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CHAPTER 12
STRATEGIC ISSUES IN MANAGING TECHNOLOGY AND INNOVATION
True/False
1.
Innovation and the management of technology are not crucial to corporate success.
Answer: F
The importance of technology and innovation must be emphasized by top management and
reinforced by all employees in the company.
Answer: T
(p.279)
2.
According to Von Hippel, suppliers accounted for 36 percent of innovations in the thermoplastics
industry.
Answer: T
(p.279)
3.
Lead users are companies, organizations, or individuals that are well ahead of market trends and
have needs that go far beyond those of the average user.
Answer: T
(p.281)
4.
(p.281)
5.
The first phase of the lead user process is identifying lead users.
Answer: F
(p.281)
6.
Market research is used to survey current users as to what they would like in a new product.
Answer: T
(p.282)
7.
Strategists should assess how well company resources are internally allocated and evaluate the
organizations ability to sell technology.
Answer: F
(p.283)
8.
R&D intensity is a principal means of gaining market share in global competition.
Answer: T
(p.283)
9.
Technology sourcing, typically a sell-or-buy decision, can be important in a firms R&D strategy.
Answer: F
(p.286)
10.
By the 1990s, more than 150 cooperative alliances involving 1,000 companies were operating in
the United States and many more were operating throughout Europe and Asia.
Answer: T
11.
Absorptive capacity is a firms ability to value, assimilate, and utilize new external knowledge.
Answer: T
The strategy/market evolution matrix depicts the types of developing products that cannot be
easily shown on other portfolio matrices.
Answer: F
(p.287)
(p.288)
12.
With the product/market evolution matrix, the circles represent the sizes of the industries
involved, and the pie wedges represent the market shares of the firms business product lines.
Answer: T
(p.289)
13.
(p.289)
14.
The first stage of new product development is preliminary design.
Answer: F
(p.291)
15.
The final stage of new product development is new business development.
Answer: T
(p.291)
256
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16.
According to the book Diffusion of Innovations, innovative organizations tend to have a positive
attitude toward change.
Answer: T
A sponsor is usually a department manager who recognizes the value of the idea, helps obtain
funding to develop the innovation, and facilitates its implementation.
Answer: T
(p.290)
17.
A product champion is a person who generates a new idea and supports it through many
organizational obstacles.
Answer: T
(p.291)
18.
19.
Corporate entrepreneurship is also called intrapreneurship.
Answer: T
(p.291)
(p.291)
20.
One of the thirteen best practices for improving R&D is that corporate and business unit strategies
are poorly defined and communicated.
(p.295)
Answer: F
Multiple Choice
21.
According to research conducted by Forbes and others, the most important driver of corporate
value for both durable and non-durable companies is said to be
a.
b.
c.
d.
e.
22.
50%.
100%.
80%.
20%.
less than 1%.
According to a study conducted by Fortune, the percentage of business executives that felt their
company had lost relatively low-value customers in small market niches or low-end market
segments is
a.
b.
c.
d.
e.
24.
mass customization.
innovation.
synergy.
logistics.
flexible manufacturing.
Approximately how much of the profits of all U.S. companies come from products launched in the
previous ten years?
(p.278)
a.
b.
c.
d.
e.
23.
(p.278)
25%.
30%.
40%.
45%.
55%.
A study by Kuczmarski & Associates revealed that _____ of all newly introduced products were
still being sold five years later.
a.
b.
c.
(p.278)
42%
48%
56%
257
(p.280)
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d.
e.
25.
According to Chairman Morita, the primary philosophy for the Sony Corporation has been to
focus on
a.
b.
c.
d.
e.
26.
28.
29.
30.
(p.280)
Corel WordPerfect.
O/S 3.0
Windows 95.
Lotus Suite.
Microsoft Word.
Automobile companies have built design centers for automotive styling in Southern California as
well as
a.
b.
c.
d.
e.
(p.280)
Netscape
Sun Systems
Apple Computers
Cisco Systems
Corel Works
Microsoft Corporation has been able to dominate the operating system software market with the
product
a.
b.
c.
d.
e.
