A firm’s target market is the limited group of individuals or businesses that it goes after
or tries to appeal to.
Answer:
A business plan can usually be completed in one to three days.
Answer:
An idea is a favorable set of circumstances that creates a need for a new product,
service, or business.
Answer:
Intellectual property is any product of human intellect that is intangible but has value in
the marketplace.
Answer:
An emerging industry is one that is characterized by a large number of firms of
approximately equal size.
Answer:
Brainstorming is used to generate a number of ideas quickly.
Answer:
In regard to management prowess, two of the most important factors in this area are the
passion that the solo entrepreneur or the management team has for the business idea and
the extent to which the management team or solo entrepreneur understands the markets
in which the firm will participate.
Answer:
An intellectual property audit is conducted to determine the intellectual property a
company owns.
Answer:
Choosing a legal entity for a firm is a one-time event. Once a form of legal entity has
been chosen, it cannot be changed.
Answer:
The passion that entrepreneurs have typically stems from the ability to pursue their own
ideas.
Answer:
Combinations of numbers and letters, such as 3M and 1-800-CONTACTS, can be
trademarked.
Answer:
An advisory board can be established for general purposes or can be set up to address a
specific need.
Answer:
For most new ventures, the business plan is a dual-purpose document used both inside
and outside the firm.
Answer:
SCORE is a for-profit organization that provides consulting services to small
businesses.
Answer:
An individual who is team oriented and has experience in the industry in which the
franchise competes is a good candidate to be a franchisee.
Answer:
Historical financial statements reflect past performance and are usually prepared on a
quarterly and annual basis.
Answer:
The break-even point for a new restaurant or product is the point where the total
revenue received equals total costs associated with the output of the restaurant or the
sale of the product.
Answer:
Which of the following items would typically be protected by a form of intellectual
property protection other than trade secret statutes?
A) Financial forecast
B) Product formula
C) A company’s logo
D) Logs of sales calls
E) Employee roster
Answer:
In terms of priority in filing a patent application, the United States uses a first-to-
________ system.
A) file
B) invent
C) manufacture
D) sell
E) validate
Answer:
________ means that as the number of employees a firm needs increases, it becomes
increasingly difficult for it to find the right employees, place them in appropriate
positions, and provide adequate supervision.
A) Difficult hazard
B) Adverse hazard
C) Adverse selection
D) Moral selection
E) Moral hazard
Answer:
Chris Smith owns a store that sells all-terrain vehicles (ATVs). In the past, Chris just
sold one version of each of the ATVs he sold in his showroom, but to increase sales,
Chris now sells a low-end, a medium-priced, and a high-end version of each of the
ATVs he sells. Chris’s new strategy is called a(n) ________ strategy.
A) improving an existing product or service
B) market penetration
C) product line extension
D) geographic expansion
E) joint venture
Answer:
From the franchisor’s point of view, which of the following is incorrect regarding
franchising?
A) Establishing a franchise system should be approached carefully and deliberately.
B) Franchising is a relatively simple business endeavor.
C) Franchising involves managerially demanding tasks.
D) Over the years a number of fraudulent franchise organizations have come and gone.
E) Franchising is a fairly heavily regulated form of business ownership.
Answer:
Katy Anderson’s startup, which is in the organic fruit and vegetables industry, was
launched on January 1, 2015. However, prior to its formal launch, Katy spent many
hours working on her business, particularly during the feasibility analysis stage. The
time and effort that entrepreneurs put into their venture, that can’t be easily measured
from a financial point of view, is referred to as ________ equity.
A) effort
B) intangible
C) sweat
D) worry
E) fret
Answer:
Zack Shields leases a manufacturing facility that produces computer monitors. Zack
tries to keep production high, because his lease payments are $10,500 a month,
regardless of whether he produces one computer monitor a month or 10,000. Zach’s
lease payment is a ________ cost.
A) variable
B) secondary
C) fixed
D) marginal
E) tangible
Answer:
A ________ strategy seeks to increase the sales of a product or service through greater
marketing efforts or through increased production capacity and efficiency.
A) product line extension
B) product line sharpening
C) product line widening
D) market penetration
E) market expansion
Answer:
Rachel Watts owns a chain of office supply stores. Over the past three years, Rachel has
significantly increased her sales through the outright purchase of additional office
supply stores. Rachel is pursuing a(n) ________ strategy.
A) acquisition
B) merger
C) strategic alliance
D) joint venture
E) licensing
Answer:
According to the textbook, there are three types of startup firms: ________.
A) lifestyle firms, general firms, and entrepreneurial firms
B) standard-of-living firms, statutory firms, and general firms
C) entrepreneurial firms, standard-of-living firms, and statutory firms
D) lifestyle firms, salary-substitute firms, and entrepreneurial firms
E) innovative firms, entrepreneurial firms, and standard firms
Answer:
James Williams is the Chief Operating Officer of a startup in the health food industry.
He is also a member of his firm’s board of directors. In board of directors terminology,
James is a(n) ________ director.
A) inside
B) outside
C) expert
D) junior
E) senior
Answer:
Which of the following is not one of the “red flags” listed in the textbook that raises
questions about one of more aspects of a company’s business plan?
A) Founders with none of their own money at risk
B) Defining the market size too narrowly
C) A poorly cited plan
D) Sloppiness in any area
E) Overly aggressive financials
Answer:
Which of the following qualities was not identified in the textbook as a preferred
attribute of the founder(s) of a firm?
