  1. If a tobacco farmer comes up with a new plant that one can smoke without experiencing any negative health effects, he could receive a plant patent for it.

 

 

 

Page: 189

 

  1. A patent now lasts 17 years in the United States.

 

 

 

Page: 190

 

  1. In the United States, an inventor is allowed to publish an invention provided he has secured a patent for that invention.

 

 

 

Page: 191

 

  1. If an inventor received a utility patent in the United States in June 2004, then his patent would be valid as of the same date in countries who have signed the Paris Convention, if he applies for protection within those countries within 12 months for a utility patent.

 

 

 

Page: 192

 

  1. If you want to file a claim of trademark infringement in court, you must have registered that trademark.

 

 

 

Page: 193

 

  1. If you live in a country that is a member of the Madrid Union and you register a trademark, that trademark is valid throughout the entire world.

 

 

 

Page: 194

 

  1. It is legal for Tom to download Madonna’s songs in MP3 format and create compact discs that he sells to his friends at school.

 

 

 

Page: 194

 

  1. Steve’s book, The Ten Commandments of Leadership, has been registered with the Copyright Office. It will remain valid for Steve’s lifetime plus 70 years.

 

 

 

Page: 195

 

  1. A trade secret receives no legal protection in the United States.

 

 

 

Page: 196

 

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

 

 

 

Page 197

 

  1. If a computer hardware company gives access to parts of its technology to a few software companies so they can produce complementary programs, but maintains approval of those programs before they can go on the market, it is providing limited licensing.

 

 

Difficulty: Hard

Page: 198

 

  1. The technology in Jinxbox Company’s magic crystal ball will become wholly open when its patent expires.

 

 

 

Page: 199

 

  1. If multiple firms benefit from a technology’s success, the developer of that technology has a much greater incentive to invest in further developing the technology.

 

 

 

Page: 200

 

  1. “Feature creep” refers to a company deleting features from its core product to pass the burden of those features on to other companies.

 

 

 

Page: 200

 

  1. If JetShoes is not able to produce the shoe glider technology at a sufficient volume or quality level, then protecting the technology so the firm is the sole provider may significantly boost the rate of adoption.

 

 

 

Page: 201

 

  1. If a firm lacks the production capability or expertise to produce a sufficient range of complementary goods, it should support an open technology strategy and utilize forms of sponsorship.

 

 

 

Page: 203

 

  1. An industry can sometimes pressurize a company to provide open (or partially open) access to a new technology.

 

 

Difficulty: Hard

Page: 203-204

 

  1. In the new shoe glider industry, standardization and compatibility of complements is important to the safety of the product as sold to consumers. External development will encourage standardization and compatibility.

 

 

 

Page: 204

 

 

Multiple Choice

 

  1. The scientists at Gerusa are former award-winning Soviet scientists who have all focused their attention on a cancer treatment. Working together, they have come up with remarkable solutions. The knowledge base they have
  2. is explicit.
  3. is easily imitable.
  4. is socially complex.
  5. has a low degree of appropriability.

 

 

 

Page: 188

 

  1. If Gerusa is able to protect its cancer treatment technology and it cannot be easily imitated, then the appropriability would be
  2. high.
  3. moderate.
  4. low.
  5. nonexistent.

 

 

 

Page: 188

 

  1. Andrew designed automobile tyres that are filled with foam and have a unique polycarbon exterior; the tires can never go flat. Is it likely that Andrew can patent his invention?
  2. Yes, it is useful, novel, and not obvious.
  3. No, it is merely an improvement of an existing object.
  4. Yes, because new tyres are always patentable.
  5. No, he would need to seek copyright protection.

 

 

 

Page: 189

 

  1. Frank was able to design a pair of sunglasses that could be folded and put into a case that easily fits into a shirt or pant pocket. Frank wants to know if he can receive a patent on this invention. What would you tell him?
  2. He can receive a patent since it is useful.
  3. He cannot receive a patent since he is merely changing the size and making the sunglasses more portable.
  4. It is patentable, but only if the sunglasses are not made out of plastic.
  5. It is patentable because sunglasses are products.

 

 

 

Page: 190

 

  1. Kendra wrote a computer program containing software algorithms that can predict the success of a movie before it has been released. Is this patentable?
  2. No, but she can get a copyright on it.
  3. Yes, since a Supreme Court ruling in 1998 upheld a patent on software algorithms.
  4. No, but she can trademark it.
  5. No, she should seek trade secret protection.

 

 

 

Page: 190

 

  1. To make sure companies do not receive patents in countries where they do not intend on making the invention, some countries have a “working requirement” that
  2. if the product does not work, it will not be granted a patent.
  3. patents will only be granted to people who have been working in their country for at least one year.
  4. the invention must be manufactured in the country where the patent was granted for a specified period of time.
  5. the workers who manufacture the product must be from the country where the patent was granted.

 

 

Difficulty: Hard

Page: 191

 

  1. If Harold receives a utility patent for an invention in the United Sates in August 2004, by when must he apply for a patent in other countries who have signed the Paris Convention to have a patent recognized there as of the same date?
  2. 3 days
  3. 3 months
  4. 6 months
  5. 12 months

 

 

 

Page: 192

 

  1. Andrew 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 does this application protect his right to file for patent protection in the member countries?
  2. 3 days
  3. 6 months
  4. 1 year
  5. 2 ½ years

 

 

 

Page: 192

 

  1. It is not legal for you to sell copies of your own original songs with a label that indicates the songs are by Madonna because
  2. that would be a patent violation.
  3. that would be a trademark violation.
  4. that would be a copyright violation.
  5. that would be a trade secret violation.

 

 

 

Page: 193

 

  1. In the 1970s, Church & Dwight developed Arm & Hammer Baking Soda Deodorants. Within 6 months, the product was very successful and another company released Arm & Hamer Deodorant to try to capture some of the market created by Church & Dwight. Can Church & Dwight prevent the maker of Arm & Hamer from selling their product?
  2. Probably, because the other company’s brand name is very similar to the trademark of Church & Dwight.
  3. No, the other company’s brand is different enough to withstand any challenge.
  4. No, you cannot protect a brand name legally, only the product itself.
  5. It is impossible to say using the information provided.

 

 

 

Page: 193

 

  1. Sally lives in a country that is a member of the Madrid Union and has registered her trademark within her country. That trademark is now protected
  2. throughout the entire world.
  3. only in the other countries that are members of the Madrid Union.
  4. only in her own country and she has 3 years to register it in the other Madrid Union countries and it will be valid from the date she first registered it in her own country.
  5. in over 500 countries.

 

 

 

Page: 194

 

  1. Steve wrote a book called The Ten Commandments of Leadership that he gave to people who attended his workshops on Leadership. The copyright protection for this book
  2. is nonexistent unless Steve registers it with the Copyright Office.
  3. is in effect from the time the book was printed.
  4. will last for only 28 years.
  5. will last until Steve dies.

 

 

 

Page: 195

 

  1. _____ specifies a minimum level of copyright protection for all member countries, and requires member countries to offer the same protection to both its own citizens and foreign nationals.
  2. The Berne Convention
  3. The Universal Copyright Convention
  4. The Rome Convention
  5. The Brussels Convention

 

 

 

Page: 195

 

  1. Trista has come up with a secret recipe for cookies and has sold them through exclusive outlets all around Atlanta. Sales are skyrocketing and her friends tell her to patent the recipe. However, she does not want to even tell the government agency her secret ingredients. Is there anything she can do to keep the recipe legally protected?
  2. No, not unless she is willing to register her recipe.
  3. Yes, her recipe can be considered a trade secret and is already afforded legal protection.
  4. Yes, she can declare her recipe a trade secret and register it with the U.S. Trade Secret Agency.
  5. Yes, but any protection she obtains will only be recognized in the state of Georgia, where she lives.

