Free Master of International Business: Global Management of Innovation & Knowledge Questions and Answers — Questions and Answers

Question 1: Innovation is characterized by:

the implementation of a new production method.
a new product or process idea.
the invention of a new product or process.
the commercialization of a new product or process. (Correct answer)

Correct answer: the commercialization of a new product or process.

Innovation is distinct from invention; it refers to the successful commercialization or implementation of a new idea, product, process, or service. While invention is about creating something new, innovation is about bringing that novelty to market and making it useful or available to others. It involves the practical application and diffusion of new concepts.

Question 2: Procedure innovation includes:

the development of a new product.
the development of new products or services.
the development of a new service.
the implementation of a new or improved production method. (Correct answer)

Correct answer: the implementation of a new or improved production method.

Process innovation specifically refers to the implementation of a new or significantly improved production or delivery method. This can involve changes in techniques, equipment, or software, aimed at improving efficiency, quality, or cost-effectiveness. It focuses on how products or services are created and delivered, rather than on the products or services themselves.

Question 3: Innovation can contribute to the creation of a transient competitive advantage when

barriers to entry are low.
there are few other competitors.
barriers to entry are high.
barriers to imitation are low and intellectual property rights are difficult to enforce. (Correct answer)

Correct answer: barriers to imitation are low and intellectual property rights are difficult to enforce.

A transient competitive advantage is short-lived, and this occurs when an innovation can be easily copied. If barriers to imitation are low, competitors can quickly replicate the innovation. Furthermore, weak intellectual property rights offer little legal protection, allowing rivals to erode the initial advantage rapidly and prevent sustained competitive differentiation.

Question 4: What would you anticipate to occur after the establishment of a dominant design in the product life cycle?

Competition to decrease as more firms exit than enter the industry.
Competition to increase as new firms enter the industry.
Emphasis on process innovation rather than product innovation. (Correct answer)
Emphasis on product innovation rather than process innovation.

Correct answer: Emphasis on process innovation rather than product innovation.

Once a dominant design is established, the market has largely settled on the core features and architecture of a product. This shifts the focus of competition from product differentiation to efficiency and cost reduction. Consequently, firms emphasize process innovation to optimize production, improve quality, and lower costs, rather than investing heavily in fundamentally new product designs.

Question 5: In comparison to newer businesses, established businesses excel at:

Innovation which is disruptive.
all types of innovation.
innovation which is competence-enhancing. (Correct answer)
innovation which is competence-destroying.

Correct answer: innovation which is competence-enhancing.

Established businesses possess deep knowledge, existing infrastructure, and well-developed processes related to their current operations. Competence-enhancing innovations build upon these existing strengths, allowing these firms to leverage their accumulated expertise and resources effectively. In contrast, disruptive or competence-destroying innovations often require new capabilities that established firms find challenging to adopt due to organizational inertia.

Question 6: What markets are likely to experience network effects?

Tippy' markets
Hi-tech product markets
Markets subject to increasing returns
All of the above (Correct answer)

Correct answer: All of the above

Network effects occur when the value of a product or service increases with the number of users. 'Tippy' markets are prone to network effects, where one solution can quickly dominate. Hi-tech product markets, like social media or operating systems, inherently exhibit network effects, and markets subject to increasing returns are characterized by this positive feedback loop, making all these categories likely to experience such effects.

Question 7: Which of the following is useful in a standards conflict?

Technological advantage
Early mover advantage (Correct answer)
Late mover advantage
Competitive advantage

Correct answer: Early mover advantage

In a standards conflict, multiple technologies vie to become the industry norm. An early mover advantage is crucial because it allows a firm to establish its technology first, building a large installed base and attracting complementary products. This momentum creates strong network effects, making it difficult for later entrants, even with potentially superior technology, to dislodge the established standard.

Question 8: The main obstacle to knowledge transfer in global corporations is:

transferring tacit knowledge across borders. (Correct answer)
transferring explicit knowledge across borders.
transferring tacit and explicit knowledge across borders.
creating tacit knowledge in overseas subsidiaries.

Correct answer: transferring tacit knowledge across borders.

Explicit knowledge, which is codified and easily documented, is relatively straightforward to transfer across borders. However, tacit knowledge, encompassing skills, experiences, and insights that are difficult to articulate or write down, poses a significant challenge. Its transfer often requires direct interaction, shared experiences, and cultural understanding, which are complex to facilitate across different countries and organizational units.

Question 9: What benefits might there be in involving abroad subsidiaries in R&D projects?

Local subsidiaries offer access to local companies.
Local subsidiaries offer access to technical knowledge and skills.
Local subsidiaries offer financial advantages as well as access to local markets, technical knowledge and skills. (Correct answer)
Local subsidiaries offer financial advantages such as lower land and labour costs.

