NETW 583/ NETW583 Final Exam MCQs Test Bank_ Fall 2021/2022.

(TCO A) The relationship between speed of innovation and product obsolescence is direct (as innovation speed increases, products become obsolete more quickly). inverse (as innovation speed increases, products become obsolete more slowly). indirect (there is an effect, but it cannot be directly determined). nonexistent (there is no relationship at all). (TCO A) While rapid innovation often benefits society, it often makes success for companies more complicated as they strive to keep up with the latest innovations. profitable as long as they do not innovate themselves, but rather use innovations of others to their advantage. easier since innovation always makes things simpler. less likely because customers will not be willing to pay as much for goods and services. (TCO B) In the 1970s, Church & Dwight developed Arm & Hammer Baking Soda Deodorants. Within 6 months, the product was very successful and another company released Arm & Hamer Deodorant to try to capture some of the market created by Church & Dwight. Can Church & Dwight prevent the maker of Arm & Hamer from selling their product? Probably, because the other company's brand name is very similar to the trademark of Church & Dwight. No, the other company's brand is different enough to withstand any challenge. No, you cannot protect a brand name legally, only the product itself. It is impossible to say using the information provided. (TCO B) The scientists at Gerusa are former award-winning Soviet scientists who have all focused their attention on a cancer treatment. Working together, they have come up with remarkable solutions. The knowledge base they have is explicit. is easily imitable. is socially complex. has a low degree of appropriability.(TCO C) For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the ___ costs were too high. transactional opportunity marginal switching (TCO C) Natal Technologies is developing a superior ultrasound machine for which it is required to invest $800,000. Based on the company's analysis, the product will generate $200,000 from the first year till perpetuity. According to this, the payback period is ______. 10 years 6 years 3 months 4 years (TCO C) Sheila Kessler is a retired millionaire who still likes to invest in new businesses and help other people get started in business. She would be called a(n) loan shark. angel investor. first generation mentor. venture investor. (TCO D) Schumpeter said that large firms are likely to have a more difficult time raising funds. lower returns with lower sales volumes because fixed costs of R&D are high. better-developed complementary activities that enable them to be more innovative. poorer global reach due to bureaucracy. (TCO E) An antichampion isa person who is out to sabotage a new project. one who plays the role of the devil's advocate. a person who uses subjective criteria. a person in a competing firm who sabotages market tests by promoting his company's products more heavily than normal. (TCO E) Your boss does not favor the use of cross-functional teams. How would you respond to this? The use of cross functional teams can result in products that do not satisfy customers' needs. A cross-functional interface can help better ensure a product's quality and price. Cross-functional teams usually result in products that cannot be engineered. Cross-functional teams necessitate the need for back and forth iterations between different stages in the product development process leading to longer cycle times. (TCO F) Which of the following is an advantage of making a new generation of technology backward compatible? Consumers will have to buy completely new complements. Consumer switching costs may be lower because they anticipate using their existing complements. Competitors will be unable to imitate the company's strategy of making the technology backward compatible. It is typically less expensive to make a new generation of technology backward compatible than to not make it backward compatible. (TCO F) Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. When Mallard developed a computerized prosthetic that would render its previous prosthetics obsolete, it decided to withhold it from the market probably so that competitors would have time to catch up. it could further develop the product and increase its leadership position. it would not cannibalize the sales of its current prosthetics. people could get used to the idea of a computerized prosthetic.Question 1.1. (TCO A) The relationship between speed of innovation and product obsolescence is direct (as innovation speed increases, products become obsolete more quickly). Question 2.2. (TCO A) While rapid innovation often benefits society, it often makes success for companies more complicated as they strive to keep up with the latest innovations. Question 3.3. (TCO B) The scientists at Gerusa are former award-winning Soviet scientists who have all focused their attention on a cancer treatment. Working together, they have come up with remarkable solutions. The knowledge base they have is socially complex. Question 4.4. (TCO B) Absorptive capacity increases a firm's future ability to assimilate information. Question 5.5. (TCO C) Natal Technologies is developing a superior ultrasound machine for which it is required to invest $800,000. Based on the company's analysis, the product will generate $200,000 from the first year till perpetuity. According to this, the payback period is 4 years Question 6.6. (TCO C) For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the switching costs were too high. (Points : 5) Question 7.7. (TCO C) Sheila Kessler is a retired millionaire who still likes to invest in new businesses and help other people get started in business. She would be called a(n) (Points : 5) angel investor. Question 8.8. (TCO D) Gerusa has developed a technology called Photodynamic Therapy (PDT) for cancer treatment. The scientists who started the company want to learn how to set up clinics and actually treat patients with this technology; hence they want to begin opening clinics quickly. To meet this objective Gerusa should (Points : 5) collaborate with a company who has gone through a similar process to learn from them. Question 9.9. (TCO E) Bob King is a Senior Vice President at Associated Grocers, and has been assigned to be the project champion for the development and implementation of a software pricing program. Both the buying department and thepricing department have determined that the new software pricing program is worthless, but they do not tell Bob. This is probably because (Points : 5) of Bob's seniority. Question 10.10. (TCO E) Kate's supervisor called her to talk about her participation in a new product development team. The supervisor told Kate she had been engaging in social loafing. This meant that Kate (Points : 5) would not put much effort into the team's work because it was a large team and she figured her effort would not be needed or recognized. Question 11.11. (TCO F) When eBay developed its online auction service, a need arose for making online payments, and PayPal was born. This is an example of how moving commerce online (Points : 5) can create additional intermediaries. Question 12.12. (TCO F) If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products, the firm can (Points : 5) prevent competitors from achieving a significant technological gap. Intel pioneered microprocessor development in the 1970s and introduced its microprocessor well ahead of competitors. According to the classification scheme provided in the text, Intel would be classified as a(n) first mover If the aspects that customers have come to expect in a technology are difficult for competitors to imitate, a technology leader can yield sustained monopoly rents. Joan had been using