 

 

 

Page: 196

 

  1. Trista has come up with a secret recipe for cookies and has sold them through exclusive outlets all around Atlanta. Sales are skyrocketing. She had to hire two employees to help her make the cookies. Now she is afraid one of them will quit and start a rival company using her recipe. What advice would you give her?
  2. Have the employees sign a nondisclosure agreement
  3. Register the recipe as a trade secret
  4. Offer the employees monetary compensation in exchange for their silence
  5. Have the court issue a gag order on the employees

 

 

Difficulty: Hard

Page: 196

 

  1. Joe was told that he should allow his newly developed investment software program to be open source software as this way
  2. he will reap more profits.
  3. it will spread and be adopted more rapidly.
  4. he can better control the platform development.
  5. he can keep the technology from fragmenting.

 

 

 

Page: 197

 

  1. Which of the following is likely to happen if Singing Cards decides to protect its technology that makes singing greeting cards possible?
  2. Singing Cards is not likely to improve the technology.
  3. Singing Cards may discourage the development of advertising for this new technology.
  4. Singing Cards may subsidize the development of complementary technology.
  5. Singing Cards will probably have more incentive to invest money in technological development, promotion, and distribution.

 

 

Difficulty: Hard

Page: 199-200

 

  1. When JetShoes obtained architectural control over the shoe glider technology, it
  2. could direct the future development path of shoe glider technology.
  3. ensured its compatibility with the complements produced by others.
  4. limited its potential to influence other firms in the industry.
  5. has restricted the possibilities of ‘feature creep’.

 

 

 

Page: 200

 

  1. Singing Cards decided to make its technology open; which of the following is likely to happen?
  2. The technology may have more rapid adoptions.
  3. The price of the technology will rise dramatically.
  4. The production of complementary goods will slow down and eventually cease.
  5. The firm’s installed base will decrease.

 

 

 

Page: 200

 

  1. Singing Cards decided to make its technology open so external companies could contribute to the development of the technology. As a result
  2. a much larger pool of talent and resources will try to improve the technology.
  3. a greater degree of coordination of research efforts for this technology will develop.
  4. the direction of the technology development will be more unified.
  5. Singing Cards will be able to control the entry and timing of technology enhancements.

 

 

 

Page: 201

 

  1. The demand for Singing Cards has been really high, but now customers are complaining because the supply is so low. Singing Cards cannot keep up with demand, so a good alternative would be to
  2. protect the technology.
  3. improve the technology.
  4. diffuse the technology.
  5. develop complementary goods.

 

 

 

Page: 201

 

  1. JetShoes has developed a great shoe glider but in order to work well, they need a good set of batteries and a recharging system. For this technology to be successful, batteries and recharging systems must be
  2. produced only by the company producing the shoe gliders.
  3. produced only by complementing companies.
  4. produced only by subsidiary companies.
  5. produced by either the company producing the shoe gliders or the complementing companies or both.

 

 

Page: 203

 

  1. JetShoes has a great shoe glider, but does not have the money or personnel to develop the technology faster. That is a problem because government regulators will not approve the sale of this product within the U.S. until further safety features are developed. This is a case for
  2. external development through open technology.
  3. greater architectural control.
  4. proprietary technology.
  5. setting higher prices.

 

 

 

Page: 204

 

  1. Singing Cards produced not only the first singing greeting card in the market, but also the musical racks on which they are displayed, and the special envelopes used for mailing them (complementary products). It is in the best interest of Singing Cards to _____ architectural control over the evolution of this technology.
  2. relinquish
  3. exert
  4. abandon
  5. transfer

 

 

Difficulty: Hard

Page: 204

 

  1. Singing Cards not only developed singing greeting cards, but also has the best holographic engineers in the business. The company can influence the development of the singing card technology toward the inclusion of holographic images more easily if it has
  2. trade secrets.
  3. an open source policy.
  4. architectural control.
  5. dynamic capabilities.

 

 

 

Page: 204

 

 

 

 

Essay

 

  1. Joshua recently developed a new kind of camera. He has a working prototype and needs to raise money for production, so he wants articles about his camera to appear in various publications. What kind of problem might that pose for Joshua if he wants to seek patents in other countries later on?

 

  1. Andrew designed a license plate holder for automobiles that makes theft of the license plate practically impossible. He has limited income and feels that he needs to protect his patent in numerous countries so he can sell his product there later on. Explain how Andrew can accomplish this.

 

 

  1. In the 1970s, Church & Dwight developed Arm & Hammer Baking Soda Deodorant. Within 6 months the product was very successful and another company released Arm & Arm Deodorant to try to capture some of the market created by Church & Dwight. Can Church & Dwight prevent the other company from selling their product? What must Church & Dwight do?

 

 

  1. Your friend states that the enforcement of copyright law in the music industry is bad for consumers because it prevents them from being able to access, download, and trade music freely. How might you attempt to explain the benefits to consumers of copyright protection of music?

 

 

  1. Fred Stringer has come up with a new computer program to help online sellers manage online auctions at sites such as eBay and others. It is superior to just using a spreadsheet to track auctions. He would like his program to become the dominant design, but also wants to earn a profit from all his hard work. What can Fred do to meet both of these objectives?

 

  1. Why would an industry “gang up” on one company that comes out with a new technology? Could this ever cause the company with the new technology to allow the technology to be more open?

 

 

 

 

Chapter 10 Organizing for Innovation

 

True/False

 

  1. A firm’s organization structure can both help and hinder the firm’s efforts at innovation.

 

 

 

Page: 213

 

  1. Coalitions of small firms often have well-defined systems of authority and control.

 

 

 

Page: 214

 

  1. When large companies break up into networks of small, often more autonomous divisions of independent firms it is called the Icarus Paradox.

 

 

 

Page: 215

 

  1. Standardization refers to the degree to which activities are performed in a uniform way.

 

 

 

Page: 216

 

  1. Formalization refers to the degree to which a firm’s decision-making authority is retained only at high levels of the firm’s hierarchy.

 

 

 

Page: 216

 

  1. Frankie’s Chicken Shack wants to ensure better consistency and quality. To accomplish this Frankie needs to make her procedures more standardized.

 

 

 

Page: 216

 

 

  1. The Bobcat Machinery Company has a high degree of formalization and requires standardization of procedures with many rules dictated. Bobcat will find that this regulation leads to disciplined thinking which in turn fosters innovation.

 

 

 

Page: 216

 

  1. According to research, consumer product companies tend to use the centralized R&D structure to better meet individual market needs.

 

 

Difficulty: Hard

Page: 217

 

  1. An ambidextrous organization is one with a complex organizational form that is composed of multiple internally inconsistent architectures that can collectively achieve both short-term efficiency and long-term innovation.

 

 

 

Page: 220

 

  1. Firms which have multiple product divisions generally implement a common structure across all the divisions.

 

 

 

Page: 220

 

  1. The International Cyberspace Corporation is a very large firm. It can overcome its size barriers to creativity if it has the internal structures with the incentives and behaviors of small firms.

 

 

 

Page: 221

 

  1. A modular product is one that “modifies” or enhances another product.

 

 

 

Page: 222

 

  1. Advances in information technology have hindered the growth of loosely coupled organizational structures.

 

 

 

Page: 223

 

  1. A loosely coupled structure is better suited for activities that involve the exchange of tacit knowledge.

 

 

 

Page: 224

 

  1. The not-invented-here syndrome encourages companies to try innovations from divisions in other countries because persons who live in another country are more often seen as experts.

