Entrepreneurship: Theory, Process, and Practice 9th Edition

A business plan __________ potential financial backers. a. indicates the exact sum to be borrowed from b. establishes a first impression of the company and its principals on c. provides an accurate sales forecast for d. purposefully underestimates financial need for Answer: B Answer: B Answer: B An account framework that goes beyond the traditional measures of profit,

A lack of demonstrated experience, no clear market niche, a failure to anticipate roadblocks, no realistic goals set, and a lack of commitment are pitfalls or common points of failure that occur before an entrepreneur ever gets a plan reviewed. Answer: T Answer: T Answer: T The sources of new business ideas among men

Laws governing intellectual property rights include copyrights, trademarks, and leases. Answer: F Answer: F Answer: F In the context of benefit corporations, what does transparency refer to? Answer: Transparency refers to the obligation to report to the public on a firm's overall social and environmental performance, using a credible third-party standard. Answer: Transparency refers to the

Social entrepreneurs are known to combine resources to exploit opportunities to create social value. Answer: T Answer: T Answer: T As part of creating an innovative climate, a firm should base rewards given upon results achieved. Answer: T Answer: T Answer: T The elimination of time and effort associated with starting a company is an advantage of acquiring an

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim. Answer: F Answer: F Answer: F Not all corporate entrepreneurial behavior is good for the organization. Why? Answer: The encouragement of corporate entrepreneurship can and often does result in counterproductive rogue

Venture capitalists are usually satisfied with a reasonable return on investments. Answer: F Answer: F Answer: F Every business plan should provide information about future harvest strategies. Answer: T Answer: T Answer: T An entrepreneur can never be certain what actual ethical consequences a decision will have. Answer: T Answer: T Answer: T The four phases of the creative process are knowledge

Which of the following statements is false? a. Entrepreneurs want the authority to make important decisions. b. Management skills are not important characteristics for entrepreneurs to possess. c. Successful entrepreneurs strive to build a successful team around them. d. An entrepreneur can develop the vision of the company over time. Answer: B Answer: B Answer: B What kind

The 'corridor principle' states that entrepreneurs often get stuck on one idea. Answer: F Answer: F Answer: F An important guideline in putting the plan together is a. to overdiversify. b. to not highlight critical risks. c. to identify the target market. d. to impress with excessive detail Answer: C Answer: C Answer: C Typically, when faced with setbacks or failure, entrepreneurs a.

Harvest strategies rarely involve the complete sale of a business. Answer: F Answer: F Answer: F During the past ten years, new business incorporations averaged nearly 600,000 per year. Answer: T Answer: T Answer: T Explain the purpose of a letter of intent. Answer: A letter of intent is preliminary, mostly nonbinding document meant to record the intentions of

The extra value a business can command in a sale is known as a. goodwill. b. saleable value. c. market value. d. asset value. Answer: A Answer: A Answer: A Which economist first associated the 'risk bearing' activity in the economy with the entrepreneur? a. Richard Cantillon b. Robert C. Ronstadt c. Peter F. Drucker d. Jean Baptiste Say Answer: A Answer: A Answer: A The

The most pro-active position for a corporation to take in regard to social responsibility would be termed a. social obligation. b. social intensity. c. social responsiveness. d. social decisiveness. Answer: C Answer: C Answer: C If you agree that the real value of a business venture is its potential earning power, which valuation method, more than the others,

A marketing information system compiles and organizes data relating to _______ from the customer base. a. price b. revenue c. demand d. supply Answer: B Answer: B Answer: B Which is not one of the chief characteristics of an entrepreneur? a. personal initiative b. ability to consolidate resources c. risk taking d. desire for control of people Answer: D Answer: D Answer: D The statement, 'with

Entrepreneurs always a. start their business at a young age b. quit school and devote themselves to being an entrepreneur c. use credit cards to start their own businesses d. generate ideas and plan for their implementation Answer: D Answer: D Answer: D Which of the following is an obstacle to corporate entrepreneurship? a. orientation to the market b. a