WordPerfect 5.1 for DOS for several years and was quite an expert in it. When her boss wanted her to change to a Windowsbased system, Joan told him that it would slow her down and it would cost a lot of money to be trained on using such a new system. The is an example of high switching costs. Which of the following scenarios describes the benefits of being a firstmover in the market? A radio station that is given authority over large portion of radio spectrum. Which of the following statements is true regarding first movers? First movers can preemptively capture scarce resources.The tendency of firms to be slow to respond to changes in the industry environment due to their large size, established routines, or prior strategic commitments to existing suppliers and customers is known as incumbent inertia. U-Totem was one of the early entrants into the convenience market boom of the 1970s and enjoyed huge success in the Arizona market. However, these stores did not sell gasoline. When later entrants combined gasoline sales with convenience markets, U-Totem was slow to respond and lost market share. This is an example of incumbent inertia. When McDonalds first moved into Russia, it had to teach farmers how to grow better potatoes and cattle, and bakers how to make hamburger buns. This is an example of an undeveloped supply channel. TechSense was the first company to introduce a GPS-enabled shoe into the market and shoe sales are rapidly increasing. Which of the following is most likely to be true for TechSense? TechSense has incurred significant research and development expenses. Which of the following is an advantage of being a later entrant into a market? Firms do not have to invest in exploratory research. Which of the following is not true regarding first movers? They can exploit incumbent inertia. When Fisher Athletics wanted to provide better landing mats for gymnasts, it asked its supplier—North Carolina Foam Industries (NCFI) — to come up with a higher quality foam to use in its mats. NCFI represents a(n) enabling technology for Fisher Athletics. If you enter the market too early, the risk is that the technology (or complements) will be underdeveloped. In the video game console industry, Magnavox was the first mover but was not the winner. Atari and Nintendo came up with their respective gaming consoles soon afterwards. They were early moversIn the personal computer operating system market Microsoft, who was a(n) follower became the winner in the market place. Which of the following statements is true regarding customer preferences? Customers themselves are unsure about the importance of different features offered by a technology. A delayed entry into the market is preferred when customer preferences are unknown. A technology that makes a dramatic improvement over previous generations or different technologies that serve similar functions will more rapidly gain customer acceptance. In which of the following scenarios would an earlier entry into the market be beneficial? A firm that has developed a new line of vacuum cleaners that can be preprogrammed to function automatically without any user involvement. Jackson Laboratories has come up with a new diabetic blood sugar monitoring device that does not require patients to prick their fingers. It has determined that this new technology will offer a great advantage to customers, that no other competitors possess the capabilities to deliver it, and that the product will not be easily imitated by others. Jackson should enter the market whenever it wants to. Jackson Laboratories has come up with a new diabetic blood sugar monitoring device that does not require patients to prick their fingers. It has determined that this new technology will quickly become the dominant method used by diabetics and will replace the old blood sugar monitoring devices Jackson currently sells. However, competitors might be able to easily imitate the device. Jackson should enter the market early.Lee Peterson has invented a new product that detects water leaks due to broken pipes and sends out an alarm similar to a smoke alarm. However, Lee has very little personal money to invest in improving this new product. Seeing his initial technical success, major corporations have now entered the market with competing products. What will be the probable destiny of Lee Peterson’s company? His company will most likely be overtaken by a larger company or it will go out of business. Acme Products was late to enter the desk height adjuster market. However, Acme has vast financial resources compared to the 2 other small companies in this new market. Which of the following best represents Acme’s chances of success? Excellent because it can outspend the other companies in further development and marketing of the product. When S.C. Johnson Company came up with a new hair care product that repaired split ends, it spent money on market education and provided incentives to wholesalers and retailers to sell the product. This strategy will accelerate the early adoption of this innovative product. In the past, Apex Systems had successfully released 10 new products in the shoe gliding market. Today it is recognized as the market leader. It has just released a new shoe glider called SmoothShoe. How difficult will it be for Apex to get distributors to take on this new product? Not very difficult because they will trust in Apex’s past record. Apex is the leader in the shoe glider market while Summit is a new startup company. Both have just released new generation shoe gliders. Which entry is likely to be adopted more quickly? Apex A firm with fast cycle development processes can introduce a refined version of a competitor’s technology. When Johnson Tanning Products finally developed a superior sun tan lotion, it decided that the best time to introduce it was in the spring. This would help take advantage of seasonal effects.When Foxie, Ltd. developed a new facial cream that buyers in California loved, it delayed its entry into that market by another 6 months. Foxie had just moved from a small facility employing 20 persons to a larger production facility that could accommodate 120 employees. It appears the delay in going into California was so that its introduction could coincide with production capacity. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. When Mallard developed a computerized prosthetic that would render its previous prosthetics obsolete, it decided to withhold it from the market probably so that it would not cannibalize the sales of its current prosthetics. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. Mallard developed a computerized prosthetic arm and has been advised by a consulting firm to “embrace cannibalization.” This means that the company should introduce the new technology right away and increase its market lead while taking away profits from its present product. If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products, the firm can prevent competitors from achieving a significant technological gap. If Circle Systems makes its smartphone technology open, it will attract more software companies to write programs for use on its smartphone. The downside to this is the underlying platform used by Circle could become fragmented. Which of the following is an advantage of making a new generation of technology backward compatible? Consumer switching costs may be lower because they anticipate using their existing complements. When Sports Paradise saw yet another sports bar open up across the street it knew that it would have to lower its price again to stay in business. The city already had too many sports bars and Sports Paradise intended onbeing one of those left after the inevitable shake out. Sports Paradise will be following a survival pricing strategy. Which of the following is a predictable competitive response to high initial prices? Competition has an incentive to enter the market T.H.E. Computer Company buys computer components and assembles them into a computer that it sells under its own brand name. T.H.E. is a(n) original equipment manufacturer (OEM). When eBay developed its online auction service, a need arose for making online payments and PayPal was born. This is an example of how moving commerce online can create additional intermediaries. When Microsoft released Word for Windows, WordPerfect had about 80 percent of the word processing market. Microsoft donated free copies of Word to colleges and universities. This is an example of a(n) contract or sponsorship. Biogyn Lifesciences wanted to enhance the adoption of its new diagnostic substances by hospitals. So, it made an agreement with the dominant producer of glass slides and test tubes to have its diagnostic substances sold to hospitals in a package with the glass slides and tubes. This is known as a bundling relationship. Multiplex Graphics Company has just released a graphics enhancement software program that it wants potential users to experience. Which of the following media would be most appropriate for this product? Television Which of the following is an advantage of using the Internet for advertising over other media? It has interactive possibility.Which of the following is true about the different advertising media? Newsletters have a wide reach. Emily was looking for a firewall for her home computer. She finally decided on a particular brand because it also included a free anti-spam package to block unwanted email as a bonus. This is an example of a premium. When eBay offered special auctions with all proceeds going to the families of victims of the September 11, 2001, terrorist attack on the World Trade Center, everyone thought it was a great gesture. This is an example of publicity. Jones Enterprises wanted to tailor its advertising for its new Financial software to early adopters. It needs to use an advertising message and medium that enables Jones to provide high technical content. When a firm wants to shift its advertising focus from early adopters to the early majority, its advertising should change from emphasizing technological features to ease of use. When there is a chasm between the early adopters and the early majority is a firm’s product diffusion curve the firm focuses on improving its efficiency to target the mass market. After completing the first draft of a textbook manuscript on Data Mining of Information, McGraw-Hill asked leading university professors to review the book and give feedback. The publisher was not only finding ways to improve the book, but also pre-marketing it to known opinion leaders. Ronnie is on the Board of Directors or Trustees of seven different nonprofit organizations and is a member of four different service clubs. Everyone in town seems to know Ronnie and he seems to know everyone. He could be called a connector.When anyone in Metropolis wants to know where to buy a computer and at the best price they all turn to Francis who can always give the answer. Francis is a maven. Gary is a member of a service club in Franklinville. When the club wants to promote a cause or have a fund raising event, Gary is put in charge because everyone likes listening to him speak and he seems to get everyone excited about the event. Gary is a salesperson. A company’s track record is a good indicator of its likelihood of success when introducing a new product. 16. As a result of the rapid pace of innovation, the time between a product’s introduction and its withdrawal from the market a. has become shorter. 17. While rapid innovation often benefits society, it often makes success for companies a. more complicated as they strive to keep up with the latest innovations. 18. After Yahoo! was introduced as an easy way to search the World Wide Web, it was followed by other search engines, some of which had improved or faster ways to search the web. This is an example of how one innovative idea can c. stimulate more innovations and create a new market. 19. The relationship between speed of innovation and product obsolescence is a. direct (as innovation speed increases, products become obsolete more quickly). 20. Most studies suggest that a. technological innovation helps to increase a country’s gross domestic product. 21. As companies adopt new technologies and increase their pace of innovation, the results may be b. rapid product introductions.22. The Solow Residual refers to a. the increased amount of output achievable from a given quantity of labor and capital due to technological innovation. 23. The ______ of an economy is its total annual output, measured by final purchase price. b. gross domestic product 24. In a series of studies of economic growth conducted at the National Bureau of Economic Research, economists showed that the historic rate of economic growth in GDP could not be accounted for entirely by growth in labor and capital inputs. Consensus emerged later that _____ helped explain this gap. a. technological change 25. Which of the following statements about being a successful innovator is most likely to be true? c. You need clearly defined strategies and processes. 26. Electronic waste results from the disposal of technological goods. This is an example of b. a negative externality. 27. Technology in its purest form is b. knowledge to solve our problems and pursue our goals. 28. According to the text, firms that rush headlong into new product development usually d. choose projects that are a poor fit with their resources and objectives. 29. If you were the director of R&D at a large pharmaceutical company, how might you apply the concept of “the innovation funnel?” b. Encourage more new ideas because it takes thousands of new ideas to come up with one successful new product. 30. A firm’s innovation projects should satisfy all of the following, exceptd. be able to produce immediate returns. 31. A firm’s new product development process should a. maximize the likelihood of projects being both technically and commercially successful. 32. If an idea can be shown to be technologically feasible, its chances of commercial success b. have improved. 33. Out of all the innovative ideas that come forth, how many become successful products? a. Very few 21. 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. c. It is often used, in practice, to assess a specific firm’s external environment. d. It emphasizes the stakeholder management issues that are likely to impact the firm’s financial performance. 22. Mr. Crunchy Inc. is a firm that manufactures potato chips. With more and more people becoming health conscious, it made no profit in the last quarter. But with large initial investment, factories, and the high-technology chips-making machines, the firm found it difficult to abandon the industry. According to Porter’s five-force model, the company was facing a(n): a. vertical integration. b. exit barrier. c. horizontal integration. d. substitute threat.Chapter 06 - Defining the Organization's Strategic Direction 6-3 23. Many people dream of opening their own restaurant someday and restaurant supply houses provide easy finance options for equipment purchases. Also, a high growth is projected for the restaurant industry sector. According to Porter’s five-force model, this is one of the reasons why the _____ in this industry is so high. a. failure rate b. exit barrier c. threat of potential entrants d. technological breakthrough 24. According to Porter’s five-force model, the more suppliers there are, providing similar supplies to a particular industry: a. the less powerful those suppliers will be. b. the more powerful those suppliers will be. c. the higher is the level of vertically integration in the industry. d. the less powerful buyers will be. 25. Ceramic Customs Co. requires a specific type of ceramic to make custom-made tiles. Since only one supplier makes that particular ceramic, the firm is forced to source all of its supplies from it. The firm tried negotiating the price at which it purchases the material, but failed to get any reduction on the cost. This is because: a. the supplier has more bargaining power than the firm. b. the supply is unlimited. c. the supply exceeds the demand. d. the industry has barriers to entry. 