Examination Questions and Answers

Invention is the introduction of a new thing that has never been in existence before while innovation is an act of improving something that already exists by adding more features on top on the initial ones. Once invention takes place, it requires innovation after sometimes. Many inventors fail to develop their inventions and end up selling their licenses to companies that ends up making billions of monies from their inventions. A good example of this is in 1947; the world’s first transistor was developed by AT&T Laboratories but they failed to innovate their invention and ended up selling licenses to companies like Texas Instruments and IBM. Sony also acquired the license at a low fee of $25000. This invention later came to generate billions for the companies due to failures of the inventors to improve on the transistor (Tidd & Bessant, 2009 p.5).

Innovation is mostly concerned on improving something in the eyes of the society for instance house tenants do not like renting old rental houses with the perception that they cannot be comfortable to live in compared to new ones. However, in case they are renovated then everyone will be willing to reside in them because the societal view of the house has been changed by innovation with the aim of increasing profits or improving performances as its image has already been improved. On the other hand, the invention is meant to change people’s lives by changing the way they do things. For example, before the invention of the telephone people used to communicate with one another after a long duration of time. This was totally changed after the invention and today they easily communicate due to change of life after the invention (McKeown, 2008 p.1).

In the business world, the invention is viewed as the act of creating ideas out of money. This is because before inventing something, one must have carried out both theoretical and physical experiments which requires money to carry out for example in the process of inventing the airplane, the Wright brothers bought the materials they used to make their aircraft and this led to the invention. Innovation in the business world is viewed as creating money out of ideas, for instance when the owner of a house realizes that the reason as to why his house has no tenants is lack of innovation, he gets the idea of painting them and putting up new doors after which he starts receiving tenants. In this way, he has created money out his idea of painting the house (Isaac, 1989 p.2)

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In another light, an organization refers innovation as the act of transforming ideas to create a final result of improvement of the organizations products, their services and also the way they process raw materials. For instance, they may decide to offer the free gift to customers who purchase a given amount of their products. This is an idea of improving their products and services to consumers and will lead to high sales. On the other hand, invention is the introduction of a new product by the organization which is mostly meant to keep the company in the competition race with competitors. The invention is mostly necessary when competition is too stiff on one side of the business, for example, a mobile phone company experiences stiff competition in the voice call field and invents mobile money transfer. This invention gains a lot of success for the organization and it lastly overcomes the competitors through the use of invention (McKeown, 2008 p.2).

In another perspective, innovation in architecture is referred to as the upgrading of an already build house and some repairs are carried out on it. For example, an old building can be renovated by painting up the walls and replacing the old worn out bricks and this way innovation is said to have taken place. On the other hand, invention in architecture is the act of coming up with a new unique style of design that has not been there before, for instance, the white house architecture style is the only of its kind in the world (Isaac, 1989 p.1)

Why firms seek alliances for their research and development?

Research and development refers to creativity developed to increase knowledge of man, culture and that of the society at large. The acquired knowledge is used to create new applications and for this reason huge companies and organizations have their own research and development managers; this assists them in the following ways:

It assists firms in the invention; through the research, the firm is able to come up with new ideas which mostly concern the firm’s field of specialization. These new ideas are then developed into realities and lastly, new things are delivered to the firm’s customers. It also encourages innovation within the firm’s premises as the research will show the main weak points that the firm is facing and necessary measures to counter their influence leading to improvement of the current services thus it assists in innovation.

Through it the company researches how to overcome their competitors in the market; this department researches why the competitors are displaying a stiff competition and they also give procedures as to how to counter the competitor’s policy and come out at the top. It assures the firm of future successes; this is done by thorough researches of the firm’s policies and strategies and they advice the management on what strategies to continue with and which ones to drop. In this way, the firm’s future is enlightened to the management and they make the right policies for the firm’s future (Tidd & Bessant, 2009 p.206).

It assists the management in decision making because they analyze decisions that are about to be made by the managers. This department advice them on whether or not to implement the decisions, which ensures the decisions made for the firm are right and are not misleading. It ensures that the firm is complying with the rules and regulations of the law and that every step that is taken by the firm also complies. This helps avoid unnecessary collisions with state agencies which can mostly lead to the incurrence of unplanned costs of hiring lawyers and payments of bails. Thus the firm will always be on the safe side of the law if it adopts this policy. It helps improve production; this department in a firm is responsible for ensuring that production rise through development. They can suggest a certain development plan, for instance, additional branches of the firm and additional transport vans. Once the production of the firm rise profits are also set to increase.

