[Solved] Business Innovation MCQ [Free PDF] - Objective Question Answer for Business Innovation Quiz - Download Now! (2024)

1. a, b, and d only
2. a, c, and e only
3. b, d, and e only
4. More than one of the above
5. None of the above

The correct answer is a,b and d only.

Key Points

• Disruptive innovations often target niche markets initially. This is because disruptive innovations are often new and different, and they may not appeal to mainstream customers at first. However, as disruptive innovations improve and become more widely adopted, they can eventually disrupt the entire market.
• For example, when smartphones were first introduced, they were targeted at a niche market of early adopters who were willing to pay a premium for a new and innovative device. However, as smartphones became more affordable and feature-rich, they eventually disrupted the entire mobile phone industry.

Important Points

• Established companies often overlook disruptive innovations as they do not meet the needs of their current customers. Established companies are often focused on meeting the needs of their current customers and maintaining their market share. This can make it difficult for them to see the potential of disruptive innovations.
• For example, when Netflix first launched, it was overlooked by established media companies such as Blockbuster and Blockbuster Video. These companies were focused on their core business of renting DVDs and VHS tapes, and they did not see the potential of a streaming video service. However, Netflix eventually disrupted the entire video rental industry.

Additional InformationDisruptive innovations tend to improve over time, eventually outperforming existing products or services. Disruptive innovations are often new and unrefined at first. However, as they are developed and improved, they can eventually outperform existing products and services.

Mistake PointsFor example, when electric cars were first introduced, they had a shorter range and were more expensive than gasoline-powered cars. However, as electric car technology has improved, electric cars now have a longer range and are more affordable than gasoline-powered cars in some cases.

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1. A, B, D and E only
2. C, D and E only
3. B, C and D only
4. A, C and E only
5. None of the above

The correct answer isA, C and E only.

Key PointsThe statements A, C, and E are correct about innovations.

Here is a brief explanation of each statement:

• A. Innovations are a must to survive in business: This is true because innovations can help businesses to create new products and services, improve their existing products and services, and reduce costs. These can help businesses to stay ahead of the competition and survive in the long run.
• C. Continuous innovations do not disrupt established usage and behaviour patterns: This is true because continuous innovations are incremental improvements to existing products and services. They do not change the way that people use or consume the products or services.
• E. In discontinuous innovations, there is a change not only in technology but also in behavioural patterns of usage and consumption: This is true because discontinuous innovations are new technologies that create new markets and disrupt existing markets. They change the way that people use or consume products and services.

The other statements are not always true. For example, discontinuous innovations do not always lead to failures. Some discontinuous innovations can be very successful, such as the iPhone, the personal computer, and the electric car. Line extensions are not discontinuous innovations, but they are still innovations because they are new products that are added to an existing product line.

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1. Prof. Schumpeter
2. Prof. J. B. Clark
3. Prof. F. B. Hawley
4. More than one of the above
5. None of the above

The correct answer is Prof. Schumpeter.

Key Points

• Innovation theory of Profits
  • The innovation theory of Profits offers a technological explanation of profits.
  • According to Prof. Joseph A. Schumpeter, an important function of an entrepreneur is to make innovations.
  • Innovations mean the commercial exploitation of technical inventions and new ideas related to business organization, business management, and marketing.
  • Schumpeter holds that technical innovations can speed up production and economizecosts.
  • According to him, profits are the reward for making innovations.

Important Points

• Kinds of innovations
  • According to Joseph A. Schumpeter, there are the following main kinds of innovations-
    • Introduction of new products.
    • Introduction of products in new markets.
    • Discovery of new sources of raw materials.
    • Introduction of new machinery or production processes.
    • Changes in the organizational structure of the business.

Thus, the innovation theory of profit was given by Prof. Schumpeter.

Additional Information

• Prof. J. B. Clark was the propounder of the dynamic theory of profits.
• Prof. F. B. Hawleywas the propounder of the risk theory of profits.
• Prof. F. H. Knightwas the propounder of the uncertainty theory of profits.