26. According to Porter’s five-force model, if a buyer can threaten to backward vertically integrate, it will:a. decrease the buyer’s bargaining power. b. increase the buyer’s bargaining power. c. increase the supplier’s bargaining power. d. lower the threat of entry into the industry. 27. Factors that make it difficult or expensive to change suppliers or buyers are referred to as _____ costs. a. transactional b. opportunity c. marginal d. switching Chapter 06 - Defining the Organization's Strategic Direction 6-4 28. Perfecto Espresso is chain of coffee shops in the United States. Earlier it used to source its coffee from several coffee manufacturers. However, recently it started a coffee manufacturing firm under its own brand name. This is an example of: a. forward vertical integration. b. backward vertical integration. c. horizontal integration. d. substitution. 29. Allure Fabrics supplied cotton, linen, and silk fabrics to various designer wear boutiques in and around Florida. The firm recently launched a boutique in Florida, under its brand name, which sells women’s fashion apparel. Allure Fabrics is practicing:a. forward vertical integration. b. backward vertical integration. c. horizontal integration. d. substitution. 30. Scripts & Scrolls Co. supplies printing paper to select publishing houses. When its customers asked for a discount in the cost of supplies, the company had to oblige fearing that the customers might withdraw pending contracts. This shows the increased: a. bargaining power of buyers. b. bargaining power of sellers. c. threat of substitutes. d. vertically integration of buyers. 31. Perfecto Espresso is a coffeehouse located opposite Ching’s Kitchen, a restaurant. According to Porter’s five-force model, the services and products provided by both are most likely to be classified as: a. complements. b. competitors. c. substitutes. d. intermediates. 32. Sam’s Sugar Co. is a leading cane sugar manufacturer. The company faced a threat of going out of business when a rival company introduced a zero-calorie sweetener to replace the high-calorie cane sugar. According to Porter’s five-force model, the two products are: a. complements. b. supplements. c. intermediates. d. substitutes.33. The Corner Shop is a leading supermarket in Chicago. According to Michael Porter’s model of a value chain, which of the following activities of the firm is a primary activity? a. A training session for the floor attendants at The Corner Shop outlets b. An advertising campaign for a new The Corner Shop outlet c. The accounting function at The Corner Shop outlets d. The hiring of lawyers to ensure the firm adheres to labor laws Chapter 06 - Defining the Organization's Strategic Direction 6-5 34. According to Michael Porter’s model of a value chain, which of the following is a support activity? a. Accounting activities b. Outbound logistics c. Marketing d. Inbound logistics 35. Which of the following would be an example of a tacit resource? a. An oddsmaker who works for a large casino in Las Vegas and is correct 95 percent of the time b. A boutique purchases hand-woven fabrics from local shops c. A retail shoe chain that has prime locations in 200 malls across the country d. A flashy ad campaign for a malt liquor 36. A resource can be extremely difficult to imitate if: a. it can be readily codified in written form. b. it is not path dependent. c. it arises through the complex interaction of multiple people. d. it is clear how the resource gives rise to value.37. Socially complex resources refer to: a. resources or activities that emerge through the interaction of multiple individuals. b. resources that cannot be defined in terms of a numerical value. c. resources that require public sanction in order to be utilized for profit-making purposes. d. resources that are shared by different parties thereby necessitating the need for legal intervention. 38. Which of the following is an example of a socially complex resource? a. A team of graphic designers who combine their skills to create products b. A food preservation technology that is available to most firms in the industry c. A pharmaceutical firm which acquires land at a subsidized price from the government d. A restaurant that procures its raw materials from a local market 39. Andrew is a gifted musician, with an instinctive knack for composing tunes that catch the public’s imagination. The means by which he has does this is unclear and cannot be defined. This makes him a _____ resource. a. socially complex b. causally ambiguous c. logistically outbound d. logistically inbound Chapter 06 - Defining the Organization's Strategic Direction 6-6 40. Prahalad and Hamel use the term _____ to refer to a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace. a. primary activitiesb. tacit resources c. socially complex resources d. core competencies 41. Which of the following statements is true of core competencies? a. A firm’s core competency refers to a single ability. b. A firm’s core competency is more than just a core technology. c. An individual business unit has only one core competency. d. A firm’s core competency is usually easy to imitate. 42. How can core competencies be leveraged more effectively? a. By encouraging exchange of resources across strategic business unit boundaries b. By binding managers too closely to their respective business units c. By utilizing the same resources for all types of projects d. By viewing individuals as being employed by a particular strategic business unit 43. Piezo Tech Solutions supplies hospitals with software to track insurance claims. Since insurance regulations and policies are always changing, its software needs to have the ability to be agile and responsive to change. In other words the software needs: a. dynamic capabilities. b. tacit resources. c. rigid competencies. d. to be path dependent. 44. When Western Franchise Services announced that its plans to go international in the next 15 years, it stated its: a. core competence. b. inventory of capabilities. c. strategic intent.d. supplier bargaining power. 45. When Faslow Medical Center changed its name to Faslow Hospital, it also unveiled a plan to build a medical tower doubling its physical facilities by 100% within the next 10 years. It also announced that its goal was to not only serve Exeter County, but the entire region including the 5 contiguous counties. This is an expression of: a. vertically integration. b. strategic intent. c. core competencies. d. supplier bargaining power. Chapter 06 - Defining the Organization's Strategic Direction 6-7 Question 1.1. (TCO A) The relationship between speed of innovation and product obsolescence is (Points : 5) *direct (as innovation speed increases, products become obsolete more quickly). inverse (as innovation speed increases, products become obsolete more slowly). indirect (there is an effect, but it cannot be directly determined). nonexistent (there is no relationship at all). Question 2.2. (TCO A) While rapid innovation often benefits society, it often makes success for companies (Points : 5) *more complicated as they strive to keep up with the latest innovations. profitable as long as they do not innovate themselves, but rather use innovations of others to their advantage. easier since innovation always makes things