Correct answer: Local subsidiaries offer financial advantages as well as access to local markets, technical knowledge and skills.

Involving abroad subsidiaries in R&D offers multiple strategic benefits. They provide direct access to local market needs and customer preferences, which is vital for developing relevant products. Additionally, subsidiaries can tap into local pools of technical talent and specialized knowledge, while also potentially benefiting from financial incentives or lower operational costs in certain regions, creating a comprehensive advantage.

Question 10: Innovation is more likely to be outsourced worldwide where:

Innovations are systemic
Innovations are autonomous (Correct answer)
Innovations are made by service sector firms
Innovations are systemic or autonomous

Correct answer: Innovations are autonomous

Autonomous innovations are those that can be developed and implemented independently without requiring significant changes to other components or systems. These innovations are easier to outsource globally because they have fewer interdependencies with the core operations or existing product architecture of the parent company. Systemic innovations, conversely, are highly interconnected and thus more challenging to outsource due to the need for close coordination and integration.

Question 11: Who claimed that a company's main social responsibility is to maximize profits?

Michael Freeman
Edward Freeman
Milton Friedman (Correct answer)
Michael Porter

Correct answer: Milton Friedman

Milton Friedman, a Nobel laureate economist, famously argued that the primary social responsibility of a business is to increase its profits, within the bounds of law and ethical custom. He believed that corporate executives are agents of the shareholders, and their main duty is to serve the interests of those shareholders by maximizing returns. This perspective is a cornerstone of shareholder primacy theory.

Question 12: What distinguishes the stakeholder approach as a whole?

It is a critical perspective on corporations and business.
A focus on social and environmental responsibilities of a corporation.
The assumption that shareholders are not the main stakeholders in the corporation.
The idea that many different groups have a legitimate interest in the corporation (Correct answer)

Correct answer: The idea that many different groups have a legitimate interest in the corporation

The stakeholder approach broadens the traditional view of corporate responsibility beyond just shareholders. It posits that various groups, including employees, customers, suppliers, communities, and the environment, have a legitimate interest in the corporation's activities and outcomes. This perspective encourages management to consider the interests and impacts on all these groups, not just those who own equity.

Question 13: What are the four universal tactics for being socially responsive?

Reaction, Defence, Investment, Withdrawal
Proaction, Defensive, Reinvestment, Reaction
Reaction, Defence, Accommodation, Proaction
Reaction, Defence, Reinvestment, Proaction (Correct answer)

Correct answer: Reaction, Defence, Reinvestment, Proaction

The four universal tactics for social responsiveness describe a spectrum of organizational responses to social issues. 'Reaction' is a passive denial of responsibility, 'Defence' involves admitting some responsibility but fighting it, 'Accommodation' (or Reinvestment) means accepting responsibility and taking action, and 'Proaction' involves anticipating issues and actively leading solutions. These tactics illustrate how firms engage with societal expectations and pressures.

Question 14: Which three stages of innovation are there?

In-market innovation, new market creation, leadership (Correct answer)
New product creation, new market creation, leadership
New product creation, new market creation, pioneering
New product creation, new market creation, new reputation

Correct answer: In-market innovation, new market creation, leadership

The three stages of innovation often include 'In-market innovation,' which focuses on improving existing products or processes within current markets. 'New market creation' involves developing entirely new markets or customer segments with novel offerings. Finally, 'Leadership' signifies achieving and maintaining a dominant position through continuous innovation and strategic foresight, often by successfully navigating both in-market and new market opportunities.

Question 15: Which of the following is an instance of the development of a new market?

Creation of microfinance services to poor creditors by a bank. (Correct answer)
Development of a cheaper drug by a pharmaceutical company.
Development of a low-emission fuel for motorbikes by an oil company.
Design of an environmentally friendly building by a construction company.

Correct answer: Creation of microfinance services to poor creditors by a bank.

The creation of microfinance services targets a previously underserved or unserved segment of the population – poor creditors – who traditionally lacked access to conventional banking. This represents the development of a completely new market for financial services. The other options involve improving existing products or processes within established markets, rather than creating entirely new ones.

Question 16: What major issue prevents non-traditional partnerships from becoming successful?

Lack of government support
Lack of expertise within a multinational firm
Lack of trust between partners (Correct answer)
Lack of investment by a multinational firm

Correct answer: Lack of trust between partners

Non-traditional partnerships, especially those involving diverse organizations like NGOs or social enterprises, often struggle due to a fundamental lack of trust. Partners may have different objectives, organizational cultures, and operating procedures, leading to suspicion and miscommunication. Building mutual trust is critical for effective collaboration, shared risk-taking, and successful achievement of common goals in such complex alliances.

Free Master of International Business: Global Management of Innovation & Knowledge Questions and Answers

Innovation is characterized by: