CHAPTER 2

1. _______ are producers of complementary goods or services (e.g. for video game console
producers such as Sony or Nintendo, game developers)
a. Complimentors
b. Collaborators
c. Complementors
d. Competitors

2. _______ are institutions designed to nurture the development of new businesses that might
otherwise lack access to adequate funding or advice.
a. science parks
b. incubators
c. technology transfer offices
d. universities

3. _______ the ability of an organization to recognize, assimilate, and utilize new knowledge
a. absorptive capacity
b. intellectual capacity
c. creative capacity
d. innovative capacity

4. Research targeted at increasing scientific knowledge for its own sake. It may or may not have
any long-term commercial application
a. basic research
b. applied research
c. experimental research
d. descriptive research

5. ________ is the practical implementation of an idea into a new idea into a new device or process.
a. Production
b. Innovation
c. Manufacturing
d. Development

6. _______ approach argued that innovation was driven by the perceived demand of potential
users
a. knowledge push
b. science-push
c. knowledge pull
d. demand pull

7. _______ approach assumed that innovation proceeded linearly from scientific discovery, to
invention, to engineering, then manufacturing activities, and marketing.
a. demand push
b. science-push
c. knowledge pull
d. demand pull

8. Research targeted at increasing knowledge for a specific application or need.

a. basic research
b. applied research
 c. experimental research
d. descriptive research

9. Activities that apply knowledge to produce useful devices, materials, or processes.

a. Production
b. Innovation
c. Manufacturing
d. Development

10. A private network, accessible only to authorized individuals. It operates only within the
organization
a. Internet
b. Innernet
c. Intranet
d. Ethernet

11. Technology clusters are divisional clusters of firms that have a connection to a common
technology, and may engage in buyer, supplier, and complementor relationships, as well as
research collaboration. False

12. Basic research refers to efforts targeted at increasing knowledge for a specific application or
need. False

13. The ability to generate new and useful ideas is termed creativity. True

14. According to Rothwell, different phases of innovation are likely to be characterized by varying
levels of demand-push and demand-pull. False

15. The benefits firms reap by locating in close geographical proximity to each other are known
collectively as agglomeration economies. True

16. Technological spillovers occur when the benefits from the research activities of one firm (or
nation or other entity) spill over to other firms (or nations or other entities). True

17. Complex knowledge is knowledge that cannot be readily codified. False

18. Innovation begins with the generation of new ideas. True

19. An individual’s creative ability is a function of his or her intellectual abilities, knowledge,
personality, motivation, and enlightenment. False

20. According to Rothwell, different phases of innovation are likely to be characterized by varying
levels of science-push and demand-pull. True
Chapter 3
1. This type of innovation focuses on the way an organization conducts its business, such as in the
techniques of producing or marketing goods or services. Process Innovation

2. It is a technology that fulfills a similar market need by building on an entirely new knowledge
base. Discontinuous Technology
3. It is an innovation that makes a relatively minor change from (or adjustment to) existing practices.
Incremental Innovation
4. It is a product design that is adopted by the majority of producers, typically creating a stable
architecture on which the industry can focus its efforts. Dominant Design

5. Technologies emerge slowly, grow quickly, and then fade away. This knowledge has been
described as the ___________. Technology s-curve

6. The following are the limitations of s-curve models as a prescriptive tool, except
a. It is rare that the true limits of technology are known in advance, and there is often
disagreement among firms about these limits.
b. The shape of a technology's s-curve is not set in stone. Unexpected changes in the
market can shorten or extend the life cycle of a technology.
c. Firms can influence the shape of the s-curve through their development activities.
d. It is used as a tool for predicting when technology will reach its limits and when a
firm should move to a new, more radical technology.

