Exam question example BAD01 and BKB0028 Innovation Management

Question based on Chapters 1-3 of Schilling:

1. Which of the following products would be considered novel?
A)
B)
C)
D)

A detergent advertises that it can remove spots

A company announces it has produced a liquid compound which can be
poured onto surfaces to produce holes in them
A cell phone company announces that it now offers text messaging
A school announces it will install artificial turf on its football field

Aswer B
Remark: this is a question not about facts in the chapter, but about understanding

2. In the class meeting on chapter 3 was explained that classifications of product

innovations often have to do with the degree of novelty of the innovation. Mention 2 of
the 3 dimensions of novelty presented in class.
Degree to which the product is new to the market (customers)
Degree to which the product is new
Degree to which the manufacturing process to make the new product is new

3. When a company that produced vinyl records for the music industry learned that music
could be recorded on compact discs to sell, it was facing a competence .
innovation
A)
B)
C)
D)

Enhancing
Destroying
Rationalizing
Synergizing

Answer B
Remark: this is a question about facts in this chapter (you have to know what
competence destroying is)

Examples of Exam questions Chapter 4 Schilling

When do process innovations play an important role in the TLC?
After the occurrence of the dominant design.
Also correct: in the era of incremental change or in the specific phase

According to Schilling, network externalities explain an important part of the

value of a new product in the market. What factor from the list below determines
the network externality effect as explained by Schilling?
a)
b)
c)
d)

A companys intranet
The external environment of the company in general
The advertising budget for the new product
The installed base of the new product

Answer D
The growth of the installed base of the automobiles in Europe from 1950-1990 is
according to Schilling the result of:
a)
b)
c)
d)

The increase of taxes on automobiles

The introduction of radical new designs of automobiles
The growing number of gas stations
The import of automobiles from the US

Answer C
Questions with regard to Schilling Chapter 5
Taking an old technology as a reference point, Schilling defines a discontinuous
technology as (page 42): A technology that fulfills a similar market need by building on
an entirely new knowledge base.
Is a discontinuous technology always a radical product innovation? Explain your answer.
A discontinuous innovation is always a new product (because it is about a market,
namely a similar market) and is always radical (because by definition it is about an
entirely new knowledge base and Schilling defines radical innovation as: an innovation
that is very new and different from prior solutions).
What is not mentioned by Schilling as a first mover advantage?
A) Brand loyalty and technological leadership

B) Reaping increasing returns advantages

C) Preemption of scarce assets
D) Research and development expenses
Answer: D (research and development expenses are a first mover disadvantage)

Chapters 6 and 7
Which of the following would be a stakeholder for Erasmus University Rotterdam?
A)
B)
C)
D)

Students
Faculty
Parents
All of the above

Answer D (general insight on stakeholder model in chapter 6)

The following was presented during class: From 1902-2005, DSM transformed itself
from a coal-mining company into a company operating in markets like Life-science
products, Performance materials, Nutritional products and Industrial chemicals.
What describes best what happened with the companys technological competences?
A) The knowledge of their original core competence, mechanical engineering,
deepened
B) The company built up a number of completely new competences, such as
biotechnology, fine chemicals, material science, and the like
C) The company gradually specialized in customer relationship marketing
D) The company relied strongly on research groups at universities in the new fields
of technology
Answer B
In chapter 7 Choosing Innovation Projects, the Net Present Value method is used.
How is an individual innovation project evaluated with this method?
Answer: The method calculates the present value of future cash-flows, inflows
(revenues from the innovation) and outflows (development costs of the innovation)
Examples of exam questions related to chapter 8 of Schilling and the class discussion
of cooperation (including the MCC case).

Gerusa is a company of former Soviet scientists who use a special chemical to kill cancer
cells. While the scientists have the knowledge, they are short on equipment, money, and
marketing know-how. It would seem that Gerusa should
A)
B)
C)
D)

give up the idea altogether

find a partner with which to collaborate
forge forward and develop this technology on their own
none of the above

Answer: B (question on general insight based on the book)

The Microelectronics and Computer Corporation (MCC) is a joint-venture which works

for the around 20 large US companies that are member (shareholder). What is the work
the MCC did in the 1980s?
A) Creating a new base for computer and microelectronics technology
B) Developing new products and services that it brings on the market
C) Developing new products and services that are slightly improved by the member
firms subsequently
D) Acquiring market information for next generation technologies
Answer: C
(this question can only be answered on the base of the class analysis of the MCC case)

