For a firm to adopt a component innovation, it typically requires that the firm have
architectural knowledge about the way components link and integrate to form a whole
system.
External development efforts typically lack the coordination of internal development.
When an industry has network externalities, the value of a good to a user is more likely
to go up linearly rather than increase in an s-shape.
In heavyweight teams, the long-term career development of individual members rests
with their project managers rather than their functional managers.
In the context of design rules for fabricated assembly products, minimizing the number
of parts for a product reduces direct labor and material handling costs.
Equity ownership helps to align the incentives of the partners.
After licensing a technology, the firm typically has limited discretion over what it can
do with the technology.
Trademarks must be registered before a suit can be brought in federal court against an
infringement of the mark.
New product development time increases when using strategic alliances and
cross-functional teams.
From a real options perspective, the exercise price associated with commercializing a
new technology would include the cost of manufacturing, marketing, and distributing
the technology.
Technology trajectories are path dependent.
Wholly open systems can be quickly commoditized and provide little appropriability of
rents to their developers.
Firms in industries characterized by increasing returns will use the objective of
maximizing market share and a penetration pricing strategy.
In the product development process, expenditures increase as uncertainty increases.
Jupiter Inc., a software firm, is starting to face competition from the new entrant Coral
Inc. Jupiter Inc. wants to prevent its existing customers from switching to Coral’s newly
developed software. Which of the following measures should Jupiter Inc. adopt?
a. Ensure that customers find its software more convenient and simpler to use, as
compared to that of Coral Inc.
b. Keep the initial cost of the software higher than that of Coral Inc.
c. Keep the prices of the complements required for the software higher than that of
Coral Inc.
d. Ensure that fewer complementary products are availability for its products, as
compared to that of Coral Inc.
_____ offers a fast way for a firm to extend the reach of its technology that is nearly
free and offers the potential for royalties.
a. Licensing out a technology
b. Forming a joint venture
c. Solo internal development
d. Vertical integration
Jacob had been using WordPerfect 5.1 for DOS for several years and was quite an
expert at it. When his boss wanted him to change to a Windows-based system, Jacob
told his boss that it would slow him down. Jacob also pointed out that it would cost a lot
of money to train him to use the new system. This is an example of:
a. cognitive dissonance.
b. high switching costs.
c. high monopoly rents.
d. early entry continuation.
An efficiency frontier is the range of _____ that optimize a combination of features of a
potential project.
a. product features
b. attribute arrangements
c. hypothetical configurations
d. conjoint dimensions
Perfecto Espresso is chain of coffee shops in the United States. Earlier it used to source
its coffee from several coffee manufacturers. However, recently it started a coffee
manufacturing firm under its own brand name. This is an example of:
a. forward vertical integration.
b. backward vertical integration.
c. horizontal integration.
d. substitution.
Doven Inc. pioneered software development in the 1970s and introduced its range of
office tools well ahead of competitors. According to the classification scheme of
entrants, Doven would be classified as a(n) _____.
a. first mover
b. early follower
c. early leader
d. laggard
In a locally leveraged strategy to innovation, the R&D divisions _____.
a. are completely centralized
b. each play a different role in the company’s overall R&D strategy
c. work on the full scope of development activities relevant to their business unit
d. do not share creative resources and innovative developments
Technological innovations decrease:
a. the variety of goods consumers can purchase.
b. the need for differentiation among competitors.
c. the time required to design and produce new products.
d. the use of common components between different models of the same product.
Urban Fashions has become very profitable and now employs in large numbers. Serena,
the owner of the firm, had been very informal in running the company. However, with
the increase in the size of the firm, she 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. The method used by
Serena is referred to as _____.
a. disintermediation
b. formalization
c. nationalization
d. decentralization
Technology is in its purest essence _____.
a. knowledge
b. trial and error
c. experimentation
d. guesswork
Earth Love electronics has developed a lawn mower that runs on solar power. The lawn
mowers are available in all neighborhood 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
The Vice President of Biomedics is trying to decide on the composition of a new
product development team. If she chooses members who are from multiple functional
areas in the firm, which of the following is likely to be one of the disadvantages she is
likely to experience?
a. Increase in instances of whistle-blowing
b. Increase in communication and coordination costs
c. Lesser cross-fertilization of ideas
d. Lesser instances of social loafing
Which of the following is an advantage typically associated with heavyweight teams?
a. Heavyweight teams have strong cross-functional coordination.
b. The team structure of heavyweight teams increase the possibility of social loafing.
c. Heavyweight teams are typically permanent and hence stable.
d. The team structure of heavyweight teams decreases the cross-fertilization of ideas.