Venture capitalists, surprisingly, require little information before they make an investment. Answer: F Answer: F Answer: F Most venture capital funds later stages of venture development, not the start-up (or seed) stage. Answer: F Answer: F Answer: F Design patents last for 20 years. Answer: F Answer: F Answer: F Most firms generally gather primary data and then see if there is

The word entrepreneur is derived from the Spanish word entreprendre, meaning 'to undertake.' Answer: F Answer: F Answer: F Selfishness and a need for power are two characteristics common in entrepreneurs. Answer: F Answer: F Answer: F Research has shown a distinct lack of planning on the part of new ventures. Answer: T Answer: T Answer: T A product does not have

An example of a trademark is a logo. Answer: T Answer: T Answer: T Entrepreneurs are high risk takers. Answer: F Answer: F Answer: F Trust from the company is one key element to successful corporate entrepreneurship. Answer: T Answer: T Answer: T Purpose, accountability, and transparency are characteristics associated with socially sustainable enterprises. Answer: T Answer: T Answer: T Entrepreneurs are pessimists who see the

Entrepreneurs themselves perceive the concept of risk in which of the following ways: a. calculated risk taking b. gambling risk c. distorted risk taking d. social risk Answer: A Answer: A Answer: A In the context of buying a business, a known commodity may command a higher price for what reason? a. historical projections have intrinsic value b. avoiding start-up

Ratio analysis can be applied from which of the following directions? a. vertical only b. vertical and horizontal c. horizontal only d. external and internal Answer: B Answer: B Answer: B Which of the following are suggestions to minimize legal costs? a. visit the lawyer during normal hours of operation b. have the lawyer custom design forms specifically for you c.

Business valuation is essential when attempting to buy out a partner. Answer: T Answer: T Answer: T Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public. Answer: F Answer: F Answer: F Licensing agreements can involve patents, trademarks, and technical know-how. Answer: T Answer: T Answer: T It is typical for a

____ people thoroughly understand the concept of corporate entrepreneurship. a. Just about all b. Most c. Many d. Few Answer: D Answer: D Answer: D In the study of contemporary entrepreneurship, one concept reoccurs: a. no one understands the field b. folklore dominates the studies c. there is no theoretical base d. entrepreneurship is interdisciplinary Answer: D Answer: D Answer: D In restructuring corporate thinking, top

A summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than ten pages. Answer: F Answer: F Answer: F What should be considered in analyzing a business and what are some weaknesses of small business? Answer: When analyzing a small closely

Which of the following costs add to the cost of franchising? a. insurance b. payroll c. legal and professional fees d. all of the above Answer: D Answer: D Answer: D The inventory should be examined for which of the following? a. salability b. correspondence between the physical count and the book count c. up-to-datedness d. All of the above. Answer: D Answer: D Answer:

Coming up with a unique good or service is a _____ approach, while adapting something that is currently on the market or extending the offering to an area where it is not presently available is a(n) _____ approach. a. new-new, old-old b. new-old, old-old c. new-new, new-old d. new-old, old-new Answer: C Answer: C Answer: C The textbook identifies

When considering employees, the entrepreneur should be concerned about a. total number of single employees. b. total number of female employees. c. total number of employees by function. d. employee productivity. Answer: C Answer: C Answer: C Which of the following is not a common characteristic of entrepreneurs? a. vision b. team building c. lack of motivational drive d. independence Answer: C Answer: C Answer:

Which of the following mental habits inhibit creativity and innovation? a. either/or thinking, stereotyping b. functional perspective, mind-sets c. security hunting, risks d. stereotyping, incubation Answer: A Answer: A Answer: A Gazelles have been responsible for which of the following: a. some job growth b. 55 percent of innovations c. 30 percent of all radical innovations d. most job turnover Answer: B Answer: B Answer:

When considering bankruptcy, entrepreneurs as sole proprietors normally prefer a. Chapter 5. b. Chapter 7. c. Chapter 11. d. Chapter 13. Answer: D Answer: D Answer: D The past is the best predictor of the future, according to which mind-set? a. the entrepreneurial mind-set b. the managerial mind-set c. the cognitive mind-set d. the risk-averse mind-set Answer: B Answer: B Answer: B Employee perception of _____

