Course Introduction
Innovation Strategy Practice
Questions
Innovation Strategy explores the principles, frameworks, and tools businesses use to develop and implement innovative ideas for sustainable competitive advantage. The course examines how organizations identify opportunities, manage creativity, invest in research and development, and bring new products, services, or processes to market. Students analyze real-world cases, learn how to foster an innovative organizational culture, assess risk, and develop strategies to protect and capture value from innovation. Emphasis is placed on integrating innovation into overall business strategy and understanding its impact on long-term growth and industry disruption.
Recommended Textbook
Strategic Management of Technological Innovation 5th Edition by Schilling
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Chapter 1: Introduction
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Q1) Which of the following is true of externalities?
A) All externalities are negative in nature.
B) They are only borne by individuals responsible for creating them.
C) Technological innovation results in complete eradication of negative externalities.
D) Externalities can be in the form of benefits reaped by individuals.
Answer: D
Q2) Kroters Inc.decides to set up its manufacturing plant near Woodsville,a small community of farmers.Kroters is most likely to create a positive externality for the community members of Woodsville if it:
A) increases its product life cycle based on consumer demand.
B) sets up an organic farm near Woodsville.
C) follows the Solow Residual.
D) reduces the rate of product obsolescence for Woodsville residents.
Answer: B
Q3) According to the concept of the innovation funnel,one new idea is usually responsible for several new products.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Sources of Innovation
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Q1) Explain the concept of technology spillovers.What are the factors affecting the likelihood of technological spillovers?
Answer: Technological spillovers are a positive externality from R&D resulting from the spread of knowledge across organizational or regional boundaries.Technology spillovers are a significant influence on innovative activity.Whether R&D benefits will spill over is partially a function of the strength of protection mechanisms such as patents,copyrights,and trade secrets.Since the strength of protection mechanisms varies significantly across industries and countries,the likelihood of spillovers varies also.The likelihood of spillovers is also a function of the nature of the underlying knowledge base and the mobility of the labor pool.
Q2) The terms research and development represent different kinds of investment in innovation-related activities.
A)True
B)False
Answer: True
Q3) Innovation often originates with those who create solutions for their own needs. A)True
B)False
Answer: True
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Page 4
Chapter 3: Types and Patterns of Innovation
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Q1) In the context of s-curves in technological improvement,performance improvement in the early stages of a technology is rapid if the fundamentals of the technology are poorly understood.
A)True
B)False
Answer: False
Q2) Firms cannot influence the shape of the s-curve through their development activities.
A)True
B)False Answer: False
Q3) Ron is highly skeptical about new ideas and products.He has not yet bought a satellite television subscription for his home because he is still unsure of its benefits.Ron is also concerned about the expense of getting such a connection.According to this description,Ron:
A) is an innovator.
B) belongs to the early majority.
C) is a laggard.
D) is an early adopter.
Answer: C
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Chapter 4: Standards Battles and Design Dominance
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Q1) How is a dominant design likely to influence the nature of the technological discontinuity that will eventually replace it?
Q2) When are winner-take-all markets good for consumers?
A) When monopoly costs exceed the value of network externality returns
B) When monopoly costs exceed the value of technological utility
C) When the monopoly cost curve is extremely steep
D) When the value of technology utility and network externality returns exceeds monopoly costs
Q3) Future Electronics Inc.'s body scanning machine has been adopted by majority of the healthcare market.As a result,the company demands a high price from its customers,which mainly include hospitals.It is not investing much on innovation and its product variety is also very low.This cost borne by the users in this case is referred to as:
A) marginal cost.
B) social cost.
C) monopoly cost.
D) deferred cost.
Q4) Technologically superior products do not always win in the market.
A)True
B)False
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Chapter 5: Timing of Entry
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Q1) The initial cost of a good itself can be a switching cost.
A)True
B)False
Q2) Jupiter Inc.,a software firm,is starting to face competition from the new entrant in its market,Coral Inc.Jupiter wants to prevent its existing customers from switching to Coral's newly developed software.Which of the following measures should Jupiter adopt to achieve its objective?
A) Ensuring that customers find its software simpler and more convenient to use than that of Coral
B) Keeping the initial cost of its software higher than that of Coral's
C) Keeping the prices of the complements required for its software higher than that set by Coral
D) Ensuring that fewer complementary products are available for its products in comparison to that for the products of Coral
Q3) Early leaders are firms that are the first to enter a market.
A)True
B)False
Q4) What assumptions underlie the use of timing of entry strategies into the market for new products?
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Chapter 6: Defining the Organizations Strategic Direction
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Q1) In general,the more firms competing that are of comparable size,the more competitive the industry will be.
A)True
B)False
Q2) Which of the following statements is true of Porter's five-force model?
A) It states that the attractiveness of an industry is unaffected by the industry's degree of rivalry.
B) It fails to acknowledge the role of substitutes for customers.
C) It is often used in practice to assess a specific firm's external environment.
D) It states that oligopolistic industries are less competitive if firms choose to engage in price wars.
Q3) Ample Espresso Corp.is a coffeehouse located across from Tian's Kitchen,a restaurant.According to Porter's five-force model,the services and products provided by both are most accurately classified as:
A) complements.
B) competitors.
C) substitutes.
D) intermediates.
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8
Chapter 7: Choosing Innovation Projects
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Q1) Which of the following is true of the internal rate of return of a project?
A) The discounted cash flow estimates are only as accurate as the original estimates of the profit.
B) It maximizes the net present value of the investment.
C) It neglects the timing of investment and cash flows.
D) It does not discriminate against projects that are long term or risky.
Q2) Which of the following is a disadvantage of using internal rate of return for assessing a project?
A) It fails to take into account the time value of money and risk.
B) It cannot be calculated by trial and error.
C) It discriminates heavily against long-term and risky projects.
D) It fails to provide concrete financial estimates.
Q3) Breakthrough projects involve development of products that incorporate revolutionary new product and process technologies.
A)True
B)False
Q4) Data envelopment analysis (DEA)utilizes linear programming.
A)True
B)False
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Chapter 8: Collaboration Strategies
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Q1) Allured Cosmetics Corp.enters into a contractual agreement with Pure Cosmetics Inc.,a manufacturing firm in the West Coast.According to the contract,Pure Cosmetics can use the manufacturing processes of Allured Cosmetics to produce cosmetics in return for a specific fee.Pure Cosmetics is bound to use the manufacturing process only to make complementary products for the cosmetics manufactured by Allured Cosmetics.This collaborative arrangement is most accurately classified as _____. A) licensing B) outsourcing C) a joint venture D) capability complementation
Q2) Which of the following statements is true of contract manufacturing?
A) It requires companies to increase its labor force to meet the scale of market demand. B) It requires firms to meet the scale of market demand by committing to long-term capital investments. C) It enables a firm to tap the greater economies of scale. D) It decreases organizational responsiveness to the environment.
Q3) What are the advantages and disadvantages of collaborating for research and product development?
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Chapter 9: Protecting Innovation
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Q1) The scientists at Brainstorm Inc.,a private medical research firm,have come up with a remarkable method for curing cancer.This cancer treatment technology is well protected and cannot be easily duplicated.Based on this information,it would be most accurate to say that this technology:
A) cannot be patented.
B) is easily imitable.
C) is not socially complex.
D) has a high degree of appropriability.
Q2) After much research,Angela has designed a new automobile tire with a unique polycarbonate exterior that cannot be punctured.In the context of U.S.patent law,which of the following statements would be true for this invention?
A) It can be patented as it is useful, novel, and not obvious.
B) It can only receive a plant patent.
C) It cannot be patented because tires are intangible products.
D) It cannot be patented as it is only eligible for a copyright protection.
Q3) External development efforts typically lack the coordination of internal development. A)True
B)False
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Chapter 10: Organizing for Innovation
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Q1) As a firm grows,it becomes more difficult to exercise direct managerial oversight.
A)True
B)False
Q2) ErgoWorld Inc.manufactures office furniture.The company is considering adopting a modular production system.A modular system would offer greater value to ErgoWorld if:
A) most customers are likely to agree on a single product configuration.
B) its customers prefer to upgrade their products by replacing their entire system.
C) its customers are willing to pay a premium price for extreme customization and personalization.
D) its customers have heterogeneous demands that need to be met in a cost-effective way.
Q3) Large and hierarchical firms disaggregate in order to:
A) lengthen new product development cycles.
B) prevent large-scale downsizing.
C) become more responsive to technological changes.
D) curb the entrepreneurial culture within them.
Q4) Explain why a mechanistic organizational structure stifles creativity.
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Chapter 11: Managing the New Product Development Process
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Q1) Which of the following measures assesses the ratio of a firm's total profits from new products to its total expenditures?
A) Return on innovation
B) Average cycle time of the innovation
C) Percentage of development projects meeting deadlines
D) Percentage of development projects within the estimated budget
Q2) Delta Cleaning Equipment Corp.is experimenting with a faster and quieter machine to polish floors.To develop this concept,the company is contemplating using the lead user method of concept development.How does this method work? What are its advantages?
Q3) A sequential process has an early warning system to indicate that planned features are not manufacturable.
A)True
B)False
Q4) Parallel development processes are universally endorsed.
A)True
B)False
Q5) What are the risks of championing?
Q7) What is a partly parallel development process? Is it universally used? Page 13
Q6) What is quality function deployment (QFD)? What are its advantages?
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Chapter 12: Managing New Product Development Teams
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Q1) June is a member of a new product development team.Her supervisor asks her about her experience in the team,and she replies,"Our team seems to be suffering from homophily." This statement means that:
A) team members are not exerting the expected amount of effort.
B) team members spend all their time chatting about their personal issues.
C) team members are only interested in talking to people who are senior to them.
D) team members only like other people whom they perceive as being similar to themselves.
Q2) Which of the following statements is true of heavyweight teams?
A) Project managers of heavyweight teams lack the authority to command resources.
B) Heavyweight teams are always temporary.
C) In heavyweight teams, members are collocated with the project manager.
D) Heavyweight teams are considered inappropriate for platform projects.
Q3) Heavyweight teams are suitable for platform projects.
A)True
B)False
Q4) A contract book must be developed before a project charter can be written.
A)True
B)False
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Chapter 13: Crafting a Deployment Strategy
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Q1) Blue Water Publication Corp.is planning to sell its books solely through its Web site BlueWaterbooks.com.By doing so,it ceases to require wholesalers and retailers.This is most accurately an example of:
A) disintermediation.
B) backward compatibility.
C) value added reselling.
D) bundling arrangement.
Q2) Firms can accelerate distribution of a new technology by bundling it with another product that is already in wide use.
A)True
B)False
Q3) In the context of a firm's product diffusion curve,when there is a chasm between early adopters and early majority customers:
A) the firm must reduce its production capacity.
B) the firm should improve its efficiency to target the mass market.
C) the early majority market becomes saturated.
D) the early majority market is ready to buy the product.
Q4) In the context of Gladwell's theories,define the terms connectors,mavens,and salespersons.
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