Unicorn Medicines, a pharmaceutical company based in the United States, has its
research and development units spread across the globe. These research and
development units have lately not been receiving adequate financial support. Which of
the following is typically the cause for such a situation?
a. Technical innovation leads to lower market segmentation and slower product
obsolescence.
b. Most innovative ideas do not become successful new products.
c. The product development cycle in the pharmaceutical industry is short.
d. The cost associated with pharmaceutical research and development is low.
Which of the following is an advantage typically associated with cross-functional
teams?
a. A cross-functional interface ensures that cross-fertilization of ideas is reduced.
b. Cross-functional teams allow a project to draw on a wider mix of information sources
in the environment.
c. Cross-functional teams usually reduce coordination and communication costs.
d. Cross-functional teams are most efficient in eradicating the problems related to
homophily.
Which of the following statements is true of learning effects?
a. There are substantial differences in the rates at which organizations learn.
b. The learning rate is impervious to organizational factors, such as firm strategy.
c. As a technology is adopted, further development and refining of the technology
reduces.
d. The cost of producing a unit rises as the number of units produced increases.
ATP Tech Inc. is a firm that manufactures high quality microprocessors. The firm
formed a joint venture with Ace Computers Inc. As per the agreement, ATP Tech would
provide Ace Computers with the microprocessors which the latter firm would use in its
desktops and laptops. However, there was no exchange of proprietary technology
between the two firms. Which of the following technology alliance strategies is being
used by the firms?
a. Quadrant A-individual alliance with capability complementation
b. Quadrant B-network of alliances with capability complementation
c. Quadrant C-individual alliance with capability transfer
d. Quadrant D-network of alliances with capability transfer
Alpha Cleaning Equipment Co. is developing a new street sweeper machine. It has a
business plan and a detailed plan of action for the machine. According to the stage-gate
process, what is the next stage of the project?
a. Launch the product by producing it commercially and selling it.
b. Verify and validate the new product, its marketing, and production.
c. Begin the actual design and development including the details of manufacturing,
marketing, and operations.
d. Build a business case to justify the project.
Which of the following statements is true of core competencies?
a. A firm’s core competency refers to a single ability.
b. A firm’s core competency is more than just a core technology.
c. An individual business unit has only one core competency.
d. A firm’s core competency is usually easy to imitate.
Which of the following statements is true of standardization?
a. It can ensure that activities within the firm run smoothly and yield predictable
outcomes.
b. It is defined as the degree to which the firm utilizes rules, procedures, and written
documentation to structure the behavior of employees.
c. It involves the use of organic structures, instead of mechanistic ones.
d. It encourages the creativity and experimentation that leads to innovative ideas.
When companies form a technology cluster it often results in:
a. the loss of agglomeration economies.
b. new firms being discouraged to start up in the immediate vicinity.
c. reduced interaction and trust between them.
d. reduced pricing power in their relationships with buyers and suppliers.
True Tarmac Co. entered into an alliance with Sam’s Trucks to use high tech
communications to manage its trucks across the nation. In this arrangement, both firms
will help each other keep a track of each other’s trucks and will share their knowledge
about other ways to make the businesses more effective and efficient. This alliance falls
in:
a. quadrant A-individual alliance with capability complementation.
b. quadrant B-network of alliances with capability complementation.
c. quadrant C-individual alliance with capability transfer.
d. quadrant D-network of alliances with capability transfer.
The Corner Shop is a leading supermarket 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 the firm adheres to labor laws
Alpha Cleaning Equipment Co. is experimenting with a faster and quieter machine to
polish floors. To develop this concept the company is contemplating using the lead user
method of concept development. How does this method work? What are its advantages?
Explain the concept of technology spillovers.
Why is the installed base of users of a technology that requires complementary goods
so important to a company’s future success?
Recently, three cell phone companies announced the addition of a nationwide
“walkie-talkie” service to supplement their regular cell phone service. Will this be a
sustainable competitive advantage? Justify your answer.
What is a project charter and a contract book? Explain their purpose and how they are
related to each other?
What is absorptive capacity? Why do firms that fall behind the technology frontier find
it difficult to catch up?
What is the danger of not having a strategic intent? In your answer, assume your
company operates a hospital in a city with a population of 30,000 people, located about
50 miles away from a large city.
What are the advantages and disadvantages of having a heterogeneous new product
development team?