 

 

 

Page: 226

 

  1. The Peedle Chocolate Company is headquartered in Belgium. In the United States, it uses manufacturing techniques from France and marketing techniques from Great Britain. It seems to be using the locally leveraged R&D strategy.

 

 

Difficulty: Hard

Page: 227

 

  1. The globally linked R&D strategy is great for global coordination, but it is expensive.

 

 

 

Page: 227

 

  1. The locally leveraged and globally linked R&D strategies are the same.

 

 

 

Page: 227

 

  1. The transnational approach to R&D leverages resources and capabilities that exist anywhere within the firm and deploys them when and where an opportunity to do so exists.

 

 

 

Page: 228

 

  1. For the transnational approach to R&D to work, the organization must balance its identity between national brands and global image.

 

 

 

Page: 228

 

 

Multiple Choice

 

  1. Schumpeter said that large firms are likely to have
  2. a more difficult time raising funds.
  3. lower returns with lower sales volumes because fixed costs of R&D are high.
  4. better-developed complementary activities that enable them to be more innovative.
  5. poorer global reach due to bureaucracy.

 

 

 

Page: 213

 

  1. Dove Laboratories is a large pharmaceutical firm that is 70 years old. It has consistently invested heavily in R&D. One would expect Dove to have
  2. better capabilities to take on larger innovation projects.
  3. fewer rules and regulations than smaller firms.
  4. increasingly effective governance systems.
  5. foolproof communication systems.

 

 

 

Page: 214

 

  1. Which of the following statements is true about small firms?
  2. They face difficulties in monitoring employees.
  3. Rewarding employees is much more difficult for them.
  4. They tend to be more entrepreneurial.
  5. They are likely to have lower rates of new product success.

 

 

 

Page: 214

 

  1. Since a large company tends to have more bureaucracy, fixed costs, and commitments to employees and customers, you can expect it to be _____.
  2. more responsive to change
  3. less responsive to change
  4. oblivious to change
  5. unaffected by change

 

 

 

Page: 214

 

  1. According to the _____, if Frankie’s Chicken Shack excels in cooking and selling chicken, this ability could lead to its downfall if it does not embrace new technology because it may become overconfident, careless, or slow to change.
  2. law of diminishing returns
  3. principle of disaggregation
  4. Icarus Paradox
  5. research of Porter

 

 

 

Page: 214

 

  1. A large company might want to disaggregate in order to
  2. lengthen development cycles.
  3. reduce costs.
  4. become more responsive.
  5. improve the rate of product adoption.

 

 

 

Page: 215

 

  1. Tracie Fashions has become very profitable and now employees 80 persons. Tracie had been very informal in running the company, but now feels she needs to have more rules and regulation of employee behavior. Tracie desires more
  2. creativity.
  3. formalization.
  4. delegation.
  5. decentralization.

 

 

 

Page: 216

 

  1. Tracie Fashions has become very profitable and now employees 80 persons. Tracie needed to have better regulation of employee behavior so she formalized the company with more rules, procedures, and written documentation. This may result in
  2. less creativity.
  3. more creativity.
  4. disgruntled employees because they do not know what to expect.
  5. more flexibility in responding to fashion trends.

 

 

 

Page: 216

 

  1. Frankie’s Chicken Shack wanted to ensure the quality and consistency of chicken served; so the cooking procedures were highly standardized. What will Frankie be giving up by making this move?
  2. Customer contact
  3. Waste
  4. Creativity and experimentation
  5. The company’s cost advantage

 

 

 

Page: 216

 

  1. If Jasper Electronics decentralizes its R&D by divisions, it will most likely
  2. achieve greater economies of scale.
  3. eliminate the duplication of efforts.
  4. benefit more from the learning curve.
  5. result in development projects that take advantage of the diversity of knowledge and market contacts that may exist in different divisions.

 

 

 

Page: 216

 

  1. An advantage of the centralized structure for R&D is that it
  2. can lead to products that better satisfy customer needs.
  3. can enable greater division of labor.
  4. it leads to a sense of ownership and empowerment among employees.
  5. leads to higher sales revenues.

 

 

 

Page: 217

 

  1. Dynamic Electronics Company develops and sells its technologically-advanced digital camera in markets all over the world. For this industry, it is most likely that the company uses a _____ structure for its R&D.
  2. decentralized
  3. centralized
  4. spaghetti
  5. homogenized

 

 

 

Page: 217

 

  1. Since much innovation arises from experimentation and improvisation, the _____ organization structure is typically considered better suited to creativity and innovation.
  2. mechanistic
  3. formalized
  4. standardized
  5. organic

 

 

 

Page: 218

 

  1. Which of the following is true regarding ambidextrous organizations?
  2. Incentive plans are uniform through out the organization.
  3. There is tight coordination of R&D activities.
  4. The organization is characterized by high levels of formalization and standardization.
  5. R&D units are allowed to function like small, independent ventures.

 

 

 

Page: 220

 

  1. Michael is a part of a new product development team that operates nearly autonomously from its parent organization—WorldLogix. Within the team, there is a considerable decentralization of authority and little bureaucracy. Michael’s team can be referred to as
  2. a modular team.
  3. skunk works.
  4. an inorganic group.
  5. a loosely coupled team.

 

 

 

Page: 220

 

  1. Quasiformal structures
  2. are slow to respond to the need for change.
  3. foster interactions based on hierarchy.
  4. are more relationship-focused.
  5. play important boundary-spanning roles.

 

 

 

Page: 221

 

 

  1. Old Hickory Furniture Company achieves both efficiency and flexibility by using the same components (legs of a dining room table) for several different types of tables. This is referred to as
  2. modularity.
  3. architecture.
  4. transparent substitution.
  5. organic innovation.

 

 

 

Page: 222

 

  1. Swaback Motors told its R&D department that it did not matter what the motor they developed was like as long as it would fit into the engine housing and connect to the electrical and other mechanical parts. This is an example of
  2. organic technology.
  3. loose coupling.
  4. functional preference.
  5. default designing.

 

 

 

Page: 223

 

  1. ErgoFlex manufactures office furniture. The company is considering adopting a modular production system. In which of the following scenarios would a modular system offer greater value to the company?
  2. When customers want office chairs with rubber wheels
  3. When customers want office chairs with lumbar support
  4. When customers want office chairs with headrests
  5. When some customers want office chairs with rubber wheels and lumbar support while the remaining prefer headrests only.

 

 

Difficulty: Hard

Page: 223

 

  1. In loosely coupled organization structures
  2. coordination is achieved through adherence to shared objectives and common standards.
  3. the possibility for achieving synergies is high.
  4. the firm reduces its chance of developing a product that has a price-to-value ratio that attracts customers.
  5. the overhead and administrative complexities of maintaining a wide scope of activities are increased.

