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Exam 12: Managing Innovation and Fostering Corporate Entrepreneurship

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Question 21

Multiple Choice

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Real options analysis is most appropriate when

A) the total investment required is small, but the environment is uncertain.
B) theinvestment required can be justified by Discounted Cash Flow (DCF) techniques.
C) a small investment up front can be followed by a series of subsequent investments.
D) there is no prospect of obtaining additional knowledge before making subsequent investments.

E) A) and C)
F) None of the above

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Question 22

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McGrath and Keil researched the types of human resource management practices that effective firms use to capture value from their innovation efforts. Which of the following is not oneof their findings?

A) Create innovation teams with experienced players.
B) Require that employees serve in the new venture group as part of their career climb.
C) Transfer people to mainstream management positions after they have experience in the new venture group.
D) Integrate the performance of individuals with the performance of the innovation.

E) B) and C)
F) A) and D)

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Question 23

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Dispersed approaches to corporate entrepreneurship are often found in organizations with a strong spirit of entrepreneurship.

One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to game the system.

Another way to evaluate a corporate venture is in terms of the four criteria from the balanced scorecard. Which of the following is not one of those criteria?

A manager might insist that separating a decision into multiple parts will guarantee that the decisions made will turn out well. This allows for an assessment of the project at each stage,lessening the likelihood the project will fall prey to which of the following?

Project ________ involves justifying whether an opportunity is attractive in the marketplace; project ________ involves evaluating the strategic and economic impact of a new venture.

Intel uses a forecasting model for potential demand for its chip designs in which they calculate the likelihood of a range of potential demand levels and they established a computer simulation of a production plant. From these models, they gather the information to identify what equipment they definitely will need to order. This helps with pricing as well. What kind of investment analysis tool are they using?

Common features of a dispersed approach to corporate entrepreneurship include all the following except

On average, approximately what percentage of corporate ventures reaches profitability within six years?

Corporate ventures that use real options logic in decision making tend to keep total investment low in order to minimize the downside risk of a project.

Radical innovations are evolutionary applications of novel ideas within existing paradigms.

Strategic reasons for undertaking a corporate venture do not include

Process innovations are often associated with a low-cost leadership strategy.

What do Taco Bell, Mondelez, General Electric, Tyco, and MasterCard have in common as they work to be innovative?

Walmart has an aggressive pricing structure that has forced smaller, local retailers out of business in many markets. Local cities responded with regulations that make it difficult forWalmart to move into or expand operations in these areas. This is an example of

According to the characterization of innovations by Professor Clayton Christensen, the rise of the smartphone was ________ innovation rather than ________ innovation.

Financial risk taking involves the risk an executive assumes in taking a stand in favor of a strategic course of action.

Proctor and Gamble has centralized 20 to 30 percent of its research efforts in a new corporate-level business creation and innovation unit. They believe that this will assist them onlywithdeveloping incremental innovations that will help the overall bottom line.

Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies.