Deck 4: Recognizing a Firms Intellectual Assets: Moving Beyond a Firms Tangible Resources

Question 1

In the current economy,reliance on the three traditional financial statements (income statement,balance sheet,and statement of cash flow)has increased.
A. Howell, an expert on the changing role of finance and accounting, suggests that the big three financial statements are about as useful as an 80-year-old Los Angeles road map.

Answer 1

False
Explanation: In 1978, the book value for U.S. companies was 95 percent of market value. However, market values and book values have diverged significantly. Within 20 years, the S&P industrials were, on average, trading at 2.2 times book value. Robert

Question 2

Knowledge workers are more loyal to their companies than traditional workers.

Answer 2

False
Explanation: Knowledge workers place professional development and personal enrichment (financial and otherwise) above company loyalty.

Question 3

Firms in more traditional industry sectors such as Nucor and General Motors have relatively low market-to-book ratios.This reflects their greater investment in knowledge resources and lower investment in physical resources.

Answer 3

False
Explanation: Firms in more traditional industry sectors such as Nucor and General Motors have relatively low market-to-book ratios. This reflects their greater investment in physical resources and lower investment in knowledge resources.

Question 4

Firms such as Apple and Microsoft will tend to have a higher ratio of market value to book value than industrial companies such as Nucor Steel.

Question 5

In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor.

Question 6

The more reliance a firm has on intellectual capital,the closer its book value will be to its market value.

Question 7

The Millennial generation expects employers to provide incentives to attract and retain them.A company that does this will have a competitive advantage.

Question 8

The importance of human capital has decreased in recent years.For this reason,many firms have placed greater attention on attracting talent,but not on developing or retaining it.

Question 9

Creation of new knowledge involves the continual interaction of explicit and tacit knowledge.

Question 10

A firm like Intel has a market-to-book value ratio that falls between Apple-Microsoft and Nucor-General Motors.This is because its low level of investment in knowledge resources is matched by a correspondingly huge investment in plant and equipment.

Question 11

The gap between company market value and book value is far greater for knowledge-intensive corporations than for firms with strategies based primarily on intangible assets.

Question 12

Social capital does not extend beyond the organizational boundaries to include relationships between the firm and its suppliers,customers,and alliance partners.

Question 13

In firms where knowledge and the management of knowledge workers are relatively important contributors to developing products,and services and physical resources are less critical,the ratio of market-to-book value tends to be much lower.

Question 14

Companies have found that referrals from their own employees are generally an effective approach to recruiting top talent.

Question 15

According to the text,for most of the 20^th century,managerial efforts were directed more toward the efficient allocation of labor and capital.

Question 16

The difference between the market value and book value of a firm is its social capital.

Question 17

Explicit knowledge is in the mind of employees and is based upon their experiences and backgrounds.

Question 18

One of the most important elements in a good employee is his or her attitude.Firms should follow the adage: hire for attitude,train for skill.

Question 19

Technical skills are a necessary and sufficient condition for hiring an employee.

Question 20

Millennials value hard work and will rarely use vacation time.

Question 21

Unique bundles of resources can contribute to employee competitive advantages.

Question 22

Developing social capital is risky for an organization because social capital is specific to individuals and remains with the employee,if he or she leaves the organization.

Question 23

The development of intellectual capital (that is,the friendships and working relationships among talented individuals)gains importance,because it helps tie knowledge workers to a given firm.

Question 24

If employees are working effectively in teams and sharing their knowledge and learning from each other,not only will they be less likely to add value to the firm,but they also will be more likely to leave the organization,because of the loyalties and social ties that they develop over time.

Question 25

Workforces that reflect demographic changes will become more homogeneous over the next few decades with regard to gender,race,ethnicity,and nationality.

Question 26

Knowledge-based resources tend to be more explicit in nature.

Question 27

The text suggests that talented professionals are typically most concerned about financial rewards.Money is the top reason why such employees take and leave jobs.

Question 28

A hiring agent offers a scientist approximately the same salary,facilities,equipment,and shared laboratory with 10 highly skilled and enthusiastic scientists.Part of the job is to collaborate with these peers and jointly develop promising drug compounds.This structure will create greater firm loyalty than one in which the hiring agent offers only monetary compensation.

Question 29

Human capital mobility caused by social relationships occurs when talent emigrates from an organization to form start-up ventures.

Question 30

Social network analysis can be used to help identify groups or clusters of individuals that comprise the network,individuals who link the clusters,and other network members.

Question 31

An internal work opportunity market for employees is one means of increasing employee retention.

Question 32

Hiring organizations can be amorphous,distant and threatening entities and therefore detractors for knowledge workers.

Question 33

The 360-degree evaluation and feedback system addresses many of the limitations of traditional approaches to evaluating human capital.

Question 34

When Michael Reene left Andersen Consulting,eventually he joined Third Millennium as CEO with a small salary and 20 percent ownership position.He brought others with him,who brought others with them.This was possible because of the Pied Piper effect.

Question 35

The most effective method of improving retention of top talent at a firm is to intensify its hiring efforts.

Question 36

Start-up ventures often are formed by mobile human capital talent.

Question 37

Social capital is found in the knowledge,skills,and abilities of individual employees.

Question 38

Hiring via personal networks is a trend in which job recruiters look for candidates at the crux of social relationships in organizations because they have the potential to bring valuable colleagues with them.

Question 39

Social capital helps organizations leverage human capital within and across the firm.

Question 40

The 360-degree evaluation systems are not useful due to the need to integrate large amounts of feedback.

