TEST BANK STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION SCHILLING

TEST BANK STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION 3RD EDITION SCHILLING

Chapter 10
Organizing for Innovation

True/False

1. A firm’s organization structure can both help and hinder the firm’s efforts at innovation.

Answer: True
Difficulty: Easy
Page: 213

2. Coalitions of small firms often have well-defined systems of authority and control.

Answer: False
Difficulty: Moderate
Page: 214

3. When large companies break up into networks of small, often more autonomous divisions of independent firms it is called the Icarus Paradox.

Answer: False
Difficulty: Easy
Page: 215

4. Standardization refers to the degree to which activities are performed in a uniform way.

Answer: True
Difficulty: Easy
Page: 216

5. Formalization refers to the degree to which a firm’s decision-making authority is retained only at high levels of the firm’s hierarchy.

Answer: False
Difficulty: Moderate
Page: 216

6. Frankie’s Chicken Shack wants to ensure better consistency and quality. To accomplish this Frankie needs to make her procedures more standardized.

Answer: True
Difficulty: Easy
Page: 216

7. The Bobcat Machinery Company has a high degree of formalization and requires standardization of procedures with many rules dictated. Bobcat will find that this regulation leads to disciplined thinking which in turn fosters innovation.

Answer: False
Difficulty: Moderate
Page: 216

8. According to research, consumer product companies tend to use the centralized R&D structure to better meet individual market needs.

Answer: False
Difficulty: Hard
Page: 217

9. An ambidextrous organization is one with a complex organizational form that is composed of multiple internally inconsistent architectures that can collectively achieve both short-term efficiency and long-term innovation.

Answer: True
Difficulty: Easy
Page: 220

10. Firms which have multiple product divisions generally implement a common structure across all the divisions.

Answer: False
Difficulty: Moderate
Page: 220

11. The International Cyberspace Corporation is a very large firm. It can overcome its size barriers to creativity if it has the internal structures with the incentives and behaviors of small firms.

Answer: True
Difficulty: Moderate
Page: 221

12. A modular product is one that “modifies” or enhances another product.

Answer: False
Difficulty: Easy
Page: 222

13. Advances in information technology have hindered the growth of loosely coupled organizational structures.

Answer: False
Difficulty: Easy
Page: 223

14. A loosely coupled structure is better suited for activities that involve the exchange of tacit knowledge.

Answer: False
Difficulty: Moderate
Page: 224

15. The not-invented-here syndrome encourages companies to try innovations from divisions in other countries because persons who live in another country are more often seen as experts.

Answer: False
Difficulty: Easy
Page: 226

16. The Peedle Chocolate Company is headquartered in Belgium. In the United States, it uses manufacturing techniques from France and marketing techniques from Great Britain. It seems to be using the locally leveraged R&D strategy.

Answer: True
Difficulty: Hard
Page: 227

17. The globally linked R&D strategy is great for global coordination, but it is expensive.

Answer: True
Difficulty: Easy
Page: 227

18. The locally leveraged and globally linked R&D strategies are the same.

Answer: False
Difficulty: Moderate
Page: 227

19. The transnational approach to R&D leverages resources and capabilities that exist anywhere within the firm and deploys them when and where an opportunity to do so exists.

Answer: True
Difficulty: Easy
Page: 228

20. For the transnational approach to R&D to work, the organization must balance its identity between national brands and global image.

Answer: True
Difficulty: Moderate
Page: 228

Multiple Choice

21. Schumpeter said that large firms are likely to have
a. a more difficult time raising funds.
b. lower returns with lower sales volumes because fixed costs of R&D are high.
c. better-developed complementary activities that enable them to be more innovative.
d. poorer global reach due to bureaucracy.

Answer: c
Difficulty: Moderate
Page: 213

22. Dove Laboratories is a large pharmaceutical firm that is 70 years old. It has consistently invested heavily in R&D. One would expect Dove to have
a. better capabilities to take on larger innovation projects.
b. fewer rules and regulations than smaller firms.
c. increasingly effective governance systems.
d. foolproof communication systems.

Answer: a
Difficulty: Moderate
Page: 214

23. Which of the following statements is true about small firms?
a. They face difficulties in monitoring employees.
b. Rewarding employees is much more difficult for them.
c. They tend to be more entrepreneurial.
d. They are likely to have lower rates of new product success.

Answer: c
Difficulty: Moderate
Page: 214

24. Since a large company tends to have more bureaucracy, fixed costs, and commitments to employees and customers, you can expect it to be _____.
a. more responsive to change
b. less responsive to change
c. oblivious to change
d. unaffected by change

Answer: b
Difficulty: Moderate
Page: 214

25. According to the _____, if Frankie’s Chicken Shack excels in cooking and selling chicken, this ability could lead to its downfall if it does not embrace new technology because it may become overconfident, careless, or slow to change.
a. law of diminishing returns
b. principle of disaggregation
c. Icarus Paradox
d. research of Porter

Answer: c
Difficulty: Easy
Page: 214

26. A large company might want to disaggregate in order to
a. lengthen development cycles.
b. reduce costs.
c. become more responsive.
d. improve the rate of product adoption.

Answer: c
Difficulty: Easy
Page: 215

27. Tracie Fashions has become very profitable and now employees 80 persons. Tracie had been very informal in running the company, but now feels she needs to have more rules and regulation of employee behavior. Tracie desires more
a. creativity.
b. formalization.
c. delegation.
d. decentralization.

Answer: b
Difficulty: Easy
Page: 216

28. Tracie Fashions has become very profitable and now employees 80 persons. Tracie needed to have better regulation of employee behavior so she formalized the company with more rules, procedures, and written documentation. This may result in
a. less creativity.
b. more creativity.
c. disgruntled employees because they do not know what to expect.
d. more flexibility in responding to fashion trends.

Answer: a
Difficulty: Moderate
Page: 216

29. Frankie’s Chicken Shack wanted to ensure the quality and consistency of chicken served; so the cooking procedures were highly standardized. What will Frankie be giving up by making this move?
a. Customer contact
b. Waste
c. Creativity and experimentation
d. The company’s cost advantage

Answer: c
Difficulty: Easy
Page: 216

30. If Jasper Electronics decentralizes its R&D by divisions, it will most likely
a. achieve greater economies of scale.
b. eliminate the duplication of efforts.
c. benefit more from the learning curve.
d. result in development projects that take advantage of the diversity of knowledge and market contacts that may exist in different divisions.

Answer: d
Difficulty: Moderate
Page: 216

31. An advantage of the centralized structure for R&D is that it
a. can lead to products that better satisfy customer needs.
b. can enable greater division of labor.
c. it leads to a sense of ownership and empowerment among employees.
d. leads to higher sales revenues.

Answer: b
Difficulty: Moderate
Page: 217

32. Dynamic Electronics Company develops and sells its technologically-advanced digital camera in markets all over the world. For this industry, it is most likely that the company uses a _____ structure for its R&D.
a. decentralized
b. centralized
c. spaghetti
d. homogenized

Answer: b
Difficulty: Easy
Page: 217

33. Since much innovation arises from experimentation and improvisation, the _____ organization structure is typically considered better suited to creativity and innovation.
a. mechanistic
b. formalized
c. standardized
d. organic

Answer: d
Difficulty: Easy
Page: 218

34. Which of the following is true regarding ambidextrous organizations?
a. Incentive plans are uniform through out the organization.
b. There is tight coordination of R&D activities.
c. The organization is characterized by high levels of formalization and standardization.
d. R&D units are allowed to function like small, independent ventures.

Answer: d
Difficulty: Moderate
Page: 220

35. Michael is a part of a new product development team that operates nearly autonomously from its parent organization—WorldLogix. Within the team, there is a considerable decentralization of authority and little bureaucracy. Michael’s team can be referred to as
a. a modular team.
b. skunk works.
c. an inorganic group.
d. a loosely coupled team.

Answer: b
Difficulty: Easy
Page: 220

36. Quasiformal structures
a. are slow to respond to the need for change.
b. foster interactions based on hierarchy.
c. are more relationship-focused.
d. play important boundary-spanning roles.

Answer: d
Difficulty: Moderate
Page: 221

37. Old Hickory Furniture Company achieves both efficiency and flexibility by using the same components (legs of a dining room table) for several different types of tables. This is referred to as
a. modularity.
b. architecture.
c. transparent substitution.
d. organic innovation.

Answer: a
Difficulty: Moderate
Page: 222

38. Swaback Motors told its R&D department that it did not matter what the motor they developed was like as long as it would fit into the engine housing and connect to the electrical and other mechanical parts. This is an example of
a. organic technology.
b. loose coupling.
c. functional preference.
d. default designing.

Answer: b
Difficulty: Easy
Page: 223

39. ErgoFlex manufactures office furniture. The company is considering adopting a modular production system. In which of the following scenarios would a modular system offer greater value to the company?
a. When customers want office chairs with rubber wheels
b. When customers want office chairs with lumbar support
c. When customers want office chairs with headrests
d. When some customers want office chairs with rubber wheels and lumbar support while the remaining prefer headrests only.

Answer: d
Difficulty: Hard
Page: 223

40. In loosely coupled organization structures
a. coordination is achieved through adherence to shared objectives and common standards.
b. the possibility for achieving synergies is high.
c. the firm reduces its chance of developing a product that has a price-to-value ratio that attracts customers.
d. the overhead and administrative complexities of maintaining a wide scope of activities are increased.

Answer: a
Difficulty: Moderate
Page: 223

41. The International Framing Company wants to tightly control R&D and achieve specialization and economies of scale. At the same time it wants to protect its core competencies and spread its innovations throughout the company. The _____ strategy would help achieve this goal.
a. center-for-global
b. local-for-local
c. locally leveraged
d. globally linked

Answer: a
Difficulty: Hard
Page: 226

42. The Frankfurt Clock Company has subsidiaries in several different countries that are highly autonomous. The clock markets in these countries are very diverse and the needs of the local markets vary greatly. The _____ or _____ strategies for R&D are most appropriate for this situation.
a. center-for-global or globally linked
b. local-for-local or locally leveraged
c. locally leveraged or globally linked
d. globally linked or local-for-local

Answer: b
Difficulty: Hard
Page: 226-227

43. Gerusa is a company with major divisions in Germany, Russia, and the U.S. (hence the name). The scientists in Russia develop cancer treatment methods. The Germans organize treatment clinics. The U.S. division gathers the financing and markets the treatment methods. This is an example of a _____ strategy.
a. center-for-global
b. local-for-local
c. locally leveraged
d. globally linked

Answer: d
Difficulty: Hard
Page: 227

45. In the locally leverage strategy the R&D divisions _____ while in the globally linked strategy the R&D divisions _____.
a. are decentralized; work on all development activities relevant to the region where they operate.
b. specialize in a particular development activity; are decentralized.
c. work on the full scope of development activities relevant to their business unit; take advantage of the diversity of resources and knowledge.
d. are decentralized; are centralized.

Answer: c
Difficulty: Moderate
Page: 227-228

45. Cromwell Electronics would like to integrate its world wide operations in order to enhance its adaptability and flexibility to environmental situations. Essentially, Cromwell would like to be able to leverage its resources and capabilities whenever and wherever an opportunity arises. What would you recommend that Cromwell do?
a. Encourage divisions to function as independent silos by developing their own specific capabilities and competencies.
b. Utilize division-spanning teams.
c. Focus on its global image instead of its national brands.
d. Strictly adhere to a decentralized structure.

Answer: b
Difficulty: Hard
Page: 228
Essay

46. What are some of the advantages and disadvantages of large firms in terms of R&D?

Answer: Large firms have the advantage of having the finances, equipment, more highly skilled personnel to use for R&D, and a wider base of complementary assets and skills. Its disadvantages could include larger fixed costs, bureaucracy, and commitments to existing customers, employees, and suppliers that make it difficult to change, especially in a timely manner.

Difficulty: Moderate
Page: 213-214

47. Biogyn produces tissues and diagnostics substances for three market segments: hospitals, universities, pharmaceutical companies. Jasper, a member of the upper management team, is trying to decide whether to decentralize its R&D activities by division or not. You have been called in as a consultant to explain the advantages and disadvantages of such a move. What will you say?

Answer: Decentralizing the R&D divisions has many advantages. Each division can develop projects that meet the needs of its particular market segment better. Each division has unique knowledge of the market and customers of its division and can therefore pursue projects that will benefit them better. The disadvantage is that there may be duplication of efforts among the divisions and this is wasteful. In fact, Biogyn will be giving up some economies of scale and benefits of the learning curve by decentralizing its R&D. To the degree that Biogyn’s R&D produces outputs that are basically the same across the markets it serves, Biogyn is likely to benefit from keeping its R&D centralized.

Difficulty: Easy
Page: 216-217

48. Explain why a mechanistic organizational structure can stifle creativity.

Answer: A mechanistic structure uses formalization and standardization to achieve efficiency. It dictates procedures and detailed rules and standards. This allows for very little deviation from the standard, thus stifling any attempts to do things differently or more creatively.

Difficulty: Moderate
Page: 218

49. The Kaibash Motor Company is considering using the loosely-coupled organizational structure. They have asked you for your evaluation of such a structure and whether you would recommend it for an automobile manufacturer. Provide your answer.

Answer: A loosely coupled organization requires that different parts of the organization adhere to set objectives and common standards but allows considerable autonomy in meeting those objectives and standards. This allows the R&D efforts to be organized in an organic structure that fosters creativity while still ensuring that components will work together. The production department can be organized more mechanistically and therefore be more efficient. However, you are giving up the synergistic effects of working closely together and may find it more difficult to resolve conflicts that arise. It would seem that this structure would work well for this company.

Difficulty: Moderate
Page: 223-224

50. Gerusa is a company that uses Photodynamic Therapy to treat cancer and has major divisions in Germany, Russia, and the U.S. The scientists in Russia develop the cancer treatment methods, the Germans organize treatment clinics, and the U.S. division gathers the financing and markets the treatment methods. What type of strategy is this and what are the advantages and disadvantages of this type of strategy?

Answer: This is the globally linked strategy. Each division uses its R&D expertise to develop different aspects of this service. Each is meeting a different need of the global company. Innovation is decentralized to take advantage of resource and talent pools, it is also spread globally to meet Gerusa’s objectives. The problem with this strategy lies in coordination. It will be expensive in both time and money to coordinate.

Difficulty: Hard
Page: 227