(p. 112)-In general, the more firms competing that are of comparable size, the more
competitive the industry will be.
(p. 131)-The ratio of R&D expenditures to sales is known as R&D trajectory.
(p. 291)-The value of a technological innovation is solely determined by what the
technology can do.
(p. 52)-In the context of s-curves in technological improvement, as a technology begins
to reach its inherent limits, the cost of each marginal improvement decreases, and the
s-curve flattens.
(p. 171)-A joint venture between two companies often results in a new separate
company.
(p. 99)-All pioneers face customer uncertainty.
(p. 224)-With advances in information technology, loosely coupled organizational
structures are losing their popularity.
(p. 271)-In a functional team approach to new product development, team members
remain in their functional departments and may meet periodically to discuss the project.
(p. 272)-Lightweight teams are appropriate for derivative projects where high levels of
coordination and communication are not required.
(p. 196)-In the United States, there are no laws to protect trade secrets.
(p. 196)-A common set of international copyright laws automatically protects an
author’s work throughout the world.
(p. 247)-A firm can benefit from developing “antichampions.”
(p. 103)-A firm intending to refine an earlier entrant’s technology should avoid
fast-cycle development processes.
(p. 189)-Discovery of scientific principles that pertain to natural laws can be patented.
(p. 75)-A legally induced adherence to a dominant design is not possible.
(p. 103)-Other things being equal, an entrant with a strong reputation can attract
adoptions earlier than entrants without strong reputations.
(p. 240)-The majority of all new product development projects result in an economic
return.
(p. 3)-If a business discharges untreated chemical waste into the local water bodies of a
community, it imposes a negative externality on the community members.
(p. 198)-Wholly open systems are usually quickly commoditized and provide little
appropriability of rents to their developers.
(p. 121)-According to Prahalad and Hamel’s model, it is possible for a firm to develop
core competencies to a set of abilities that enable it to quickly reconfigure its
organizational structure and routines in response to new opportunities.
(p. 1)-Investing in process innovation helps firms lower their costs.
(p. 204)-For technologies in which standardization and compatibility are important,
maintaining the integrity of the core product is absolutely essential.
(p. 121)-Path dependency refers to the abilities that make a firm more agile and
responsive to change.
(p. 94)-The initial cost of a good itself can be a switching cost.
(p. 164)-A firm cannot collaborate with its competitor.
(p. 113)-Low exit barriers intensify rivalry by making firms reluctant to abandon the
industry.
(p. 307)-While mavens with a valuable piece of information are likely to expose it to a
great number and diversity of people, connectors are likely to convey the information to
fewer people but in more detail.
(p. 201)-When multiple firms can produce a technology, losing money on the
technology in the short term to promote it as a standard is highly risky.
(p. 171)-Licensing a technology from another firm is typically more expensive for a
licensee than developing a new technology in-house.
(p. 214)-According to Joseph Schumpeter, small firms are likely to have
better-developed complementary activities such as marketing or financial planning that
enable them to be more effective innovators than larger firms.
(p. 143-144)-Derivative projects offer fundamental improvements in the cost, quality,
and performance of a technology over preceding generations.
(p. 55)-Technology diffusion and information diffusion take the same amount of time.
(p. 204)-Technology trajectories are path dependent.
(p. 26)-The terms research and development represent different kinds of investment in
innovation-related activities.
(p. 95)-In an industry characterized by increasing returns to adoption, there can be
powerful advantages to being an early provider.
(p. 200-201)-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.
(p. 80)-Since perceived or expected installed base may drive subsequent adoptions, a
large perceived or expected installed base can lead to a large actual installed base.
(p. 272)-Project managers of heavyweight teams are typically junior managers.
(p. 76)-Technologically superior products do not always win in the market.
(p. 166)-Easymake Corp. developed a new Web design software to build Web pages for
its clients. However, Easymake soon realized it could make more money by selling this
software to those who wish to quickly build Web pages to sell their products. Which of
the following would be the most appropriate strategy for Easymake?
A. It should not sell the Web design software as it will give rise to competition on the
Internet.
B. It should become a licensor of the new Web design software.
C. It should become a licensee of the new Web design software.
D. It should make the Web design software available to users as open source software.
(p. 96)-Pioneer Athletics Inc. wants to provide better landing mats for gymnasts. It
therefore asks its foam suppliers to use a new innovative process to manufacture higher
quality, durable foam for use in its mats. This new process used to develop the foam
represents a(n) _____ for Pioneer Athletics.
A. network externality
B. preemption rent
C. enabling technology
D. incumbent rent
(p. 218)-Pioneer Systems Inc. has a high degree of formalization. Employees in Pioneer
Systems are more likely to:
A. exhibit high levels creativity and experimentation.
B. feel empowered to implement new solutions.
C. face morale and motivation problems.
D. face ambiguity as a result of a lack of formal rules and procedures.
(p. 191)-Which of the following statements is true of a patent?
