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Strategic Management and Business Policy, 13e - Web Chapters (Wheelen/Hunger)
Web Chapter A: Strategic Issues in Managing Technology and Innovation
1) Innovation and the management of technology are not crucial to corporate success.
Answer: FALSE
Diff: 1Page Ref: A-2
Topic: The Role of Management
2) The importance of technology and innovation must be emphasized by top management and reinforced by all employees in the company.
Answer: TRUE
Diff: 1Page Ref: A-2
Topic: The Role of Management
3) Between 33% and 60% of all new products that reach the market fail to make a profit.
Answer: TRUE
Diff: 1Page Ref: A-4
Topic: The Role of Management
4) Research reveals that firms that focus inward on their core competencies as a way to generate new products or processes are more innovative.
Answer: FALSE
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
5) Focusing one's scanning efforts too closely on one's current product line are dangerous.
Answer: TRUE
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
6) According to Von Hippel, customers are a key source of innovations in many industries.
Answer: TRUE
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
7) 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: TRUE
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
8) The first phase of the lead user process is identifying lead users.
Answer: FALSE
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
9) Market research is used to survey current users as to what they would like in a new product.
Answer: TRUE
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
10) Market research is a good source to provide the information needed for radical innovation.
Answer: FALSE
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
11) Leading firms often fail to switch to the new technology available because management is ignorant of the new development.
Answer: FALSE
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
12) Some successful companies are developing their products by probing potential markets with early versions of the products, learning from the probes, and probing again.
Answer: TRUE
Diff: 1Page Ref: A-7 - A-8
Topic: Issues in Corporate Governance
13) Microsoft follows an embrace and extend strategy of imitating new products developed by pioneers, refining them, and out-marketing the competition.
Answer: TRUE
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
14) R&D intensity is a principal means of gaining market share in global competition.
Answer: TRUE
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
15) Time to market in the 1980s was generally accepted to be 7 to 11 years; today it is closer to 12 to 15 years.
Answer: FALSE
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
16) Research indicates that too much emphasis by a firm on efficiency-oriented process R & D can drive out product R & D.
Answer: TRUE
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
17) Technology sourcing, typically a sell-or-buy decision, can be important in a firm's R&D strategy.
Answer: FALSE
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
18) 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: TRUE
Diff: 1Page Ref: A-11
Topic: Not-for-Profit Strategies
19) Licensing technology to other companies may be an excellent R & D strategy – especially in a stable, low technology environment where second movers have an advantage.
Answer: FALSE
Diff: 1Page Ref: A-11
Topic: Not-for-Profit Strategies
20) Absorptive capacity is a firm's ability to value, assimilate, and utilize new external knowledge.
Answer: TRUE
Diff: 1Page Ref: A-13
Topic: Not-for-Profit Strategies
21) The product/market evolution matrix depicts the types of developing products that cannot be easily shown on other portfolio matrices.
Answer: TRUE
Diff: 1Page Ref: A-15
Topic: Not-for-Profit Strategies
22) 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 firm's business product lines.
Answer: TRUE
Diff: 1Page Ref: A-15
Topic: Not-for-Profit Strategies
23) The first stage of new product development is preliminary design.
Answer: FALSE
Diff: 1Page Ref: A-15
Topic: Importance of Small Business and Entrepreneurial Ventures
24) The final stage of new product development is new business development.
Answer: TRUE
Diff: 1Page Ref: A-15
Topic: Importance of Small Business and Entrepreneurial Ventures
25) According to the book Diffusion of Innovations, innovative organizations tend to have a positive attitude toward change.
Answer: TRUE
Diff: 1Page Ref: A-16
Topic: Importance of Small Business and Entrepreneurial Ventures
26) 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: TRUE
Diff: 1Page Ref: A-16
Topic: Importance of Small Business and Entrepreneurial Ventures
27) A product champion is a person who generates a new idea and supports it through many organizational obstacles.