What is for a company the biggest advantage and disadvantage, in terms of money, of
going solo in the development of new technology and new products?
Biggest advantage: the possibility to get all the profits
Biggest disadvantage: paying for the required R&D alone

Chapter 10
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 achieve this goal.
a. center for global
b. local for loca;
c. locally leveraged
d. globally linked
Answer: a
What is the purpose of visible design rules:

a. Create agreement between product developers on interfaces

b. Create agreement between marketing and product design on the requirements
which the product has to fulfill.
c. Clarify the functioning of a product to clients, to facilitate maintenance and repair
d. Clarifying the functioning of a product to clients, to facilitate the exchange of
modules
Answer: a
Chapter 11
Sample exam questions
Jasbar Industries has developed a very short product development cycle. It can expect
which of the following results?
A. Consumers will not regret having bought previous models of Jasbar products
because the new ones are so advanced
B. Consumers will not hesitate to buy Jasbar products
C. Jasbar can take advantage of the latest technology advances
D. The development team will be comfortable with the pressures because they
operate best under pressure

Stage

Gate Reviews
Stage
completed

Gate
Review

All
Deliverables
Met and
Acceptable?

NO

Should
Project
continue?
continue?
NO

END
Project

YES
YES

YES WITH ACCEPTED RISK

Resources
Available?

NO

input
avavailabl
e?

YES

AGREE ON deliverables
for next Stage

HOLD

Study the model above (from the lecture Managing the New Product Development
Process). What is your opinion on the application of the funnel in this firm?
- This funnel is a top-down process instead of horizontal communication
- This funnel becomes wider towards the end instead of more narrow
- In this model selection does not take place in a funnel
- In this firm quality and costs are separated in the funnel

Answers: C, C

Sample exam questions chapter 12

Which type of international virtual team is likely to be used only for strategic innovations
of the utmost importance due to its high expense?
A. decentralized self-coordination
B. system integrator as coordinator
C. core team as system architect
D. centralized venture team
According to the lecture Managing the New Product Development Teams the
heavyweight team manager has to fulfill a number of roles. Which one does not belong to
those roles?
- Direct Market Interpreter
- Purchasing Coordinator
- Program Manager in Motion
- Concept infuser
Answers: D, B

BAD01 Innovation management (Group 1)

Instructions:
The multiple choice questions (40 questions) count for 75% of the grade.
The three open questions count for 25%.
Answer the open questions as brief as possible! For each open question an
indication of the expected length of the answer is given.
Give the answers to the open questions on separate blank forms. Do not
forget to write down name, student number and signature on each page.
It is not allowed to use a dictionary nor any electronic device.
The correct answers to the multiple choice questions will be published on
the blackboard immediately after the exam.
Date and place of feedback sessions will also be announced on
blackboard.

1. Segway developer Dean Kamen's notion of kissing frogs refers to a specific activity
in the new product development process. Which activity?
A) Embracing new ideas even though they seem repugnant
B) Courting customers for R&D funds
C) Producing, evaluating, and eliminate many different design concepts to explore a
wide range of potential solutions
D) Look beneath the surface at ideas for underlying concepts

2. Novelty is a main criterion to consider something an innovation. Which of the

following products would be considered novel in 2005?
A) A detergent advertises that it can remove spots
B) A company announces it has produced a liquid compound which can be poured
onto surfaces to produce holes in them
C) A cell phone company announces that it now offers text messaging
D) A college announces it will install artificial turf on its football field

3. Process innovations are a major type of innovation (Schilling chapter 3). What is very
clearly an example of process innovation?
A) A pizza chain is able to develop a method of baking pizza that enables pizzas to be
baked in 10 minutes rather than the standard 20 minutes during the late 1980s
B) A potato chip company introduces a line of its potato chips with a new type of
seasoning.
C) A major motion picture studio releases a new 3D movie
D) A tire manufacturer develops a tire that re-inflates itself instantly when it is
punctured

4. At the first page of the book, Schilling provides a definition of technological

innovation. What is this definition?
A) A discovery of a natural law in scientific research
B) The act of introducing a new device, method, or material for application to
commercial or practical objectives
C) Component technologies that are necessary for the performance or desirability of a
given innovation
D) A single product or process architecture that dominates a product category

5. According to Schilling, Technology clusters may span a region as narrow as a city or

as wide as a group of neighboring countries. Schilling mentions one primary reason for
the emergence of such regional clusters. Which one?
A) The benefit of proximity in knowledge exchange
B) The possibility to apply for patents at the same regional office
C) The independence of the companies forming this cluster
D) The local or regional government, financing the R&D done in the cluster

