A market penetration strategy involves actions taken to increase the sales of a product
or service through greater marketing efforts or through increased product capacity and
efficiency.
Answer:
Although a board of directors has formal governance responsibilities, its most useful
role is to provide guidance and support to the firm’s managers.
Answer:
Stability is a company’s ability to meet its short-term financial obligations.
Answer:
The idea that it’s important to get “everything in writing” in regard to business
agreements causes unnecessary work and can lead to an erosion of trust between
business partners.
Answer:
A business model is a firm’s plan or recipe for how it creates, delivers, and captures
value for its stakeholders.
Answer:
In the majority of cases, a franchisee pays a royalty based on a percentage of weekly or
monthly net income.
Answer:
More people are willing to serve on a company’s board of directors than board of
advisors.
Answer:
The term “liability of newness” refers to the fact that companies often falter because the
people who start the firms can’t adjust quickly enough to their new roles and because
the firms lack “track records” with outside buyers and suppliers.
Answer:
Geographic expansion is most common in manufacturing settings.
Answer:
Founding teams that have worked together before, as opposed to teams that are working
together for the first time, have an edge.
Answer:
Most business angels remain fairly anonymous and are matched up with entrepreneurs
through referrals.
Answer:
A statement of cash flows is a snapshot of a company’s assets, liabilities, and owners’
equity at a specific point in time.
Answer:
In regard to acquisitions, many firms have found that the process of assimilating
another company into their current operations is relatively easy and is not disruptive to
the current operations of their firm.
Answer:
Trademark law falls under the Lanham Act, which passed in 1946.
Answer:
The balance sheet reflects the results of the operations of a firm over a specified period
of time.
Answer:
The information that is gathered by a firm to learn about its competitors is referred to as
tactical intelligence.
Answer:
Primary research probes data that is already collected.
Answer:
Marks that are merely descriptive of a product or service can be trademarked.
Answer:
Focus groups typically involve a group of people who are unfamiliar with a topic and
are brought together to respond to questions.
Answer:
Networking is building and maintaining relationships with people whose interests are
similar or whose relationship could bring advantages to a firm.
Answer:
Debt financing means exchanging partial ownership in a firm in exchange for cash.
Answer:
A competitive analysis grid is a tool for organizing the information a firm collects about
its competitors.
Answer:
The ideal candidate for a bank loan is a firm with weak cash flow, high leverage, low to
moderate growth and unproven management.
Answer:
A utility patent can be obtained for a new product or process or the “idea” for a new
product or process.
Answer:
The four forms of feasibility analysis include: product/service feasibility, industry/target
market feasibility, organizational feasibility, and financial feasibility.
Answer:
A comparison analysis is a detailed evaluation of a firm’s competitors.
Answer:
There are four factors that determine the threat of new entrants: number and balance of
competitors, degree of difference between products, growth rate of an industry, and
level of fixed costs.
Answer:
A spin-out occurs when a large company divests itself of one of its smaller divisions
and the division becomes an independent company.
Answer:
The Google AdWords program allows advertisers to buy ads that will be shown on
other Web sites instead of Google’s Home Page.
Answer:
If a firm’s debt-to-equity ratio gets too high, it may have trouble meeting its obligations
and securing the level of financing needed to fuel its growth.
Answer:
Entrepreneurs are motivated primarily by money.
Answer:
A firm’s core strategy is largely determined by its core competencies, or what it does
particularly well.
Answer:
Venture capitalists are individuals who invest their personal capital directly in startups.
Answer:
A company’s accounts receivable is money owed to it by its customers.
Answer:
A competitor analysis, which is a detailed analysis of a firm’s competitors, should be
included in the market analysis section of its business plan.
Answer:
It is more likely that an entrepreneur will get a new business idea through a strong-tie
than a weak-tie relationship.
Answer:
A product line extension strategy involves making additional versions of a product so
that it will appeal to a different clientele or making related products to sell to the same
clientele.
Answer:
Which mechanism for firm growth involves the creation and sale of new products or
services?
A) Strategic alliances
B) New product development
C) Licensing
D) Franchising
E) Joint ventures
Answer:
The What Went Wrong? feature in Chapter 5 focused on Digg, a Web site that was once
one of the hottest sites on the Internet but eventually failed. According to the feature,
through a series of missteps Digg ________.
A) failed to conduct sufficient competitor analysis
B) succumb to the bargaining power of suppliers
C) lost its way and its place in its industry
D) was unable to erect sufficient barriers to entry
E) succumb to the bargaining power of buyers
Answer:
According to the textbook, research results over time consistently suggest that
somewhere between ________ percent of those who start businesses got their ideas
through social contacts.
A) 10 and 20
B) 20 and 30
C) 30 and 40
D) 40 and 50
E) 50 and 60
Answer:
To make the best impression, a business plan should follow a ________.
A) conventional structure for companies with standard business models and a
nonconventional structure for firms with disruptive business models
B) conventional structure for manufacturing firms and a nonconventional structure for
service firms
C) conventional structure
D) nonconventional structure
E) nonconventional structure for manufacturing firms and a conventional structure for
service firms
Answer:
An increased focus on health and wellness has resulted in a number of new business
ideas including healthier foods and beverages, yoga instruction and training centers, and
nutrition consulting. An increased focus on health and wellness is an important
________ that is creating opportunities in many areas for entrepreneurial firms.
A) economic force
B) regulatory force
C) legal force
D) technological advances
E) social force
Answer:
Which of the following is an example of an external growth strategy?
A) Geographic expansion
B) Improving an existing product or service
C) Increasing the market penetration of an existing product or service
D) Extending product lines
E) Strategic alliances
Answer:
A ________ is a partnership between two or more firms that is developed to achieve a
specific goal and has no joint ownership involved.
A) joint alliance
B) joint venture
C) licensing agreement
D) merger
E) strategic alliance
Answer:
Erin Hill is working on the box in the Barringer/Ireland Business Model Template that
defines the products and markets on which her firm will concentrate. Erin is working on
the ________ scope portion of the business model template.
A) offering/market
B) offering/industry
C) business/market
D) business/industry
E) product/market
Answer:
The Partnering for Success feature in Chapter 10 focuses on Startup Weekend. Startup
Weekend is a not-for-profit organization that ________.
A) creates a context in which small groups of people can start a business in 54 hours
(usually over a weekend)
B) sponsors “weekend” events that connect entrepreneurs with mentors, advisors and
potential investors
C) provides 54-hour weekend retreats for people to gather and learn as much as
possible about the startup process
D) sponsors pitch events, usually over a weekend, that allow entrepreneurs to pitch their
business ideas to angel investors
E) facilitates weekend business plan competitions across the United States
Answer:
Steven and Emily Campbell are planning to open a casual dining restaurant in
downtown Akron, Ohio, and need $125,000 to get started. They have $50,000 of their
own money, which leaves $75,000. After getting turned down by a couple of banks,
they decided to turn to their relatives and acquaintances for help. Fortunately, they were
able to raise the money through a gift from Steven’s grandfather, a loan from Emily’s
parents, and a small investment by Steven’s best friend in college, Doug. The money
that an entrepreneur raises in this manner is referred to as ________.
A) friends and family
B) bootstrapping
C) networking money
D) compassion money
E) legacy money
Answer:
________ are limited partnerships of money managers who raise money in “funds” to
invest in startups and growing firms.
A) Venture capital firms
B) Business angels
C) Institutional investors
D) Investment bankers
E) Business capitalists
Answer:
In startup firms, inventory must be purchased, employees must be trained and paid, and
advertising must be paid for before cash is generated from sales. Which of the
following reasons that motivate firms to seek funding or financing is illustrated in this
example?
A) Cash flow challenges
B) Marketing costs
C) Personnel costs
D) Capital investments
E) Lengthy product development cycles
Answer:
According to the textbook, there are three categories of costs to consider when
completing the “financing/funding” section of the Barringer/Ireland Business Model
Template. These are ________.