Answer: TRUE
Diff: 1Page Ref: A-16
Topic: Importance of Small Business and Entrepreneurial Ventures
28) Corporate entrepreneurship is also called intrapreneurship.
Answer: TRUE
Diff: 1Page Ref: A-16
Topic: Importance of Small Business and Entrepreneurial Ventures
29) When an entrepreneurial proposal might not be important strategically to the corporation but is strongly related to present operations, top management might help the entrepreneurial unit to spin off from the corporation.
Answer: TRUE
Diff: 1Page Ref: A-18 - A-19
Topic: Importance of Small Business and Entrepreneurial Ventures
30) The managers of Corning report that the stage-gate process increases development time and decreases the ratio of internally generated products that result in commercially successful products.
Answer: FALSE
Diff: 1Page Ref: A-19 - A-20
Topic: Evaluation and Control
31) One of the thirteen best practices for improving R&D is that corporate and business unit strategies are poorly defined and communicated.
Answer: FALSE
Diff: 1Page Ref: A-21
Topic: Evaluation and Control
32) 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) mass customization.
B) innovation.
C) synergy.
D) logistics.
E) flexible manufacturing.
Answer: B
Diff: 1Page Ref: A-2
Topic: The Role of Management
33) Approximately how much of the profits of all U.S. companies come from products launched in the previous ten years?
A) 50%
B) 100%
C) 80%
D) 20%
E) less than 1%
Answer: A
Diff: 1Page Ref: A-2
Topic: The Role of Management
34) A study of 111 successful and 86 unsuccessful product innovations found that the successful innovations had some of which of the following features?
A) They were moderately new to the market.
B) They were based on tried-and-tested technology.
C) They saved money, met customer needs, and supported existing practices.
D) all of the above
E) none of the above
Answer: D
Diff: 1Page Ref: A-4
Topic: The Role of Management
35) A study by Kuczmarski & Associates revealed that ______of all newly introduced products were still being sold five years later.
A) 21%
B) 35%
C) 56%
D) 80%
E) 95%
Answer: C
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
36) Information that assesses where breakthroughs are likely to occur can be depicted on a
A) technology chart.
B) technology strategic blueprint.
C) technology roadmap.
D) technology highway.
E) technology monograph.
Answer: C
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
37) Most new developments that threaten existing business practices and technologies come from
A) within one's own industry.
B) outside one's own industry.
C) one's current competitors.
D) within one's own corporation.
E) Bell Labs.
Answer: B
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
38) The corporation ______was able to establish itself as the industry standard for browsers.
A) Netscape
B) Sun Systems
C) Apple Computers
D) Cisco Systems
E) Corel Works
Answer: A
Diff: 1Page Ref: A-5
Topic: Issues in Corporate Governance
39) Software firms know that in order to remain on the leading edge of technology, they must have a programming presence in
A) Silicon Valley, California.
B) Austin, Texas.
C) Fayetteville, Arkansas.
D) New York, New York.
E) Los Angeles, California.
Answer: A
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
40) Research by Von Hippel indicates that 77 percent of the innovations in the scientific instruments industry come from
A) the needs of the supplier.
B) the needs of the employees.
C) the needs of the customers.
D) the needs of the shareholders.
E) the needs of the corporation itself.
Answer: C
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
41) Besides the users of the products, helpful advances toward innovations are derived from
A) suppliers.
B) employees.
C) shareholders.
D) government regulators.
E) lobbyists.
Answer: A
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
42) The involvement of the customer in the commercialization of a new technology is known as
A) lead technology.
B) co-development.
C) technology customization.
D) developmental manufacturing.
E) technological continuity.
Answer: B
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
43) 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) first to market benefactors.
B) traditionalists.
C) lead users.
D) strategic pursuers.
E) technological maneuvers.
Answer: C
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
44) The first phase of the lead user process is
A) determining the trends.
B) identifying lead users.
C) laying the foundation.
D) developing the breakthrough.
E) hosting seminars.
Answer: C
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
45) Lead user teams are typically composed of employees from the
A) accounting department.
