Deck 13: Entrepreneurial Implications for Strategy

Question 1

A firm that innovates through imitation can expect to produce a product for a niche market, since the general market for the standardized product will be dominated by early adopters.

Answer 1

False

Question 2

Invention is defined as the adoption of a similar innovation by different firms.

Answer 2

False

Question 3

P&G's CEO, A.G. Lafley, has a goal of 50% of P&G's new products to come from partnerships with customers, suppliers, other firms, inventors and universities. P&G has implemented a process of "open innovation" (Chapter 13 Opening Case).

Answer 3

True

Question 4

Entrepreneurship is the economic engine driving national economic growth in many nations.

Question 5

The essence of entrepreneurship is to capture most of the existing markets from less aggressive and innovative competitors.

Question 6

Joseph Schumpeter suggested that firms engage in three types of innovative activity when managing the innovation process: imitation, invention, and innovation.

Question 7

Rosalie has become totally preoccupied by her idea for creating a business leasing horses to riders on the same principle as time-shares on condominiums. Rosalie is researching the legal, financial, and insurance aspects of her idea and is preparing a prospectus to take to banks to ask for a business loan. Rosalie's significant other is complaining that she "sleeps, eats, and drinks" this concept. Rosalie has the entrepreneurial characteristic of passion.

Question 8

Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of production.

Question 9

The entrepreneurial mind-set is found primarily among managerial and scientific employees.

Question 10

Innovation is the means by which the entrepreneur creates wealth.

Question 11

Given the rapid rate of technological change, patents are not a useful gauge of a firm's entrepreneurial prowess.

Question 12

As a process, entrepreneurship results in the "creative destruction" of existing products (goods or services) or methods of producing them and replaces them with new products and production methods.

Question 13

Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market.

Question 14

Tide Total care, a premium version of Tide detergent, was developed through Sweden's Lund University along with two small chemical companies. This is an example of open innovation where new products come from ideas external to the firm (Chapter 13 Opening Case).

Question 15

An organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit through innovations.

Question 16

Most large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal activities.

Question 17

Evidence demonstrates that large firms with well-funded R&D operations are more effective at innovation than are smaller firms.

Question 18

The open innovation approach is consistent only with the alliance and acquisition approaches discussed in the chapter and not with the internal innovation approaches (Chapter 13 Opening Case).

Question 19

According to the Chapter 13 Opening Case, "open innovation" is not a viable process for fostering innovations because competitors can easily copy a firm's competitive advantages.

Question 20

Corporate entrepreneurship describes the opportunity seeking and exploitation of innovations in new start-up enterprises.

Question 21

Induced strategic behavior does not result in true innovation because it is a top-down process rather than a bottom-up process.

Question 22

For firms to be entrepreneurial, they must stress individualism in their employees above all other characteristics.

Question 23

The iPod likely resulted from autonomous strategic behavior at Apple, though the iPhone was more the result of induced strategic behavior.

Question 24

Bill Kroganski is the owner of a moderately successful industrial services firm. His reaction to the introduction of a new process technology that could be a direct competitor to the process his firm utilizes is fear. He spends his time considering ways to isolate his firm from this new technology. Bill has characteristics consistent with the entrepreneurial mind-set.

Question 25

Most of 3M's innovations are radical (i.e., significant breakthroughs) rather than incremental (i.e., building on existing knowledge bases and providing small improvements in current product lines) (Chapter 13 Strategic Focus).

Question 26

A innovation developed through autonomous strategic behavior will probably take the firm into new markets not addressed by its current strategy.

Question 27

Most innovations are incremental, not radical.

Question 28

Autonomous strategic behavior results in internal innovations that are highly consistent with the firm's current strategy.

Question 29

According to the Chapter 13 Strategic Focus, research labs play an important role in 3M's innovation process; each of its six businesses has its own research lab which is product-focused.

Question 30

While both incremental and radical innovations can create value, incremental innovations have the potential to contribute more significantly to a firm's efforts to earn above-average returns.

