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Exam 12: Managing Innovation and Fostering Corporate Entrepreneurship

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Question 51

Multiple Choice

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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.

A) down; goes above
B) down; drops below
C) up; drops below
D) up; goes above

E) All of the above
F) B) and C)

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Question 52

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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?

A) inventory analysis
B) financial analysis
C) real options analysis
D) break-even analysis

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

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Question 53

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Fair Oaks Farms,one of the largest dairy farms in the country,is rapidly becoming a zero-carbon-footprint dairy.Starting with the 430,000 gallons of manure produced daily,a number of innovations designed to capture value from the manure and assorted by-products are leading to greater efficiencies and at the same time are environment-friendly.This is an example of a firm defining its ________ envelope.

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?

Research indicates that leaders of innovative firms spend 50 percent more time on discovery activities than the leaders of less innovative firms.

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

Define the five dimensions of an entrepreneurial orientation and why are they important?

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

Pierre Omidyar saw the opportunity that led to eBay when he linked three items: (1) a personal fascination with creating more efficient markets,(2) the desire of his fiancée to locate hard-to-find collectible Pez dispensers,and (3) the ineffectiveness of local classified ads in locating such items.This is an example of which innovator DNA trait?

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

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

Whereas ________ are often associated with a low-cost leader strategy,________ are frequently an important aspect of a differentiation strategy.

If not all corporate venture efforts are financially rewarding,how else might they be evaluated?