(p.280)
The corporation _____ was able to establish itself as the industry standard for browsers.
a.
b.
c.
d.
e.
(p.280)
technology chart.
technology strategic blueprint.
technology roadmap.
technology highway.
technology monograph.
Most new developments that threaten existing business practices and technologies come from
a.
b.
c.
d.
e.
(p.280)
its employees.
its technology.
its plants.
its social responsibility.
its geographical location.
Information that assesses where breakthroughs are likely to occur can be depicted on a
a.
b.
c.
d.
e.
27.
65%
72%
Mexico.
China.
Japan.
Italy.
Sweden.
258
(p.281)
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31.
Software firms know that in order to remain on the leading edge of technology, they must have
some sort of presence in
a.
b.
c.
d.
e.
32.
33.
35.
36.
(p.281)
(p.281)
lead technology.
co-development.
technology customization.
developmental manufacturing.
technological continuity.
Companies, organizations, or individuals that are well ahead of market trends and have needs that
go far beyond those of the average user are known as
a.
b.
c.
d.
e.
(p.281)
suppliers.
employees.
shareholders.
government regulators.
lobbyists.
(p.281)
Besides the users of the products, helpful advances toward innovations are derived from
a.
b.
c.
d.
e.
34.
Research by Von Hippel indicates that 77 percent of the innovations for various industries are
derived from
a.
b.
c.
d.
e.
(p.281)
(p.281)
259
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37.
The effort to talk with users of the target market to understand their needs is indicative of
the phase
a.
b.
c.
d.
e.
38.
39.
41.
(p.281)
one week
two weeks
three weeks
four weeks
eight weeks
A study of the impact of technological discontinuity in various industries revealed that the leading
firms failed to switch to the new technology because
(p.282)
a.
b.
c.
d.
e.
42.
(p.281)
3M
Corning
Microsoft
America Online
General Electric
For a lead user team, what is the minimum duration of each phase in the process?
a.
b.
c.
d.
e.
(p.281)
accounting department.
marketing department.
technical department.
finance department.
marketing and technical departments.
Based on the lead user team process, what company was able to successfully implement this
process in eight of its 55 divisions?
a.
b.
c.
d.
e.
40.
(p.282)
According to the section on market research, what company has been able to successfully use
market research in its survey of current users regarding what they would like in a new product?
a.
b.
c.
d.
e.
3M
Proctor and Gamble
BMW
General Motors
Chrysler
260
(p.282)
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43.
According to the section on market research, what company has used market research in directing
incremental improvements to existing products?
a.
b.
c.
d.
e.
44.
45.
(p.283)
Seiko
Microsoft
Maytag
Trilogy
3M
The consulting firm Arthur D. Little found that the use of standard market research techniques has
resulted in a success rate for new cereals of
(p.283)
a.
b.
c.
d.
e.
48.
Timex.
Wittnauer.
Swatch.
Seiko.
Pulsar.
What company was cited in the text as using the embrace and extend strategy as a way to monitor
the competition for new developments?
a.
b.
c.
d.
e.
47.
(p.283)
Imitating new products developed by pioneers, refining them, and outmarketing the competition is
a process known as
(p.283)
a.
b.
c.
d.
e.
46.
3M
Proctor and Gamble
BMW
General Motors
Chrysler
According to the text, the watch maker that only retains models that sell is
a.
b.
c.
d.
e.
(p.282)
over 92%.
only 8%.
around 75%.
50%.
around 25%.
What was the company Microsoft used to imitate its system in order to build the foundation for
Microsofts window operating system?
a.
b.
c.
d.
e.
Sun Systems
Unix
Netscape
Apple
Java
261
(p.283)
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49.
50.
51.
53.
54.
55.
(p.284)
incremental innovation
radical innovation
innovative technology
manufacturing technology
flexible manufacturing
Research by Hitt, Hoskisson, and Harrison indicates that the maximum innovator in an industry
tends to be
a.
(p.284)
incremental innovation.
novel innovation.
incentive innovation.
strategic innovation.
radical innovation.
