Deck 10: Innovating Through Strategic Entrepreneurship

Question 1

Dell's business model was based on a/an ____ innovation because it changed the means of selling personal computers from store-front retailers to selling directly to customers using the Internet.

A) mechanistic
B) external
C) administrative
D) process

Answer 1

D

Question 2

Organizations need to strike a balance between taking risks and understanding the trauma associated with too much failure.

Answer 2

True

Question 3

Incremental innovations are internal innovations because they build on the organization's existing knowledge base, whereas radical innovations are external innovations because they create new knowledge

Answer 3

False

Question 4

Google's innovations come about from all three methods to innovate: internal development, cooperative relationships, and acquisitions.

Question 5

Firms should innovate internally if they have a strong set of skills and capabilities to do so.

Question 6

Claudette is a well-educated human resources professional in the compensation area. She understands the importance of innovation in her area, and would like to be a leader of administrative innovation in her organization. Claudette is very realistic, intolerant of ambiguity, and willing to tackle projects only after they have the financial support of top management. Claudette has the personality profile of an entrepreneur.

Question 7

Although a firm can buy ownership of another firm's innovations and innovation capabilities, this is not considered true strategic entrepreneurship.

Question 8

Organizations pursue innovation because it eliminates the uncertainty inherent in the competitive marketplace.

Question 9

An organization-wide reliance on innovation and entrepreneurship within established firms is called

A) corporate entrepreneurship.
B) process innovation.
C) innovative entrepreneurship.
D) organizational innovation.

Question 10

Organizations pursue innovation because it

A) significantly reduces uncertainty.
B) guarantees competitive success in the marketplace.
C) is less challenging to implement in the current environment than other strategic alternatives such as cost reduction.
D) is positively linked to improved firm performance.

Question 11

Identifying opportunities is a strategic process while developing the capabilities needed to exploit them is an entrepreneurial process.

Question 12

The process through which existing products, methods of production, or ways of managing the firm are destroyed and replaced with new ones is called "creative destruction."

Question 13

The record of acquisitions with respect to promoting innovation shows that acquirers experience increased levels of innovation.

Question 14

In the sense used in the textbook, which of the following would be not classified as an innovation?

A) the development of a unique wind-resistant glass for commercial and residential buildings
B) implementing a method of marketing medical services to a new population
C) the creation of a new database management system for an organization
D) increasing the efficiency of a manufacturing plant by running two shifts of workers

Question 15

A new way of handling payroll and benefits would be considered an administrative innovation.

Question 16

One risk of innovating through acquisitions is that it may stifle the firm's ability to innovate internally.

Question 17

Proctor & Gamble's new tooth pastes are considered incremental innovations.

Question 18

Innovating by cooperating is accomplished primarily through acquisitions.

Question 19

Radical innovations are more likely to lead to substantial improvements in a firm's performance than are incremental innovations.

Question 20

George, an engineer who specializes in the fireproofing of buildings, has been laid off from his job with a large commercial construction firm because the firm has switched to an entirely new and better fireproofing process that makes George's knowledge and experience outdated. George's fate is the result of the process of

A) impersonal advancement.
B) creative destruction.
C) irresistible movement.
D) creative downsizing.

Question 21

All of the following are advantages for both parties of strategic alliances for innovation except sharing

A) the risk of the innovation.
B) all core capabilities of each firm.
C) the cost of developing the innovation.
D) the potential profits generated by the innovation.

Question 22

If a firm has a strong set of innovation skills and capabilities, it should pursue entrepreneurial opportunities through

A) acquisitions.
B) joint ventures.
C) strategic alliances.
D) internal innovation.

Question 23

Which of the following allows the fastest growth for a firm wishing to be on the cutting edge of a market?

A) organic growth through aggressive research and development
B) internal development of innovations
C) cooperative alliances with innovative partners
D) acquiring innovative companies

Question 24

Firms can buy ownership of another firm's innovations and innovation capabilities,

A) but this is not considered "true" entrepreneurship because the innovation was not created internally.
B) and this is considered a legitimate way for organizations to innovate.
C) and this requires little strategic expertise on the part of the purchasing organization.
D) which is a good route for firms that have difficulty in identifying entrepreneurial opportunities.

Question 25

What is the connection between entrepreneurs and innovation?

Question 26

For the last 9 years, SISI Designs, has been the outstanding innovator in its field. Its top design team has worked together closely all this time and has resisted lucrative offers from other firms to join them. Megalith, Inc., wishes to gain SISI's elite design team and integrate them with its own designers. Megalith will probably have most success it if

A) forms a strategic alliance with SISI.
B) forms a joint venture with SISI.
C) acquires SISI.
D) franchises SISI

Question 27

The cell phone was a radical innovation relative to

A) personal computers.
B) smoke signals.
C) landline phones.
D) morris code.

Question 28

____ is the organizational function most critical to successful internal innovation.

A) Research and development
B) Marketing
C) Engineering
D) Accounting

Question 29

Tyrone, the CEO of a small chemical research firm (TTK), has been approached by a very large company (MegaChem, Inc.) regarding a joint venture. Although there are many benefits to this relationship, such as MegaChem's ability to manufacture, market, and distribute the innovative toxin-testing kit that TTK has developed, Tyrone lies awake at night worrying about the upcoming decision. Most likely, Tyrone is worried that

A) MegaChem may steal TTK's knowledge.
B) MegaChem may force all the risk of the new product on to TTK.
C) TTK will have to provide most of the financing of the joint venture.
D) TTK would have had a better chance of success by going into the marketplace alone.

Question 30

Which of the following is not a characteristic of an entrepreneur?

A) accepting of uncertain outcomes
B) tolerant of ambiguity
C) focused on cost-benefit analyses
D) willing to take financial responsibility for their projects

Question 31

After identifying entrepreneurial opportunities, entrepreneurs turn their attention to

A) analyzing the competitive environment to minimize strategic error.
B) developing capabilities to create competitive advantages required to make a profit from them.
C) selecting a willing partner to help them pursue the opportunity.
D) identifying the next major opportunity.

Question 32

____ innovations build on the firm's existing knowledge base and existing products.

A) Radical
B) Organic
C) Incremental
D) Cooperative

Question 33

The destruction of businesses in New Orleans by Hurricane Katrina is a/an ____ for some firms.

A) innovational catastrophe
B) entrepreneurial opportunity
C) example of creative destruction
D) example of "Schumpeter's Rule"

Question 34

A radical innovation involves

A) revitalization of currently-unsuccessful products or services.
B) building on the organization's existing knowledge base.
C) new applications of proven technologies.
D) creation of new knowledge.

Question 35

Hector is a research scientist in the field of optics at TransOptic, Inc. His employer is in the middle of a series of acquisitions of other firms noted for innovations in optics. These acquisitions are expensive, and other areas of the firm have experienced budget reductions.

A) Hector's future is secure, as TransOptic is obviously committed to innovations in optics.
B) Hector should be concerned, as excessive acquisitions often cause a firm to neglect internal R&D.
C) This policy of cooperation with other cutting edge optical companies will enhance Hector's opportunities to innovate.
D) Organic growth such as this tends to erode the organization's ability to innovate internally. Hector would be wise to move to another firm.

Question 36

A redesign of an automobile tire to make it more resistant to punctures would be a/an ____ innovation.

A) radical
B) organic
C) breakthrough
D) incremental

Question 37

Identifying opportunities is a/an ____ process. Developing the capabilities needed to exploit them is a/an ____ process.

A) entrepreneurial, strategic
B) strategic, entrepreneurial
C) creative, administrative
D) administrative, creative

Question 38

Describe internal innovation, and the two types of internal innovation. What are the advantages and disadvantages of organizations relying on internal innovation?

Question 39

A firm that seeks to encourage innovation must support

A) rapid progress from idea to product.
B) risk minimization programs.
C) "quirky" employees.
D) failure of innovative products.

Question 40

Entrepreneurs are found e.g., research and development, engineering, and marketing.

A) in middle and upper management.
B) in the staff areas of the organization, rather than the line areas.
C) at all levels of the organization.
D) in the scientific and areas of the organization,

Question 41

What are the main characteristics of entrepreneurs? Speculate on the "downside" of the entrepreneurial personality within the typical organization.

Question 42

When would it be to an organization's advantage to use internal innovation rather than external innovation? When would it be best for an organization to use external innovation rather than internal innovation?