simpler. less likely because customers will not be willing to pay as much for goods and services. Question 3.3. (TCO B) The scientists at Gerusa are former award-winning Soviet scientists who have all focused their attention on a cancer treatment. Working together, they have come up with remarkable solutions. The knowledge base they have (Points : 5)is explicit. is easily imitable. *is socially complex. has a low degree of appropriability. Question 4.4. (TCO B) Absorptive capacity (Points : 5) is the result of effective strategic decisions by a firm's upper management. *increases a firm's future ability to assimilate information. is an essential component of a learning organization. is inversely proportionate to the size of the organization. Question 5.5. (TCO C) Natal Technologies is developing a superior ultrasound machine for which it is required to invest $800,000. Based on the company's analysis, the product will generate $200,000 from the first year till perpetuity. According to this, the payback period is ________. (Points : 5) 10 years 6 years 3 months *4 years Question 6.6. (TCO C) For several years, Mountain Home University had used IBM computers. Recently, Apple Computers offered them a better machine at lower a price for one of the University's labs; however Mountain Home did not buy them because the _____ costs were too high. (Points : 5) transactional opportunity marginal *switching Question 7.7. (TCO C) Sheila Kessler is a retired millionaire who still likes to invest in new businesses and help other people get started in business. She would be called a(n) (Points : 5) loan shark. *angel investor. first generation mentor. venture investor. Question 8.8. (TCO D) Gerusa has developed a technology called Photodynamic Therapy (PDT) for cancer treatment. The scientists who started the company want to learn how to set up clinics and actually treat patients with this technology; hence they want to begin opening clinics quickly. To meet this objective Gerusa should (Points : 5) *collaborate with a company who has gone through a similar process to learn from marketing professionals to market the product and managers to run the clinics. go ahead with the project on its own to develop the desired capabilities and skills. seek the help of consultants. Question 9.9. (TCO E) Bob King is a Senior Vice President at Associated Grocers, and has been assigned to be the project champion for the development and implementation of a software pricing program. Both the buying department and the pricing department have determined that the new software pricing program is worthless, but they do not tell Bob. This is probably because (Points : 5) *of Bob's seniority. they lack a sense of ownership for the project. they have different goals. they cannot prove that it is worthless. Question 10.10. (TCO E) Kate's supervisor called her to talk about her participation in a new product development team. The supervisor told Kate she had been engaging in social loafing. This meant that Kate (Points : 5) would work only when she was around other people. would engage in too much socializing while working. *would not put much effort into the team's work because it was a large team and she figured her effort would not be needed or recognized. would waste time on social networking sites. Question 11.11. (TCO F) When eBay developed its online auction service, a need arose for making online payments, and PayPal was born. This is an example of how moving commerce online (Points : 5) *can create additional intermediaries. reduces effectiveness. necessitates the need for virtual alliances. poses additional costs to suppliers and customers. Question 12.12. (TCO F) If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products, the firm can (Points : 5) lose a significant number of customers. introduce the next generation product while continuing to reap profits from the current product. *prevent competitors from achieving a significant technological gap. just use deployment as a mechanism to earn revenues from its innovations. 9. Which of the following statements is true about parallel development processes? a. It enhances the probability that R&D will design products that are difficult to manufacture. b. It requires costly iterations between design stages.c. It shortens overall cycle time. d. It initiates product design once concept development is complete. Answer: c Difficulty: Easy Page: 242 10. Pioneer Cleaning Equipment wants to use The House of Quality in designing and developing a new floor buffing machine. What is the first step that Pioneer should take? a. Identify customer requirements. b. Determine the relative value or weight of customer requirements. c. Identify engineering attributes that determine the performance of the buffing machine. d. Evaluate competing products to determine how well they meet customer needs. Answer: a Difficulty: Moderate Page: 250 11. According to FEMA, firms should a. focus first on the failure modes that have the highest scores for severity of risk, but occur less often and are less detectable. b. focus first on the failure modes that have the highest scores for severity of risk, occur more often and are less detectable. c. focus first on the failure modes that have less severe impacts, occur less often but are more detectable. d. focus first on the failure modes that have less severe impacts, but occur more often and are less detectable. Answer: dDifficulty: Hard Page: 253 12. In constructing new product development teams, a. the larger the team, the easier it is to foster a shared sense of identity among team members. b. as the size of the team increases, the potential for social loafing increases. c. cross-functional communication can lead to a poor fit between product attributes and customer requirements. d. the diversity of team members helps avoid homophily. Answer: b Difficulty: Hard Page: 266-267 13. Innovations that are_____ require greater centralization, while those that are _____ can be more decentralized. a. modular; architectural b. incremental; radical c. architectural; modular d. radical; architectural Answer: c Difficulty: Moderate Page: 27414. Apple Computers reported that once the Macintosh computer was successfully launched, many of the people on the development team had trouble adjusting to the corporate culture again and some even left the company. This is one drawback of the _____ team. a. functional b. lightweight c. heavyweight d. autonomous Answer: d Difficulty: Easy Page: 270-271 15. Karen is a member of a new product development team. She still reports to her manager, the marketing director, but spends about 25 percent of her time on the project. Her team has a project manager. This sounds like a(n) _____ team. a. functional b. lightweight c. heavyweight d. autonomous Answer: b Difficulty: Easy Page: 270 21. The first entrants to sell in a new product or service category are referred to as _____. a. pioneers b. early leaders c. early followersd. laggards Answer: a Difficulty: Easy Page: 89 22. Doven Inc. pioneered software development in the 1970s and introduced its range of office tools well ahead of competitors. According to the classification scheme of entrants, Doven would be classified as a(n) _____. a. first mover b. early follower c. early leader d. laggard Answer: a Difficulty: Medium Page: 89 23. In the video game console industry, Magnitude was the first firm to introduce a console in the market. However, consumers were uncertain about the product, and its high costs discouraged consumers from purchasing it. Eventually, Magnitude withdrew the product from the market. A few years later, Mantel and Adventura came up with their respective gaming consoles and successfully established their products. Mantel and Adventura will be considered as: a. pioneers. b. early