Through research, the firm is able to identify potential markets by analyzing inhabitants of a particular locality and concluding whether they can expand the coverage of their products to the area. Thus research and development encourages the firm’s expansion and investment. It also guides the firm’s management on which marketing plans to adopt for them to ensure the products reach out to almost everyone who needs their services. This is done by researching about the most efficient consumer coverage methods and also the methods of transportation to be used in case the firm distributes the products to the customers.

The researches that are carried out are future-oriented, hence they assist the managers to set up long-term strategies which are meant to assist the organization to attain the goals that are set in a given duration of time. Similarly, they also provide the procedures to be followed to achieve the goals (Tidd & Bessant, 2009 p. 211).

Venture capital

This refers to the financial capital that is given to new companies with high potential growth and also has high risks; the financial capital comes from investment companies on small businesses or from venture capital firms. Similarly, it can also come from rich individuals (Tidd & Bessant, 2009 p.557)


The venture capital has the following advantages. Capital provision; the investors provide capital which is long-term to assist the new companies grow and also assists by providing managerial participations through buying. It also helps improve cooperate governance; investors turn the companies from informally run companies to professional organizations which are professionally managed with improved managerial control. The other advantage is many business solution providers; this is brought about by the fact that the company can access its partner’s business advisors services hence they gain managerial skills quickly. The small companies also access the investors company’s capital and also have access to the financial market be it in debt or equity capital (Tidd & Bessant, 2009 p.564).

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Both companies must come to a consensus and agree upon the value of the business. This is used to calculate the required equity as they exchange with venture capital. A firm with low valuation has to provide a higher equity percentage and vice versa. In case the small company collapses, the investments by the mother company also go down. The other demerit is that the process of gaining a venture capital is time-consuming and very tiresome. The process is also an expensive one as lots of money is spent on it (Tidd & Bessant, 2009 p. 564).

Cooperate venturing

This refers to funds in form of equity that are invested by a company in a small firm which is innovative and to which it can go ahead and provide expertise support. However, the aim is to acquire some added advantage in the competitive market. This method is mostly used in the United States and the United Kingdom (Tidd & Bessant, 2009 p.425).


The cooperate venturing has the following advantages: Acquisition of skills and knowledge especially in technical fields in which case the small company acquires a lot of skills from the investing company due to the financial support and staff training. The issuing company gains access to marketing and distribution paths that are well established. This is possible because without the investing company the issuing company did not have any of these very strong paths. The investing company has the chance to make good use of its resources as this is a very important investment to it. The investing company also has a chance to learn new things including new business ideas and also generate more income (Tidd & Bessant, 2009 p.426).


The disadvantages of corporate venturing include the following. It takes a very long time for the whole process to take place and the investor can even decide not to take up the offer at all. The issuing company should have a minimum value of £15 million before the process and £16 million after the process. The venturing process is a very long legal process and will be very expensive for both companies to undergo (Tidd & Bessant, 2009 p.430).

Open innovation

This is an approach that outlines that as firms look forward to improve their technology, they should consider the use of both internal and external ideas and also internal and external market paths. This means that both internal and external forces are involved in a business’s decision making. However, under some circumstances firms should avoid the adoption of this innovation and some of these circumstances may include one of the next in the discussion below.

If the decision that is about to be made in a business is a trial version, the real thing then is that the management of the firm should not be ready to listen to any views from external sources that are not associated with the firm. This is because the decision has not yet been made and the act is being done to try the outcomes of the real thing if it were to be adopted. However, after the trial the management should be ready to listen to other sources again. In cases where there are very stiff competitions amongst companies, the management should not be ready to listen to anyone outside its bracket. This is because the competitor may decide to use both the company’s internal and external associates to intimidate the management and push for installation of policies that will work in their favor. Thus during high competition and rivalry, the management should not listen to any views from internal sources or external sources (Chesbrough, 2003 p.7).