Question 31

A company with a need for immediate, large returns should invest in research and development.

Question 32

If the company's workers have scant existing knowledge, their "absorptive capacity" to learn new knowledge will be limited.

Question 33

Research has shown that internationally diversified firms are generally more innovative.

Question 34

In order to be successful, a new entrepreneurial enterprise should be sheltered from the global environment until it is firmly established in domestic markets.

Question 35

Toyota's Prius, the first mass-produced hybrid-electric car is an example of a radical innovation as changed the industry by providing new functionalities for users.

Question 36

Firms that continually change their strategic context and strategies because of the continuous changes in the current competitive landscape are in danger of losing sight of their main competitive strengths.

Question 37

A society's cultural characteristics influence a nation's rate of entrepreneurship and its related practices.

Question 38

A product champion should come from outside the organization in order to ensure that the entrepreneurial vision has the objective support it needs.

Question 39

Some of the new products to be produced by the joint venture between Intel and Nokia integrating smartphones and computers would be considered radical innovations.

Question 40

Larger, established firms, mainly those competing globally, use their R&D labs to create competence-destroying new technologies and products.

Question 41

Pet Care Companion Connection (PCCC) is an organization that trains persons with mild to moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of

A) taking advantage of a need in the marketplace.
B) creative destruction of existing services for pet boarding.
C) institutionalized entrepreneurship.
D) internal corporate venturing.

Question 42

While smaller firms must use cooperative strategies as a means of producing innovations, larger firms with large R&D units such as P&G and 3M can produce most if not all innovations internally.

Question 43

Acquisitions are a low risk approach to producing and managing innovation.

Question 44

The network of strategic alliances built by an organization is a form of intellectual capital from which the organization can draw to develop innovations.

Question 45

Cross-functional work teams are best supported by vertical organizational structures.

Question 46

Entrepreneurial ventures often produce more radical innovations than do their larger, more established counterparts.

Question 47

Firms develop innovations in all the following ways EXCEPT

A) Through autonomous or induced strategic behavior.
B) By acquiring other companies.
C) Through cooperative strategies.
D) Via divestiture of low-performing units.

Question 48

All of the following are paths to scout external opportunities to arrive at open innovation solutions EXCEPT (Chapter 13 Opening Case)

A) Engaging current and potential customers to better capture unarticulated needs.
B) Pursue breakthrough technology ideas and focus on incremental changes to solve unarticulated customer problems with a new technology.
C) Using product champions to develop radical innovations internally.
D) Continuously monitor customers and competitors, making incremental changes as a "fast follower" of a proven concept.

Question 49

The use or application of entrepreneurship within an established firm is called

A) corporate emergence.
B) transformational leadership.
C) exceptional R&D.
D) corporate entrepreneurship.

Question 50

Acquisitions are a means of extending the company's product line and increasing revenues. The capital market values growth. Therefore, some firms make acquisitions to improve their standing in the capital markets.

Question 51

The fastest-growing group of entrepreneurs in the U.S. is women.

Question 52

As noted in the Chapter 13 Strategic Focus, social networking sites such as Facebook are primarily used for employees to communicate, but are of limited value in identifying new and different markets for existing and new product ideas.

Question 53

Tide Total Care, a premium version of Tide detergent, was developed through Sweden's Lund University along with two small chemical companies as partners. Which of the following methods of generating innovations does Tide Total Care illustrate (Chapter 13 Opening Case)?

A) Induced strategic behavior
B) Autonomous strategic behavior
C) Open innovation
D) Innovation through acquisitions

Question 54

Larger and well-established firms often have more resources and capabilities to produce more radical innovations than do smaller entrepreneurial firms.

Question 55

According to the Chapter 13 Strategic Focus, businesses can use social networking sites such as Facebook to facilitate innovation.

Question 56

A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce innovations internally.

Question 57

An entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three ways that firms implement internal innovations.

Question 58

Political activity that is centered on the allocation of resources to the different functions may limit the effective use of cross-functional teams.

Question 59

Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees.