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1. Create a new market by offering value products
2. Involve often, new technology or a new business model to offer value to the market
3. Displace established market-leading firms, products and alliances
4. All of the above
5. None of the above

Disruptive Innovation:

• Disruptive innovation refers to offering a valuableproduct, service, or concept that either disrupts an existing market or creates a new market segment, displacingestablished market-leading firms, products, and alliances.
• In practice, disruption occurs when traditional value drivers in an existing market are significantly changed.
• In disruptive innovation, a new player enters an existing market with a new technology or new business model, providing a new kind of value that differs from the incumbent's offerings.
• This term was first analyzed and defined by the American scholar ClaytonM. Christensen and his collaborators beginning in 1995 and has been known as the most influential idea of the early 21st century.
• Disruptive innovation refers to the innovation that transforms expensive or sophisticated products or services which were previously accessible to high-end or more skilled segment of customers to those thatare more affordable and accessible to a broader population.
• This transformation itself disrupts the market by displacing long-standing, established competitors.
• Disruptive innovation refers to the use of technology that upsets a structure as opposed to "disruptive technology", which refers to the technology itself.
• Disruptive innovation requires enabling the technology, an innovative business model along a coherent value network.
• Example of disruptive innovation: Amazon - launched as an online bookstore in the mid-1990s.

Therefore,Disruptive innovations in business are those that create a new market by offering value products, involve often, new technology or a new business model to offer value to the market, and displace established market-leading firms, products and alliances i.e. All of the above.

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1. a, b, and d only
2. a, c, and e only
3. b and e only
4. All of the above (a, b, c, d, and e)

The correct answer isa, b, and d only.

Key PointsThe correct answer is a, b, and d.

• Sustaining innovations typically involve incremental improvements to existing products or services.
• They often target existing customers' needs and preferences.
• Sustaining innovations do not usually require significant changes in consumer behavior.
• Sustaining innovations can have a significant impact on established market leaders, as they can help companies to maintain their competitive advantage. However, they are not typically disruptive in nature.

Some examples of sustaining innovations include:

• A new smartphone model with a faster processor and better camera.
• A new version of a software program with new features and bug fixes.
• A new type of shampoo that is more moisturizing or less harsh.
• A new type of car that is more fuel-efficient or has more safety features.

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Business Innovation Question 6

1. A, B and C only
2. A, C and D only
3. A, C and E only
4. B, D and E only

Business Innovation Question 6 Detailed Solution

Important Points

The introduction of something novel or distinctive is referred to as innovation.

A radical innovationis one that completely replaces an already existing good or service. This type of innovation typically destroys current procedures and replaces them with fresh procedures and new goods.It takes an existing system, design, or invention and turns it into something brand new.

Examples of radical innovation are:

• Personal Computers
• Cloud Computing
• Disposable diapers
• Overnight mail delivery.
• Digital compact discs,etc.

Important Points

A. Personal Computers
C. Disposable diapers
D. Overnight mail delivery

Personal computers transformed the way individuals and businesses process information, while disposable diapers revolutionized the baby care industry with their convenience and ease of use. Overnight mail delivery introduced a faster and more reliable method of transporting documents and packages.

Frozen yogurt and microwave popcorn, on the other hand, are not considered radical innovations as they represent incremental improvements or variations on existing products rather than groundbreaking advancements.

Thus, the correct answers are Options A, C, and D only.

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Business Innovation Question 7

1. A, B, D and E only
2. C, D and E only
3. B, C and D only
4. A, C and E only

Business Innovation Question 7 Detailed Solution

The correct answer isA, C and E only.

Key PointsThe statements A, C, and E are correct about innovations.

Here is a brief explanation of each statement:

• A. Innovations are a must to survive in business: This is true because innovations can help businesses to create new products and services, improve their existing products and services, and reduce costs. These can help businesses to stay ahead of the competition and survive in the long run.
• C. Continuous innovations do not disrupt established usage and behaviour patterns: This is true because continuous innovations are incremental improvements to existing products and services. They do not change the way that people use or consume the products or services.
• E. In discontinuous innovations, there is a change not only in technology but also in behavioural patterns of usage and consumption: This is true because discontinuous innovations are new technologies that create new markets and disrupt existing markets. They change the way that people use or consume products and services.

The other statements are not always true. For example, discontinuous innovations do not always lead to failures. Some discontinuous innovations can be very successful, such as the iPhone, the personal computer, and the electric car. Line extensions are not discontinuous innovations, but they are still innovations because they are new products that are added to an existing product line.

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Business Innovation Question 8

1. Create a new market by offering value products
2. Involve often, new technology or a new business model to offer value to the market
3. Displace established market-leading firms, products and alliances
4. All of the above

Business Innovation Question 8 Detailed Solution

Disruptive Innovation:

• Disruptive innovation refers to offering a valuableproduct, service, or concept that either disrupts an existing market or creates a new market segment, displacingestablished market-leading firms, products, and alliances.
• In practice, disruption occurs when traditional value drivers in an existing market are significantly changed.
• In disruptive innovation, a new player enters an existing market with a new technology or new business model, providing a new kind of value that differs from the incumbent's offerings.
• This term was first analyzed and defined by the American scholar ClaytonM. Christensen and his collaborators beginning in 1995 and has been known as the most influential idea of the early 21st century.
• Disruptive innovation refers to the innovation that transforms expensive or sophisticated products or services which were previously accessible to high-end or more skilled segment of customers to those thatare more affordable and accessible to a broader population.
• This transformation itself disrupts the market by displacing long-standing, established competitors.
• Disruptive innovation refers to the use of technology that upsets a structure as opposed to "disruptive technology", which refers to the technology itself.
• Disruptive innovation requires enabling the technology, an innovative business model along a coherent value network.
• Example of disruptive innovation: Amazon - launched as an online bookstore in the mid-1990s.

Therefore,Disruptive innovations in business are those that create a new market by offering value products, involve often, new technology or a new business model to offer value to the market, and displace established market-leading firms, products and alliances i.e. All of the above.

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1. Labour
2. Capital
3. Government
4. Culture

Key Points

Innovation -Innovation is the process of improving something that already exists, whether it be a service, a process, or a product.

Important Points

• An influential argument is made by Gerard Tellis, a well-known authority on innovation, advertising, and international markets, that a company's culture is the primary factor in determining how innovative a company is.
• He outlines the three characteristics and three activities required to foster an environment of constant invention in this ground-breaking work.

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1. A-IV, B-III, C-II, D-I

2. A-I, B-III, C-II, D-IV

3. A-IV, B-II, C-III, D-I
4. A-IV, B-I, C-II, D-III

The correct answer isA-IV, B-III, C-II, D-I.

Key PointsThe correct match is:

• Product Innovation (A): Product innovation involves introducing new or improved products to the market. It focuses on developing unique features, benefits, or functionalities to meet customer needs and enhance customer value.
• Process Innovation (B): Process innovation involves implementing new methods, techniques, or technologies to improve business operations. It aims to enhance efficiency, effectiveness, or quality by rethinking or redesigning the way tasks are performed.
• Business Model Innovation (C): Business model innovation involves rethinking and redesigning the way a company creates, delivers, and captures value. It often involves introducing new revenue streams, changing the value proposition, or reconfiguring the business ecosystem.
• Service Innovation (D): Service innovation focuses on innovating the way services are delivered to customers. It can involve changes in service design, delivery channels, or the overall customer experience.

Hence, the correct answer isA-IV, B-III, C-II, D-I.

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1. Risk-bearing theory
2. Frictional theory
3. Monopoly theory
4. Innovation theory

The correct answer is Risk-bearing theory.

Key PointsRisk-Bearing Theory

• The risk bearing theory of profit is established by Hawley. It suggests that entrepreneur’s profit depends on his risk taking behavior.
• That is, how much risk the entrepreneur will bear during the production determines the amount of profit enjoyed by him.
• During production the entrepreneur may not know the exact demand for his product in the market or change in consumers’ taste and preferences that affects the market demand. If the entrepreneur’s production exceeds the demand, he will incur loss for not selling his entire output.
• This implies that there is a demand side risk associated with production. If there is no compensation or reward for risk, there will be no incentive for taking risk.
• The nature of risk and the riskbearing capacity vary across industries. The higher the risk under taken, the more will be the profit earned.

Additional InformationFrictional theory-One explanation of economic profits or losses is frictional profit theory. It states that markets are sometimes in disequilibrium because of unanticipated changes in demand or cost conditions. Unanticipated shocks produce positive or negative economic profits for some firms.

Monopoly theory- Itoccurs when a firm restricts output so as to prevent prices from falling to the level of costs.

Innovation theory-nnovation theory of profits was proposed by Schumpeter. He essentially means that if an entrepreneur wants to make profits he needs to make innovations in terms of the products/services.

Hence, the correct answer is Risk-bearing theory of profit.

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1. A, B and C only
2. A, C and D only
3. A, C and E only
4. B, D and E only

Important Points

The introduction of something novel or distinctive is referred to as innovation.

A radical innovationis one that completely replaces an already existing good or service. This type of innovation typically destroys current procedures and replaces them with fresh procedures and new goods.It takes an existing system, design, or invention and turns it into something brand new.

