Deck 13: Strategic Entrepreneurship

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

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

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 15

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 16

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

Question 17

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

Question 18

Innovation is the means by which the entrepreneur creates wealth.

Question 19

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 20

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

Question 21

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

Question 22

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 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

Most innovations are incremental, not novel.

Question 28

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

Question 29

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

Question 30

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

Question 31

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 32

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

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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 38

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

Question 39

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

Question 40

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

Question 41

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 42

____ 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 43

____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 44

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 45

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 46

Because 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 47

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 6 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 48

3M's Cubitron II, described as "an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less elbow grease than any other abrasive on the market" is an example of:

A) imitation of a competitor's product.
B) a novel innovation.
C) an incremental innovation.
D) a(n) innovation created through a cooperative strategy.

Question 49

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 50

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

A) the receiving party has 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 51

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 52

Innovation creates a(n):

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

Question 53

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

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

Question 54

Entrepreneurs tend to have all the following characteristics EXCEPT:

A) willing to take responsibility for projects.
B) passion.
C) preference for certainly about projects.
D) optimism.

Question 55

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 56

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

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

Question 57

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

Question 58

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.  Which one of the following is true?

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 59

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 60

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 61

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 62

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 63

Internal corporate venturing does NOT involve:

A) autonomous strategic behavior.
B) induced strategic behavior.
C) strategic alliances.
D) product champions.

Question 64

The idea that it is "vital to sell the ideas to others in the organization so that innovations will be commercialized" is the rationale behind the use of:

A) product champions.
B) joint ventures.
C) strategic leadership.
D) cross-functional teams.

Question 65

____ involves internally developed incremental and novel innovations that result from deliberate efforts.

A) Internal corporate venturing
B) Autonomous strategic behaviors
C) Bottom-up strategic behaviors
D) Product championing

Question 66

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

A) incremental; novel
B) novel; incremental
C) alliance-generated; acquisition-generated
D) acquisition-generated; alliance-generated

Question 67

Research suggests that _________ is needed to encourage entrepreneurial behavior.

A) individualism rather than collectivism
B) a balance between individualism and cooperative behavior
C) collectivism rather than individualism
D) limited autonomy and incentives

Question 68

One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process:

A) is encouraged through a bottom-up or top-down process.
B) is encouraged by a product champion or an entrepreneur external to the organization.
C) relies on internal structure or existing strategy to encourage innovation.
D) is in a large or small organization.

Question 69

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 70

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 71

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

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

Question 72

The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation.

A) incremental; novel
B) novel; incremental
C) concentric; novel
D) novel; concentric

Question 73

WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in:

A) entrepreneurial incubation.
B) creative destruction.
C) internal corporate venturing.
D) cooperative innovation strategies.

Question 74

AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2 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 75

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 76

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 77

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 78

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 79

A negative effect of acquiring other firms for the purpose of innovation is:

A) innovations cannot be transferred between organizations.
B) the effect it can have on the firm's own ability to produce innovations.
C) innovations may not actually be present in the firm after the purchase is completed.
D) the acquired firm's employees usually leave.

Question 80

Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas.

A) top-down
B) horizontal
C) integrated
D) bottom-up