Strategic Management of Technological Innovation 5th Edition Test Bank

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Chapter 01IntroductionTrue / False Questions1.Investing in process innovation helps firms lower their costs.TrueFalse2.Flexible manufacturing technologies have increased the importance of production economies ofscale.TrueFalse3.Globalization of markets has reduced the importance of innovation.TrueFalse4.Innovation and new technologies have led to longer product life cycles and slower productobsolescence.TrueFalse5.Technological innovation decreases the amount of output achievable from a given quantity oflabor and capital.TrueFalse6.GDP does not directly relate to the amount of goods consumers can purchase.TrueFalse

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7.Externalities are costs that are borne by individuals other than those responsible for creatingthem.TrueFalse8.Technological innovation results in complete eradication of negative externalities.TrueFalse9.If a business discharges untreated chemical waste into the local water bodies of a community, itimposes a negative externality on the community members.TrueFalse10.Most innovative ideas do not become successful new products.TrueFalse11.The majority of effort and moneyinvested in technological innovation comes from nonindustrialfirms.TrueFalse12.The innovation process is often conceived of as a funnel because most potential new productideas make it through the development process.TrueFalse13.According to the concept of innovation funnel, the number of successful products launched willbe greater than the number of raw ideas generated.TrueFalse14.According to the concept of the innovation funnel, one new idea is usually responsible for severalnew products.TrueFalse

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15.A firm's organizational structure and control systems have no influence on the generation ofinnovative ideas.TrueFalseMultiple Choice Questions16.Which of the following is anadvantage of flexible manufacturing technologies?A.They have made shorter production runs economical.B.They have increased the importance of production economies of scale.C.They eliminate the need for differentiation from competitors.D.They have reduced the importance of technological innovation in industries.17.As a result of the rapid pace of innovation:A.product life cycles have become short.B.product development cycles have become significantly longer.C.market segmentation has reduced.D.product obsolescence has slowed down.18.The _____ of an economy is its total annual output as measured by its final purchase price.A.balance of paymentB.gross domestic productC.cashreserve ratioD.net national income

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19.Which of the following is true of technological innovations?A.Technological innovations help increase a country's gross domestic product.B.Technological innovations decrease the amount ofoutput achievable from a given quantity oflabor and capital.C.Technological innovations slow down product obsolescence and lengthen the productdevelopment cycles.D.Technological innovations increase production costs and reduce productdifferentiation.20.Virtual Inc., a manufacturing company, has recently entered the cell phone industry. This industryis characterized by rapid technological innovations. Which of the following is most likely to betrue for Virtual?A.Thelife cycle of its cell phones will be very long.B.It will face rapid product obsolescence.C.It will face low market segmentation in the cell phone industry.D.It will have a lower need for product differentiation.21.Technological innovations increase:A.the gross domestic product of an economy.B.product life cycles.C.the time required for product development and introduction.D.the production costs of multiple product variations.22.If acountry's GDP stands at $4,867 billion, it means that the country's _____ is worth $4,867billion.A.total annual outputB.investment on technological innovationC.savings with the World BankD.negative variance in budget

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23.TheSolow Residual refers to the:A.obsolete products left in a market due to accelerated product life cycles.B.less developed nations of the world being left behind due to their obsolete technology.C.increased amount of outputachievable from a given quantity of labor and capital due totechnological innovation.D.process of dumping goods in developing and underdeveloped countries at a price lower thanthe home-market price.24._____ refer to the costs (or benefits) of technological innovations that are borne by individualsother than those responsible for creating them.A.ExternalitiesB.Innovation funnelsC.Opportunity costsD.Cultural lags25.Which of the following is most likely tocreate a positive externality for its neighboring communitymembers?A.A coal mineB.An organic farmC.A petroleum refineryD.A dye manufacturing company26.Kroters Inc. decides to set up its manufacturing plant nearWoodsville, a small community offarmers. Kroters is most likely to create a positive externality for the community members ofWoodsville 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.

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27.Silk Work Inc., a manufacturer of silk garments, is planning to replace hand weaving with somemodern machines that run on fuel.Which of the following consequences of this measure can becategorized as a negative externality?A.Increased amount of output achievable from the given quantity of laborB.Increase in the quality of the silk garmentsC.Increasedpollution as a result of the new technologyD.Increased need for investment to finance the modernization28.Technology is, in its purest essence, _____.A.knowledgeB.dissonanceC.chaosD.guesswork29.If a businessbuilds a park in a community, it creates a(n) _____ for the community members.A.social costB.positive externalityC.opportunity costD.negative variance30.Which of the following is true of externalities?A.Allexternalities 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 ofbenefits reaped by individuals.

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31.Electronic waste results from the disposal of technological goods. This is an example of:A.the Solow Residual.B.a negative externality.C.a negative variance.D.the innovation funnel.32.The innovation process is often conceived of as a funnel because:A.most innovative ideas become successful new products.B.it decreases the amount of output achievable from a given quantity of labor and capital.C.it increases theimportance of production economies of scale.D.there are many potential new product ideas and only a few make it through the developmentprocess.33.Jordan, the CEO of Early Bird Corp., believes that it is important to focus on thequantity of newproduct ideas generated rather than the quality of ideas generated. He encourages everyone inthe company to come up with product ideas, and those that seem feasible are further developed.According to him, it takes several raw ideas to develop one successful new product. Jordan'sviews reflect the concept of:A.innovation adolescence.B.innovation diffusion.C.innovation readiness.D.innovation funnel.