Question 41

Developing and protecting social capital requires independence,in which individuals must spend most of their time working individually.

Question 42

The use of email can be distracting to employees.Some firms limit the time that employees spend using email.

Question 43

In social network analysis,a person who has no linkages to others in the network is labeled a conformist.

Question 44

Burt studied several hundred managers in the Raytheon supply chain group and asked them to write down ideas to improve the company supply chain management.Then he asked two Raytheon executives to rate the ideas.The conclusion: The best suggestions consistently came from managers who discussed ideas outside their regular work group.This is an example of a structural hole.

Question 45

In bridging relationships in social networks,one member is central to the communication flows in a group.

Question 46

Deliberate actions to reduce email output consist of forwarding all messages,but limiting the number of recipients.

Question 47

John wanted to set up a nurse-led preoperative assessment service intended to free up time for the doctors who previously led the assessments,reduce cancelled operations (and costs),and improve patient care.Carol,a well-respected nurse,had less seniority than John,but many colleagues relied on her advice about navigating hospital politics.She knew many of the people whose support John needed and she eventually converted them to the change.This is an example of a connector.

Question 48

The role of technology in the recruitment of human capital has lowered individual reliance on the use of social networks.

Question 49

Social networks such as Facebook do not facilitate increased interactions between members in a social network via Internet-based communications.

Question 50

Phone calls can be better than emails for providing real-time feedback on whether a message is being understood.

Question 51

Technology can be used successfully to leverage human capital and knowledge within organizations as well as with customers and suppliers beyond their boundaries.

Question 52

Effective collaboration requires overcoming four barriers: the not-invented-here barrier,the hoarding barrier,the search barrier,and the place-setter barrier.

Question 53

Top executives should use email for monthly blasts to employees to discuss company health and other specific issues.

Question 54

Facial expressions and body language make in-person meetings a rich method of communication,but not significantly better than email in most cases.

Question 55

From the individual perspective,social networks deliver three unique advantages: private information,access to diverse skill sets,and power.

Question 56

Connectors are people to have a unique ability to link people,ideas and resources and are rarely useful for business because they maintain only personal connections that are not transferable.

Question 57

One potential downside of building social capital in an organization is groupthink.This means everyone in the group thinks on his or her own and comes up with new ideas.

Question 58

Email can cause embarrassment,as explained by Marshall Goldsmith,executive coach.

Question 59

Sharing knowledge and information throughout the organization is important for conserving resources,developing products and services,and thwarting new opportunity creation.

Question 60

Closure,in contrast to bridging relationships,stresses the importance of ties connecting heterogeneous people.

Question 61

When an organization tries to improve cycle times in a manufacturing process,it finds far more value in problem solving shaped by the diverse experiences,perspectives,and learning of a tightly knit team (shared through knowledge flows)than in a training manual (knowledge stocks)alone.

Question 62

Explicit knowledge is generally known to everyone in the firm and is not a critical concern of management.

Question 63

Technology can be used to leverage human capital and knowledge within organizations as well as with customers and suppliers beyond their boundaries.

Question 64

At Accenture,the knowledge of its consultants has been codified and stored in electronic repositories and,therefore,cannot be employed in many jobs by their huge number of consultants.

Question 65

The use of communication platforms such as the Cisco Integrated Workforce Experience (IWE)permits companies to push out information where it is needed.

Question 66

According to the text,effective e-teams identify group members with a proper balance of technical and interpersonal skills.

Question 67

Most of the interactions among members of e-teams occur through electronic communication channels such as fax machines and groupware tools such as email,bulletin boards,chat,and videoconferencing.

Question 68

The potential for process losses tends to be less prevalent in e-teams than in traditional teams because the geographic dispersion of members increases the complexity of establishing effective interaction and exchanges.

Question 69

Cisco launched Integrated Workforce Experience (IWE)in 2010.It is a social business platform designed to facilitate internal and external collaboration and decentralize decision making.It functions much like a Facebook wall in that a real-time news feed provides updates on employee status and activities as well as information about relevant communities,business projects,and customer and partner interactions.This is a reason to totally eliminate email.

Question 70

Generally,teams suffer process loss because of low cohesion,low trust among members,a lack of appropriate norms or standard operating procedures,or a lack of shared understanding among team members about their tasks.

Question 71

Since electronic teams (e-teams)seldom meet face-to-face,it is not important for them to be concerned with how to combine individual contributions effectively.

Question 72

The management of intellectual property (IP)involves,besides patents,contracts with confidentiality and non-compete clauses,copyrights,and the development of trademarks.

Question 73

E-teams do not have the potential to acquire a broader range of human capital or the skills and capacities that are necessary to complete complex assignments.

Question 74

Intellectual property rights are easier to define and protect than property rights for physical assets (e.g.,plant and equipment).

Question 75

Given the narrower boundaries associated with e-teams,members and leaders generally have limited access to a wider range of social contacts than would be typically available in more traditional face-to-face teams.

Question 76

One should only rely on communication platforms and never on email for communicating information.

Question 77

Technology can also enable much more sophisticated forms of communication in addition to knowledge sharing.

Question 78

One of the challenges of knowledge-intensive organizations is to capture and codify the knowledge and experience that,in effect,resides in the heads of its employees.This is known as explicit knowledge.

Question 79

Once a knowledge asset (e.g.,a software code)is developed and paid for,it can be used many times at very low cost as long as it does not have to be substantially modified each time.

Question 80

Process losses prevent teams from reaching high levels of performance because of inefficient interaction dynamics among team members.