followers. c. laggards. d. late movers. Answer: b Difficulty: Medium Page: 8924. Marine Systems was the first company to develop inventory management software specifically for hotels and restaurants. Soon after Marine Sytems had launched its product, Unicorn Systems developed similar software. The software developed by Unicorn Systems outperformed the one developed Marine Systems, and it eventually became the market leader. Unicorn Systems is an example of a(n) _____. a. pioneer b. late mover c. early follower d. laggard Answer: c Difficulty: Medium Page: 89 23. If the aspects that customers have come to expect in a technology are difficult for competitors to imitate, a technology leader: a. will have to bear monopoly costs. b. can yield sustained monopoly rents. c. will have lower bargaining power. d. will have higher switching costs. Answer: b Difficulty: Medium Page: 89-90 24. Alpen Inc. is a manufacturing firm that holds a patent for a new food processing machine, which is considerably more efficient and safe. Being the only firm that manufactures that product, Alpen Inc. charges a very high price for its products. This is referred to as _____. a. monopoly rent b. technology lag c. incumbent inertiad. absorptive capacity Answer: a Difficulty: Medium Page: 90 25. Jacob had been using WordPerfect 5.1 for DOS for several years and was quite an expert at it. When his boss wanted him to change to a Windows-based system, Jacob told his boss that it would slow him down. Jacob also pointed out that it would cost a lot of money to train him to use the new system. This is an example of: a. cognitive dissonance. b. high switching costs. c. high monopoly rents. d. early entry continuation. Answer: b Difficulty: Easy Page: 90 26. Jupiter Inc., a software firm, is starting to face competition from the new entrant Coral Inc. Jupiter Inc. wants to prevent its existing customers from switching to Coral’s newly developed software. Which of the following measures should Jupiter Inc. adopt? a. Ensure that customers find its software more convenient and simpler to use, as compared to that of Coral Inc. b. Keep the initial cost of the software higher than that of Coral Inc. c. Keep the prices of the complements required for the software higher than that of Coral Inc. d. Ensure that fewer complementary products are availability for its products, as compared to that of Coral Inc. Answer: a Difficulty: MediumPage: 90 27. Which of the following statements is true of first movers relative to early followers and late entrants? a. Cost of developing necessary production processes and complementary goods is lower for first movers. b. First movers are in a better position to exploit buyer switching costs and also to reap increasing returns advantages. c. First movers, being incumbents, have greater ability than later entrants to respond to changes in the industry environment and adopt newer production processes. d. First movers fail to capture scarce resources such as key locations, government permits, access to distribution channels, and relationships with suppliers. Answer: b Difficulty: Medium Page: 89-91 28. The tendency of existing firms to be slow to respond to changes in the industry environment due to their large size, established routines, or prior strategic commitments to existing suppliers and customers is known as: a. monopoly costs. b. path dependency. c. incumbent inertia. d. technology trajectory. Answer: c Difficulty: Easy Page: 92 29. Fashion Fair, the first mover in the “all year discount” stores market, lost its market share to a late entrant—Brand Fair. Brand Fair operated its discount stores solely over the Internet, which, in turn, saved a lot of expenses. However, Fashion Fair was unable to adopt the online store business model due to its existing contracts with suppliers and investment in a physical infrastructure. This is an example of:a. incumbent inertia. b. monopoly rents. c. path dependency. d. technology spillover. Answer: a Difficulty: Medium Page: 92 30. When Fun Bun, an international fast food chain, first moved into China, it had to teach farmers how to grow a particular variety of potatoes and bakers had to be taught to make hamburger buns. This is an example of: a. corporate social responsibility. b. an undeveloped supply channel. c. incumbent inertia. d. monopoly rents. Answer: b Difficulty: Medium Page: 92 31. After much experimentation and trial and error, TechSmart launched a GPS-enabled shoe into the market. It was the first company to introduce such footwear. Later, several other firms also began to offer similar shoes. Which of the following is most likely to be true for TechSmart? a. TechSmart had incurred significant research and development expenses. b. TechSmart’s ability to exploit monopoly rents will be low. c. TechSmart will be able to exploit incumbent inertia of the late entrants. d. TechSmart had to invest less on establishing distribution channels and generating consumer awareness, compared to firms that entered the market after it. Answer: aDifficulty: Hard Page: 92 32. Which of the following is an advantage of being a later entrant into a market? a. Firms can capture scarce resources. b. Firms do not have to invest in exploratory research. c. Firms have to develop their own supply and distribution channels. d. Firms are unaffected by switching costs. Answer: b Difficulty: Medium Page: 92 33. Component technologies that are necessary for the performance or desirability of a given innovation are referred to as _____ technologies. a. architectural b. diffused c. primary d. enabling Answer: d Difficulty: Easy Page: 92 34. Which of the following is an example of an enabling technology for the computer hardware industry? a. Laptops gradually replacing desktops at workplace b. Computer hardware has zero utility without a microprocessor c. Employees using anti-glare eyeglasses to increase readability from computer screens d. Availability of special chairs with back support for people who work for long hours on computersAnswer: b Difficulty: Medium Page: 92 35. When Pioneer Athletics wanted to provide better landing mats for gymnasts, it asked its supplier Delta Foam Industries (DFI) used a new processes to manufacture higher quality, durable foam for use in its mats. This foam represents a(n) _____ for Pioneer Athletics. a. network externality b. monopoly cost c. enabling technology d. incumbent inertia Answer: c Difficulty: Medium Page: 92 36. Which of the following is true of a firm entering a market too early? a. The distribution channel will be well established prior to its entry. b. The technology and complements will be underdeveloped. c. Competitors would have already captured controlling shares of the market. d. The firm will not be able to reap the advantages of monopoly rent. Answer: b Difficulty: Easy Page: 92 37. Which of the following statements is true of customer preferences? a. The importance of technological features to customers stays constant over time. b. Customers can differ from producers in their understanding of a new technology.c. All pioneers of new-to-the-world technologies face customer uncertainty. d. Other things being equal, more customer uncertainty favors earlier timing of entry. Answer: b Difficulty: Medium Page: 95 38. There are more chances for a technology to be underdeveloped and its fit with customer needs unknown in the _____ market stage. a. very early b. late c. maturity d. mass Answer: a Difficulty: Medium Page: 95 39. A delayed entry into a market with a new technology is preferred when: a. support by complementary goods providers is initially high. b. enabling technologies are initially less mature. c. customer uncertainty is low in the beginning. d. the scope for improving over previous technologies is high. Answer: b Difficulty: Medium Page: 96 40. Which of the