 

 

 

Page: 223

 

  1. The International Framing Company wants to tightly control R&D and achieve specialization and economies of scale. At the same time it wants to protect its core competencies and spread its innovations throughout the company. The _____ strategy would help achieve this goal.
  2. center-for-global
  3. local-for-local
  4. locally leveraged
  5. globally linked

 

 

Difficulty: Hard

Page: 226

 

  1. The Frankfurt Clock Company has subsidiaries in several different countries that are highly autonomous. The clock markets in these countries are very diverse and the needs of the local markets vary greatly. The _____ or _____ strategies for R&D are most appropriate for this situation.
  2. center-for-global or globally linked
  3. local-for-local or locally leveraged
  4. locally leveraged or globally linked
  5. globally linked or local-for-local

 

 

Difficulty: Hard

Page: 226-227

 

  1. Gerusa is a company with major divisions in Germany, Russia, and the U.S. (hence the name). The scientists in Russia develop cancer treatment methods. The Germans organize treatment clinics. The U.S. division gathers the financing and markets the treatment methods. This is an example of a _____ strategy.
  2. center-for-global
  3. local-for-local
  4. locally leveraged
  5. globally linked

 

 

Difficulty: Hard

Page: 227

 

  1. In the locally leverage strategy the R&D divisions _____ while in the globally linked strategy the R&D divisions _____.
  2. are decentralized; work on all development activities relevant to the region where they operate.
  3. specialize in a particular development activity; are decentralized.
  4. work on the full scope of development activities relevant to their business unit; take advantage of the diversity of resources and knowledge.
  5. are decentralized; are centralized.

 

 

 

Page: 227-228

 

  1. Cromwell Electronics would like to integrate its world wide operations in order to enhance its adaptability and flexibility to environmental situations. Essentially, Cromwell would like to be able to leverage its resources and capabilities whenever and wherever an opportunity arises. What would you recommend that Cromwell do?
  2. Encourage divisions to function as independent silos by developing their own specific capabilities and competencies.
  3. Utilize division-spanning teams.
  4. Focus on its global image instead of its national brands.
  5. Strictly adhere to a decentralized structure.

 

 

Difficulty: Hard

Page: 228
Essay

 

  1. What are some of the advantages and disadvantages of large firms in terms of R&D?

 

 

  1. Biogyn produces tissues and diagnostics substances for three market segments: hospitals, universities, pharmaceutical companies. Jasper, a member of the upper management team, is trying to decide whether to decentralize its R&D activities by division or not. You have been called in as a consultant to explain the advantages and disadvantages of such a move. What will you say?

 

 

  1. Explain why a mechanistic organizational structure can stifle creativity.

 

 

  1. The Kaibash Motor Company is considering using the loosely-coupled organizational structure. They have asked you for your evaluation of such a structure and whether you would recommend it for an automobile manufacturer. Provide your answer.

 

 

  1. Gerusa is a company that uses Photodynamic Therapy to treat cancer and has major divisions in Germany, Russia, and the U.S. The scientists in Russia develop the cancer treatment methods, the Germans organize treatment clinics, and the U.S. division gathers the financing and markets the treatment methods. What type of strategy is this and what are the advantages and disadvantages of this type of strategy?

 

 

 

Chapter 11 Managing the New Product Development Process

 

True/False

 

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

 

 

 

Page: 239

 

  1. Fuchs Development was trying to decide whether to have a short or long product development cycle. The R&D director said that a shorter cycle is usually better and this is a correct assessment.

 

 

 

Page: 240

 

  1. If R&D engineers fail to communicate directly with manufacturing engineers, features may be planned that cannot be manufactured.

 

 

 

Page: 241

 

  1. Parallel development processes are universally endorsed.

 

 

 

Page: 242

 

  1. Project champions are more likely to be from marketing.

 

 

 

Page: 243

 

  1. A firm can benefit from developing “antichampions”.

 

 

 

Page: 244

 

  1. The R&D engineers are often the ones most able to identify the maximum performance capabilities and minimum service requirements of a new product.

 

 

 

Page: 245

 

  1. A lead user for a product will often give you an earlier and more accurate idea of whether a new product will be successful in the marketplace compared to other customers.

 

 

 

Page: 246

 

  1. Suppliers may be actual members of the product team.

 

 

 

Page: 246

 

  1. In stage 1 of the stage-gate process, the team builds a business case that includes a defined product, its business justification, and a detailed plan of action for the next stages.

 

 

 

Page: 247

 

  1. The criteria in the go/kill decision points are the questions or metrics used to make the decision regarding whether or not to kill the project or allow it to proceed.

 

 

 

Page: 248

 

  1. In the product development process, expenditures increase as uncertainty increases.

 

 

 

Page: 249

 

  1. QFD was developed in Germany.

 

 

 

Page: 250

 

  1. The House of Quality uses a scale from one to ten to evaluate competing products.

 

 

 

Page: 251

 

  1. Those who advocate Quality Function Deployment (QFD) say its one drawback is that it hinders cross-functional communication.

 

 

 

Page: 252

 

  1. One way to reduce direct labor and material handling cost is to minimize the number of parts for a product.

 

 

 

Page: 252

 

  1. In FEMA, problems are classified according to the time at which they occurred.

 

 

 

Page: 253

 

  1. Computer-aided design (CAD) can provide more designs to choose from, but this slows down the new product development process while project members decide from these designs.

 

 

 

Page: 253-254

 

  1. Computer-aided manufacturing (CAM) provides faster and more flexible manufacturing than traditional methods.

 

 

 

Page: 254

 

  1. When measuring a company’s new product development process performance, it is best to use multiple measures.

 

 

 

Page: 255

 

Multiple Choice

 

  1. Talkaphone decided to emphasize text messaging capabilities in its cell phones and to only incorporate a basic photographic capability. This led to slow sales most likely because
  2. the text messaging feature was not compelling enough.
  3. the text messaging feature was too advanced for customers.
  4. Talkaphone invested in one feature at the expense of one that customers valued more.
  5. Talkaphone’s cellphone was too expensive.

 

 

 

Page: 239

 

  1. Talkaphone discovered that teens preferred text messaging and that senior citizens preferred cell phones that could take pictures. It was too expensive to provide the highest quality of both these functions in a cell phone; so they provided a second-tier level of quality, but included both features to appeal to both markets. As a result
  2. they will probably sell lots of cell phones to the teen market, but not to the senior citizen market.
  3. they will probably sell lots of cell phones to the senior citizen market, but not to the teen market.
  4. they will probably sell lots of cell phones to both the teen market and the senior citizen market.
  5. they will probably not sell lots of cell phones to either market.

 

 

 

Page: 239

 

  1. Even though WordPerfect had a great product that fit customer requirements, it lost critical market share to Word for Windows as it was slow in coming out with its windows-based word processing program. This was probably due to the fact that its
  2. expected profit margin was too high.
  3. product development cycle time was too long.
  4. program was too inferior to the Word program.
  5. target market was heterogeneous in nature.

 

 

 

Page: 240

 

  1. Jasbar Industries has developed a product with a very short product development cycle. Which of the following results can it expect?
  2. Sales will be slow as consumers will already be committed to other products.
  3. Jasbar will be able to provide complementary goods to enhance the attractiveness of its product.
  4. Jasbar will be unable to fully amortize the fixed costs of development before the product becomes obsolete.
  5. Jasbar will not be able to upgrade its product.

 

 

Difficulty: Hard

Page: 240

 

  1. Android Systems developed a robot that was very popular and sold well. However, it never recovered the full cost of product development. This points out that the development efforts must be both
  2. effective and efficient.
  3. relevant and discounted.
  4. organic and fast-paced.
  5. active and replicable.

 

 

 

Page: 241

 

  1. Which of the following statements is true about parallel development processes?
  2. It enhances the probability that R&D will design products that are difficult to manufacture.
  3. It requires costly iterations between design stages.
  4. It shortens overall cycle time.
  5. It initiates product design once concept development is complete.

 

 

 

Page: 242

 

  1. Paul is an Executive Vice President in a bank. Recently the bank President asked Paul to use his influence to ensure that the online banking project was developed and implemented. Paul is being asked to be a
  2. devil’s advocate.
  3. project champion.
  4. senior vice-president.
  5. “yes” man.