A) Prior entrepreneurial experience
B) Firm started by a team
C) Relevant industry experience
D) Prior experience working in a government or university position
E) Higher education
Answer:
Which of the following was not identified in the textbook as one of the common
mistakes that entrepreneurs make regarding intellectual property?
A) Not fully recognizing the value of their intellectual property
B) Not properly identifying all their intellectual property
C) Not properly registering their Internet domain names
D) Not using their intellectual property as part of their overall plan for success
E) Not taking sufficient steps to protect their intellectual property
Answer:
The term of a utility patent is ________ years from the date of the ________.
A) 7; patent is granted
B) 15; initial application
C) 15; patent is granted
D) 20; initial application
E) 20; patent is granted
Answer:
Which of the following set of characteristics places a startup in the strongest position to
apply for equity funding?
A) Weak cash flow, high leverage, low-to-moderate growth, unproven management
B) Strong cash flow, low leverage, audited financials, good management, healthy
balance sheet
C) Unique business idea, strong cash flow, low-to-moderate growth, broad market
D) Strong cash flow, high leverage, low-to-moderate growth, unproven management
E) Unique business idea, high growth, niche market, proven management
Answer:
The facilities and equipment that a business needs should be described in the ________
section of its business plan.
A) marketing plan
B) management team and company structure
C) company description
D) market analysis
E) operations plan
Answer:
Montana Sky Trails leads multiday outdoor adventure trips for private groups and
corporate clients to various locations across Montana. The company was started by
Justin Smith, an individual that gave up a prestigious job in banking because Montana
Sky Trails better accommodates his personal lifestyle. Montana Sky Trails is an
example of a(n) ________ firm.
A) entrepreneurial
B) salary-substitute
C) standard-of-living
D) statutory
E) lifestyle
Answer:
For startup firms, the cost of buying real estate, building facilities, and purchasing
equipment often exceeds the firm’s ability to provide funds for those needs on its own.
Which of the following reasons that motivate firms to seek funding or financing is
illustrated in this example?
A) Lengthy product development cycles
B) Costs associated with building a brand
C) Cash flow challenges
D) Capital investments
E) Personnel costs
Answer:
Which of the following is an advantage of internal growth strategies?
A) Need to develop new resources
B) Get quality and pricing right
C) Investment in a failed internal effort can be difficult to recoup
D) Provides maximum control
E) Adds to industry capacity
Answer:
iCracked, the company profiled in the opening feature of Chapter 2, was started by AJ
Forsythe and Anthony Martin, two California college students. Through personal
experiences, the two discovered that an opportunity existed to start a company that
would ________.
A) repair computer printers inexpensively and conveniently
B) repair used automobiles inexpensively and conveniently
C) repair broken items (e.g., furniture and appliances) in college dorm rooms and
apartments inexpensively and conveniently
D) repair laptop computers inexpensively and conveniently
E) repair iPhones inexpensively and conveniently
Answer:
Which of Porter’s five forces is most directly influenced by the number and balance of
competitors, degree of difference between products, growth rate of an industry, and
level of fixed costs?
A) Threat of new entrants
B) Rivalry among existing firms
C) Threat of substitutes
D) Bargaining power of buyers
E) Bargaining power of suppliers
Answer:
Which of the following firms introduced a disruptive business model?
A) Salesforce.com
B) eBay
C) Panera Bread
D) Barnes & Nobel
E) J. Crew
Answer:
According to the textbook, Dropbox, Facebook, and LinkedIn are examples of
________ firms.
A) lifestyle
B) salary-substitute
C) industry-standard
D) entrepreneurial
E) standard-of-living
Answer:
In the beverage industry, soda, fruit juice, and sports drinks are ________ competitors
of bottled water.
A) occasional
B) infrequent
C) indirect
D) direct
E) future
Answer:
Which of the following is an example of a resource that normally would not be
evaluated as part of the “resource sufficiency” stage of organizational feasibility
analysis?
A) Ability to form favorable business partnerships
B) Financial resources
C) Affordable office space
D) Key equipment needed to operate the business
E) Key support personnel
Answer:
The First Screen feasibility analysis template included in Chapter 3 is called “First
Screen” because ________.
A) it is the first feasibility analysis template created
B) it is the first and most important step in the opportunity recognition process
C) it is the first step in a sequence of several steps that must be completed before a
business idea is deemed to be feasible
D) feasibility analysis is an entrepreneur’s initial or first pass at determining the
feasibility of a business idea
E) it is the first of several ‘screens” that a business idea must pass through before it is
considered to be feasible
Answer:
Creating ________ means creating awareness and a sense of anticipation about a
company and its offerings.
A) ruckus
B) noise
C) clatter
D) clamor
E) buzz
Answer:
Which of the following is a company that is suitable for franchising but has a relatively
small number of franchise outlets?
A) Anytime Fitness
B) Hampton Inn Hotels
C) McDonalds
D) Starbucks
E) The UPS Store
Answer:
A(n) ________ is the set of attributes-positive or negative-that people associate with a
company.
A) emblem
B) logo
C) symbol
D) brand
E) trade name
Answer:
According to the textbook, the unique value provided by business angels is they
________.
A) are willing to make relatively large investments
B) are willing to make relatively small investments
C) require a fairly low rate of return on their money
D) invest money but typically don’t take a seat on a company’s board of directors
E) are easy to find
Answer: