University of Houston

MBA 6205

Chapter 4: New Product Development Process

Multiple Choice

1)The customer satisfaction cycle shows that new product development is truly a                      

process, requiring extensive collaboration throughout a company.

1000. personal
14. revolutionary
15. cross-functional
16. innovative

2. SC leaders regarding new product introduction rely heavily on a teaming approach that includes

                     and                    early in the process. A) raw materials, labor

2. orders, inventory
3. information, materials
4. customers, suppliers

3. The first critical step in managing and controlling risk is to recognize the                        .

1000. products
14. processes
15. risks
16. raw materials

4. The use of new product development (NPD) teams reduces the risk that comes from poor

                    .

5. communication
6. suppliers
7. customers
8. processes

5. As part of the design process, it is most important for each company to know its                     .

1000. core competencies
14. raw materials
15. marketing forecasts

4. demands

6. The first step in the cycle of customer satisfaction is to get into the mind of the customer to identify customer                                          and                            .

1000. products, processes
14. people, products
15. needs, desires
16. goals, objectives

7. One marketing department responsibility is to identify current and emerging               .

5. products
6. competitors
7. core competencies
8. employees

8. Most viable ideas for new products don’t come as a flash of insight, but rather from               

and                    .

5. books, journals
6. hard work, research
7. suppliers, customers
8. employees, partners

9. Satisfying customer needs is not the job of the marketing department alone. It is the task of the entire supply chain, sometimes called a                                      by customer focused marketers.

1000. contingency
14. business
15. organization
16. demand chain

10. It is the job of all members of the                    to understand, serve, and satisfy the end customer.

1000. supply chain
14. organization
15. department
16. team

11. Customer focus requires that businesses look not only at their own operations, but also at external

                    .

5. competitors
6. organizations

7. supply chains
8. financial institutions

12. Understanding your                  and positioning the total package to meet their needs is critical to customer loyalty.
    1. customers
    2. suppliers
    3. competitors
    4. products

13. The second step in the cycle of satisfaction is to take the product from idea to               .

1000. customer
14. production
15. end
16. market

14. A sequential NPD cycle is often                      and                    . E) value-adding, effective

6. fast, intuitive
7. time consuming, inefficient
8. quantifiable, efficient

15. The first challenge of the new product introduction process is determining the               of the product.

1000. market
14. target price
15. attributes
16. qualities

16. Deducting the target                  from the                     yields the target cost.

5. value, target price
6. price, profit
7. cost, profit
8. profit, target price

17. Getting                     involved early through an ESI program is critical to the success of complex development efforts.

11. suppliers

50. managers

1000. competitors
14. customers

18. Assessing the cost and quality of a new product in the                 phase of development enables a more accurate prediction of customer acceptability of the product or service.

1000. production
14. design
15. marketing
16. sales

19. While the team is working on cost management activities, it must keep in mind that the new product it is creating must                                                 .

1000. be inexpensive
14. meet the customer’s needs
15. have the highest quality
16. be technically excellent

20. The NPD process and target costing process are                   processes.

E) competing F) successive

7. complimentary
8. intuitive

21. The third step in the cycle of customer satisfaction is to verify the                   viability of new products.

5. production
6. market
7. technical
8. financial

22.                      is a metric for monitoring and managing business activities. E) Financial performance

6. Management
7. SCM
8. NPD

23. The finance department at Intel sees itself as a                    of cost management by providing the right tools and support.

5. leader
6. facilitator G) controller

H) prime mover

24. The                           is a measure of how much a company makes after paying all its expenses. E) sales revenue

6. profit
7. assets
8. cash flow

25.                       represents how much money a company makes from the ongoing business of selling its goods and services.

5. Financing cash flow
6. Working capital
7. Operating profit
8. Total profit

True/False

1. Profit before tax represents the sum of operating profits plus or minus gains and losses from              other activities.

2. Cash also flows out to repay investors with dividends and creditors.

3. A long production time or high inventory levels tie up large amounts of cash.

4. A company with good long-term investments may look profitable before taxes, but actually be                          losing money on operations.

5. Cash flows out of the company when receivables are collected; the company borrows money, or sells shares of stock.  

6. EVA gives a longer-term perspective on whether a project is generating or destroying the firm’s value over the project life cycle.

7. The top management is the driver of SCM.  

8. The interface between marketing and SCM lies in developing the right product at a fair price and then positioning it properly in the marketplace.

9. New product development exists only as a function in many organizations.  

10. Finance and accounting are the firm’s scorekeepers. They communicate performance results throughout the organization and to the outside world.

11. As important as it is, few companies have mastered the new product development process.

12. Top management often gives the new product team responsibility for the entire customer satisfaction cycle.

13. Companies like Intel have seen their product life cycles grow from 4 or 5 months to 4 or 5 years.  

14. Honeywell’s Engine Division estimates that it costs them about $1 million a week to develop a new product.

15. Because costly misunderstandings almost never occur with upstream suppliers, the NPD team need not include key suppliers of inputs and services.  

16. Working together over a sustained time period helps companies get to know their suppliers’ capabilities and risk factors.

17. A company should never outsource its core competency or activities that support it.

18. Explicitly focusing on downstream requirements can increase risks in the development and introduction process.  

19. Excessive change can become a “habit” that does not add value, but adds unnecessary complexity and risk.

20. As taught in any basic marketing class, the marketing mix is made up of four Ps: product, price, place, and promotion.

21. Good marketing, advertising, and a sharp Web site can sell a product with little apparent value.  

22. Satisfying customer needs is the job of the marketing department alone.  

23. Failure in any aspect of the tangible or intangible product experience can leave a bad taste in the customer’s mouth and cause an organization to lose future sales.  

24. It is the job of all members of the supply chain to understand, serve, and satisfy the end customer.

25. Harley-Davidson gives all employees the opportunity to attend motorcycle rallies to talk to customers and get a feel for customer wants and needs.

26. Cost management and product development beyond the concept stage are also marketing’s areas of expertise.  

27. Sequential NPD is a traditional approach based on strict functional boundaries.