Instructor’s Manual
ANSWERS TO OPENING CASE DISCUSSION QUESTIONS
1. Why does Nayak say it’s important to “start with the pictures not with the
numbers”?
Nayak believed that it was extremely important for innovators to begin by attempting to
2. What are the challenges with doing a quantitative analysis of the value of the
Shaan project?
The Shaan project is a fairly radical departure from existing tractor options in India. This
means that it will be extremely difficult to anticipate customer response to the vehicle, to
3. What are the different sources of value that Mahindra’s management appears to
think will arise from developing the Shaan?
First, the Shaan might be able to serve the very large market of farmers who could not afford to
buy regular tractors. Because it served multiple purposes (enabling them to use it as a transporter
ANSWERS TO DISCUSSION QUESTIONS
1. What are the advantages and disadvantages of discounted cash flow methods such as
NPV and IRR?
The main advantage of these methods is their ability to support rigorous mathematical and
statistical comparisons of innovation projects. Though these methods look good on the surface
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Instructor’s Manual
2. For what kind of development projects might a real options approach be appropriate?
For what kind of projects would it be inappropriate?
The real options approach is most appropriate when there is significant uncertainty concerning
the outcomes of an innovation project and/or when a firm’s investment in its own capabilities is
3. What are some of the reasons that a firm might use both qualitative and quantitative
assessments of a project?
The primary reason to use both qualitative and quantitative assessments of a project is to provide
a complete view of the project’s potential. A project’s potential profitability is important but it is
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Instructor’s Manual
4. Identify a particular development project you are familiar with. What kinds of methods
do you believe were used to assess the project? What kinds of methods do you believe
should have been used to assess the project?
Students should provide their own examples here; one student example obtained previously went
as following: “I led a team that was charged with assessing whether or not our firm could make
use of new biotechnology based forms of identification. In addition to calculating the benefits of
5. Will different methods of evaluating a project typically yield the same conclusions about
whether to fund its development? Why or why not?
On one level it is unlikely that different methods will yield the same conclusions because they
apply different criteria (e.g. financial, strategic, etc.). On another level we could expect different
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Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education