BUS498- CH7 Innovation and Entrepreneurship

How was Netflix able to outperform both Hulu and Amazon?
D- by focusing its resources on producing high-quality content for content streaming
They typical 4-step innovation process begins with
B- the presentation of an idea as findings derived from basic research
A ______ is best described as a form of intellectual property that gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for pubic disclosure of the underlying idea.
A- patent
When TrueHeal Pharma Inc. released a new drug to treat insomnia, its chemical composition was disclosed at the back of the drug’s cover. However, any attempts by competitors to copy the chemical compound would result in infringement of THP’s intellectual property rights. Thus, the drug is protected by a
B- patent
In the US, the time period for the right to exclude others from the use of a patented technology is ____ from the filing date of the patent application
A- 20 years
___ is best described as the commercialization of any new product, process, or the modification and recombination of existing ones.
C- innovation
As a research scholar, Ricardo had built a helicam as part of his project. Realizing the potential use of this product in movie production and military and rescue operations, he started a new venture where he could customize the HC to fit the specific needs of buyers and sell them. Ricardo can be described as an
A- entrepreneur
An intrapreneur is described as a person who
B- innovates within existing companies
A.G. Lafley at P&G had implemented an open-innovation model, which had greatly benefited the company. In light of this information we can conclude that Lafley is a
C- intrapreneur
Which of the following statements is NOT true about innovation?
C- innovation has to be high-tech in order to be a potent competitive weapon
How has Apple been able to sustain its CA in the smartphone industry?
D- by regularly introducing incremental improvements in its products
Which of the following is a competitive benefit experienced by the first mover firm in an industry?
D- the first mover will be able to reduce costs through economies of scale
The 4-step innovation process ends with
D- imitation
As the inventor of hypertension medication, OSP was able to reap the benefits of economies of scale due to a large consumer demand for the drug. Which of the following benefits does this scenario best illustrate?
A- first mover advantage
Which of the following statements accurately describes social entrepreneurs?
D- social entrepreneurs are those who consider financial, ecological, and social metrics to evaluate their firm’s performance
Georgia Ray is the found of dept store chain, Either Inc. She ensures that her products are ethically and responsibly sourced. Most products are 100% organic. Also, purchase handicrafts from nonprofit orgs supporting the aged. Which of the following terms best describes GR?
C- social entrepreneur
After Jeff Bezos read about how the Internet was growing by 2,000% per month, he set out to use the Internet as a new distribution channel and founded Amazon. This is an example of a
B- entrepreneur who commercialized invention into an innovation
The market for 3-D TV is in the intro stage of the industry life cycle. What does this imply?
A- there are only a few competitors in the 3-D TV market
The strategic objective of a first mover during the intro stage of industry life cycle is to
A- pursue a harvest strategy (achieve market acceptance and seed future growth)
NextDoor is an IM app for smartphones. New smartphone users find it easier to connect with friends through this mobile app when compared to other similar IM apps. Thus, NextDoor app’s value has increased primarily due to its
D- network effects (occur when the value of a product or service increases with the number of users)
Dollar Shave Club is an ecommerce start-up that delivers razors by mail. By doing this, DSC is using a ____ to disrupt an existing market.
C- business model innovation
In the context of industrial growth, which of the following statements is true of standards?
B- as the size of a market expands, a standard signals the market’s agreement on a common set of engineering features and design choices
In which of the following stages of the industry life cycle is a standard first established?
B- growth stage
Which of the following is a feature of the growth stage of the industry life cycle?
A- the consumer demand increases
Which of the following best illustrates a process innovation as opposed to product innovation?
B- an auto company using computer-aided design in its production
Process innovation is more important than product innovation during the growth stage because
D- a standard, in terms of engineering features and design choices, has been set across the industry
While cell phones with holographic keyboards are currently in the intro stage of the industry life cycle, table computers are in the growth stage. In the context of this scenario, which of the following statements is true?