 

 

 

Page: 243

 

  1. Bob King, a Senior Vice President at Associated Grocers, called a meeting between the production team and the pricing department. These two groups had an ongoing conflict regarding the development and implementation of a software pricing program. Bob is the product champion for this project and probably wants to stimulate _____ between these two departments.
  2. communication and cooperation
  3. creative conflict
  4. resolution diversity
  5. design suggestions

 

 

 

Page: 244

 

  1. Bob King is a Senior Vice President at Associated Grocers, and has been assigned to be the project champion for the development and implementation of a software pricing program. Both the buying department and the pricing department have determined that the new software pricing program is worthless, but they do not tell Bob. This is probably because
  2. of Bob’s seniority.
  3. they lack a sense of ownership for the project.
  4. they have different goals.
  5. they cannot prove that it is worthless.

 

 

 

Page: 244

 

  1. An “antichampion” is
  2. a person who is out to sabotage a new project.
  3. one who plays the role of the “devil’s advocate.”
  4. a person who uses subjective criteria.
  5. a person in a competing firm who sabotages market tests by promoting his company’s products more heavily than normal.

 

 

 

Page: 244

 

  1. Project champions
  2. will increase the likelihood that a product will be successful in the market place.
  3. are more likely to support projects that benefit the entire organization.
  4. can come from any level in the organization.
  5. are more likely to be involved with radical innovation projects.

 

 

Difficulty: Hard

Page: 245

 

  1. Dr. Aznuck is a Professor of Information Systems at Mountain Home University. She was asked to be a beta tester for the latest version of Microsoft Office a year before it was released because she tends to use such programs in an advanced way and often develops her own solutions to problems with the programs. She made several suggestions for its improvement. She would be called a(n)
  2. lead user.
  3. alpha user.
  4. expert technician.
  5. consumer advocate.

 

 

 

Page: 246

 

  1. The Marketing Director of Pambiotics says that the company should use _____ rather than a large sample of customers to test market its new PDA because they have the same general needs as the marketplace, but are likely to face them earlier than the bulk of the market.
  2. focus groups
  3. lead users
  4. “antichampions”
  5. significant suppliers

 

 

 

Page: 246

 

  1. A _____ of a product is an early working prototype of a product released to users for testing and feedback.
  2. beta version
  3. dummy
  4. replica
  5. placebo

 

 

 

Page: 246

 

  1. You are considering involving the suppliers of the electronic components used in the DVD player/recorder your company manufactures in the concept development and design of a new version of the product. Research has shown that including suppliers will result in
  2. bringing products to the market more slowly because getting their input takes time.
  3. an increased cost because you must pay them for their contributions.
  4. a higher quality of product as you incorporate their ideas into the design.
  5. short-term supplier relations.

 

 

 

Page: 246

 

  1. Pioneer Cleaning Equipment has a basic concept for a new floor buffing machine and a business plan for that machine. Which stage in the stage-gate process comes next?
  2. Stage 5, launch the product by producing and selling it.
  3. Stage 4, verify and validate the process for the new product, its marketing, and production.
  4. Stage 3, begin the actual design and development including the details of manufacturing, marketing, and operations.
  5. Stage 2, build a business case to justify the project.

 

 

 

Page: 247-248

 

  1. Pioneer Cleaning Equipment has begun the actual design and development including the details of manufacturing, marketing, and operations of a new floor buffing machine. Which stage in the stage-gate process comes next?
  2. Stage 5, launch the product by producing and selling it.
  3. Stage 4, verify and validate the process for the new product, its marketing, and production.
  4. Stage 3, form a focus group to make sure the product meets user expectations.
  5. Stage 2, build a business case to justify the project.

 

 

 

Page: 248

 

  1. The go/kill decision points in the stage-gate process include deliverables that are
  2. finished products ready to ship.
  3. inventory ready to move to the next production stage.
  4. results of the previous stage which will be inputs for the gate review.
  5. an action plan for the dates of the next gate.

 

 

 

Page: 248

 

  1. Pioneer Cleaning Equipment wants to use The House of Quality in designing and developing a new floor buffing machine. What is the first step that Pioneer should take?
  2. Identify customer requirements.
  3. Determine the relative value or weight of customer requirements.
  4. Identify engineering attributes that determine the performance of the buffing machine.
  5. Evaluate competing products to determine how well they meet customer needs.

 

 

 

Page: 250

 

  1. Pioneer Cleaning Equipment wants to use The House of Quality in designing and developing a new floor buffing machine. What is the last step Pioneer will have to take?
  2. Determine the relative value or weight of customer requirements.
  3. Evaluate the new design based on the design targets.
  4. Identify engineering attributes that determine the performance of the buffing machine.
  5. Evaluate competing products to determine how well they meet customer needs.

 

 

 

Page: 252

 

  1. Pioneer Cleaning Equipment wants to use The House of Quality in designing and developing a new floor buffing machine. This will
  2. result in a common language and framework for project team members to use.
  3. blur the relationship between product attributes and customer requirements.
  4. conceal the competitive shortcomings of the company’s existing products.
  5. lead to design trade-offs.

 

 

 

Page: 252

 

  1. Pioneer Cleaning Equipment has decided to use Design for Manufacturing (DFM) in designing and developing a new floor buffing machine. This will most likely result in a buffing machine that
  2. has more parts, but is faster.
  3. allows users to make many adjustments.
  4. eliminates fasteners for buffing pads, and other parts of the machine.
  5. utilizes more jigs and fixtures.

 

 

Difficulty: Hard

Page: 252

 

  1. TeknoWorld has undertaken a failure modes and effects analysis of a digital identification system it has 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?

  1. 24
  2. 6
  3. 2.67
  4. 1.5

 

 

Difficulty: Hard

Page: 253

 

  1. According to FEMA, firms should
  2. focus first on the failure modes that have the highest scores for severity of risk, but occur less often and are less detectable.
  3. focus first on the failure modes that have the highest scores for severity of risk, occur more often and are less detectable.
  4. focus first on the failure modes that have less severe impacts, occur less often but are more detectable.
  5. focus first on the failure modes that have less severe impacts, but occur more often and are less detectable.

 

 

Difficulty: Hard

Page: 253

 

  1. Which of the following might be used to determine a company’s overall innovation performance?
  2. Return on innovation
  3. Average cycle time
  4. Percent of development projects meeting deadlines
  5. Percent of development projects staying within or under budget

 

 

 

Page: 256

 

 

Essay

 

  1. Talkaphone discovered that teenagers preferred text messaging and that senior citizens preferred cell phones that could take pictures. It was too expensive to provide the highest quality of both these functions in a cell phone so they provided a second-tier level of quality, but included both features to appeal to both markets. What is likely to happen?

 

 

  1. Dr. Aznuck is a Professor of Information Systems at Mountain Home University. She conducts courses in computer applications. Why might she be asked to be a beta tester for the latest version of Microsoft Office before it is released?

 

 

  1. Pioneer Cleaning Equipment Company is experimenting with a faster and quieter machine to buff floors. To develop this concept the company is contemplating using the lead user method of concept development. Explain how this method would work and what the advantages of it are.

 

 

  1. Explain the value of the stage-gate process of new product development.

 

 

  1. Joe attended a workshop where the Quality Function Deployment (QFD) method of new product development was explained. During the workshop he asked the following question, “This all seems very complex and quantitative to me. I prefer qualitative checks instead. They are less confusing.” If you were the workshop leader, how would you address Joe’s concern?

 

Chapter 12 Managing New Product Development Teams

 

True/False

 

  1. Research has shown that large product development teams are superior to small teams because they can share the work and have better ideas. Commitment of team members is also higher.