The incubation process involves which of the following? a. working harder b. letting the subconscious work c. talking with friends d. changing jobs Answer: B Answer: B Answer: B When should a potential franchisee receive the FDD (Franchise Disclosure Document)? a. two days before signing a contract or paying any money b. at least ten days before signing a contract

Evaluating franchise opportunities include finding out more about which of the following? a. the franchisor b. the franchise c. the franchisee d. all of the above Answer: D Answer: D Answer: D The discounted earnings method of valuation establishes a. potential earning power. b. an appropriate rate for replacement. c. expectancy of the business expenses. d. future profits. Answer: A Answer: A Answer: A When Facebook

Legal protection is granted to computer programs in what form? a. patent b. trademark c. copyright d. service mark Answer: C Answer: C Answer: C The text of a patent application is known as the a. specification. b. particulars. c. concept. d. value. Answer: A Answer: A Answer: A Competitive analysis, advertising plan, and pricing policy are all part of the a. research, design, and development segment. b.

The purpose of marketing research is __________. a. to gain customers b. to identify customer c. to fulfill customer needs d. to develop new products Answer: B Answer: B Answer: B When premature entry into the marketplace causes the failure of a new venture, it can be termed a. poor timing. b. undercapitalization. c. a design problem. d. a distribution problem. Answer: A Answer:

How does a public offering differ from a private placement? Answer: A public offering involves entering the stock exchange. Once the stock is publicly offered, anyone can buy shares and, in turn, ownership. Public offerings are very expensive and highly regulated. These disadvantages are offset by the large amounts of capital

The person who sells the franchise is usually required to do all of the following except: a. pay a fee. b. provide professional management training to the unit's staff. c. help out with financial assistance. d. provide continuing aid and a guidance to the person buying the franchise. Answer: A Answer: A Answer: A Which of the following

Name and describe the final phase of the budget process. Answer: The third phase of the budget process is the preparation of pro forma statements, including a pro forma balance sheet and a pro forma income statement. The pro forma income statement tells the manager the outlook for income and expenses

With psychic risk you fear a. losing your sanity b. failure. c. money d. adapting. Answer: B Answer: B Answer: B Sales growth is a critical factor in the a. prestart-up phase. b. poststart-up phase. c. start-up phase. d. evaluations phase. Answer: C Answer: C Answer: C Which of the following is not a critical factor that should be addressed in planning a venture? a. milestones b. flexibility c.

There are five specific phases that a new venture goes through. Answer: F Answer: F Answer: F Tangible assets as well as intangible assets of a business need to be assessed for proper venture evaluation. Answer: T Answer: T Answer: T Encourage user participation and dialogue. A successful social media marketing program must fully engage and respect the

The entrepreneurial strategy matrix measures risk and innovation. Answer: T Answer: T Answer: T Pro forma statements show the firm's present financial position. Answer: F Answer: F Answer: F What are important questions to ask, from an entrepreneurial and administrative point of view, when managing entrepreneurial growth? Answer: The Entrepreneur's Point of ViewWhere is the opportunity?How do I capitalize

Ethics represents a set of principles prescribing a behavioral code that does not include moral duty and obligations. Answer: F Answer: F Answer: F The metacognitive model of entrepreneurship fails to consider entrepreneurial motivation. Answer: F Answer: F Answer: F Solid analysis and evaluation of the feasibility of the product/service idea are critical tasks in starting a new

Entrepreneurs sense potential in business problems by asking a. who is to blame for failures? b. what about profits? c. what if and why not? d. farfetched, unimaginative questions Answer: C Answer: C Answer: C A written succession strategy a. is part of an entrepreneur's will. b. prepares the entrepreneur for developing a management continuity strategy and policy. c. must be

When considering management, the entrepreneur should be concerned about a. ownership positions. b. pension and profit sharing. c. total number of employees. d. employee benefits. Answer: A Answer: A Answer: A Which of the following is not a suggestion a tax accountant or lawyer might make concerning tax reduction? a. Place real estate in a separate corporation. b. Increase management's

What does a post-money valuation include that a pre-money valuation does not? a. market value b. replacement value c. excess earnings d. venture capital investment Answer: D Answer: D Answer: D Production requirements are figured by subtracting the period's beginning inventory from a. inventory from the previous period. b. inventory needed for that period. c. both of the above. d. fixed costs. Answer:

In order to develop an entrepreneurial environment, factors that organizations need to be aware of include: a. management support and rewards b. autonomy and time c. business plans and inventions d. a and b should be considered Answer: D Answer: D Answer: D The cash flow budget describes a. cash inflows/cash outflows. b. cash outflows/accounts receivables. c. interest income/interest expense. d. profits/costs. Answer:

A reason new venture managers lack knowledge in the strategic planning process is because a. they refuse to learn new things. b. they have minimal exposure to the planning process. c. they attempt to implement actions too quickly. d. they are overconfident. Answer: B Answer: B Answer: B Entrepreneurial characteristics include a. a strong drive to succeed. b. superior intelligence. c.

An entrepreneurial successor is someone who is interested in efficiency and the effective use of resources. Answer: F Answer: F Answer: F What are the rules for avoiding pitfalls in selecting trademarks? Answer: Trademarks registration and research is expensive. Trademark infringement is even more expensive. There are five basic rules to avoid difficulties with trademarks.

What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to plan for a liquidity event as an exit strategy. b. It is important for the entrepreneur to know how to buy up troubled companies. c. It is important for the entrepreneur to

Capital budgeting is used to help the entrepreneur plan for capital expenditures. Answer: T Answer: T Answer: T Entrepreneurial cognition is, in part, about understanding how entrepreneurs use simplifying mental models to make assessments, judgments, and decisions about opportunities. Answer: T Answer: T Answer: T Nonfamily members sometimes bring pressure on the owner-manager in an effort to protect

Success of the corporate entrepreneurship plan depends on a. resources provided by the firm. b. shirking ethics to ensure entrepreneurial wins. c. a few individuals. d. the reaction of rivals. Answer: A Answer: A Answer: A Secretly working on new ideas on company time as well as on personal time is referred to as a. skunk works. b. champion. c. bootlegging. d.

In some cases, entrepreneurs may be in violation of the law if they employ too many family members. Answer: T Answer: T Answer: T Bill and James Raymond have worked for their father's company for 15 years. Their father, who is president and now wants to retire, wants his sons jointly to take over

Financial considerations play a major role in a. lifestyle ventures. b. smaller profitable ventures. c. high-growth ventures. d. corporate debentures. Answer: B Answer: B Answer: B The entrepreneurial ego can cause the entrepreneur to a. have a sense of pessimism. b. take characteristics that usually lead to success to the extreme. c. ignore government regulations. d. take too few risks. Answer: B Answer: B Answer:

People practice the creative search for background knowledge in which of the following ways: a. join professional groups and organizations b. attend seminars or professional meetings c. a and b d. socializing at parties Answer: C Answer: C Answer: C It is important that an entrepreneur a. seek the assistance of outside professionals to prepare a business plan. b. develop an

In a lifestyle venture, independence, autonomy, and control are the primary driving forces. Answer: T Answer: T Answer: T Two important factors classified as managerial that could be a cause for failure include human resource problems and the concept of the team approach. Answer: T Answer: T Answer: T Social entrepreneurship is rarely a vehicle for sustainable development. Answer:

When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to a. assets minus liabilities. b. assets minus owner's equity. c. assets minus (liabilities plus owner's equity). d. zero. Answer: D Answer: D Answer: D Which of the following statements is false? a. Entrepreneurs are

One of every 1,000 adults participates in the founding of a new firm every year. Answer: F Answer: F Answer: F A trademark is a distinctive name, mark, or symbol that is identified with a company's product. Answer: T Answer: T Answer: T The harvest decision may come when the venture has grown to a stage where an

Entrepreneurs are aggressive catalysts for change within the marketplace. Answer: T Answer: T Answer: T Name the sources of entrepreneurial stress and discuss the ways of dealing with stress. Answer: Entrepreneurs experience four types of stress. The first is loneliness. Although there are many people around the entrepreneur, there are few in whom he can