6. According to Schilling, many markets coalesce around a single dominant design

rather than support a variety of technological options. What is a main driving factor for
this, according to Schilling?
A) The entry of many firms from other industries
B) The inability of companies to come up with different technological designs of the
new products
C) Increasing returns to adoption
D) The broad technological base of the companies in those markets

7. A company that establishes a technological breakthrough in an existing market may

have some 1st mover advantages. It may also encounter some disadvantages. What is a
major disadvantage according to Schilling?
A) Brand loyalty
B) Exploiting buyer switching costs
C) Bearing a large portion of the R&D
D) The change of government regulation during development of the breakthrough

8. According to Schilling (chapter 7), qualitative and quantitative methods for choosing
innovation projects are used regularly by companies. What is, according to her, a major
reason for using qualitative methods?
A) Because many factors in the choice of innovation projects are extremely difficult to
quantify
B) Because the estimated cash flows of a project are crucial criteria for selection
C) Because financial managers have a preference for such methods
D) Because junior members of an innovation team prefer such methods

9. When a company that produced vinyl records for the music industry learned that
music could be recorded on compact disks to sell, it was facing a particular type of
competence _______________ innovation. Which one?
A) Enhancing
B) Destroying
C) Rationalizing
D) Synergizing

10. When McDonalds first moved into Russia it had to teach farmers how to grow better
potatoes and cattle, and bakers how to make hamburger buns. This is what kind of
disadvantage of a 1st mover?
A) Communism's failures
B) An undeveloped supply channel
C) Greedy capitalism
D) Late-mover manipulation

11. Hydrogen as an energy source has which major disadvantage?

A) Creating more environmental pollutants than fossil fuel
B) Being a very scarce commodity
C) Requiring a new refueling infrastructure to support it
D) Capturing less of the energy potential than fossil fuelbeing less efficient

12. Venture capitalists are very important for new companies that want to start with
developing new technology. Venture capitalists provide these new companies with
several things for innovation? Here are three such things.
1. Money
2. Credibility
3. Employees
Which ones are provided by venture capitalists, according to Schilling?
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3

13. Red Hat Systems is a small company started by two computer programmers who
have come up with a medical diagnosis software program that is truly amazing. They
can try to market it themselves, but there are only two of them and they have very little
money for mass marketing efforts as well as no contacts in the medical field. They have
heard that other companies are developing similar products. They have decided to form
an alliance with United Medical Systems. What would seem to be the most important
reason for this alliance for Red Hat Systems?
A) To gain rapid access to the market
B) To maintain control of the product
C) To learn more about how to market medical software
D) To get more money to develop new software

14. Frank was able to design a pair of sunglasses that you can fold up and put into a case
that easily fits into a shirt or pants pocket. Frank wants to know if he can receive a
patent on this invention. What does the book of Schilling tell him (chapter 9)?
A) He could receive a patent since it is useful
B) He could not receive a patent since it is merely changing the size and making the
sunglasses more portable
C) It is patentable, but only if the sunglasses are not made out of plastic
D) It is patentable because sunglasses are products
15. The funnel can be used to plot all the innovation projects (including ideas) at a
certain moment. Schilling (chapter 1) presents this innovation funnel as a pipeline that
becomes narrower and narrower. So, there are more projects in the beginning than at the
end. What is the explanation for this?
A) The limited amount of time managers have for the projects at later stages
B) There is little room in the market for innovation
C) The big mouth is needed to grasp the few ideas there are
D) Most of the innovation projects are cancelled before the end of the funnel

16. An innovation project can be modeled as a sequence of steps or stage, as in the

stage-gate model discussed in class and in chapter 11. What do, very generally speaking,
these stages represent?
A) Various activities needed for the realization of the innovation
B) Specific decisions on how to change the innovation project
C) A forum to present the results of the innovation project in front of all R&D
employees
D) A way to stimulate the spirit of an innovation team at every stage

17. A radical product innovation plays an important role in understanding technology

life-cycles (TLC). Of what is such an innovation the start with respect to TLC (chapter
4: standards battles and dominant designs)? Here are a number of alternatives.
1. The beginning of the era of incremental change
2. A new technology life-cycle
3. Severe price competition
4. A technological breakthrough
Of which alternatives is radical product innovation the start?
A) 1 and 2
B) 3 and 4
C) 2 and 4
D) 1 and 3