 

 

 

Page: 266

 

  1. A cross-functional team is one that has members of different ethnic backgrounds in it.

 

 

 

Page: 266

 

  1. Cross-functional communication can lead to longer cycle times.

 

 

 

Page: 266

 

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

 

 

 

Page: 267

 

  1. The personality traits of individuals do not have an impact on the success of new product development teams.

 

 

 

Page: 268

 

  1. Negotiating delivery deadlines is a task coordination activity.

 

 

 

Page: 268

 

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

 

 

 

Page: 269

 

  1. Functional team members are usually highly committed to development projects.

 

 

 

Page: 269

 

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

 

 

 

Page: 269

 

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

 

 

 

Page: 270

 

  1. Heavyweight teams are permanent in nature.

 

 

 

Page: 270

 

  1. Lightweight teams are suitable for platform projects.

 

 

 

Page: 271

 

  1. The evaluation of members of a lightweight team is done by the project manager.

 

 

 

Page: 271

 

  1. Autonomous teams usually undertake derivative projects.

 

 

 

Page: 271

 

  1. The contract book must be developed before a project charter can be written.

 

 

 

Page: 272

 

  1. Project champions are suitable for heavyweight teams.

 

 

 

Page: 272

 

  1. The purpose of the contract book is to gain commitment to and ownership of the new product development from team members.

 

 

 

Page: 273

 

  1. If members of a new product development team live and work great distances from each other, a virtual team may have to be developed.

 

 

 

Page: 273

 

  1. In forming a virtual team, you should choose persons who avoid interaction so that no one person dominates the group.

 

 

 

Page: 273

 

  1. The decentralized self-coordination international virtual team is suited to architectural innovation.

 

 

Difficulty: Hard

Page: 274

 

  1. Virtual teams are adept at exchanging tacit knowledge.

 

 

 

Page: 275

 

 

Multiple Choice

 

  1. Kate’s supervisor called her to talk about her participation in a new product development team. The supervisor told Kate she had been engaging in social loafing. This meant that Kate
  2. would work only when she was around other people.
  3. would engage in too much socializing while working.
  4. would not put much effort into the team’s work because it was a large team and she figured her effort would not be needed or recognized.
  5. would waste time on social networking sites.

 

 

 

Page: 266

 

  1. Your boss does not favor the use of cross-functional teams. How would you respond to this?
  2. The use of cross functional teams can result in products that do not satisfy customers’ needs.
  3. A cross-functional interface can help better ensure a product’s quality and price.
  4. Cross-functional teams usually result in products that cannot be engineered.
  5. Cross-functional teams necessitate the need for back and forth iterations between different stages in the product development process leading to longer cycle times.

 

 

Difficulty: Hard

Page: 266

 

  1. In constructing new product development teams,
  2. the larger the team, the easier it is to foster a shared sense of identity among team members.
  3. as the size of the team increases, the potential for social loafing increases.
  4. cross-functional communication can lead to a poor fit between product attributes and customer requirements.
  5. the diversity of team members helps avoid homophily.

 

 

 

Difficulty: Hard

Page: 266-267

 

  1. The Vice President of Fortune Computers is trying to decide on the composition of a new product development team. If he chooses members who are from different backgrounds, the positive effects will be
  2. broader knowledge base.
  3. increased trust.
  4. good coordination and communication right from the start.
  5. social loafing.

 

 

 

Page: 267

 

  1. The Vice President of Biogyn Lifesciences is trying to decide on the composition of a new product development team. If she chooses members who are from different backgrounds, one of the disadvantages will be
  2. the team will more quickly achieve consensus on ideas.
  3. the team may have more difficulty communicating and cooperating.
  4. the team will tend to have more difficulty generating multiple ways of looking at the problem.
  5. the team will spend too much time socializing.

 

 

 

Page: 267

 

  1. Jan is the member of a new product development team. Her supervisor asked her how she likes the experience and she replied, “Our team seems to be suffering from homophily.” This means that
  2. team members are afraid of persons who are more senior to them.
  3. team members spend all their time chatting about personal issues.
  4. team members are only interested in talking to people very different from themselves.
  5. team members only like other people whom they perceive as being similar to themselves.

 

 

 

Page: 267

 

  1. Which of the following statements is true regarding the various boundary-spanning activities in new product development teams?
  2. Asking a team’s internal customers for their comments on the team’s performance is an ambassador activity.
  3. Developing a project schedule is a task coordination activity.
  4. Acting as representative of a team at a regional company conference is a scouting activity.
  5. Identifying journals that can further enhance team members’ knowledge is a task coordination activity.

 

 

Difficulty: Hard

Page: 268

 

  1. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he heard that the department chair of the Business department doubted the effectiveness of the committee, Dr. Askew went to meet with the chair and assure her of the committee’s progress. Dr. Askew is performing a(n) _____ activity, which is a boundary-spanning activity.
  2. ambassador
  3. task coordination
  4. scouting
  5. paternalism

 

 

 

Page: 268

 

  1. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he negotiated with the Dean of the University that committee members have no other service assignments so they could concentrate on this project and that the team be given 12 months to complete its goals, he was performing a(n) _____ activity.
  2. ambassador
  3. task coordination
  4. scouting
  5. paternalism

 

 

 

Page: 268

 

  1. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he did an Internet search of the websites of other colleges and universities to discover what type of freshman curriculum they have developed, he was performing a(n) _____ activity.
  2. ambassador
  3. task coordination
  4. scouting
  5. paternalism

 

 

 

Page: 268

 

  1. Andrew has put together a functional new product development team. Which of the following is most likely to be true about this team?
  2. Team members will spend up to 50% of their time on team-related activities.
  3. The team will require a person to act as a dedicated liaison.
  4. Team members will need to coordinate with members from different functions.
  5. The team will most likely handle derivative projects.

 

 

 

Page: 269

 

  1. Karen is a member of a new product development team. She still reports to her manager, the marketing director, but spends about 25 percent of her time on the project. Her team has a project manager. This sounds like a(n) _____ team.
  2. functional
  3. lightweight
  4. heavyweight
  5. autonomous

 

 

 

Page: 270

 

  1. Susan is the member of a new product development team. She no longer reports to her manager, the engineering director, and spends all of her time on the project. However, the team will disband once the new product is on the market. This sounds like a(n) _____ team.
  2. functional
  3. lightweight
  4. heavyweight
  5. autonomous

 

 

 

Page: 270

 

  1. Frank tells his son about when he was part of the Macintosh team at Apple Computer. The team had its own building, own dress, and behavior code. They had their own operating procedures and even their own flag (skull and crossbones to show they were rebels). This sounds like a(n) _____ team.
  2. functional
  3. lightweight
  4. heavyweight
  5. autonomous

 

 

 

Page: 270

 

  1. Apple Computers reported that once the Macintosh computer was successfully launched, many of the people on the development team had trouble adjusting to the corporate culture again and some even left the company. This is one drawback of the _____ team.
  2. functional
  3. lightweight
  4. heavyweight
  5. autonomous

 

 

 

Page: 270-271

 

  1. Sam works at Waterways Inc. and will be heading a team of individuals to work on improving the cost, quality, and performance of the company’s award winning water purifying system. Based on this information, which of the following is most likely to be true?
  2. Sam is a junior manager.
  3. Team members will be located in their respective functions.
  4. Sam has a high level of power.
  5. The potential for conflict between the team and the functions is low.

 

 

Difficulty: Hard

Page: 271

 

  1. Bill is looking for a team leader for a heavyweight new product development team. He told his administrative assistant that he needs someone with multilingual skills. By this he means someone who
  2. can speak English and Spanish.
  3. can speak the language of marketing, engineering, and manufacturing.
  4. can speak as well as listen well to others.
  5. can speak without bias toward any employee.

 

 

 

Page: 272

 

  1. John was serving in an autonomous team and was asked to sign a document honoring the project plan and pledging to work towards the goals specified. This document is called a
  2. project charter.
  3. contract charter
  4. project book.
  5. contract book.

 

 

 

Page: 273

 

  1. Which of the following are the advantages of collocation?
  2. It provides opportunities for rich face-to-face communication.
  3. It is suitable for teams whose members are spread across distances.
  4. It reduces employee and organizational travel expenses.
  5. It facilities independent work.

 

 

 

Page: 273

 

  1. The main purpose of the contract book is to
  2. clarify goals.
  3. facilitate cooperation.
  4. establish commitment to and ownership of the project.
  5. develop a legal contract.

 

 

 

Page: 273

 

  1. Members of a virtual team
  2. must be located in the same office.
  3. may live great distances apart.
  4. will automatically have a sense of commitment to each other.
  5. will find it easy to develop trust in each other.

 

 

 

Page: 273

 

  1. Which type of international virtual team is more likely to arise if there are well-developed standard interfaces between components being developed in different locales?
  2. Decentralized self-coordination
  3. System integrator as coordinator
  4. Core team as system architect
  5. Centralized venture team

 

 

 

Page: 274

 

  1. Which type of international virtual team is likely to be used only for strategic innovations of the utmost importance due to its high expense?
  2. Decentralized self-coordination
  3. System integrator as coordinator
  4. Core team as system architect
  5. Centralized venture team

 

 

 

Page: 274

 

  1. In which type of international virtual team are R&D personnel and resources relocated to a single location to enable maximum integration and coordination?
  2. Decentralized self-coordination
  3. System integrator as coordinator
  4. Core team as system architect
  5. Centralized venture team

 

 

 

Page: 274

 

  1. Innovations that are_____ require greater centralization, while those that are _____ can be more decentralized.
  2. modular; architectural
  3. incremental; radical
  4. architectural; modular
  5. radical; architectural

 

 

 

Page: 274

 

  1. Which type of international virtual team conducts all R&D through decentralized divisions, but each coordinates with one person?
  2. Decentralized self-coordination
  3. System integrator as coordinator
  4. Core team as system architect
  5. Centralized venture team

 

 

 

Page: 275

 

  1. Which type of international virtual team has a team that takes the lead role in R&D activities while also coordinating the R&D activities of the decentralized divisions?
  2. Decentralized self-coordination
  3. System integrator as coordinator
  4. Core team as system architect
  5. Centralized venture team

 

 

 

Page: 275

 

 

 

 

Essay

 

  1. What are the advantages and disadvantages to having a heterogeneous new product development team?

 

  1. Dr. Askew was the chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. Explain how Dr. Askew might perform all three boundary-spanning activities.

 

 

  1. The CEO of Cromwell Electronics has put together an autonomous new product development team. Now he is trying to decide what type of a leader to appoint to head the team. What should he look for in the leader of this team to improve its chances of success?

 

 

  1. What is a project charter and a contract book? Explain their purpose and how they are related to each other?

 

 

  1. Marion has argued that with modern information technologies, collocation of team members is no longer important. How would you respond to this claim?

 

 

  1. When John Vegas contacted Dr. House about developing a marketing plan for Gerusa, a company that uses Photodynamic Therapy to treat cancer, Dr. House learned the following facts. Mr. Vegas lived in Kentucky. Dr. House was in North Carolina. The marketing expert lived in New Mexico. The medical director lived in Germany, and the scientist who had come up with this cancer treatment lived in Russia. What type of team would work for this far-flung organization? What problems might they encounter?

 

Chapter 13 Crafting a Deployment Strategy

 

 

True/False

 

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

 

 

 

Page: 287

 

  1. Firms should constantly focus on launching their products as early as possible.

 

 

 

Page: 288

 

  1. Cannibalization is the process by which a firm’s financial resources are depleted by a single product offering.

 

 

 

Page: 289

 

  1. Opening a technology completely may result in a loss of compatibility and erosion of product quality.

 

 

 

Page: 290

 

  1. If Circle Systems decides to not make its new PDA backward compatible with programs written for the old PDA, its sales of PDA programs would be more profitable assuming consumers upgrade.

 

 

Difficulty: Hard

Page: 290

 

  1. If your objective is maximum market skimming, you will initially set a high price.

 

 

 

Page: 291

 

  1. If you are seeking to become the dominant design of a new technology, then penetration pricing will not work.

 

 

 

Page: 292

 

  1. Wholesalers sell goods to the public.

 

 

 

Page: 293

 

  1. When manufacturers bypass wholesalers and retailers to sell directly to end users it is called disintermediation.

 

 

 

Page: 294

 

  1. Online distribution is suitable when customers are disbursed and require extensive education about the product.

 

 

 

Page: 295

 

  1. Bundling products together can offer firms the advantage of switching costs.

 

 

 

Page: 296

 

  1. When a company asks another firm to develop a complementary good, one incentive that is often used is a guarantee that specific quantities of that complimentary good will be sold.

 

 

 

Page: 297

 

  1. To be effective, advertising for technology should always concentrate on the real message and not try to be entertaining.

 

 

 

Page: 297

 

  1. Radio advertising offers high sensory richness.

 

 

 

Page: 298

 

  1. Innovators are unwilling to accept incompleteness in products.

 

 

 

Page: 299

 

  1. Most firms find it easy to make the transition between successfully selling to early adopters and the early majority.

 

 

 

Page: 299

 

  1. In targeting the late majority and laggards, a company should emphasize the advanced technological features of the new product.

 

 

Difficulty: Hard

Page: 299

 

  1. If a company, through promotion, can create a large perceived installed base where one does not yet exist, it can lead to a large actual installed base.

 

 

 

Page: 301

 

  1. A “connector” can spark an information epidemic about a new product.

 

 

 

Page: 302

 

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

 

 

 

Page: 303
Multiple Choice

 

  1. When Johnson Tanning Products finally developed a superior sun tan lotion, it decided that the best time to introduce it was in the spring. This would help take advantage of
  2. seasonal effects.
  3. tax refunds.
  4. pent up demand.
  5. the time value of money.

 

 

 

Page: 288

 

  1. When Foxie, Ltd. developed a new facial cream that buyers in California loved, it delayed its entry into that market by another 6 months. Foxie had just moved from a small facility employing 20 persons to a larger production facility that could accommodate 120 employees. It appears the delay in going into California was so that its introduction could coincide with
  2. investment commitments.
  3. production capacity.
  4. seasonal fluctuations.
  5. pent up demand.

 

 

 

Page: 288

 

  1. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. When Mallard developed a computerized prosthetic that would render its previous prosthetics obsolete, it decided to withhold it from the market probably so that
  2. competitors would have time to catch up.
  3. it could further develop the product and increase its leadership position.
  4. it would not cannibalize the sales of its current prosthetics.
  5. people could get used to the idea of a computerized prosthetic.

 

 

 

Page: 289

 

  1. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. Mallard developed a computerized prosthetic arm and has been advised by a consulting firm to “embrace cannibalization.” This means that the company should
  2. introduce the new technology right away and increase its market lead while taking away profits from its present product.
  3. introduce the new technology and hope that it “eats up the competition.”
  4. use up most of its financial resources in promoting the new prosthetic arm.
  5. only offer the new prosthetic arm in certain isolated markets (islands of the market).

 

 

 

Page: 289

 

  1. If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products, the firm can
  2. lose a significant number of customers.
  3. introduce the next generation product while continuing to reap profits from the current product.
  4. prevent competitors from achieving a significant technological gap.
  5. just use deployment as a mechanism to earn revenues from its innovations.

 

 

Difficulty: Hard

Page: 289

 

  1. If Circle Systems makes its smartphone technology open, it will attract more software companies to write programs for use on its smartphone. The downside to this is
  2. its installed base will also decline.
  3. the underlying platform used by Circle could become fragmented.
  4. nobody will adopt the smartphone.
  5. this practice is illegal.

 

 

 

Page: 290

 

  1. Which of the following is an advantage of making a new generation of technology backward compatible?
  2. Consumers will have to buy completely new complements.
  3. Consumer switching costs may be lower because they anticipate using their existing complements.
  4. Competitors will be unable to imitate the company’s strategy of making the technology backward compatible.
  5. It is typically less expensive to make a new generation of technology backward compatible than to not make it backward compatible.

 

 

 

Page: 291

 

  1. When Sports Paradise 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 Paradise intended on being one of those left after the inevitable shake out. Sports Paradise will be following a _____ pricing strategy.
  2. penetration
  3. skimming
  4. survival
  5. predatory

 

 

 

Page: 291

 

 

  1. Which of the following is a predictable competitive response to high initial prices?
  2. Competition has an incentive to enter the market
  3. Competition will stay out of the market because your product quality must be high
  4. Competing companies may report you for price gouging
  5. Competition will offer radically different products

 

 

Difficulty: Hard

Page: 291

 

  1. T.H.E. Computer Company buys computer components and assembles them into a computer that it sells under its own brand name. T.H.E. is a(n)
  2. pirate operator.
  3. original equipment manufacturer (OEM).
  4. disintermediary.
  5. wholesaler.

 

 

Difficulty: Hard

Page: 294

 

  1. When eBay developed its online auction service, a need arose for making online payments and PayPal was born. This is an example of how moving commerce online
  2. can create additional intermediaries.
  3. reduces effectiveness.
  4. necessitates the need for virtual alliances.
  5. poses additional costs to suppliers and customers.

 

 

 

Page: 294

 

  1. When Microsoft released Word for Windows, WordPerfect had about 80 percent of the word processing market. Microsoft donated free copies of Word to colleges and universities. This is an example of a(n)
  2. alliance with a distributor.
  3. bundling relationship.
  4. contract or sponsorship.
  5. guarantee or consignment.

 

 

 

Page: 296

 

  1. Biogyn Lifesciences wanted to enhance the adoption of its new diagnostic substances by hospitals. So, it made an agreement with the dominant producer of glass slides and test tubes to have its diagnostic substances sold to hospitals in a package with the glass slides and tubes. This is known as
  2. backward compatibility.
  3. penetration pricing.
  4. a bundling relationship.
  5. disintermediation.

 

 

Difficulty: Hard

Page: 296

 

  1. Multiplex Graphics Company has just released a graphics enhancement software program that it wants potential users to experience. Which of the following media would be most appropriate for this product?
  2. Newspapers
  3. Radio
  4. Direct mail
  5. Television

 

 

 

Page: 298

 

  1. Which of the following is an advantage of using the Internet for advertising over other media?
  2. It is a well-established medium.
  3. It has a high number of users.
  4. It has interactive possibility.
  5. It is uncluttered.

 

 

 

Page: 298

 

  1. Which of the following is true about the different advertising media?
  2. Magazines have a “junk mail” image.
  3. Yellow pages have high believability.
  4. Newsletters have a wide reach.
  5. Telephone advertising is relatively low cost.

 

 

 

Page: 298

 

  1. Emily was looking for a firewall for her home computer. She finally decided on a particular brand because it also included a free anti-spam package to block unwanted email as a bonus. This is an example of
  2. a premium.
  3. vaporware.
  4. cash rebate.
  5. introductory pricing.

 

 

 

Page: 298

 

  1. When eBay offered special auctions with all proceeds going to the families of victims of the September 11, 2001, terrorist attack on the World Trade Center, everyone thought it was a great gesture. This is an example of
  2. advertising.
  3. publicity.
  4. promotion.
  5. subliminal advertising.

 

 

 

Page: 299

 

  1. Jones Enterprises wanted to tailor its advertising for its new Financial software to early adopters. It needs to use an advertising message and medium that
  2. is very entertaining.
  3. enables Jones to provide high technical content.
  4. can reach the masses.
  5. makes the product seem practical and cost effective.

 

 

Difficulty: Hard

Page: 299

 

  1. When a firm wants to shift its advertising focus from early adopters to the early majority, its advertising should change from emphasizing
  2. ease of use to technical superiority.
  3. legitimacy to fit with way of life.
  4. technological features to ease of use.
  5. consistency to legitimacy.

 

 

Difficulty: Hard

Page: 299

 

  1. When there is a chasm between the early adopters and the early majority is a firm’s product diffusion curve
  2. the firm must reduce its production capacity.
  3. the firm focuses on improving its efficiency to target the mass market.
  4. the early majority market is saturated.
  5. the product requires additional R&D.

 

 

 

Moderate: 299

 

  1. After completing the first draft of a textbook manuscript on Data Mining of Information, McGraw-Hill asked leading university professors to review the book and give feedback. The publisher was not only finding ways to improve the book, but also pre-marketing it to
  2. known opinion leaders.
  3. partners.
  4. students through an intermediary.
  5. allies.

 

 

 

Page: 299-300

 

  1. Ronnie is on the Board of Directors or Trustees of seven different nonprofit organizations and is a member of four different service clubs. Everyone in town seems to know Ronnie and he seems to know everyone. He could be called a
  2. connector.
  3. maven.
  4. salesperson.
  5. social proliferate.

 

 

 

Page: 302

 

  1. When anyone in Metropolis wants to know where to buy a computer and at the best price they all turn to Francis who can always give the answer. Francis is a
  2. connector.
  3. maven.
  4. salesperson.
  5. social proliferate.

 

 

 

Page: 302

 

  1. Gary is a member of a service club in Franklinville. When the club wants to promote a cause or have a fund raising event, Gary is put in charge because everyone likes listening to him speak and he seems to get everyone excited about the event. Gary is a
  2. connector.
  3. maven.
  4. salesperson.
  5. social proliferate.

 

 

 

Page: 302

 

  1. A company’s _____ is a good indicator of its likelihood of success when introducing a new product.
  2. track record
  3. advertising
  4. business forecast
  5. management board

 

 

 

Page: 303

 

 

 

Essay

 

  1. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. Mallard developed a computerized prosthetic arm and is trying to decide when to introduce it to the market. What options does it have?

 

 

  1. When S.C. Johnson released Agree Shampoo in the late 1970s it was an innovative hair care concept because it repaired split ends. Since it was such an improvement why would S.C. Johnson enter the market with low prices and dealer incentives as it did?

 

 

  1. Gary London is a retired race car driver who helped Dale Earnhardt, Jr. get his start. Gary London is writing a book and making a video about the early days of Dale Earnhardt. He is trying to decide whether to market these items direct over the Internet or to use intermediaries. To make this decision he needs to know the pros and cons of each route. Provide that information and make a recommendation to him.

 

 

  1. Frankl Products is coming out with a new type of computerized refrigerator with a flat panel display that accesses the internet for recipes, nutrition information, etc. Which group (innovators, early adopters, early majority, late majority, or laggards) should the company target its promotion towards initially and what type of message and medium should it use?

 

 

  1. Friction Technologies has come out with a new fuel-efficient engine for automobiles. Explain how Friction might use connectors, mavens, and salespersons to create an information epidemic about this new product.