NETW 583 Week 4 Midterm Exam (Version 1) | 30 OUT OF 30 | 100% Guaranteed Pass

NETW 583 Week 4 Midterm Exam (Version 1) Week 4 : Identifying Core Competencies and Choosing Innovation Projects - Midterm Page 1 Question 1.1. (TCO A) Out of all the innovative ideas that com e forth, how many be- come successful products? (Points : 4) *Very few Most About half Seventy-five percent Question 2.2. (TCO A) Which of the following is true about technology trajectories? (Points : 4) a technology is always replaced by a new technology after its trajectory has flattened (i.e., it has reached its performance limits) most technology s-curves last about twenty years *some technologies have steeper s-curves than others a technology s progress along the s-curve cannot be sped up or slowed down Question 3.3. (TCO B) When both Nintendo and Sega claimed to have over 60 per- cent market share of the video game console market, both were trying to influence . (Points : 4) *users perceptions and expectations about the installed base. perceived technical utility. pre-order demand. technology bias. Question 4.4. (TCO B) IBM used MS DOS on its new personal computer because Gary Kildall was slow to sign a contract to license CP/M. This lead to the rapid building of installed base for MS DOS and the eventual dominance of Microsoft in personal com- puter operating systems. This unfolding of events could best be described as . (Points : 4) *path dependency. a monopolistic practice. image carryover. the technology halo effect. Question 5.5. (TCO C) Which of the following would be an example of a tacit re- source? (Points : 4) *An odds maker who works for a large casino in Las Vegas and is correct 95 per- cent of the time. A highly effective and efficient distribution network throughout the continental U.S. A retail shoe chain that has prime locations in 200 malls across the country. A flashy ad campaign for a malt liquor. Question 6.6. (TCO D) If a firm has the option of investing in R&D, the cost of imple- menting the technology is the . (Points : 4) *exercise price nature of the option benefit of exercising the option the value of the option Page 2 Question 1. 1. (TCO A) Explain how the globalization of markets affects the impor- tance of innovation. (Points : 30) Globalization of markets affect innovation because of the competition with foreign firms places pressure to continuously maintain the innovation in order to make dif- ferent products and services. Innovation happens because of this competition and can arise from individuals to solve an issue they have encountered or from groups like government or universities. Firms, being the primary source of innovation, intro- duce new products and by doing this they are able to protect their margins and also by investing in new innovative processes that aid on the manufacturing of the prod- ucts can aid on lowering the costs. With the advances in computers and information technology a firm can speed up their innovative process because they can use soft- ware to aid on their design and computers can also aid on the manufacturing process. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Question 2. 2. (TCO A) Lately, computer users have been using USB jump drives to copy and store files. These are also called thumb drives, pen drives, and other names. These are small drives you can attach to a key chain and plug into any USB port and have the utility of a hard drive. The size of their memory varies from 16 kilobytes to several gigabytes. Assume you are the CEO of the Ajax Thumb Drive Company. How might you use the s-curve model to predict when to switch to a new technology? What would be the limitations of this approach? (Points : 30) The S-Curve can be used as a perceptive tool to identify when it is the perfect time to switch from old technologies when they reach their limits to new ones. A firm can use their data on the investment and the performance of their own technologies or data from the overall industry investment on a technology and calculate an average performance that was achieved by other firms. This information will provide man- agers whether the technology is reaching it’s limits or identify newer and better technology. The S-Curve is good to provide information but like all tools there are some limitations on its use. First, all technology has its limits but it is rare that the true limits are known in advance. The second limitation is that the information pro- vided by the S-Curve is not set in stone because there could be changes in the mar- ket, component or complimentary technologies can either shorten or extend the technology life cycle. Lastly, the information provided by the S-Curve can be influ- enced by the firm and their development activities. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Question 3. 3. (TCO B) Explain what factors affect the technology trajectory and chance of success of a new technology besides its quality and technical advantage. (Points : 29) The trajectory of technology can be influenced or affected by anything from timing, the sponsor, complementary goods, the installed base, network externalities, or event the timing. The timing of entry on a market is critical, if you enter too early you get access to scarce assets, you could exploit buyer switching costs and get in- creasing returns due to brand loyalty. On the other side of that coin the firm will ex- perience a lot of research and development costs, underdeveloped supply and dis- tribution channels and immature technology and complements. The sponsor is an- other critical factor, if the technology is introduced by an industry leader, it has a chance of a longer life cycle. Complementary goods are important because they en- hance the value of the product or technology, for example if Sony released the PlayStation without any games or third party accessories, people would not pur- chase it because it would not work. Lastly, the installed base is necessary because it displays the quantity of users that have purchased the technology and use it there- fore creating a need for more complementary goods or it even may start a network externalty cycle that makes the technology more dominant in the market. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Question 4. 4. (TCO B) In the 1970s, Church & Dwight began selling Arm & Hammer Baking Soda Deodorant. Within 6 months the product was very successful and an- other company released Arm & Arm Deodorant to try to capture some of the market created by the Church & Dwight product. Can Church & Dwight prevent the other company from selling their product? What must Church & Dwight do? (Points : 29) Church & Dwight can treat the intellectual property (recipe and process of manufac- turing the baking soda deodorant) as a trade secret. This allows the keep the process secret from disclosure unlike a patent. The item recipe needs to qualify as a trade secret under the Uniform Trade Secret Act and must meet the following crite- ria: * The information must not be generally known or be discovered through legitimate means. * The information must have economic importance that is dependent on its secrecy. * The trade secret holder must exercise reasonable measures to protect the secrecy of the information. Benefits of keeping the recipe a trade secret is that Church & Dwight they can pre- vent others from benefiting from this information and can take legal action to pre- vent further use of the trade secret. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Question 5. 5. (TCO C) Prahalad and Hamel offer three tests to identify a firm's core competencies. List the tests, explain them, and provide examples. (Points : 29) 1. Is it a significant source of competitive differentiation? Does it provide a unique signature to the organization? Does it make a significant contribution to the value a customer perceives in the end product? This test is directed at how the customer perceives the end product and the value it provides. For example, Apple Inc intro- duced the iPhone which has provided customers a touchscreen smartphone that is sleek in design and user friendly. The iPhone is not just a phone, it has the capability of playing music, watching videos, read emails and books, gaming, other applica- tions that are useful. 2. Does it transcend a single business? Does it cover a range of businesses, both current and new? This test is directed to state which users or businesses are the products being directed to. The iPhone was designed to be used by anybody and ev- erybody, this means that it covers regular businesses both current and new because it appeals to users of all ages. 3. Is it hard for competitors to imitate? This test is directed to analyze if the prod- ucts can be imitated or cloned easily. For example, when the iPhone was released other companies launched phones modeled after the iPhone, both in appearance and capabilities. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Question 6. 6. (TCO D) Johnston Products has gathered data to evaluate the attrac- tiveness of a potential project. It knows the cash flows expected under different sce- narios. It has conducted a focus group that ranks various product attributes, and it has the ranking of various marketing techniques provided by a consulting company. What method should Johnston use to evaluate this project? Why is this method the best one to use? (Points : 29) Johnston should use the Data Envelopment Analysis (DEA) method to evaluate the project. The DEA assesses the potential projects based on multiple decision criteria by comparing them to hypothetical efficiency frontier. This criteria could be the cash flow estimates, the ranking on how the project fits with current competencies and the potential for building future competencies, a score for technical feasibility, and lastly a score for the customer desirability. These scores all together will provide a score on how likely is the project going to succeed, how much it will cost and how much revenue it might bring. The DEA uses linear programming to combine the measures and create a hypothetical efficiency frontier that represents the best per- formance on each measure and the values then can be used to compare this project to other projects. MELISSA A SCHILLING. Strategic Management of Technological Innovation, 3rd Edi- tion. McGraw-Hill Learning Solutions, 2009. VitalBook file. Show Less