18. The selection of a dominant design marks a major change in the market. What
(according to Schilling) determines that a particular firm gets the dominant design? Here
are three factors.
1. Value of the product relative to competitors
2. Improvement of the new product (learning effects)
3. Network externalities
Which factors determine that the firm gets the dominant design?
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) 1, 2 and 3

19. According to Schilling (chapter 4), learning effects in the early stages of the
technology life-cycle are important for early movers. What factor does she stress as
determining these effects?
A) The learning of the company due to hiring recent graduates for developing the
technological breakthrough
B) The training, specific for the new product, that sales people followed
C) The experience with mass production of the new product
D) The feedback from customers after market introduction of the new product

20. Schilling only discusses one particular innovation in the timing of entry of a new
product initiating a new technology life-cycle (chapter 5), which was emphasized in
class by Beije. What kind of innovation?
A) An incremental innovations
B) A process innovation
C) A technological discontinuity
D) A modular innovation

21. Companies like DEKA and Take2 (see book Schilling) sell most of their new
products to other companies. They do not manufacture and distribute these products
themselves. How do they continue to finance the further development of new products,
as described by Schilling?
A) They receive loans from a bank
B) They get money from a regional development office
C) They receive royalties from the licenses they give to the companies
D) They receive money from supply firms
22. Handspring, a company that made PDAs, decided to leave this market and enter the
market for smart phones within one year. As discussed during class, building the
competences to move towards the cellular phone market in such a short time was
possible, because of a particular factor. What factor?
A) It already had made a PDA with cellular phone options
B) It received financial support from one of the large cellular phone companies
C) The market for cellular phones has more competition than the market for PDAs so
the company knew it had to build up competences quickly
D) The market for PDAs had very strong competition, so companies are forced to
develop competences
23. In managing innovation project in the funnel, selection as well correction is
applied (as discussed during class) during the different stages from idea to market
introduction. If we limit the stages to idea generation and product development, for
which stages are selection and correction applied?
A) Idea correction and product development selection
B) Correction and selection of ideas and product development correction
C) Idea selection, and selection and correction of product development
D) Idea selection and product development correction

24. The net present value of an innovation project calculates the present value of future
cash flows (negative and positive flows). What does this method assume with regard to
the value of those future cash flows?
A) They have the same value for all future periods
B) They have a higher value for positive flows than for negative flows
C) They have a higher value for all flows in the near future than compared to the far
future
D) They have a lower value for all flows in the near future than compared to the far
future

25. The MCC joint-venture, as discussed during class, tried to cope with the sometimes
very different research base of its member companies as best as possible. This research
cooperation used what particular organizational solution for this?
A) Letting member companies pay a different membership fee
B) Leaving member companies the opportunity to participate in research projects at a
later stage
C) Letting an outside person lead the joint-venture
D) Giving member companies the opportunity to select the research programs they
want to join

26. In the MCC and in other cases of cooperation in which technology is jointly
developed, the aim is to let all participants profit as much as possible from that
technology. What is a major management problem in profiting from the cooperations
technology?
A) To transfer the technology from the cooperation to the firms individually
B) To get sufficient numbers of researchers for the cooperation
C) To transfer researchers from the firms individually to the cooperation
D) To get patents, for which the cooperation applied, granted

27. Many companies receive patents for their new products and are thereby legally
protected against imitation. In that way, competition is diminished. Precisely what is not
allowed in case a company in a particular market receives a patent for a new product?
A) Another company cannot develop another new product for the same market
B) Another company cannot bring a product on the market, which is the same as the
product of the company receiving the patent
C) This company cannot apply for other patents related to the same market
D) This company cannot at the same time receive copyright on the design of that
product

28. When a company that produced vinyl records for the music industry learned that
music could be recorded on compact discs to sell, it was facing a competence .
innovation.
A) Enhancing
B) Destroying
C) Rationalizing
D) Synergizing

29. In the first part of her book, Schilling discusses various patterns of technology and
types of innovation. Why are those patterns and types important with regard to the
crafting (part 2 of the book) of a companys innovation strategy?
A) They show the company what particular new idea is most promising
B) They set the boarders for the companys innovation strategy
C) They show what technological breakthrough comes next
D) They limit the company in applying general rules for managing its innovation
projects

30. The Siemens case discussed the role of formal and informal communication
networks within a company. Given the insights gained from that case, why are informal
networks important with regard to management of a radical innovation project?
A) They make communication patterns regular and thus as efficient as possible
B) They adjust communication patterns to the fixed strategic goals of the company
C) They make it possible to continuously change the composition of the innovation
team
D) They make it possible that communication patterns adjust to the needs of the
ongoing innovation

31. 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.
To what is this way of innovation referring?
A) Modularity
B) Architecture
C) Transparent substitution
D) Organic innovation

32. Schilling distinguished three structural dimensions of firms, affecting innovation.

What is not mentioned by here as a dimension?
A) Communication
B) Standardization
C) Formalization
D) Centralization

33. Which of the following statements are true?

1. The Nestl 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.
2. The globally linked R&D strategy is well suited for global coordination, but it is
expensive.
A) None
B) 1
C) 2
D) Both

34. Pioneer Cleaning Equipment has a basic concept of a new floor buffing machine and
has performed a market, technical and financial assessment for that machine. Which
stage in Schillings stage-gate process comes next?
A) Stage 5, launch the product by producing and selling it
B) Stage 4, verify and validate the process for the new product, its marketing, and
production
C) Stage 3, begin the actual design and development including the details of
manufacturing, marketing, and operations
D) Stage 2, build a business case to justify the project

35. The time-cost tradeoff curve relates the cost of product development to the speed of
development. Why does a long time-to-market of a project usually lead to lower costs of
that project?
A) Engineers dedicate less time to the project
B) Working during a longer period reduces overhead
C) During development the chance that members leave the team is high, so there are
less team members
D) During development less mistakes are made

36. What is the most important reason that QFD (quality function deployment) is
primarily used for incremental innovations?
A) Sufficient knowledge of the customer is available
B) Sufficient time to acquire supplier information is available
C) Incremental innovations use a parallel process which is especially suited for QFD
D) Incremental innovations use a heavyweight team which is able to use QFD

37. Paul is an executive vice-president in a bank. Recently the bank president asked Paul to
use his influence to make sure that the online banking project was developed and implemented.
Paul is being asked to play what role?
A) Devil's advocate
B) Project champion
C) Senior vice-president
D) Yes man

38. The vice-president of Fortune Computers is trying to decide on the composition of a new
product development team. He decides to select people with a similar background. What are the
positive effects of such a composition?
A) Broader knowledge base.
B) Increased cross-fertilization of ideas.
C) Good coordination and communication right from the start.
D) Social loafing.

39. What is the most important factor explaining the performance of a heavyweight team
compared to a lightweight team (lecture Managing New Product Development Teams)?
A) Higher specialization of team members
B) More input of the project manager in evaluations
C) More control of resources
D) More input of experts from R&D

40. Schilling mentions four structures for international virtual teams.

1. Decentralized Self-Coordination
2. System Integrator as Coordinator
3. Core Team as System Architect
4. Centralized Venture Team
Which ones fit best with the approach Globally Linked?
A) 1 and 2
B) 2 and 3
C) 2 and 4
D) 3 and 4

Three open questions (each question counts for 1/3)

1. Absorptive capacity is a concept that can be used to explain certain aspects of
innovation processes. In class it was used to discuss the transfer problems of the MCC
cooperation.
a) Describe briefly what absorptive capacity is (indication length of answer: 1
line!)
b) Assume that in the 1970s an important scientific discovery was done about
biotechnology, which made the development of new drugs based on
biotechnology possible. From 1975-1985 further biotechnology research was
done at universities. In the late 1980s a number of new companies were
started by researchers from those universities. In reaction, large
pharmaceutical companies started biotechnology research themselves in 1990.
Compare the large companies with the small start-ups in 1990: which type of
company had the highest absorptive capacity for biotechnology knowledge?
Give arguments. (length: two lines)

2. The R&D intensity of an industry (as presented by Schilling in chapter 7) can be

described as the average expenditure on R&D as a percentage of sales of the companies
in that industry. Schilling presents figures indicating clear differences between industries.
Examples of industries: textile industry, automotive industry, electronics industry,
pharmaceutical industry. Based on your own insight (and not on something extensively
discussed in class, nor in the book), mention one major general factor that explains these
differences? Make clear how this factor might explain differences in R&D-intensity
between many industries. (length: 2 lines)

3. A parallel process of product development has a number of advantages and

disadvantages. A parallel process is said to be more appropriate for a radical product
innovation project than for an incremental product innovation project.
What is the main difference between the two types of innovation and how does it explain
why a parallel process is more suited for radical innovation? (length: 2 lines)

BAD01 Innovation Management (group 1)

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
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C
B
A
B
A
C
C
A
B
B
C
A
A
B
D
A
C
D
D
C
C
A
D
C
D
A
B
B (double)
B
D
A
A
D
D
D
A
B
C
B
A correction: D!