Some entrepreneurs are easy to replace, and some cannot be replaced. Answer: T Answer: T Answer: T One of the benefits of a business plan for a financial source is that it forces the source to view the plan for miscalculations. Answer: F Answer: F Answer: F The real value of any venture is its potential earning power. Answer: T Answer:

An entrepreneur needs neither a lot of money nor luck. Answer: T Answer: T Answer: T Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility. Answer: T Answer: T Answer: T Venture capital firms want to own control of the firms in which they invest. Answer:

Researchers have identified specific factors that organizations can concentrate on in helping individuals develop more entrepreneurial behavior. Answer: T Answer: T Answer: T The business plan is the entrepreneur's road map for a successful enterprise. Answer: T Answer: T Answer: T Innovators must always search for new ideas, opportunities, or sources of innovation. Answer: T Answer: T Answer: T Three primary legal

The typical business will have cash inflows from three sources: cash sales, cash payments received on account, and loan proceeds. Answer: T Answer: T Answer: T A common mistake in business planning is to purge all acronyms and technical jargon from the plan. Answer: F Answer: F Answer: F Resource-rich countries and market-rich countries are usually one and

In negotiating a deal to purchase an existing business, it is possible to request that the seller retain a minority interest in the firm. Answer: T Answer: T Answer: T Every business person feels comfortable operating in an entrepreneurial environment. Answer: F Answer: F Answer: F Entrepreneurs are doers not thinkers. Answer: F Answer: F Answer: F Inexperience and incompetent management are

SEC stands for the a. Stock Exchange Corporation. b. Securities and Exchange Commission. c. Standard Equity Commission. d. Source of Equity Company. Answer: B Answer: B Answer: B The displacement school of thought can be divided into which three groups? a. political, cultural, environmental b. cultural, environmental, and financial c. environmental, financial, and economic d. economic, cultural, and political Answer: D Answer: D Answer: D One

One of the most helpful avenues for developing one's own creative talents is to be aware of the habits and mental blocks that stifle creativity. Answer: T Answer: T Answer: T Entrepreneurship involves an interdisciplinary approach. Answer: T Answer: T Answer: T Explain and discuss the 'dark side' of entrepreneurship. Answer: The entrepreneurial profile has its destructive side. First,

Most successful innovations are complex and focused. Answer: F Answer: F Answer: F The price/earnings ratio (multiple of earnings) method is determined by dividing the market price of common stock by retained earnings. Answer: F Answer: F Answer: F The liquidity event stands for positioning the venture for the realization of a cash return for the owners and

The liquidity event can be achieved through an IPO or selling out. Answer: T Answer: T Answer: T Firms do not need to alter management techniques to encourage corporate entrepreneurship since it tends to occur naturally. Answer: F Answer: F Answer: F Obtaining external financing is considered one of the major types of problems for a new venture during

A patent gives the holder a temporary a. profit. b. oligopoly. c. monopoly. d. specification. Answer: C Answer: C Answer: C In an innovative climate, failure is viewed as a. the end of the world. b. a learning experience. c. O.K., inevitable, since the employee is probably not capable of further innovative thought. d. a basis for firing. Answer: B Answer: B Answer: B The idea

The results of a profile analysis enable the entrepreneur to judge a. himself or herself. b. the competition. c. the potential of the business. d. venture capital opportunities. Answer: C Answer: C Answer: C Most entrepreneurs are objective when they evaluate their new idea. Answer: F Answer: F Answer: F Innovative factors identified by James Brian Quinn that exist in large organizations

A common pitfall in selecting a new venture is a. poor financial understanding. b. proper objective evaluation. c. real insight into the market. d. none of the above. Answer: A Answer: A Answer: A Which of the following statements about a business plan is true? a. It is the entrepreneur's road map for profits. b. It is the minimum document

Is the firm's budget allocated appropriately for greater profit'according to products, territories, and market potentials? Answer: Answer: Answer: What is included in an operating budget and how is this helpful? Answer: The operating budget includes a sales forecast. A forecast can be acquired from a linear regression analysis or a trend