The other circumstance is when the information is from a non reliable source and this means that the management to the business can decide to suspend the open innovation policy as they are aware that the source of information can either be right or wrong so they are not sure. If the decision to be made is urgent and requires very fast decision making and conclusion, then the management might not have time to go about inquiring from its workers, suppliers or customers as there is no available time for such processes. Therefore, if the decision to be made is urgent then the open innovation policy in an organization can be suspended.

If the action to be undertaken is as a result of government policy, then the management to the business cannot consult any one of the companies as well as close associates as it is the law’s and only the legislature can revoke it. Thus government policies also lead to suspension of the open innovation. A firm can also avoid the open technology approach if the decision to be made is made after an advice from lawyers, analysts and risk managers among others. This is because they are people who are professionals in their fields of specialization and other sources cannot be reliable to interfere with the advices they give to the firm. For instance, if a lawyer advices the firm not to undertake a certain project because it is unlawful, workers cannot push the administration to continue with the project because they are not law professionals.

Another circumstance is of natural calamities such as tsunami which can also lead to suspension of the open invention policy. These are emergency situations and any decisions made upon them are most likely to be urgent as there is no time trying to configure a meeting. Thus, this can be a reason for suspension of this policy. An executive order is another circumstance that can cause the suspension of open innovation for instance the Prime minister can order that food price increase should not go beyond a certain monetary value. If the organization is a food manufacturing firm, then there is no need for converging a meeting to discuss the same topic about price. Instead, the topic should be on how to adjust prices to the premier’s order and this can suspend open invention (Chesbrough, 2003 p.8).

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Disruptive technologies

These are innovations which interrupt an already existing market by replacing what have been in use in that market with another more improved product. For instance desktops were widely used and were all over the world market. However, their use was disrupted by the invention of the technology of personal computers. Within some few years of personal computers in the market, the desktop was almost completely eliminated. After some time the technology of mini-computers came in and in a short time, the personal computers were out of the market. This is the meaning of a disruptive technology because after the introduction of a new commodity to the market it completely displaces the existing products. The opposite of disruptive technology is sustaining technology where the introduction of a new commodity in to the market does not alter the market demand of the existing one.

A good example of technology that is sustaining is when cars were introduced; individuals did not stop using carriages which used horses until Henry Ford made one cheap car that was affordable to many and this is when people turned to cars (Tidd & Bessant, 2009 p.29). Managers have the following problems in identifying disruptive behavior. The issue of poor staffing makes the disruptive behavior hard to be identified by the manager. This occurs where the organization is not adequately staffed because there could be lesser staff than the firm requires. Therefore every one will be busy in their fields of assignments and even their supervisors will be busy. This means for example if an employee develops the disruptive behaviors no one in authority will note him as they are all busy in work. Poor controlling of the work environment is another reason why a manager cannot be in a position to identify disruptive behavior. The reason behind this is that the supervision is very poor and an employee just sits next to a computer and enjoys playing games. This is because no one is keeping the employees on their toes and with it the manager will never be in a position to identify changes in their workers (Sinfield & Altman, 2008 p.10).

Poor organizational policies are other factors that can hide the disruptive behavior thus making it hard for the manager to identify it. For instance, where the worker develops bad attitudes towards the job, for example he comes late to work late and leaves before time which is a bad work habit since there is no show of commitment. The manager will never be in a position to note this unless the organizational policies are reviewed and strictly returned to power as this is another hideout for disruptive behavioral employees. Poor financial management in the firm which is revealed when the firm’s finances are mismanaged and the manager fails to get time to oversee the working progress. Some employees seize this opportunity to fraud the firm’s finances and these disruptive actions will never be noted by the manager because he is the architect.

Some managers are too bullying to their juniors to the extent that workers just perform their duties because of their presence. However, in case the manager leaves for some time they feel free and start wasting time an act that can be blamed on the manager for his failure to install willingness in to the employee. Therefore, such managers should change their attitudes towards the employees. Managers do not organize seminars for their employees and this is a setback even to the company since the workers are not informed. The employees also become aware that they are headed somewhere but due to lack of such treatments, they are capable of developing very negative attitudes towards their jobs and the organization fails to succeed (Clayton, 1997 p.10).

Office boredom may also lead to exhaustion as the employee has been on the same seat in the same office day inn day out. When they see the manager approaching they disguise themselves as hard workers but they later start sleeping due to boredom. This can be brought to an end by organizing retreats over weekends to bring harmony in to the firm and to educate and motivate employees.

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