7. It is an innovation that changes the overall design of a system or the way its components interact
with each other.
a. Radical Innovation
b. Process Innovation
c. Architectural Innovation
d. Incremental Innovation

8. Both the ______________ and the _________________ have been shown to conform to an S-
shaped curve.
a. rate of performance and rate of improvement
b. rate of performance improvement and rate of adoption
c. rate of adoption and rate of improvement
d. performance improvement and performance adoption

9. The following are the adopter categories, except

a. Laggards
b. early majority
c. scientists
d. late majority

10. S-curves pertain to what?

a. technology diffusion
b. technology improvement
c. technology improvement and technology diffusion
d. none of these

11. Architectural innovations are often considered more radical and more competence-destroying
than component innovations. True

12. How innovation is described on a dimension does not depend on who is doing the describing
and with what it is being compared. False

13. When a technology’s performance is plotted against the amount of effort and money invested in
the technology, it typically shows slow initial improvement, then accelerated improvement, then
diminishing improvement. True
14. Component enhancing is an innovation to one or more components that do not significantly
affect the overall configuration of the system. False

15. Technology diffusion is the spread of technology through a population; it accelerates as the
technology becomes better understood and utilized by the mass market, and eventually, the
market is saturated. True

16. Architectural innovation is an innovation that is very new and different from prior solutions. False

17. Process innovations are embodied in the outputs of an organization—its goods or services, even
if those products are services. True

18. Incremental innovation is an innovation that makes a relatively minor change from existing
practices. True

19. Technology trajectory refers to the path the technology takes through its lifetime. True

20. The adopter categories are composed of innovators, early adopters, early adopters, late
majority, and laggards. True

21. Customer requirement demands often improve faster than technologies. False

22. Segment zero is a portion of the market that is frequently neglected by most players in the
market. True

23. Utterback and Abernathy characterized the technology in two phases, the fluid phase and the
dominant design/specific phase. True

24. Specific phase, firms experiment with different form factors or product features to assess the
market response. False
Chapter 4
1. A single product or process architecture that dominates a product category
a. Installed base
b. Dominant design
c. complementary goods
d. modularity

2. How many people use the product/service, synonymous with users

a. Installed base
b. Complementary goods
c. Platform ecosystem

3. Small historical events can have a great impact on final outcome. Not only does the quality of
technology influence its fate, but also other factors such as timing and by whom the technology
is sponsored affect the fate
a. Path dependency
b. Platform ecosystem
c. Network externalities
d. The learning curve
4. Also called positive consumption externalities, the more people that consume a product/service,
the more valuable it becomes, e.g. Facebook, railroads.
a. Absorption Capacity
b. Modularity
c. Network externalities
d. Standalone

5. The degree to which a system’s components can be separated and recombined

a. Platform
b. Perception
c. Dominant
d. Modularity

6. Goods or services that enable or enhance another good

a. Installed base
b. Modularity
c. complementary goods
d. Installed based

7. What 6x6 matrix developed by W. Chan Kim and Renee Mauborgne consisting of six different
utility levers and six different stages of buyer's experience cycle.
a. Buyer utility map.
b. Buyer map
c. EFE matrix
d. IFE matrix

8. a firm’s ability to recognize, assimilate, and utilize new knowledge. Prior knowledge builds the
firm's ability to recognize the value of new information.
a. Learning effects
b. Learning curve
c. Absorptive capacity
d. Modularity product competition

9. Technology generates revenue that can be reinvested to develop the technology. The more it is
used, the more efficiently the technology is applied and the more use cases are found.
a. Learning effects
b. Learning curve
c. Technological effects
d. Dominant effect

10. Meets all needs of buyers itself, no customization, no external compatibility, e.g. Nokia E90.
a. Product bundle with third party complements
b. Product bundle with third party components and complements
c. Traditional integrated product bundle
d. Traditional integrated product bundle third party complements

11. In industries characterized by network externalities, the value of a technological innovation to

users will be a function only of its stand-alone benefits. FALSE
12. In a platform ecosystem, some core part of a product mediates the relationship between a wide
range of other components or complements and prospective end users. TRUE

13. Products that are not actually on the market and may not even exist but are advertised—by
many software. Vaporware
14 -19. What are the 6 utility levers of buyer utility map?
1. customer productivity,
2. simplicity,
3. convenience,
4. risk,
5. fun and image,
6. environmental friendliness

1. When the rate of return (not just gross returns) from a product or process increases with the
size of its installed base. increasing returns

CHAPTER 5

1. First mover who developed a new technology entails significant research and development
expenses. TRUE

2. Incumbent Inertia is the tendency for incumbents 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. TRUE

3. A first mover to the market may face considerable uncertainty about what product features
customers will ultimately desire and how much they will be willing to pay for them. TRUE

4. First movers have no opportunity to shape customer preferences by establishing the precedent
for product design in the newly emerging market and by investing in customer education. FALSE

5. Followers or later entrants often do not have to invest in exploratory research. TRUE

6. Manage the timing of entry into the market is a complex matter? TRUE

7. To have more choices in its timing of entry, a firm need to be able to develop the innovation late
or quickly? FALSE

8. Firms that have fast-cycle development processes have more options when it comes to timing?
TRUE

9. All pioneers face costumer uncertainty. FALSE

10. Many innovations rely on crucial enabling technologies to ensure their performance. TRUE

11. All firms have the resources and capabilities to develop both a good and its complement. FALSE
12. If the threat of competitive entry is high, the firm may need to enter earlier to establish brand
image, capture market share, and secure relationships with suppliers and distributors. ans:
TRUE

13. The degree to which the technology represents an improvement over previous technology
increases a firm’s likelihood of successful early entry. TRUE

14. First movers always have the advantage. FALSE

15. They are called as the pioneers

a. Early follower
b. First movers
c. Late entrants
d. Late followers

16. It is the advantage of the first mover where they may rise in market power through increased
returns and eventually make it the dominant design.
a. Technological leadership
b. Brand loyalty
c. Reaping increasing returns advantages
d. Preemption of scarce asset

17. First movers can build a reputation as a leader in that area of technology which can help it
maintain a lead even after competition enters the arena.
a. Brand loyalty and technological leadership
b. Reaping increasing returns advantages
c. Exploiting buyer switching costs
d. Preemption of scars asset

18. Inertia to change increases the longer a product is around.

a. Technological Leadership
b. Brand loyalty
c. Preemption of scarce asset
d. Exploiting buyer switching costs

19. What process that the firm not only has a better chance at being an early entrant, but it can also
use experience gained through customers’ reactions? FAST DEVELOPMENT PROCESS

20. What cycle that indicates the development of time can be greatly shortened by using strategic
alliances, cross-functional new product development teams, and parallel development
processes. PRODUCT DEVELOPMENT CYCLE
CHAPTER 6
1. He was a serial entrepreneur who had launched a number of start-ups and developed an
environmentally friendly sports car.
a. Martin Eberhard
b. Elon Musk
c. Al Coconi
 d. Tom Tesla

2. In this model, the attractiveness of an industry and a firm’s opportunities and threats are
identified by analyzing five forces.
a. Internal Analysis
b. Stakeholder Analysis
c. Porter’s Five-Force Model
d. Porter’s Value Chain

3. The following are primary activities except:

a. Inbound Logistics
b. Human Resource Management
c. Marketing and Sales
d. Operations

4. Resources of an intangible nature (such as knowledge) that cannot be readily codified.

a. Causal ambiguity
b. Tacit resources
c. Socially complex resources
d. Procurement
5. Products or services that enhance the usefulness or desirability of another product.
a. Complements
b. Vertical integration
c. Stakeholder
d. Switching cost

6. Measures might include the percentage of sales from products developed within the past five
years, average length of the new product development cycle, or employee training targets.
a. Innovation and learning perspective.
b. Customer perspective
c. Financial perspective
d. Internal perspective

7. It is typically considered to be those that differentiate it strategically.

a. Core Rigidities
b. Core Competencies
c. Dynamic Capabilities
d. Strategic Intent

8. Who compared core competencies to roots?

a. Prahalad and Camel
b. Prahalad and Hamel
c. Elon Musk
d. Kayden Break

9. What makes core competencies to be difficult to imitate?

a. Harmonization and combination of multiple abilities.
b. Due to incentive systems
 c. Due to inflexibility
d. I don’t know.

10. These are different kind of abilities, core competencies often combined except?
a. Market interface
b. Building and managing
c. Technological abilities
d. Communication

11. Dynamic capabilities enable firms to quickly adapt to emerging markets or major technological
discontinuities. TRUE

12. A firm’s purpose is to create value. TRUE

13. The analysis of the internal environment of the firm most often begins with identifying the firm’s
strengths and weaknesses. TRUE

14. Identifying and exploiting core competencies is seen as important to established companies
only. FALSE

15. A firm’s competency also depends on building high quality relationships across different
functions and business units. TRUE

16. Core competencies are easy to imitate. FALSE

17. Knowledge accumulation are path independent. FALSE

18. Any entity that has an interest (“stake”) in the organization is called stockholder. FALSE

19. Shareholders are always stakeholders in a corporation, but stakeholders are not always
shareholders. TRUE

20. Kayden Break and Sung Jin Woo describe firms who crafted what they call “blue ocean”
strategies by innovating in a way that allowed them to enter untapped market space. FALSE

CHAPTER 7

1. Knowing where we are currently on the curve will help reveal where the most opportunity for
improvement lies. TRUE

2. If, in the future, the stock is worth more than the exercise price, the holder of the option will
typically exercise the option by buying the stock. TRUE

3. Given the four types of development projects that commonly appear on a project map, a
particular technology may migrate through these different types of projects over time. TRUE

4. Many factors in the choice of development process are extremely difficult to quantify, or
quantification could lead to misleading results. TRUE
5. Conjoint Analysis is a method that estimates the relative value individuals place on attributes of
a choice which can then be used in development and pricing decisions whereas Data
Envelopment Analysis (DEA) is a method of ranking projects based on multiple decision criteria
by comparing them to a hypothetical efficiency frontier. TRUE

6. Identifying the key dimensions that a technology has progressed along is the last step in
predicting its future. FALSE

7. If the NPV of a prospective project is positive, it should be rejected. However, if NPV is negative,
the project should be accepted. FALSE

8. In a Concave Parabolic Utility Curve, utility decreases with decreasing selection, but at an
increasing rate, and indefinitely. FALSE

9. Only a few firms use a form of capital rationing in formulating their new product development
plans. FALSE

10. R&D intensity is the ratio of R&D sales to expenditures. FALSE

11. It is the allocation of a finite quantity of resources over different possible uses.
a. Capital Rationing
b. Capital Budgeting
c. Capital Allocation
d. Capital Development Budget

12. _________ is the plot of the value customers derived from a technology according to its
performance on a given dimension.
a. Parabolic Curve
b. S-Curve
c. Utility Curve
d. Technology Curve

13. These projects pay off the quickest and help service the firm’s short-term cash flow needs.
a. Advanced R&D Projects
b. Breakthrough Projects
c. Platform Projects
d. Derivative Projects

14. Quantitative methods for assessing whether the anticipated future benefits are large enough to
justify expenditure, given the risks.
a. Net Present Value (NPV)
b. Internal Rate of Return (IRR)
c. Discounted Cashflow Methods (DCF)
d. Real Options

15. The Angel’s Technology Company is considering developing an equipment to be attached to

their main manufacturing machine. The equipment will cost $6,000 and will increase annual cash
 inflow by $2,200. The useful life of the equipment is 6 years. The management wants a 20%
return on all investments. The NPV of this investment project is?
a. $1,316.12
b. $3,316.12
c. $5,316.12
d. $7,316.12

16. The discount rate that makes the net present value of the investment zero.
a. Net Present Value (NPV)
b. Internal Rate of Return (IRR)
c. Discounted Cashflow Methods (DCF)
d. Real Option

17. __________ asks, “Given a particular level of expenditure, particular level(s) and rate of cash
inflows, and a discount rate, what is this project worth today?”
a. Net Present Value (NPV)
b. Internal Rate of Return (IRR)
c. Discounted Cashflow Methods (DCF)
d. Real Options

18. The question “Does the new project leverage the firm’s core competencies or sources of
sustainable competitive advantage?” is most likely to be asked to know the role of capabilities,
specifically
a. Existing capabilities
b. Future capabilities
c. Project capabilities
d. Competitor’s capabilities

19. A quantitative method in which the application of stock option valuation methods to investments
is in nonfinancial assets.
a. Net Present Value (NPV)
b. Internal Rate of Return (IRR)
c. Discounted Cashflow Methods (DCF)
d. Real Options

20. These are projects necessary to develop cutting-edge strategic technologies.

a. Advanced R&D Projects
b. Breakthrough Projects
c. Platform Projects
d. Derivative Projects