A) This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.
B) This example shows the dysfunctional aspects of unrestricted entrepreneurialism.
C) This is an example of the lack of human capital hampering internal innovation.
D) Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.

Question 60

Innovations can only be produced by actions and activities within the firm.

Question 61

If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have

A) social capital.
B) entrepreneurial capabilities.
C) high absorptive capacity to learn.
D) intellectual slack.

Question 62

____ are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it.

A) Leaders
B) Innovators
C) Entrepreneurs
D) Transformative leaders

Question 63

Entrepreneurs tend to have all the following characteristics EXCEPT

A) willing to take responsibility for projects.
B) passionate.
C) prefer certainly about projects.
D) optimistic.

Question 64

The risks of international entrepreneurship include all the following EXCEPT

A) unstable foreign currencies.
B) problems with market efficiencies.
C) limitations on market size.
D) strong "buy-domestic" programs.

Question 65

The level of entrepreneurial activity in a nation is ____ the nation's level of economic development.

A) negatively related to
B) independent of
C) positively related to
D) weakly related to

Question 66

Research shows that internationally diversified firms tend to be ____ than domestic-only firms.

A) less profitable
B) more innovative
C) less technologically advanced
D) more likely to have an individualistic culture

Question 67

Commercialization of ideas is more difficult than idea creation as suggested by the fact that ____ percent of R&D occurs in large firms, yet the same firms produce fewer than ____ percent of patents.

A) 50; 50
B) 50; 80
C) 80; 50
D) 80; 80

Question 68

According to Peter Drucker,the primary goal of innovation is to

A) promote social well being.
B) increase the number of jobs.
C) create wealth.
D) support national economies.

Question 69

Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that

A) the receiving party have adequate absorptive capacity to learn.
B) the communication process be highly intensive.
C) the knowledge be broken into the smallest comprehensible units.
D) training consultants be involved in every step of transference.

Question 70

Products developed through ____ are often offered at lower prices without as many features than products developed through ____.

A) innovation, imitation
B) imitation, invention
C) imitation, innovation
D) innovation, invention

Question 71

GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that

A) this innovation will resist competitors' attempts to imitate it.
B) its investors will react positively to the introduction of the new product because of the potential for higher returns.
C) its investors will react negatively because of the risk and cost entailed in introducing a new product.
D) this will be recognized in the industry as a radical innovation.

Question 72

Entrepreneurial opportunities

A) present the potential for a firm to leverage existing products or services into new markets.
B) present risk to the firm and should be avoided.
C) are conditions contrary to a firm's established strategy and segments served.
D) are conditions in which new goods or services can satisfy a need in the market.

Question 73

The number of patents held by an organization is a rough guide to the

A) effective use of organizational politics.
B) future success of an initial public offering.
C) amount of venture capital a firm will be able to attract.
D) level of innovation in a firm.

Question 74

Innovation by imitation usually leads to _________ and products based on imitation are usually offered at ________.

A) product or process standardization; lower prices
B) product or process dedifferentiation; higher prices
C) product or process standardization; higher prices
D) product or process dedifferentiation; lower prices

Question 75

The three types of innovative activity include all of the following EXCEPT

A) invention.
B) imitation.
C) implementation.
D) innovation.

Question 76

Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control.

A) opportunities; resources
B) opportunities; core competencies
C) threats; resources
D) threats; core competencies

Question 77

____ exist(s) when there is a need in the market that can be satisfied by new goods or services.

A) Potentiality
B) Market readiness
C) Entrepreneurial opportunities
D) Critical core competencies

Question 78

Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After six months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is

A) the ability to identify opportunities.
B) a corporate sponsor.
C) financial slack.
D) passion for his invention.

Question 79

Since it replaces existing products and methods of production, entrepreneurship is a process of

A) harnessing the human potential.
B) creative destruction.
C) creation of opportunity.
D) exploitation of innovation.

Question 80

Innovation creates a(an)

A) opportunity for a new product or process.
B) new product or process.
C) commercial product.
D) idea for potential exploitation.