following calls for an early entry into a market?a. Immature enabling technologies b. Unavailability of complementary goods c. High customer uncertainty d. Low entry barriers Answer: d Difficulty: Easy Page: 96 41. If _____ is high, firms will have to enter a market early. a. threat of competitive entry b. entry barrier c. inability to improve previous technology d. customer ambiguity Answer: a Difficulty: Easy Page: 97 44. New innovations typically tend to: a. be adopted very slowly at first. b. have a rapid initial takeoff. c. provide high sales revenue when they are first introduced. d. be adopted as soon as they are introduced. Answer: a Difficulty: Medium Page: 9845. If a firm has a longer new product development process, it means that the firm will: a. have a better chance to introduce a refined version of a competitor’s technology. b. face a high possibility of losing to an early entrant. c. have an increased ability to respond to changes in customer requirements. d. overburden its development team by following a parallel development process. Answer: b Difficulty: Easy Page: 99 21. When Johnson Tanning Products finally developed a superior sun tan lotion, it decided that the best time to introduce it was in the spring. This would help take advantage of a. seasonal effects. b. tax refunds. c. pent up demand. d. the time value of money. Answer: a Difficulty: Easy Page: 288 22. When Foxie, Ltd. developed a new facial cream that buyers in California loved, it delayed its entry into that market by another 6 months. Foxie had just moved from a small facility employing 20 persons to a larger production facility that could accommodate 120 employees. It appears the delay in going into California was so that its introduction could coincide with a. investment commitments. b. production capacity. c. seasonal fluctuations. d. pent up demand.Answer: b Difficulty: Easy Page: 288 23. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. When Mallard developed a computerized prosthetic that would render its previous prosthetics obsolete, it decided to withhold it from the market probably so that a. competitors would have time to catch up. b. it could further develop the product and increase its leadership position. c. it would not cannibalize the sales of its current prosthetics. d. people could get used to the idea of a computerized prosthetic. Answer: c Difficulty: Moderate Page: 289 24. Mallard Prosthetics was a leader in the prosthetic arm market and profits from its prosthetics were very high. Mallard developed a computerized prosthetic arm and has been advised by a consulting firm to “embrace cannibalization.” This means that the company should a. introduce the new technology right away and increase its market lead while taking away profits from its present product. b. introduce the new technology and hope that it “eats up the competition.” c. use up most of its financial resources in promoting the new prosthetic arm. d. only offer the new prosthetic arm in certain isolated markets (islands of the market). Answer: a Difficulty: Moderate Page: 289 25. If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products, the firm cana. lose a significant number of customers. b. introduce the next generation product while continuing to reap profits from the current product. c. prevent competitors from achieving a significant technological gap. d. just use deployment as a mechanism to earn revenues from its innovations. Answer: c Difficulty: Hard Page: 289 26. If Circle Systems makes its smartphone technology open, it will attract more software companies to write programs for use on its smartphone. The downside to this is a. its installed base will also decline. b. the underlying platform used by Circle could become fragmented. c. nobody will adopt the smartphone. d. this practice is illegal. Answer: b Difficulty: Easy Page: 290 27. Which of the following is an advantage of making a new generation of technology backward compatible? a. Consumers will have to buy completely new complements. b. Consumer switching costs may be lower because they anticipate using their existing complements. c. Competitors will be unable to imitate the company’s strategy of making the technology backward compatible. d. It is typically less expensive to make a new generation of technology backward compatible than to not make it backward compatible. Answer: bDifficulty: Moderate Page: 291 28. When Sports Paradise saw yet another sports bar open up across the street it knew that it would have to lower its price again to stay in business. The city already had too many sports bars and Sports Paradise intended on being one of those left after the inevitable shake out. Sports Paradise will be following a _____ pricing strategy. a. penetration b. skimming c. survival d. predatory Answer: c Difficulty: Moderate Page: 291 29. Which of the following is a predictable competitive response to high initial prices? a. Competition has an incentive to enter the market b. Competition will stay out of the market because your product quality must be high c. Competing companies may report you for price gouging d. Competition will offer radically different products Answer: a Difficulty: Hard Page: 291 30. T.H.E. Computer Company buys computer components and assembles them into a computer that it sells under its own brand name. T.H.E. is a(n) a. pirate operator.b. original equipment manufacturer (OEM). c. disintermediary. d. wholesaler. Answer: b Difficulty: Hard Page: 294 31. When eBay developed its online auction service, a need arose for making online payments and PayPal was born. This is an example of how moving commerce online a. can create additional intermediaries. b. reduces effectiveness. c. necessitates the need for virtual alliances. d. poses additional costs to suppliers and customers. Answer: a Difficulty: Easy Page: 294 32. When Microsoft released Word for Windows, WordPerfect had about 80 percent of the word processing market. Microsoft donated free copies of Word to colleges and universities. This is an example of a(n) a. alliance with a distributor. b. bundling relationship. c. contract or sponsorship. d. guarantee or consignment. Answer: c Difficulty: Moderate Page: 29633. Biogyn Lifesciences wanted to enhance the adoption of its new diagnostic substances by hospitals. So, it made an agreement with the dominant producer of glass slides and test tubes to have its diagnostic substances sold to hospitals in a package with the glass slides and tubes. This is known as a. backward compatibility. b. penetration pricing. c. a bundling relationship. d. disintermediation. Answer: c Difficulty: Hard Page: 296 34. Multiplex Graphics Company has just released a graphics enhancement software program that it wants potential users to experience. Which of the following media would be most appropriate for this product? a. Newspapers b. Radio c. Direct mail d. Television Answer: d Difficulty: Easy Page: 298 35. Which of the following is an advantage of using the Internet for advertising over other media? a. It is a well-established medium. b. It has a high number of users. c. It has interactive possibility. d. It is uncluttered.Answer: c Difficulty: Moderate Page: 298 36. Which of the following is true about the different advertising media? a. Magazines have a “junk mail” image. b. Yellow pages have high believability. c. Newsletters have a wide reach. d. Telephone advertising is relatively low cost. Answer: c Difficulty: Moderate Page: 298 37. Emily was looking for a firewall for her home computer. She finally decided on a particular brand because it also included a free anti-spam package to block unwanted email as a bonus. This is an example of a. a premium. b. vaporware. c. cash rebate. d. introductory pricing. Answer: a Difficulty: Easy Page: 298 38. When eBay offered special