Deck 13: Strategic Entrepreneurship

Question 1

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

Answer 1

False

Question 2

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.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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.

Question 5

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

Question 6

Panera Bread uses the same type of equipment and ingredients to manufacture its artisan breads as do its competitors. Therefore its improvements in the manufacturing process do not constitute true innovations.

Question 7

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

Question 8

Google's culture encourages and supports continuous innovation. Therefore, Google does not have a business or corporate level strategy.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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 14

For entrepreneurial activities to take place, the firm must create a market which did not previously exist.

Question 15

Regarding competition and markets, entrepreneurship's primary focus is to capture most of the existing markets from less aggressive and innovative competitors.

Question 16

The ultimate goal of entrepreneurial innovation is to create wealth.

Question 17

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

Question 18

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

Question 19

Most large organizations innovate through cooperative strategies or strategic alliances rather than internal activities.

Question 20

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

Question 21

Whole Foods acquisition of other organic and health related retailers suggests that the firm is no longer seeking to be entrepreneurial via internal activities.

Question 22

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 23

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

Question 24

Strategic entrepreneurship can only be accomplished by actions and activities within the firm.

Question 25

Netflix developed a subscription-based model of DVD rental based on using the Internet and the mail instead of the retail location approach used by Blockbuster. This innovative subscription service would be correctly classified as a competence-destroying innovation because of its devastating impact on traditional movie rental businesses such as Blockbuster.

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

Most innovations are incremental, not radical.

Question 32

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 33

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

Question 34

Large established firms use R&D labs to create competence-destroying new technology.

Question 35

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

Question 36

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 37

Radical innovations are more likely to be developed in business units separate from the main organization than to be developed within the existing organizational structure.

Question 38

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 39

Firms operating in international markets tend to be less innovative because they are more concerned with expanding their existing competitive advantage to new locations than in developing innovations.

Question 40

Because Motorola's Razr phone was a radical innovation, all of the variants of the phone, such as the Razr2, are also correctly considered radical innovations.

Question 41

In its early life an innovation may be valuable and rare, but to protect its position in the market, the firm needs to

A) practice transformational leadership.
B) institutionalize the innovation.
C) implement cross functional teams in a horizontal organizational structure.
D) engage in strategic entrepreneurship.

Question 42

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 43

Products developed through ____ are often offered at lower prices with less differentiation than products developed through ____.

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

Question 44

Entrepreneurial activity is increasing globally.

Question 45

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

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

Question 46

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

Question 47

Innovation by imitation damages the existing product's competitive advantage by reducing its

A) rarity.
B) target market.
C) intrinsic worth.
D) usefulness to the consumer.

Question 48

____ 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 49

When an existing firm creates a new venture or develops an innovation, it is said to be engaging in

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

Question 50

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 51

The board of directors of Minerva Corporation has recognized the need for innovation. Several of the board members are strongly arguing for internal innovation, while other directors are in favor of acquiring another firm. The persons in favor of acquisition are probably

A) the CEO and chairman of the board.
B) outside directors with equity positions in the firm.
C) inside directors with equity positions in the firm.
D) outside directors without equity positions in the firm.

Question 52

Google promotes creativity and innovation and has a flat organizational structure with few managers where team members rotate as project leaders. The company is considered a relaxed and fun place to work with free snacks and meals and video games available for break times. Together, these attributes help to describe Google's

A) organizational culture.
B) institutional entrepreneurship.
C) continuous improvement process.
D) investment in human capital.

Question 53

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 54

Google has recently launched Google Labs, where the public is invited to test new product ideas and provide feedback on new technology and service prototypes. Which best describes Google Labs?

A) Google Labs exists to highlight new technologies to attract potential employees.
B) Google Labs was created to facilitate the transition from invention to innovation.
C) Google Labs is a marketing ploy.
D) The purpose of Google Labs is to show failed technologies to the public, therefore allowing them to be written off as R&D expenses on corporate taxes.

Question 55

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 56

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

Question 57

The primary goal of entrepreneurship is to

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

Question 58

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.

Question 59

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 60

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 61

Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of

A) incremental innovation.
B) invention.
C) imitation.
D) the use of social capital.

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

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusiness in the past. Now, the company plans to expand operations to Mexico and Central America in the next two years. To maximize the chances of success it is critical that the new executive

A) be of Hispanic descent.
B) have international experience.
C) possess an advanced degree in animal science.
D) have a background in managing agribusiness firms.

Question 64

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 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, in general, entrepreneurship declines as

A) individualism is emphasized in the culture.
B) collectivism is emphasized in the culture.
C) economic reforms allow more autonomy.
D) government reforms allow more political freedoms.

Question 67

Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore

A) increasing its costs and reducing its potential to succeed.
B) engaged in internal corporate venturing.
C) pursuing innovation through both internal and cooperative strategies.
D) not an innovative company.

Question 68

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 69

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

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

Question 70

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 71

Which of the following is true? For firms to be entrepreneurial, they require a culture with

A) an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations.
B) an exceptionally high level of collectivism.
C) a balance of individualism and collectivism.
D) an exceptionally high level of individualism.

Question 72

QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect

A) immediate wealth creation.
B) a long wait for an uncertain payoff.
C) a long wait for a high probability payoff.
D) a large payoff in the short-term with rapidly decreasing wealth generation in the longer run.

Question 73

Innovations that involve significant technological breakthroughs and create new knowledge

A) build incrementally on the firm's existing technologies and knowledge.
B) are the most common type of innovation.
C) involve substantial uncertainty and risk.
D) typically have clear market opportunities.

Question 74

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 75

Successfully creating innovations through internal means requires

A) a highly individualistic culture.
B) significant spending on R&D.
C) acquisitions of innovative firms.
D) venture capital.

Question 76

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 77

A person with an entrepreneurial mind-set has all the following characteristics EXCEPT he/she

A) values uncertainty in the marketplace.
B) is willing to take risks.
C) is objective about his/her projects.
D) is optimistic.

Question 78

A successful ____ innovation will be less risky but less profitable than a successful ____ innovation.

A) incremental, radical
B) radical, incremental
C) alliance-generated, acquisition-generated
D) acquisition-generated, alliance-generated

Question 79

____ is one of the reasons for the differences in rates of entrepreneurship among different countries.

A) Climate
B) Competitiveness
C) Culture
D) Constitution

Question 80

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.