What is the term that refers to the development of completely new products?
a.
b.
c.
d.
e.
(p.284)
(p.284)
(p.283)
52.
What percentage of sales is spent on R&D for the computer software and drug industries?
a.
b.
c.
d.
e.
(p.283)
262
(p.284)
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b.
c.
d.
e.
56.
Between 1950 and 1979, which countrys industry spent more money on plant maintenance and
upgrading for each ton of production capacity than did the Japanese steel industry?
a.
b.
c.
d.
e.
57.
59.
d.
e.
60.
61.
(p.285)
logistical innovations.
product innovations.
category one innovations.
process innovations.
category two innovations.
(p.284)
Innovations such as improved manufacturing facilities, increasing product quality, and faster
distribution, are
a.
b.
c.
d.
e.
(p.284)
duration of innovation
time to market
time to shelf
duration of R&D intensity
span of R&D
(p.284)
continuous casting
reengineering
assembly line manufacturing
basic oxygen furnace and reengineering
basic oxygen furnace and continuous casting
What term refers to the time from inception to profitability of a specific R&D program?
a.
b.
c.
d.
e.
(p.284)
United States
Sweden
Germany
France
Korea
What technology(ies) was the catalyst for the United States to lose its market share of the world
steel market?
a.
b.
c.
d.
e.
58.
logistical innovations.
product innovations.
category one innovations.
263
(p.285)
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d.
e.
62.
63.
65.
66.
67.
68.
(p.286)
30%
50%
60%
70%
80%
(p.286)
30%
50%
60%
70%
80%
(p.286)
30%
50%
60%
70%
80%
(p.285)
United States
Japan
China
Germany
Finland
(p.285)
logistical innovation
product innovation
category one innovation
process innovation
category two innovation
Which nation is the worlds fastest growing and potentially most profitable market for bathroom
fixture manufacturers?
a.
b.
c.
d.
e.
(p.285)
logistical innovation
product innovation
category one innovation
process innovation
category two innovation
64.
process innovations.
category two innovations.
30%
264
(p.286)
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b.
c.
d.
e.
69.
70.
72.
73.
74.
(p.287)
venture affiliation
vertical integration
R&D outsourcing
strategic alliance
corporate entrepreneurship
The innovations which dominate the major home appliance industry are
a.
b.
c.
d.
e.
(p.287)
Chrysler
Mazda
Cummins
Apple
Volvo
What term describes the situation where a corporation finances the costs of developing a new
technology by coordinating its R&D effort with that of other firms?
a.
b.
c.
d.
e.
(p.287)
rational logic
fuzzy logic
multiple sensoring
category two innovation
category one innovation
To what company did Ford pay $100 million for the exclusive use of this companys truck engine
technology?
a.
b.
c.
d.
e.
(p.287)
computer
microwave oven
DVD player
MP3 player
CD recorder
What type of process was used by Maytag to build its line of Intellisense dishwashers?
a.
b.
c.
d.
e.
(p.286)
technology sourcing
technology continuity
technology discontinuity
process innovation
product innovation
What was the last product to be released in the major home appliance industry?
a.
b.
c.
d.
e.
71.
50%
60%
70%
80%
financial innovations.
product innovations.
technological innovations.
process innovations.
category two innovations.
265
(p.287)
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75.
76.
77.
79.
80.
(p.288)
technological competence.
absorptive capacity.
technological continuity.
technology transfer.
index of R&D effectiveness.
The theory of a cultural right angle turn was utilized at what telecommunications equipment
company?
(p.289)
a.
Northern Telecom
b.
Apple
c.
Microsoft
d.
Alliance
e.
Sprint
The Fifteen-cell Product/Market Evolution Matrix
(p.289)
a.
b.
c.
d.
e.
81.
(p.288)
anticipated benefit
flexible manufacturing system
planned potential
absorptive capacity
competitive advantage
(p.288)
Which term is used to describe a valuable by-product of routine in-house R&D activity allowing
the firm to assimilate and exploit new knowledge?
a.
b.
c.
d.
e.
78.
