Deck 13: Strategic Entrepreneurship

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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 5

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

Question 6

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

Question 7

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

Question 8

According to the chapter Opening Case, Amazon's success with the Kindle was largely attributed to its invention of the digital book.

Question 9

According to the chapter Opening Case, Amazon should expect a sustainable competitive advantage with the Kindle as its technology is not easily imitated.

Question 10

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

Question 11

The ultimate goal of entrepreneurial innovation is to create wealth.

Question 12

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 13

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 14

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

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

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

Question 17

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 18

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

Question 19

According to the chapter Opening Case, Amazon's 24% increase in earnings for the first quarter 2009 (over the first quarter 2008) was largely attributable to the Kindle.

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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 25

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

Question 26

The chapter Strategic Focus notes that firms based in the United States have focused too much on producing short-term returns, leading to an overemphasis on incremental innovations.

Question 27

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

Question 28

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

Question 29

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

Question 30

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 31

The chapter Strategic Focus notes that future technological breakthroughs in medical science, drugs, and information technology are likely to be made by U.S. firms.

Question 32

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

Question 33

According to the chapter Strategic Focus, in 2009, the United States fell to second position as the most competitive nation behind China.

Question 34

According to the chapter Strategic Focus, innovation is the most critical factor in a nation's competitiveness over time.

Question 35

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

Question 36

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

Question 37

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 38

Most innovations are incremental, not radical.

Question 39

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

Question 40

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 41

All of the following are correct about the Opening Case on Amazon's Kindle EXCEPT

A) Much of Amazon's success was attributable to Kindle being the first e-book.
B) Amazon's success in the first quarter of 2009 (a 24% increase in earnings) was attributed to the Kindle.
C) The Kindle technology is likely easily imitable and Sony already has a competitor e-reader on the market.
D) Amazon also earns a return from selling content for use on the Kindle in the form of e-books and other electronic content.

Question 42

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 43

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 44

The joint venture between Intel and Nokia that integrates functions of the smartphones and personal computers demonstrates that the best innovations are developed through an internal process.

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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 50

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

Question 51

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

Question 52

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 53

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 54

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

Question 55

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

Question 56

Since its innovations in Internet retailing, Amazon has implemented several innovations, especially in processes and approaches to marketing its products. Its most recent innovation, the Amazon Kindle, is described in the chapter Opening Case. Which of the following methods of generating innovations described in the chapter would the Kindle illustrate?

A) Innovation through international joint venture.
B) Internal innovation.
C) Innovation through cooperative strategies.
D) Innovation through acquisitions.

Question 57

As noted in the chapter 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 58

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

Question 59

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

Question 60

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

Question 61

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 62

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 63

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 64

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 65

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 66

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 67

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 68

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

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

Question 69

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 70

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 71

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 72

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 73

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 74

____ 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 75

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 76

____ 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 77

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 78

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 79

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 80

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