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34.Unicorn Medicines Inc., a pharmaceutical company based inthe United States, has its researchand development units spread across the globe. Lately, these research and development unitshave not been receiving adequate financial support. Which of the following is most likely to bethe cause for such a situation?A.Technical innovation leads to lower market segmentation and slower product obsolescence.B.Most innovative ideas do not become successful new products.C.The product development cycle in the pharmaceutical industry is short.D.Thecost associated with pharmaceutical research and development is low.35.Walter is the new director of R&D at Good Health Inc., a pharmaceutical company. Which of thefollowing statements, if made by Walter, would indicate that he believes in the concept of theinnovation funnel?A."Innovation is a freewheeling process that is unconstrained by rules and plans."B."While there are many potential new product ideas going in the wide end, very few make itthrough the development process."C."I believe that Good Health should limit new idea generation to save time and otherresources."D."I believe that Good Health should allow all new ideas generated in the company to make it tothe development process."EssayQuestions

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36.Explain the impact of computer-aided design and flexible manufacturing technologies on firms.37.Explain how the globalization of markets affects the importance of innovation.38.What are some of thenegative impacts on society due to technological innovation? How wouldyou respond to critics of technological innovation who cite these negative impacts?

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39.Why is it important for a company to have a well-defined process forstrategically managing itsnew product development process?40.Explain how an understanding of the innovation funnel might influence a company's view ofresearch and development.

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Chapter 01 IntroductionAnswer KeyTrue / False Questions1.(p.1)Investing in process innovation helps firms lower their costs.TRUEDifficulty: 1 Easy2.(p.1)Flexible manufacturing technologies have increased the importance ofproduction economiesof scale.FALSEDifficulty: 1 Easy3.(p.1)Globalization of markets has reduced the importance of innovation.FALSEDifficulty: 1 Easy4.(p.2)Innovation and new technologies have led to longer product lifecycles and slower productobsolescence.FALSEDifficulty: 1 Easy5.(p.2)Technological innovation decreases the amount of output achievable from a given quantity oflabor and capital.FALSEDifficulty: 1 Easy

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6.(p.3)GDP does notdirectly relate to the amount of goods consumers can purchase.FALSEDifficulty: 1 Easy7.(p.3)Externalities are costs that are borne by individuals other than those responsible for creatingthem.TRUEDifficulty: 1 Easy8.(p.3)Technological innovation results in complete eradication of negative externalities.FALSEDifficulty: 1 Easy9.(p.3)If a business discharges untreated chemical waste into the local water bodies of a community,it imposes anegative externality on the community members.TRUEDifficulty: 2 Medium10.(p.4)Most innovative ideas do not become successful new products.TRUEDifficulty: 1 Easy11.(p.4)The majority of effort and money invested intechnological innovation comes fromnonindustrial firms.FALSEDifficulty: 1 Easy

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12.(p.5)The innovation process is often conceived of as a funnel because most potential new productideas make it through the development process.FALSEDifficulty: 1 Easy13.(p.5)According to the concept of innovation funnel, the number of successful products launchedwill be greater than the number of raw ideas generated.FALSEDifficulty: 1 Easy14.(p.5)According to theconcept of the innovation funnel, one new idea is usually responsible forseveral new products.FALSEDifficulty: 1 Easy15.(p.6)A firm's organizational structure and control systems have no influence on the generation ofinnovativeideas.FALSEDifficulty: 1 EasyMultiple Choice Questions

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16.(p.1)Which of the following is an advantage of flexible manufacturing technologies?A.They have made shorter production runs economical.B.They have increased theimportance of production economies of scale.C.They eliminate the need for differentiation from competitors.D.They have reduced the importance of technological innovation in industries.Difficulty: 2 Medium17.(p.2)As a result ofthe rapid pace of innovation:A.product life cycles have become short.B.product development cycles have become significantly longer.C.market segmentation has reduced.D.product obsolescence has slowed down.Difficulty: 1 Easy18.(p.2)The _____ of an economy is its total annual output as measured by its final purchase price.A.balance of paymentB.gross domestic productC.cash reserve ratioD.net national incomeDifficulty: 1 Easy

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19.(p.2)Which of the following is true of technological innovations?A.Technological innovations help increase a country's gross domestic product.B.Technological innovations decrease the amount of output achievable from a given quantityof labor andcapital.C.Technological innovations slow down product obsolescence and lengthen the productdevelopment cycles.D.Technological innovations increase production costs and reduce product differentiation.Difficulty: 2 Medium20.(p.2)Virtual Inc., a manufacturing company, has recently entered the cell phone industry. Thisindustry is characterized by rapid technological innovations. Which of the following is mostlikely to be true for Virtual?A.The life cycle of itscell phones will be very long.B.It will face rapid product obsolescence.C.It will face low market segmentation in the cell phone industry.D.It will have a lower need for product differentiation.Difficulty: 3 Hard21.(p.2)Technological innovations increase:A.the gross domestic product of an economy.B.product life cycles.C.the time required for product development and introduction.D.the production costs of multiple product variations.Difficulty: 2 Medium

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