A. The laws governing patent protection are universal and do not differ from country to
country.
B. A patent granted in one country provides protection in all other countries as well.
C. In the United States, an inventor can publish an invention up to a year before
applying for the patent.
D. Discovery of scientific principles that pertain to natural laws can be patented.
(p. 58)-Iris is quite skeptical about new innovations and is most likely to adopt
something new only after experiencing peer pressure to adopt the new innovation.
However, she is not so risk averse that she will wait until all uncertainty of a new
technology has been resolved; she is willing to accept a little uncertainty if her peers
already use the product. Which of the following adopter categories does Iris belong to?
A. Early adopters
B. Innovators
C. Late majority
D. Laggards
(p. 27)-The demand-pull approach to research and development refers to research and
development that:
A. focuses on developing products that are expected to increase demand in a particular
market segment.
B. begins by examining the outcomes of the firm’s basic research and the potential
commercial applications that may be constructed from those outcomes.
C. focuses on developing products that are expected to decrease the demand for their
substitute products.
D. originates as a response to the specific problems or suggestions of customers.
(p. 142-143)-TechToTeach Co. has developed and sold a product that can be used by
students to take faster notes in a classroom as the teacher speaks. The device
automatically records the teacher’s voice and converts it into a text format. This new
technology has been widely accepted by various universities and has been appreciated
by students, thus increasing the company’s inflow. This technology can be most
accurately described as a(n) _____ project by TechToTeach.
A. advanced R&D
B. platform
C. breakthrough
D. -derivative
(p. 163)-Which of the following is an advantage of collaborating?
A. It increases the in-house development time for projects.
B. It increases a product’s cycle time.
C. It gives firms more flexibility.
D. It causes firms to commit to assets that will rapidly become obsolete.
(p. 3)-Kroters Inc. decides to set up its manufacturing plant near Woodsville, a small
community of farmers. Kroters is most likely to create a positive externality for the
community members of Woodsville if it:
A. increases its product life cycle based on consumer demand.
B. sets up an organic farm near Woodsville.
C. follows the Solow Residual.
D. reduces the rate of product obsolescence for Woodsville residents.
(p. 223)-ErgoWorld Inc. manufactures office furniture. The company is considering
adopting a modular production system. A modular system would offer greater value to
ErgoWorld if:
A. most customers are likely to agree on a single product configuration.
B. its customers prefer to upgrade their products by replacing their entire system.
C. its customers are willing to pay a premium price for extreme customization and
personalization.
D. its customers have heterogeneous demands that need to be met in a cost-effective
way.
(p. 173)-_____ refers to the degree to which partners have compatible objectives and
styles.
A. Resource fit
B. Strategic fit
C. Capability complementation
D. Contractual fit
(p. 293)-Maverick Systems Inc. is a leading company in the mobile phone market, and
profits from its mobile phones are very high. Maverick Systems has developed a new
generation of smartphones, which is better than its existing line of smartphones, and has
decided to embrace cannibalization of its existing line of smartphones. This means that
the company is going to:
A. introduce the new technology right away and increase its market lead while taking
away profits from its existing line of smartphones.
B. delay introduction of the next generation product until profits have begun to
significantly decrease for the existing line of smartphones.
C. use up most of its financial resources in promoting the new phone.
D. wait for the existing line of smartphones to become obsolete and then introduce the
new generation of smartphones into the market.
(p. 295)-When Sports 360, a sports bar in New York, saw yet another sports bar open up
across the street, it knew that it would have to lower its price again to stay in business.
The city already had too many sports bars, and Sports 360 intended on being one of
those left after the inevitable shake out. In this situation, the best pricing strategy for
Sports 360 would be:
A. premium pricing.
B. market skimming.
C. survival pricing.
D. a freemium program.
(p. 169)-Which of the following statements is true of contract manufacturing?
A. It requires companies to increase its labor force to meet the scale of market demand.
B. It requires firms to meet the scale of market demand by committing to long-term
capital investments.
C. It enables a firm to tap the greater economies of scale.
D. It decreases organizational responsiveness to the environment.
(p. 142-143)-NewDigger Inc. makes backhoes for digging ditches and trenches. It has
developed an acid that, when poured on the ground, reduces the time and labor required
to dig trenches of various depths, depending on how much is applied. The firm has
recently started using this product commercially. This would most probably be
considered a(n) _____ project for NewDigger.
A. derivative
B. platform
C. breakthrough
D. -additive
(p. 268)-In the context of product development teams, which of the following
statements is true?
A. The larger a team is, the easier it is to foster a shared sense of identity among team
members.
B. As the size of a team increases, the potential for social loafing increases.
C. Formation of cross-functional teams hinders the cross-fertilization of ideas.
D. Increasing the diversity of team members eliminates the possibility of homophily.
(p. 116)-The Corner Shop Corp. is a leading supermarket chain in Chicago. According
to Michael Porter’s model of a value chain, which of the following activities of the firm
is a primary activity?
A. A training session for the floor attendants at The Corner Shop outlets
B. An advertising campaign for a new The Corner Shop outlet
C. The accounting function at The Corner Shop outlets
D. The hiring of lawyers to ensure that the firm adheres to labor laws
(p. 26)-Which of the following is an example of user innovation?
A. Samuel has invented a detachable bicycle in order to make profits by selling it to a
reputed bicycle manufacturing firm.
B. Sandra, an engineer, has developed a device that helps track the location of her
teenage daughter’s car.
C. Jessica, an ace designer for a clothing brand, has been asked to work on a dyeing
technique that changes fabric color according to the room temperature.
D. Ivan, a scientist at a reputed pharmaceutical company, has developed an
anti-inflammatory drug for the company to commercialize.
(p. 271)-Which of the following is an advantage of a functional team?
A. The team structure of a functional team is straightforward to implement.
B. The team structure of a functional team allows for greater cross-functional
coordination.
C. The team structure of a functional team increases the cross-fertilization of ideas.
D. The team structure of a functional team increases the possibility of social loafing.
(p. 165)-Combining the capabilities and other resources of partner firms but not
necessarily transferring those resources between the partners is referred to as _____.
A. capability transfer
B. capability complementation
C. resource modification
D. disintermediation
(p. 272)-Which of the following statements is true of lightweight teams?
A. Lightweight teams are typically permanent.
B. Lightweight teams do not have dedicated liaison personnel.
C. Lightweight teams are most appropriate for projects where high levels of
coordination are required.
D. Lightweight teams are comprised of members who still reside in their functional
departments.
(p. 135)-What is the net present value (NPV) of a project if the present value of cash
inflow is $10,000 and the present value of cash outflows is $5,000?
A. $2,000
B. $5,000
C. $10,000
D. -$15,000
(p. 217-218)-Urban Fashions Corp. has become very successful in the last few years
and now employs a large number of people. Serena, the owner of the firm, had been
very informal in running the company. However, because of the increase in the size of
the firm, she now feels that the informal ways of management have become ineffective.
In order to structure the behavior of employees, Serena wants to introduce written codes
of conduct and regulations into the firm. This change being introduced in the company
by Serena is referred to as _____.
A. disintermediation
B. formalization
C. nationalization
D. decentralization
(p. 96)-Fashion Fair Corp., the first mover in the “all-year discount” stores market, lost
its market share to a late entrant, Brand Fair Inc. Brand Fair operates its discount stores
solely through the Internet, which saves a lot of expenses. Fashion Fair has been unable
to replicate this strategy by adopting the online store business model due to its existing
contracts with suppliers and heavy investment in retail stores. Fashion Fair has been
experiencing:
A. incumbent inertia.
B. monopoly rents.
C. path dependency.
D. technology attrition.
(p. 77)-Earth Love Electronics Inc. has developed a lawn mower that runs on solar
power. The lawn mowers are available in all local supermarkets and several electronic
stores. According to the Buyer Utility Map, the company is trying to offer convenience
utility in the _____ stage.
A. supplements
B. purchase
C. disposal
D. maintenance
(p. 305)-In the context of a firm’s product diffusion curve, when there is a chasm
between early adopters and early majority customers:
A. the firm must reduce its production capacity.
B. the firm should improve its efficiency to target the mass market.
C. the early majority market becomes saturated.
D. the early majority market is ready to buy the product.
(p. 113)-According to Porter’s five-force model, if suppliers of a particular good are
very abundant, _____.
A. their bargaining power will be less
B. their level of differentiation will be very high
C. their level of vertical integration in the industry will be high
D. their annual employee turnover rates will be less
(p. 121)-When Faslow Medical Center in Exeter County changed its name to Faslow
Hospital, it also unveiled a plan to build a medical tower that would double its physical
facilities by 100 percent within the next 10 years. It also announced that its goal was to
not only serve Exeter County but also the entire region including the five contiguous
counties. This is most accurately an expression of:
A. vertical integration.
B. strategic intent.
C. monopoly rent.
D. supplier bargaining power.
(p. 189)-Under U.S. patent law, which of the following is one of the mandatory
requirements to be met by a new invention in order to be eligible for patent protection?
A. It must be obvious.
B. It must be novel.
C. It must substitute one material for another.
D. It must substitute an element for an equivalent element.
(p. 50)-Which of the following statements is true of component innovation?
A. Component innovation does not significantly affect the overall configuration of a
system.
B. Component innovation is also called architectural innovation.
C. For a firm to initiate component innovation, knowledge about the whole system is
necessary.
D. Component innovations have more far-reaching and complex influences on industry
competitors and technology users than architectural innovations.