Examples of radical innovation are:

• Personal Computers
• Cloud Computing
• Disposable diapers
• Overnight mail delivery.
• Digital compact discs,etc.

Important Points

A. Personal Computers
C. Disposable diapers
D. Overnight mail delivery

Personal computers transformed the way individuals and businesses process information, while disposable diapers revolutionized the baby care industry with their convenience and ease of use. Overnight mail delivery introduced a faster and more reliable method of transporting documents and packages.

Frozen yogurt and microwave popcorn, on the other hand, are not considered radical innovations as they represent incremental improvements or variations on existing products rather than groundbreaking advancements.

Thus, the correct answers are Options A, C, and D only.

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1. a, b, and d only
2. a, c, and e only
3. b, d, and e only
4. More than one of the above
5. None of the above

The correct answer is a,b and d only.

Key Points

• Disruptive innovations often target niche markets initially. This is because disruptive innovations are often new and different, and they may not appeal to mainstream customers at first. However, as disruptive innovations improve and become more widely adopted, they can eventually disrupt the entire market.
• For example, when smartphones were first introduced, they were targeted at a niche market of early adopters who were willing to pay a premium for a new and innovative device. However, as smartphones became more affordable and feature-rich, they eventually disrupted the entire mobile phone industry.

Important Points

• Established companies often overlook disruptive innovations as they do not meet the needs of their current customers. Established companies are often focused on meeting the needs of their current customers and maintaining their market share. This can make it difficult for them to see the potential of disruptive innovations.
• For example, when Netflix first launched, it was overlooked by established media companies such as Blockbuster and Blockbuster Video. These companies were focused on their core business of renting DVDs and VHS tapes, and they did not see the potential of a streaming video service. However, Netflix eventually disrupted the entire video rental industry.

Additional InformationDisruptive innovations tend to improve over time, eventually outperforming existing products or services. Disruptive innovations are often new and unrefined at first. However, as they are developed and improved, they can eventually outperform existing products and services.

Mistake PointsFor example, when electric cars were first introduced, they had a shorter range and were more expensive than gasoline-powered cars. However, as electric car technology has improved, electric cars now have a longer range and are more affordable than gasoline-powered cars in some cases.

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1. A, B, D and E only
2. C, D and E only
3. B, C and D only
4. A, C and E only
5. None of the above

The correct answer isA, C and E only.

Key PointsThe statements A, C, and E are correct about innovations.

Here is a brief explanation of each statement:

• A. Innovations are a must to survive in business: This is true because innovations can help businesses to create new products and services, improve their existing products and services, and reduce costs. These can help businesses to stay ahead of the competition and survive in the long run.
• C. Continuous innovations do not disrupt established usage and behaviour patterns: This is true because continuous innovations are incremental improvements to existing products and services. They do not change the way that people use or consume the products or services.
• E. In discontinuous innovations, there is a change not only in technology but also in behavioural patterns of usage and consumption: This is true because discontinuous innovations are new technologies that create new markets and disrupt existing markets. They change the way that people use or consume products and services.

The other statements are not always true. For example, discontinuous innovations do not always lead to failures. Some discontinuous innovations can be very successful, such as the iPhone, the personal computer, and the electric car. Line extensions are not discontinuous innovations, but they are still innovations because they are new products that are added to an existing product line.

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1. Prof. Schumpeter
2. Prof. J. B. Clark
3. Prof. F. B. Hawley
4. More than one of the above
5. None of the above

The correct answer is Prof. Schumpeter.

Key Points

• Innovation theory of Profits
  • The innovation theory of Profits offers a technological explanation of profits.
  • According to Prof. Joseph A. Schumpeter, an important function of an entrepreneur is to make innovations.
  • Innovations mean the commercial exploitation of technical inventions and new ideas related to business organization, business management, and marketing.
  • Schumpeter holds that technical innovations can speed up production and economizecosts.
  • According to him, profits are the reward for making innovations.

Important Points

• Kinds of innovations
  • According to Joseph A. Schumpeter, there are the following main kinds of innovations-
    • Introduction of new products.
    • Introduction of products in new markets.
    • Discovery of new sources of raw materials.
    • Introduction of new machinery or production processes.
    • Changes in the organizational structure of the business.

Thus, the innovation theory of profit was given by Prof. Schumpeter.

Additional Information

• Prof. J. B. Clark was the propounder of the dynamic theory of profits.
• Prof. F. B. Hawleywas the propounder of the risk theory of profits.
• Prof. F. H. Knightwas the propounder of the uncertainty theory of profits.

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