A) setup costs, one-time expenses, and costs associated with incorporating the firm
B) capital costs, marketing costs, and provisions for ramp-up expenses
C) setup costs, marketing costs, and operating costs
D) capital costs, one-time expenses, and provisions for ramp-up expenses
E) operating costs, capital costs, and costs associated with setting up the firm
Answer:
Peter Watson is thinking about launching a small business consulting company. To get
advice on how to proceed, he stopped by his local Small Business Administration
(SBA) office. The SBA advisor told Peter that one of the first things he needs to do is to
sit down and write a 25 to 35 page narrative that describes what his new business plans
to accomplish and how it plans to accomplish it. The SBA advisor is telling Peter to
write a(n) ________.
A) tactical plan
B) marketing plan
C) operations plan
D) business plan
E) feasibility analysis
Answer:
A(n) ________ is a favorable set of circumstances that creates the need for a new
product, service, or business. A(n) ________ is a thought, an impression or a notion.
A) scheme, notion
B) opportunity, idea
C) idea, design
D) idea, opportunity
E) notion, scheme
Answer:
In 2000, Tish Cirovolo realized that there were no guitars on the market made
specifically for women. As a result, she started Daisy Rock Guitars, a company that
makes guitars just for women. Daisy Rock Guitars are stylish and come in feminine
colors, and incorporate design features that accommodate a woman’s smaller hand and
build. The best way to describe how Cirovolo’s business idea was recognized is
________.
A) brainstorming
B) talking to consumers
C) reading industry reports
D) observing trends
E) finding a gap in the marketplace
Answer:
Which of the following is incorrect regarding the “total startup cash needed” component
of financial feasibility analysis?
A) It’s not necessary to complete an actual budget of startup expenses.
B) When explaining where the startup funds will come from, avoid cursory
explanations such as “I plan to bring investors on board” or “I’ll borrow the money.”
C) There are worksheets posted online that help entrepreneurs determine the startup
costs to launch their venture.
D) An explanation of where the startup funds will come from should be included.
E) If the money will come from friends and family or is raised through other means, a
reasonable plan should be stipulated to repay the money.
Answer:
Which form of business ownership is a particularly poor choice for an aggressive
entrepreneurial firm?
A) C corporation
B) Sole proprietorship
C) Subchapter S corporation
D) Limited partnership
E) Limited liability corporation
Answer:
The 4Ps of marketing refer to a company’s ________.
A) tactical mix
B) promotional blend
C) organizational mix
D) marketing mix
E) selling mix
Answer:
A corporation is formed by filing ________ with the Secretary of State’s office in the
state of incorporation.
A) a certificate of intent to incorporate
B) articles of business
C) corporate credentials
D) a corporation permit
E) articles of incorporation
Answer:
Tim Rutherford is thinking about starting a firm in the medical equipment industry. In
the industry analysis Tim has been conducting, one thing he has noticed is that the
medical equipment industry is characterized by buyer group concentration. This factor
concerns Tim because it tells him that the profitability of the medical equipment
industry is potentially suppressed by the ________.
A) threat of substitutes
B) bargaining power of buyers
C) rivalry among existing firms
D) bargaining power of suppliers
E) threat of new entrants
Answer:
________ are itemized forecasts of a company’s income, expenses, and capital needs
and are also an important tool for financial planning and control.
A) Profitability statements
B) Financial statements
C) Owners’ equity statements
D) Budgets
E) Statements of cash flows
Answer:
The ________ section of the business plan addresses the basic logic of how profits are
earned in the business.
A) economics of the business
B) operations plan
C) executive summary
D) design and development plan
E) market analysis
Answer:
Which of the following options was not identified in the textbook as an appropriate
reason for growth?
A) Need to accommodate the growth of key customers
B) Influence, power, and survivability
C) Economies of scale
D) Market leadership
E) Maintain the appearance that the firm is successful
Answer:
A(n) ________ industry is one that is characterized by a large number of firms of
approximately equal size.
A) fragmented
B) mature
C) declining
D) emerging
E) global
Answer:
A(n) ________ involves showing a preliminary description of a product or service idea
to prospective customers to gauge customer interest, desirability, and purchase intent.