B- while the industry for cell phones with holographic keyboards will focus on product innovation, the tablet industry will focus on process innovation
Which of the following statements accurately brings out the distinction between the intro and growth stages of the industry life cycle?
A- there is more strategic variety in the growth stage when compared to the intro stage
The key objective for firms during the growth phase is to
B- stake out a strong strategic position not easily imitated by rivals
Which of the following is a feature of the shakeout phase of the industry life cycle?
C- competitive intensity within the industry increases
To be successful and to survive the shakeout stage of the industry life cycle, a firm should
C- gain economies of scale
In emerging economies, the LCD TV industry is in that phase of the industry life cycle in which the previously increasing market demand becomes limited. The competitive intensity within the industry is high, and inefficient firms have begun to exit the industry. This has allowed only a few major companies to come out as cost-leaders and hold the shrinking market. Which of the following stages of the industry life cycle is the LCD TV industry currently in?
C- shakeout stage
In developed economies, the electric car industry is in the intro stage and the industry for MP3 players is in the shakeout stage. What does this imply?
B- the industry for electric cars will focus more on product innovation, whereas in the MP3 player industry, the focus will be on process innovation
The strategic objective of businesses during the shakeout phase of the industry life cycle will primarily be to
B- survive by drawing on “deep pockets”
Why is the phase after the growth stage of the ILC referred to as the shakeout stage?
D- the weaker firms are forced out of the industry in this stage
A few efficient and strong firms in the laptop industry have remained and emerged successful from the shakeout stage. Which of the following stage of the ILC will they move to next?
C- maturity stage
Which of the following is a feature of the maturity stage of the ILC?
B- the market reaches its max size
The compact disk industry is in the maturity phase of its ILC. What conditions prevail for an industry in this stage?
D- the industry structure is an oligopoly with only a few large firms
While the domestic airline industry is in the maturity stage of the ILC, the pet clothing industry is in its growth stage. Which of the following can be inferred from the given data?
C- while the domestic airline industry is free from excess capacity, the pet clothing industry will have new entrants
Which of the conditions prevail when an industry is at the end of its life cycle?
A- the level of process innovation reaches its max as firms attempt to lower cost
The demand for video recorders has drastically reduced, and there are only a few consumer electronics companies selling them at extremely low prices. Also, the current buyers of video recorders are mainly categorized under laggards. Which of the following stages of the ILC is the video recorder industry in currently?
C- decline stage
When a firm pursues a harvest strategy, it
D- reduces investments in product support
Although TechnoWare Electronics Inc still sells its VCR players, a product in a decline stage, the investments made by the company on improving or marketing the product are very low. The company as allocated the least amount of human and financial capital to this dept. Which of the following strategies has TWE adopted in this scenario?
A- harvest strategy
When the market for photo film negatives declined with the arrival of digital camers, Momento Films Inc, a manufacturer of film negatives, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has MF adopted in this scenario?
C- consolidated strategy
When a firm pursues a maintain strategy, it
C- continues to support marketing efforts even if the demand for the product is declining
While the industry for e-book readers is in its growth stage, the industry for landline telephones is in the decline stage of the ILC. Which of the following can be inferred from this?
D- the number of competitors in the e-book industry will be larger when compared to the landline telephone industry
While the industry for 3-D TVs is in the intro stage of the ILC, the CRT TV industry is in its decline stage. Which of the following statements will be true in this scenario?
B- while product innovation will be at is max for the 3-D TV industry, process innovation will be more crucial for the CRT TV industry
On which of the following tenets is the crossing-the-chasm framework, suggested by Geoffrey Moore, based?
B- each stage of the ILC is dominated by a different customer group
Which of the following customer segments as described in the chasm framework make up the mass market?
A- the early and late majority together
Which of the following statements is true of technology enthusiasts?
D- they enjoy using beta versions of products and providing feedback to companies
The customers entering the market in the growth stage are primarily
C- early adopters (13.5% of total market potential)
Which of the following statements accurately brings out the difference between technology enthusiasts and early adopters?
