Question 1

One of the following statements about innovativeness is false.Which is it?

Accepted Answer

Innovativeness refers to efforts of a firm to find new opportunities and novel solutions. It involves creativity and experimentation that result in new products, new services, or improved technological processes.

Question 2

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved.This can give rise to

Accepted Answer

Managers may have an incentive and the know-how to game the system. If managers know that a certain option value must be met in order for the proposal to get approved, they can back-solve the model to find a variance estimate needed to arrive at the answer that upper management desires. This is an example of an agency problem that is typically inherent in investment decisions. A manager may have something to gain by not acting in owner best interests, or the interests of managers and owners are not co-aligned.

Question 3

Strategic reasons for undertaking a corporate venture do not include

Accepted Answer

Corporations expect a higher return from corporate venturing projects than from normal operations. But there are other important strategic considerations as well that are not financial. These include undertaking a corporate venture to strengthen the competitive position, enter into new markets, expand capabilities by learning and acquiring new knowledge, and build the base of resources and experience of the corporation.

Question 4

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?

Accepted Answer

The balanced scorecard is a method of evaluating company performance using performance measures from the customer, internal, innovation and learning, and financial perspectives.

Question 5

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?

Accepted Answer

Real options analysis (ROA) an investment analysis tool that looks at an investment or activity as a series of sequential steps, and for each step the investor has the option of (a) investing additional funds to grow or accelerate, (b) delaying, (c) shrinking the scale of, or (d) abandoning the activity. Intel uses real option analysis to limit the risks there are inherent in managing the complex and dynamic semiconductor business.

Question 6

One of the following is not a question that should be answered when evaluating the performance of corporate venturing efforts.Which is it?

Accepted Answer

Three questions should be used to assess the effectiveness of the venturing initiatives of the firm:are the products or services offered by the venture accepted in the marketplace; are the contributions of the venture to the internal competencies and experience of the corporation valuable; and is the venture able to sustain its basis of competitive advantage? External funding may not be critical to success.

Question 7

Whereas ________ are willing to violate procedures and operate outside normal channels,________ gather hard data and develop a strong case for why a project should be killed.

Accepted Answer

Product champions are often thought to be willing to violate procedures and operate outside normal channels. Exit champions reduce ambiguity by gathering hard data and developing a strong case for why a project should be killed.

Question 8

Which of the following is not one of the dimensions of entrepreneurial orientation?

Accepted Answer

An entrepreneurial orientation has five dimensions that permeate the decision-making styles and practices of the members of the firm:autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. These factors work together to enhance the entrepreneurial performance of a firm.

Question 9

Which of the following statements about skunkworks is false?

Accepted Answer

Skunkworks are independent work groups that are tasked with generating new ideas.

Question 10

Some of the most common applications of real options are with property and insurance.A real estate option grants the holder the right to buy or sell a piece of property at an established price sometime in the future.If the price of the property goes ________,the owner of the option is likely to buy it.If the market value of the property ________ the strike price,the option holder is unlikely to execute the purchase.

Accepted Answer

Some of the most common applications of real options are with property and insurance. A real estate option grants the holder the right to buy or sell a piece of property at an established price sometime in the future. The actual market price of the property may rise above the established (or strike) price or the market value may sink below the strike price. If the price of the property goes up, the owner of the option is likely to buy it. If the market value of the property drops below the strike price, the option holder is unlikely to execute the purchase. In the latter circumstance, the option holder has limited his or her loss to the cost of the option but during the life of the option retains the right to participate in whatever the upside potential might be.

Question 11

Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities?

Accepted Answer

Proactiveness is a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand.

Question 12

Whereas ________ often emerge as heroes,________ run the risk of losing status by opposing popular projects.

Accepted Answer

Whereas product champions often emerge as heroes, exit champions run the risk of losing status by opposing popular projects.

Question 13

If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can,they might demonstrate ________ and trust only their own judgment rather than conduct sufficient analysis.

Accepted Answer

Managerial conceit occurs when decision makers who have made successful choices in the past come to believe that they possess superior expertise for managing uncertainty. They believe that their abilities can reduce the risks inherent in decision making to a much greater extent than they actually can. Such managers are more likely to shift away from analysis to trusting their own judgment. In the case of real options, they can simply declare that any given decision is a real option and proceed as before.

Question 14

After 15 teams created 128 different phones,Chris Galvin,former CEO of Motorola,eliminated the autonomous teams being used to develop new wireless phones.This was necessary because such teams

Accepted Answer

Autonomous teams often lack coordination. Excessive decentralization has a strong potential to create inefficiencies, such as duplication of effort and wasting resources on projects with questionable feasibility. For example, Chris Galvin, former CEO of Motorola, scrapped the skunkworks approach the company had been using to develop new wireless phones. Fifteen teams had created 128 different phones, which led to spiraling costs and overly complex operations.