B) marketing department.
C) technical department.
D) finance department.
E) marketing and technical departments.
Answer: E
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
46) Based on the lead user team process, what company was able to successfully implement this process in eight of its 55 divisions?
A) 3M
B) Corning
C) Microsoft
D) America Online
E) General Electric
Answer: A
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
47) For a lead user team, what is the minimum duration of each phase in the process?
A) one day
B) one week
C) three weeks
D) four weeks
E) eight weeks
Answer: D
Diff: 1Page Ref: A-6
Topic: Issues in Corporate Governance
48) The effort to talk with users at the leading edge of the target and related market to understand their needs is indicative of which phase in the lead user process?
A) determining the trends
B) identifying lead users
C) laying the foundation
D) developing the breakthrough
E) hosting seminars
Answer: B
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
49) A study of the impact of technological discontinuity in various industries revealed that the leading firms failed to switch to the new technology because
A) management was ignorant of the new development.
B) it was too expensive.
C) they listened too closely to their current customers.
D) of government regulations.
E) they did studies which revealed that the new technology was inferior to the current technology.
Answer: C
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
50) What company has been able to successfully use market research in its survey of current users in directing incremental improvements in existing products?
A) 3M
B) Proctor and Gamble
C) BMW
D) General Motors
E) Chrysler
Answer: B
Diff: 1Page Ref: A-7
Topic: Issues in Corporate Governance
51) According to the textbook, the watch maker that introduces hundreds of new models of watches into the marketplace then makes more of the models that sell, dropping those that don't sell is
A) Timex.
B) Wittnauer.
C) Swatch.
D) Seiko.
E) Pulsar.
Answer: D
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
52) Imitating new products developed by pioneers, refining them, and outmarketing the competition is a process known as
A) embrace and extend strategy.
B) no change strategy.
C) first to market strategy.
D) hold strategy.
E) refinement strategy.
Answer: A
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
53) What company was cited in the textbook as using the embrace and extend strategy as a way to monitor the competition for new developments?
A) Seiko
B) Microsoft
C) Maytag
D) Trilogy
E) 3M
Answer: B
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
54) 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
A) over 92%.
B) only 8%.
C) around 75%.
D) 50%.
E) around 25%.
Answer: B
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
55) Instead of conducting traditional market research, a number of companies are
A) conducting untested market research procedures.
B) simply following what the market leader does.
C) probing potential markets with early versions of new products to see which have potential.
D) developing new, much more sophisticated market research techniques which involve global testing.
E) forming alliances to pool their research findings.
Answer: C
Diff: 2Page Ref: A-7 - A-8
Topic: Issues in Corporate Governance
56) What percentage of sales is spent on R&D for the computer software and drug industries?
A) between 11% and 13%
B) between 2% and 5%
C) between 18% and 20%
D) between 25% and 28%
E) between 41% and 44%
Answer: A
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
57) A rule of thumb for R&D spending is that a corporation should
A) spend twice as much as the market leader.
B) spend half as much as the market leader.
C) spend the same as the market leader.
D) spend at a "normal" rate for that industry.
E) spend whatever it takes to build market share.
Answer: D
Diff: 1Page Ref: A-8
Topic: Issues in Corporate Governance
58) According to one study cited in the textbook, what is the innovation rate of small businesses?
A) 200 innovations per million employees
B) 225 innovations per million employees
C) 275 innovations per million employees
D) 322 innovations per million employees
E) 350 innovations per million employees
Answer: D
Diff: 1Page Ref: A-8 - A-9
Topic: Issues in Corporate Governance
59) An extension of a product can be referred to as
A) incremental innovation.
B) novel innovation.
C) incentive innovation.
D) strategic innovation.
E) radical innovation.
Answer: A
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
60) What is the term that refers to the development of completely new products?
A) incremental innovation
B) radical innovation
C) innovative technology
D) manufacturing technology
E) flexible manufacturing
Answer: B
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
61) Research by Hitt, Hoskisson, and Harrison indicates that the maximum innovator in an industry tends to be
A) the smallest firm.
B) the largest firm.
C) the middle-sized firm.
D) the newest firm.
E) the one with the largest R&D department.
Answer: C
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
62) Confirming that R&D spending can be wasted, between 1950 and 1979, which country's steel industry spent 20% more money on plant maintenance and upgrading for each ton of production capacity added or replaced than did the Japanese steel industry?
A) United States
B) Sweden
C) Germany
D) France
E) Korea
Answer: A
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
63) What technology(ies) was the catalyst for the United States to lose its market share of the world steel market when they were not recognized and adopted?
A) flexible manufacturing
B) reengineering
C) assembly line manufacturing
D) basic oxygen furnace and reengineering
E) basic oxygen furnace and continuous casting
Answer: E
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
64) What term refers to the time from inception to profitability of a specific R&D program?
A) duration of innovation
B) time to market
C) time to shelf
D) duration of R&D intensity
E) span of R&D
Answer: B
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
65) Time to market is an important consideration in the management of technology because
A) cycle times are getting longer.
B) technology management is a discontinuous business.
C) 60% of successful patented innovations are imitated within four years at 65% of the cost of the innovation.
D) R&D budgets are becoming a higher proportion of total revenues in most large corporations.
E) the distinction between process and product R&D is becoming blurred.
Answer: C
Diff: 1Page Ref: A-9
Topic: Issues in Corporate Governance
66) In the early stages of a product's life cycle, ______are most important.
A) process innovations
B) product innovations
C) cost leadership strategies
D) improved manufacturing facilities
E) faster distribution
Answer: B
Diff: 1Page Ref: A-9
Topic: Not-for-Profit Strategies
67) Innovations such as improved manufacturing facilities, increasing product quality, and faster distribution, are
A) logistical innovations.
B) product innovations.
C) category one innovations.
D) process innovations.
E) category two innovations.
Answer: D
Diff: 1Page Ref: A-9 - A-10
Topic: Not-for-Profit Strategies
68) Innovations such as new product designs and features are
A) logistical innovations.
B) product innovations.
C) category one innovations.
D) process innovations.
E) category two innovations.
Answer: B
Diff: 1Page Ref: A-9
Topic: Not-for-Profit Strategies
69) Which type of innovation is important in achieving differentiation strategies?
A) logistical innovation
B) product innovation
C) category one innovation
D) process innovation
E) category two innovation
Answer: B
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
70) Which type of innovation is important in achieving cost leadership strategies?
A) logistical innovation
B) product innovation
C) category one innovation
D) process innovation
E) category two innovation
Answer: D
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
71) What percent of their R & D budgets do U.S. firms spend on product R&D?
A) 30%
B) 50%
C) 60%
D) 70%
E) 90%
Answer: D
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
72) What percent of their R&D budgets do U.S. firms spend on process R&D?
A) 30%
B) 50%
C) 60%
D) 70%
E) 90%
Answer: A
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
73) What percent of their R&D budgets do German firms spend on product R&D?
A) 30%
B) 50%
C) 60%
D) 70%
E) 90%
Answer: B
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
74) What percent of their R&D budgets do Japanese firms spend on process R&D?
A) 30%
B) 50%
C) 60%
D) 70%
E) 80%
Answer: D
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
75) What term is appropriate for identifying a make-or-buy decision as it relates to technology?
A) technology sourcing
B) technology continuity
C) technology discontinuity
D) process innovation
E) product innovation
Answer: A
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
76) The traditionally heavy emphasis by U.S. major home appliance manufacturers on ______is one reason they have such a strong position in the North American market.
A) technology sourcing
B) technology continuity
C) technology discontinuity
D) process innovation
E) product innovation
Answer: D
Diff: 1Page Ref: A-10
Topic: Not-for-Profit Strategies
77) The innovations which dominate the major home appliance industry are
A) financial innovations.
B) product innovations.
C) technological innovations.