B- unlike technology enthusiasts, early adopters’ demand is fueled more by intuition and vision rather technology concerns
Which of the following statements is true of the early majority section of consumers?
C- they weigh the benefits and costs carefully when adopting a new product
It is important for a firm to win over the early majority section of the market to ensure the commercial success of an innovation because they
C- enter into the market in large numbers, creating a herding effect
When does a firm fall into the large competitive chasm between early adopters and early majority?
C- when it fails to successfully launch a mass-market version of its product
At the time when Kevin decided to purchase a tablet computer, the product had just become accessible to the mass market. He purchased the tablet only after he was completely convinced that the benefits it would offer him would far exceed its price. Also, he waited for his friends to try the product and popular gadget TV shows to endorse it. Which of the following customer segments does Kevin best represent?
D- early majority
Sara can be categorized under the late majority customer segment. Which of the following behaviors is she most likely to exhibit?
B- she will prefer to buy from well-established brands rather than unknown new ventures
How is the early majority section of consumers different from the late majority section?
C- although the early majority is confident in their ability to master a new technology, the late majority is not
Which of the following statements is true of laggards?
B- they tend to enter the market frequently during the decline stage
While the personal computer industry is flooded and growing with laptops and tablets, Ivan recently bought a desktop, his first personal computer. He realized that a computer at home would be helpful for his children for their school projects and he could use it to maintain the simple accounts of his plumbing business. Which of the following customer segments does Ivan best represent?
C- laggards
Which of the following is a drawback of using the ILC as a framework to guide strategic choice?
B- the framework doesnt explain everything about changes in industries
Sync Touch Inc is a manufacturer of cell phones. It has released an improvised version of its smartphone in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate?
B- incremental innovation
In a radical innovation, a firm targets
C- new markets by using new technologies
A firm’s resistance to changes in the status quo is referred to as
C- organizational inertia
Incumbent firms favor incremental innovation over radical innovation because
B- radical innovation will disturb the existing power distribution within the firm
Why is it easier for new entrants to involve in radical innovations when compared to incumbent firms?
C- unlike incumbent firms, new entrants do not have formal organization structures and processes
When firms innovate by leveraging existing technologies into new markets, they are said to be involved in
C- architectural innovation
DigitalHealth Electronics Inc is a company that builds diagnostic devices. It was the first company to develop a compact MRI scanner by reconfiguring the components of the MRI technology. This smaller and user-friendly version of the huge MRI scanner created demand from hospitals. Which of the following types of innovations does this scenario best illustrate?
D- architectural innovation
A ____ leverages new technologies to attack existing markets
A- disruptive innovations
Which of the following statements is true of a disruptive innovation?
D- it invades the market from the bottom up, by first capturing the low end
Which of the following is one of the reasons that led to CNN, an innovator, losing its leadership position in the 24-hour cable news industry?
B- the second movers imitated CNN’s incremental innovation to continuously improve their offerings
As a start-up company, Virtue Mobiles Inc entered the low end of the highly competitive cell phone industry with its low-cost smartphones. Initially, the company was able to sell its inferior technology due to low prices. Over the years, however, its rate of technology improvements increased above the industry standards. This helped the company create a strong strategic position for its smartphones in the high-end segment and claim a premium price. Which of the following types of innovation does this scenario best illustrate?
D- disruptive innovation
When Japanese carmakers attacked the existing U.S. auto market by first offering small fuel-efficient cars, and then leveraging their low-cost and high-quality advantages into high-end luxury segments, they were engaging in
C- disruptive innovation
Digital photography replacing film photography would be an example of
D- disruptive innovation
Which of the following is true of a disruptive innovation?
A- it targets existing markets
A factor favoring the success of disruptive innovation is that
A- incumbent firms are slow to change
Intel’s Celeron chip and Atom chip are initiatives to
B- guard the company against disruptive innovation by protecting the low end of the market
GE disrupted itself in the healthcare industry by
B- introducing inexpensive and smaller diagnostic devices in developing countries
The increasing availability of external options to commercialize ideas that were previously shelved is one of the factors that led to the shift from the
D- closed innovation to open innovation
Which of the following scenarios would typically happen in a firm that uses open innovation?