Question 15

The costly Motorola global satellite telecom project known as Iridium provides a useful illustration of the ________.Even though problems with the project existed during the lengthy development process,Motorola refused to pull the plug.Only after investing 5 billion USD and years of effort was the project abandoned.

Accepted Answer

An exit champion is an individual working within a corporation who is willing to question the viability of a venture project by demanding hard evidence of venture success and challenging the belief system that carries a venture forward. Motorola did not have an exit champion and therefore wasted resources long past the time that the project needed to end.

Question 16

A(n)________ manager's role is to question the viability of corporate venture projects.

Accepted Answer

In contrast to product champions and other entrepreneurial enthusiasts within the corporation, exit champions are willing to question the viability of a venture project. By demanding hard evidence and challenging the belief system that is carrying an idea forward, exit champions hold the line on ventures that appear shaky.

Question 17

Which of the following dimensions of entrepreneurial orientation is described as an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion?

Accepted Answer

Autonomy is an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion.

Question 18

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?

Accepted Answer

Escalation of commitment is the tendency for managers to irrationally stick with an investment, even one that is broken down into a sequential series of decisions, when investment criteria are not being met. The costly Motorola global satellite telecom project known as Iridium provides a useful illustration. Even though problems with the project existed during the lengthy development process, Motorola refused to pull the plug. Only after investing 5 billion USD and years of effort was the project abandoned.

Question 19

Real options analysis is most appropriate when

Accepted Answer

ROA is appropriate to use when investments can be staged; a smaller investment up front can be followed by subsequent investments. Real options can be applied to an investment decision that gives the company the right, but not the obligation, to make follow-on investments.

Question 20

Real options analysis (ROA)is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the ________ associated with launching ________ ventures.

Accepted Answer

Real options analysis (ROA) is an investment analysis tool from the field of finance. It has been slowly, but increasingly, adopted by consultants and executives to support strategic decision making in firms. Applied to entrepreneurship, real options suggest a path that companies can use to manage the uncertainty associated with launching new ventures.

Quiz 12: Managing Innovation and Fostering Corporate Entrepreneurship

One of the following statements about innovativeness is false.Which is it?

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved.This can give rise to

Strategic reasons for undertaking a corporate venture do not include

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?

One of the following is not a question that should be answered when evaluating the performance of corporate venturing efforts.Which is it?

Whereas are willing to violate procedures and operate outside normal channels, gather hard data and develop a strong case for why a project should be killed.

Which of the following is not one of the dimensions of entrepreneurial orientation?

Which of the following statements about skunkworks is false?

Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities?

Whereas often emerge as heroes, run the risk of losing status by opposing popular projects.

If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can,they might demonstrate ________ and trust only their own judgment rather than conduct sufficient analysis.

After 15 teams created 128 different phones,Chris Galvin,former CEO of Motorola,eliminated the autonomous teams being used to develop new wireless phones.This was necessary because such teams

A(n) ________ manager's role is to question the viability of corporate venture projects.

Which of the following dimensions of entrepreneurial orientation is described as an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion?

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?

Real options analysis is most appropriate when

Real options analysis (ROA) is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the associated with launching ventures.

Quiz 12: Managing Innovation and Fostering Corporate Entrepreneurship

One of the following statements about innovativeness is false.Which is it?

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved.This can give rise to

Strategic reasons for undertaking a corporate venture do not include

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?

One of the following is not a question that should be answered when evaluating the performance of corporate venturing efforts.Which is it?

Whereas ________ are willing to violate procedures and operate outside normal channels,________ gather hard data and develop a strong case for why a project should be killed.

Which of the following is not one of the dimensions of entrepreneurial orientation?

Which of the following statements about skunkworks is false?

Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities?

Whereas ________ often emerge as heroes,________ run the risk of losing status by opposing popular projects.

If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can,they might demonstrate ________ and trust only their own judgment rather than conduct sufficient analysis.

After 15 teams created 128 different phones,Chris Galvin,former CEO of Motorola,eliminated the autonomous teams being used to develop new wireless phones.This was necessary because such teams

A(n) ________ manager's role is to question the viability of corporate venture projects.

Which of the following dimensions of entrepreneurial orientation is described as an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion?

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?

Real options analysis is most appropriate when

Real options analysis (ROA) is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the ________ associated with launching ________ ventures.

Whereas are willing to violate procedures and operate outside normal channels, gather hard data and develop a strong case for why a project should be killed.

Whereas often emerge as heroes, run the risk of losing status by opposing popular projects.

Real options analysis (ROA) is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the associated with launching ventures.