(p.288)
A matrix that depicts the status of developing products according to their competitive positions
and their stages of product/market evolution is referred to as
a.
b.
c.
BCG Matrix.
GE Business Screen.
Product/market evolution matrix.
266
(p.289)
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d.
e.
82.
For research and development strategies, what is the first stage of new product development?
a.
b.
c.
d.
e.
83.
85.
c.
d.
e.
86.
87.
(p.291)
orchestrator.
conductor.
sponsor.
product champion.
angel.
What is the term for a person who generates a new idea and supports it through many
organizational obstacles?
a.
b.
c.
(p.292)
A department manager who recognizes the value of an idea, helps obtain funding to develop the
innovation, and facilitates its implementation is called a(n)
a.
b.
c.
d.
e.
(p.291)
idea generation
preliminary design
prototype build and test
final design and pilot production
new business development
According to the text, companies with entrepreneurial cultures have two characteristics in
common:
a.
b.
(p.291)
idea generation
preliminary design
prototype build and test
final design and pilot production
new business development
For research and development strategies, what stage of new product development is occurring
when a venture team is formed to prepare desired product specifications?
a.
b.
c.
d.
e.
(p.291)
idea generation
concept evaluation
preliminary design
prototype build and test
final design and pilot production
For research and development strategies, what is the last stage of new product development?
a.
b.
c.
d.
e.
84.
orchestrator
conductor
sponsor
267
(p.291)
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d.
e.
88.
Which organizational design is appropriate when the strategic importance and operational
relatedness of the new business are negligible?
a.
b.
c.
d.
e.
89.
91.
92.
93.
(p.291)
entrepreneurship.
mentoring.
corporate entrepreneurship.
joint ventures.
strategic alliances.
(p.291)
According to Burgelman, what are the two interacting factors which result in the nine
organizational designs for corporate entrepreneurship?
a.
b.
c.
d.
e.
(p.291)
spin-off project
corporate entrepreneurship
enterprise creation
venture origination
industry growth
(p.293)
complete spin-off
new product business department
micro ventures department
special business units
nurturing and contracting
What term describes the birth of new businesses within an existing organization?
a.
b.
c.
d.
e.
(p.293)
complete spin-off
new product business department
special business units
new venture division
nurturing and contracting
What is the appropriate term for a new business with uncertain strategic importance and high
operational relatedness?
a.
b.
c.
d.
e.
90.
product champion
innovative champion
268
(p.292)
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94.
Which organizational design for corporate entrepreneurship occurs when the new business has
uncertain strategic importance and is only partly related to present corporate operations?
a.
b.
c.
d.
e.
95.
96.
98.
99.
c.
(p.293)
(p.293)
Which organizational design for corporate entrepreneurship occurs if both the strategic
importance and the operational relatedness of the new business are negligible?
a.
b.
c.
d.
e.
(p.293)
(p.292)
direct integration
special business units
new product business department
micro new-venture department
new venture division
Which organizational design for corporate entrepreneurship occurs if the new business has
uncertain strategic importance and high operational relatedness and is a peripheral project which
is likely to emerge in the operating divisions on a continuous basis?
a.
b.
c.
d.
e.
97.
direct integration
special business units
new product business department
micro new-venture department
new venture division
Which organizational design for corporate entrepreneurship occurs when the new business has a
great deal of strategic importance and operational relatedness and must be a part of the
corporation's mainstream?
a.
b.
c.
d.
e.
(p.293)
269
(p.294)
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d.
e.
100.
averaging the amount of time it takes for all new products to move from the lab to the
marketplace.
comparing the company against the 13 best R&D practices.
Which of the following is NOT one of the 13 best practices reported in the text that successful
MNCs followed?
a.
b.
c.
d.
e.
Corporate and business unit strategies are well defined and clearly communicated.
Core technologies are defined and communicated to R&D.
Transfer of technology to business units is the least important measure of R&D
effectiveness.
Formal mechanisms are used for monitoring external technological developments.
Formal, cross-functional teams are created for basic, applied, and developmental
projects.
270
(p.294)