auctions with all proceeds going to the families of victims of the September 11, 2001, terrorist attack on the World Trade Center, everyone thought it was a great gesture. This is an example ofa. advertising. b. publicity. c. promotion. d. subliminal advertising. Answer: b Difficulty: Moderate Page: 299 39. Jones Enterprises wanted to tailor its advertising for its new Financial software to early adopters. It needs to use an advertising message and medium that a. is very entertaining. b. enables Jones to provide high technical content. c. can reach the masses. d. makes the product seem practical and cost effective. Answer: b Difficulty: Hard Page: 299 40. When a firm wants to shift its advertising focus from early adopters to the early majority, its advertising should change from emphasizing a. ease of use to technical superiority. b. legitimacy to fit with way of life. c. technological features to ease of use. d. consistency to legitimacy. Answer: c Difficulty: Hard Page: 29941. When there is a chasm between the early adopters and the early majority is a firm’s product diffusion curve a. the firm must reduce its production capacity. b. the firm focuses on improving its efficiency to target the mass market. c. the early majority market is saturated. d. the product requires additional R&D. Answer: b Difficulty: Moderate Moderate: 299 42. After completing the first draft of a textbook manuscript on Data Mining of Information, McGraw-Hill asked leading university professors to review the book and give feedback. The publisher was not only finding ways to improve the book, but also pre-marketing it to a. known opinion leaders. b. partners. c. students through an intermediary. d. allies. Answer: a Difficulty: Moderate Page: 299-300 43. Ronnie is on the Board of Directors or Trustees of seven different nonprofit organizations and is a member of four different service clubs. Everyone in town seems to know Ronnie and he seems to know everyone. He could be called a a. connector. b. maven. c. salesperson. d. social proliferate.Answer: a Difficulty: Easy Page: 302 44. When anyone in Metropolis wants to know where to buy a computer and at the best price they all turn to Francis who can always give the answer. Francis is a a. connector. b. maven. c. salesperson. d. social proliferate. Answer: b Difficulty: Easy Page: 302 45. Gary is a member of a service club in Franklinville. When the club wants to promote a cause or have a fund raising event, Gary is put in charge because everyone likes listening to him speak and he seems to get everyone excited about the event. Gary is a a. connector. b. maven. c. salesperson. d. social proliferate. Answer: c Difficulty: Easy Page: 302 46. A company’s _____ is a good indicator of its likelihood of success when introducing a new product. a. track recordb. advertising c. business forecast d. management board Answer: a Difficulty: Easy Page: 303 22. Kate’s supervisor called her to talk about her participation in a new product development team. The supervisor told Kate she had been engaging in social loafing. This meant that Kate a. would work only when she was around other people. b. would engage in too much socializing while working. c. would not put much effort into the team’s work because it was a large team and she figured her effort would not be needed or recognized. d. would waste time on social networking sites. Answer: c Difficulty: Moderate Page: 266 23. Your boss does not favor the use of cross-functional teams. How would you respond to this? a. The use of cross functional teams can result in products that do not satisfy customers’ needs. b. A cross-functional interface can help better ensure a product’s quality and price. c. Cross-functional teams usually result in products that cannot be engineered. d. Cross-functional teams necessitate the need for back and forth iterations between different stages in the product development process leading to longer cycle times. Answer: b Difficulty: HardPage: 266 24. In constructing new product development teams, a. the larger the team, the easier it is to foster a shared sense of identity among team members. b. as the size of the team increases, the potential for social loafing increases. c. cross-functional communication can lead to a poor fit between product attributes and customer requirements. d. the diversity of team members helps avoid homophily. Answer: b Difficulty: Hard Page: 266-267 25. The Vice President of Fortune Computers is trying to decide on the composition of a new product development team. If he chooses members who are from different backgrounds, the positive effects will be a. broader knowledge base. b. increased trust. c. good coordination and communication right from the start. d. social loafing. Answer: a Difficulty: Easy Page: 267 26. The Vice President of Biogyn Lifesciences is trying to decide on the composition of a new product development team. If she chooses members who are from different backgrounds, one of the disadvantages will be a. the team will more quickly achieve consensus on ideas. b. the team may have more difficulty communicating and cooperating.c. the team will tend to have more difficulty generating multiple ways of looking at the problem. d. the team will spend too much time socializing. Answer: b Difficulty: Easy Page: 267 27. Jan is the member of a new product development team. Her supervisor asked her how she likes the experience and she replied, “Our team seems to be suffering from homophily.” This means that a. team members are afraid of persons who are more senior to them. b. team members spend all their time chatting about personal issues. c. team members are only interested in talking to people very different from themselves. d. team members only like other people whom they perceive as being similar to themselves. Answer: d Difficulty: Moderate Page: 267 28. Which of the following statements is true regarding the various boundary-spanning activities in new product development teams? a. Asking a team’s internal customers for their comments on the team’s performance is an ambassador activity. b. Developing a project schedule is a task coordination activity. c. Acting as representative of a team at a regional company conference is a scouting activity. d. Identifying journals that can further enhance team members’ knowledge is a task coordination activity. Answer: b Difficulty: Hard Page: 26829. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he heard that the department chair of the Business department doubted the effectiveness of the committee, Dr. Askew went to meet with the chair and assure her of the committee’s progress. Dr. Askew is performing a(n) _____ activity, which is a boundary-spanning activity. a. ambassador b. task coordination c. scouting d. paternalism Answer: a Difficulty: Easy Page: 268 30. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he negotiated with the Dean of the University that committee members have no other service assignments so they could concentrate on this project and that the team be given 12 months to complete its goals, he was performing a(n) _____ activity. a. ambassador b. task coordination c. scouting d. paternalism Answer: b Difficulty: Easy Page: 268 31. Dr. Askew was the Chairman of the Freshman Program Committee at Mountain Home University. This committee was designing a new curriculum for freshman. When he did an Internet search of the websites of other colleges and universities to discover what type of freshman curriculum they have developed, he was performing a(n) _____ activity.a. ambassador b. task coordination c. scouting d. paternalism Answer: c Difficulty: Easy Page: 268 32. Andrew has put together a functional new product development team. Which of the following is most likely to be true about this team? a. Team members will spend up to 50% o