A- a meeting with professors at a university to get ideas for product:
open innovation allows a firm to benefit not only from internal ideas and innovation, but also from ideas and innovation from external sources
Which of the following statements is strongly influenced by the not-invented-here syndrome?
C- if a product was not created and developed at our company, it could not be good enough
Which of the following is an open innovation principle?
D- external R&D can create significant value
A firm’s ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones is called
C- absorptive capacity
Large companies have been shifting their knowledge landscape from closed innovation to open innovation because of the
D- increasing supply and mobility of skilled workers
Which of the following statements is true of firms pursuing a closed innovation?
B- firms in the closed innovation model are extremely protective of their IP
Globe Source Inc is a consumer electronics company that follows an open innovation model. Which of the following can be concluded about this firm?
C- the firm will buy others’ IP whenever it advances its own business model
Which of the following statements accurately brings out the difference between closed innovation and open innovation?
B- while open innovation focuses on building an effective business model to commercialize R&D, closed innovation focuses on being first to market
Which of the following key assumptions are innovations like P&G’s “Connect + Develop” based on?
A- combining the best of internal and external R&D will more likely lead to a competitive advantage
Norce Autos Inc allows its customers, suppliers, researchers, and the community in general to contribute the ideas toward new product developments. Customers and other stakeholders can let the company know what new features they want to see in their next car. NAI is primarily leveraging its
B- open innovation model
What is an invention?
A- the transformation of an idea into a new product or process
First movers often have several competitive benefits including
C- network effects
Researchers at Games First Inc., spent several months coming up with a fun game for toddlers that incorporates a new idea in preschool education. This scenario describes step ____ of the innovation process
B- two
The 4 step innovation process:
1- the idea often presented in terms of abstract concepts or as findings derived from basic research
2- invention describes the transformation of an idea into a new product or process, or the modification and recombination of existing ones
3- innovation concerns the commercialization of an invention by entrepreneurs
4- the innovation process ends with imitation. if an innovation is successful in the marketplace, competitors will attempt to imitate it
Which of the following scenarios would be characteristic of an entrepreneur?
A- Rachel implemented a new and more efficient way to produce pottery
Which of the following is an example of social entrepreneurship?
D- the committee approved the new formula for an all-purpose cleaner because it cleaned as well as other cleaners and used organic ingredients
What is strategic entrepreneurship?
B- the pursuit of an innovation that uses concepts from strategic management
Which of the following lists the stages of the ILC in the correct order?
A- Intro, Growth, Shakeout, Maturity, and Decline
A new product often has a high price when it is launched because of a
A- large investment in designing a product while producing small quantities
Which of the following would be the result of product innovation?
B- an inexpensive, high-quality refrigerator
EasyOpen Inc. has entered a stage in which the demand for their innovative electric can openers has declined. Now must customers are buying replacement parts or buying their second can opener from the firm. What stage in the ILC does this scenario describe?
C- shakeout phase
In the decline stage, which of the following strategies involves a reduction of investments in product support?
B- harvest strategy
Assume that the market for print book publishing has entered the maturity stage. Which of the following would most likely exist during this stage?
C- a few large publishers
YourGarden Inc
B- growth stage
Which of the following is an accurate definition of the customer segment “laggards”?
A- the last consumer segment to come into the market during the growth stage of the ILC
Which of the following most accurately describes a difference between incremental innovation and radical innovation?
C- incremental innovation builds on an established knowledge base; radical innovation uses an entirely different knowledge base
The crossing-the-chasm framework states that ___ need to be adjusted for each customer segment
B- business strategies
Canon
A- architectural innovation
Futura Inc = disruptive innovation
To be a disruptive force, the new product or technology has to ahve additional characteristics:
– begin as a low-cost solution to an existing problem
– initial performance is inferior to the existing technology, but its rate of technological improvement over time is faster than the rate of performance increases required by different market segments