In marketing a new product to the late majority and laggards, a company should
emphasize the advanced technological features of the new product.
If a firm wishes to avoid giving away its own installed base or complementary goods
advantages to others, it should ensure that its products are incompatible with those of
future entrants.
The investor is an active driver of the value of the investment.
Parallel development processes are universally endorsed.
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.
Innovators are unwilling to accept incompleteness in products.
Network externalities cannot arise in markets that do not have physical networks.
Heavyweight teams are typically permanent in nature.
A common set of international copyright laws automatically protects an author’s work
throughout the world.
Technologically superior products do not always win in the market.
FootsTrend Co. and AmazeDeals entered into an alliance. FootsTrend wanted access to
online sales but did not have the same expertise in this field as Amaze Deals.
AmazeDeals wanted to sell FootsTrend exercise mats from its online Web site. This is
an example of quadrant C-individual alliance with capability transfer.
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.
Factors that make it difficult or expensive to change suppliers or buyers are referred to
as _____ costs.
a. transactional
b. opportunity
c. marginal
d. switching
Which of the following is most clearly an example of process innovation?
a. A donut chain develops a method that enables donuts to be baked in 15 minutes rather
than the standard 30 minutes.
b. A company that manufactures canned soups introduces a line of canned soups with
new flavors and seasonings.
c. A major motion picture studio releases a new 3D movie.
d. A tire manufacturer develops a tire that re-inflates itself instantly when punctured.
A new technology is most likely to be successful in displacing an existing technology
when:
a. its installed base is significantly less than that of the existing technology.
b. the new technology competes only on the value of its stand-alone utility.
c. it eclipses the combined value of the existing technology’s stand-alone utility, its
installed base, and its complementary goods.
d. the new technology’s perceived and anticipated components of value are lower than
its actual components of value.
Maverick Systems was a leader in the phone market and profits from its cell phones
were very high. Maverick Systems developed a new generation smartphone and has
been advised by a consulting firm to “embrace cannibalization.” This means that the
company should:
a. introduce the new technology right away and increase its market lead while taking
away profits from its present product.
b. delay introduction of the next generation product until profits have begun to
significantly decrease for the current product.
c. use up most of its financial resources in promoting the new phone.
d. wait for the previous cell phone to become obsolete and then introduce this new
phone into the market.
Jonathan recently developed a new kind of camera. He has a working prototype and
plans to patent his invention. He needs to raise money for production, so he wants
articles about his camera to appear in various publications. Discuss the problems that
Jonathan might have to face if he wants to seek patents in other countries in the future.
Component technologies that are necessary for the performance or desirability of a
given innovation are referred to as _____ technologies.
a. architectural
b. diffused
c. primary
d. enabling
BioMark Lifesystems wanted to enhance the adoption of its new diagnostic substances
by medical laboratories. It made an agreement with the dominant producer of syringes
and test tubes to have its diagnostic substances sold to laboratories in a package along
with the syringes and tubes. This arrangement is known as:
a. sponsorship.
b. product modularity.
c. a bundling relationship.
d. disintermediation.
Jordan, the CEO of Early Bird, believes that it is important to focus on the quantity of
new product ideas generated rather than the quality of ideas generated. He encourages
everyone in the company to come up with product ideas, and those that seem feasible
are further developed. According to him, it takes several raw ideas to develop one
successful new product. Jordan’s views reflect the concept of:
a. innovation quotient.
b. innovation diffusion.
c. innovation readiness.
d. innovation funnel.
A firm that invests heavily in derivative projects:
a. will have greater long-term strategic momentum.
b. will be on the leading edge of technology.
c. will have good returns on its R&D investment in the short run.
d. will be able to compete easily when the market shifts to a newer technology.
Data envelopment analysis (DEA) utilizes linear programming.
When Blue Water publication releases professional books, it lends or donates a number
of these new books to university libraries and professors. Which of the following
strategies is the firm using to accelerate distribution?
a. Bundling relationship
b. Product modularity
c. Sponsorship
d. Consignment arrangement
Which of the following is true of technology diffusion?
a. S-curves in technology diffusion are obtained by plotting performance against time.
b. Information diffusion is slower than technology diffusion.
c. A drop in the prices of a new technology can accelerate technology diffusion.
d. Adoption is initially fast when a new technology is introduced to the market.
Large and hierarchical firms disaggregate in order to:
a. lengthen new product development cycles.
b. prevent large-scale downsizing.
c. become more responsive to technological changes.
d. curb the entrepreneurial culture within them.
The more a technology is adopted:
a. the less valuable it becomes on account of market saturation.
b. the more susceptible it becomes to decreasing returns of adoption.
c. the better are the opportunities for development of complementary assets.
d. the lesser are the possibilities for improvements in the technology and its
applications.
Alpha Information Inc. is a firm that manufactures desktop computers and wireless
network hardware components. The company is spending heavily on R&D to
experiment with new designs for wireless networks instead of trying to refine how well
they make their current wireless network hardware components. The firm is going
through a period of ambiguity and anxiety. Alpha Information Inc. is in the:
a. dominant design phase.
b. era of incremental change.
c. era of ferment.
d. specific phase.
Which of the following statements is true of first movers relative to early followers and
late entrants?
a. Cost of developing necessary production processes and complementary goods is
lower for first movers.
b. First movers are in a better position to exploit buyer switching costs and also to reap
increasing returns advantages.
c. First movers, being incumbents, have greater ability than later entrants to respond to
changes in the industry environment and adopt newer production processes.
d. First movers fail to capture scarce resources such as key locations, government
permits, access to distribution channels, and relationships with suppliers.
Joe’s Burgers is a famous fast food chain that uses a picture of a cook in a red hat as its
symbol. It is not legal for you to sell hamburgers with the same identification picture as
that of Joe’s Burgers because that would be a(n):
a. patent violation.
b. trademark violation.
c. embargo violation.
d. trade secret violation.
Alpha Cleaning Equipment Co. wants to use the house of quality matrix in designing
and developing a new vacuum cleaning machine. The use of house of quality will
typically:
a. provide a common language and framework for members of a project team to use.
b. blur the relationship between product attributes and customer requirements.
c. conceal the competitive shortcomings of the company’s existing products.
d. hide design trade-offs.
Ceramic Customs Co. requires a specific type of ceramic to make custom-made tiles.
Since only one supplier makes that particular ceramic, the firm is forced to source all of
its supplies from it. The firm tried negotiating the price at which it purchases the
material, but failed to get any reduction on the cost. This is because:
a. the supplier has more bargaining power than the firm.
b. the supply is unlimited.
c. the supply exceeds the demand.
d. the industry has barriers to entry.
Tacit knowledge is best defined as the knowledge that:
a. cannot be readily codified or transferred in written form.
b. cannot be patented.
c. has a very low degree of appropriability.
d. is not eligible for copyright protection.
What assumptions underlie the use of timing of entry strategies into the market for new
products?
What are some of the advantages and disadvantages of large firms in terms of R&D?
Explain the value of the stage-gate process in new product development.
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 should consider sponsoring a business incubator.
Explain what an incubator is and how this might help the city meet its goals.
Frosty 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 toward initially, and what type of message and medium
should it use?
Gerald Rupert is a retired race car driver. He is writing a book and planning a video
release to share his racing experiences. He is trying to decide whether to market these
items directly to consumers over the Internet or to use intermediaries. To make this
decision he needs to know the pros and cons of each route. Provide the necessary
information and make a recommendation to him.
What is vaporware? What are its advantages?
General Sys Inc. 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 General Sys use to
evaluate this project? Why is this method the best one to use?
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 new technology as quickly as it
can? Explain the reason for your answer.
The CEO of Bright 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?