A) concept test
B) product/service statement
C) impression test
D) idea prospectus
E) idea test
Answer:
Which of the following is not a part of assessing the product/service feasibility of a
business idea?
A) “Get out of the building” and talk to potential customers
B) Surveying potential customers
C) Library research
D) Analyzing industry attractiveness
E) Concept test
Answer:
When a firm’s managerial resources are insufficient to take advantage of its new
product and service opportunities, the subsequent bottleneck is referred to as the
________ problem.
A) commercial capacity
B) entrepreneurial aptitude
C) managerial capacity
D) business capacity
E) business aptitude
Answer:
Opportunities for leadership, niche, harvest and divestment are associated with
________ industries.
A) mature
B) emerging
C) declining
D) fragmented
E) global
Answer:
Kasey Stevenson is starting a firm in the women’s clothing industry primarily to pursue
financial rewards. According to the textbook, starting a business to make a lot of money
________.
A) often fails to live up to its hype
B) is equally as satisfying as other reasons for starting a business
C) is the number one reason people start their own business
D) is the number two reason that people start their own business, right behind the lack
of better career prospects
E) does not rank among the top three reasons that people start their own business
Answer:
The Resources section of the Barringer/Ireland Business Model Template consists of
the ________ and ________ boxes.
A) business mission; core competency
B) core competency; product/market scope
C) channels; key partners
D) core competency; key assets
E) revenue streams; key assets
Answer:
Firms that pursue a(n) ________ strategy compete for market share on a
country-by-country basis and vary their product or service offerings to meet the
demands of the local market.
A) inclusive
B) universal
C) multidomestic
D) contemporary
E) worldwide
Answer:
A(n) ________ is a person who is in business for themselves, works on their own time
with their own tools and equipment, and performs services for a number of different
clients.
A) employee
B) virtual assistant
C) intern
D) trainee
E) freelancer
Answer:
The Partnering for Success feature in Chapter 4 focused on Web-based platforms,
including Odesk, Elance, and Guru, that make it easy to identify and hire experienced
________.
A) part time employees
B) freelancers
C) interns
D) virtual assistants
E) full-time employees
Answer:
The people who buy franchises from master franchises are typically called ________
franchisees.
A) minor
B) secondary
C) mini-
D) subordinate
E) sub
Answer:
Describe the purpose of a nondisclosure agreement. Provide an example of when a
nondisclosure agreement kicks in.
Answer:
What is the difference between a product and trademark franchise and a business format
franchise? Which type of franchise is most common for entrepreneurial firms?
Answer:
What is the organizational life cycle and why is it important?
Answer:
What is a trademark? Why are trademarks important?
Answer:
Describe what is meant by a “general partnership” and a “limited partnership.” Describe
the major difference between the two.
Answer:
Define the term “market leadership.” Why do firms work hard to obtain market
leadership?
Answer:
What is entrepreneurship? What is the essence of entrepreneurial behavior?
Answer:
What is a business model? Why is it important? Provide an example to illustrate your
answer.
Answer:
What is an emerging industry? What is the primary opportunity available to
entrepreneurial firms in emerging industries? Name three examples of firms in
emerging industries.
Answer:
What are the two main reasons for writing a business plan?
Answer:
Describe the four main characteristics of successful entrepreneurs.
Answer:
Describe how library and Internet research can be used to generate new business ideas.
Answer:
Why is the “management team and company structure” section of the business plan
often given disproportionate weight among investors?
Answer:
What is meant by the term “bootstrapping”? Provide several examples of the ways that
entrepreneurs bootstrap to raise money or cut costs?
Answer:
According to Chapter 13, business success doesn’t always scale. What is meant by this
statement?
Answer:
List and briefly describe three specific steps that an entrepreneurial organization can
take to build a strong ethical culture.
Answer:
What are the primary advantages and disadvantages to establishing a franchise system
(from the franchisor’s point of view)?
Answer:
Are more firms started by individuals or founding teams? What are the advantages to
founding a firm as a team rather than as an individual?
Answer:
Explain the difference between internal and external growth strategies. Provide
examples of each.
Answer: