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Entrepreneurs are usually moderate, rather than high, risk-takers.
Answer:
Many startups emphasize advertising over public relations primarily because it's
cheaper and helps build the firm's credibility.
Answer:
Primary research is research that is collected by the person or persons completing the
analysis.
Answer:
According to the textbook, the executive summary is arguably the most important
section of the business plan.
Answer:
The mechanics for filling out a First Screen worksheet are complicated.
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Entrepreneurship is the process by which individuals pursue opportunities within the
constraints of the resources they control.
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A skills profile is a chart that depicts the most important skills that are needed and
where skills gaps exist.
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Although a board of directors has formal governance responsibilities, its most useful
role is to provide guidance and support to the firm's managers.
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A fragmented industry is one that is characterized by a large number of firms of
approximately equal size.
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One of the most important questions a prospective franchisor should consider is
whether the fees and royalties charged by a franchisor are consistent with the franchise's
value or worth.
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Stock options are a special form of incentive compensation.
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The owner of a patent is granted a legal monopoly for an unlimited period of time.
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Feasibility analysis is the process of determining if a business idea is viable.
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The balance sheet reflects the results of the operations of a firm over a specified period
of time.
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A tagline is a catchy phrase that's used consistently in a company's literature,
advertisements, and even invoices and thus becomes associated with a companyto
reinforce their position in the market.
Answer:
Budgets are itemized forecasts of a company's income, expenses, and capital needs and
are also an important tool for financial planning and control.
Answer:
The temptation to show a concept statement to friends and family members should be
avoided because they are predisposed to give positive feedback.
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There are two primary areas to consider in organizational feasibility analysis:
management prowess and resource sufficiency.
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An important distinction should be made between a firm's core product and its actual
product. While the core product may be a CD that contains an antivirus software
program, the actual product may have a number of characteristics, include a quality
level, features, design, a brand name, and packaging.
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New product development is a low-risk growth strategy.
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Economies of scope are generated when increasing production lowers the average cost
of each unit produced.
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Venture capital involves getting a loan or selling corporate bonds.
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External growth strategies rely on establishing relationships with third parties, such as
mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising.
Answer:
Management complexities is a disadvantage of participating in strategic alliances and
joint ventures.
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A trademark is a word, name, symbol, or device used to identify the source or origin of
products or services and to distinguish those products or services from others.
Answer:
Creating buzz means creating awareness and a sense of anticipation about a company
and its offerings.
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An acquisition is the pooling of interests to combine two or more firms into one. A
merger is the outright purchase of one firm by another.
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The primary activities in a firm's value chain include: inbound logistics, operations,
outbound logistics, marketing and sales, and service.
Answer:
Copyright infringement occurs when one work derives from another or is an exact copy.
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Combinations of numbers and letters, such as 3M and 1-800-FREE-411, cannot be
trademarked.
Answer:
Match the business plan with its appropriate length:
A) operational business plan, 10-15 pages
B) full business plan, 25-35 pages
C) summary business plan, 25-35 pages
D) full business plan, 40 to 100 pages
E) operational business plan, 25-35 pages
Answer:
An important part of obtaining venture capital funding is going through ________,
which refers to the process of investigating the merits of a potential venture and
verifying the key claims made by the business plan.
A) appropriate diligence
B) fit diligence
C) due diligence
D) prior diligence
E) responsible diligence
Answer:
Two fatal flaws can render a business model untenable from the beginning. These are
utterly unsound economics and:
A) a complete misread of the customer
B) failure to copy the industry leader's business plan
C) overemphasis on the importance of feasibility analysis
D) overemphasis on the importance of industry analysis
E) failure to complete a business plan prior to developing a business model
Answer:
A ________ partnership is a modified form of a general partnership.
A) restricted
B) limited
C) partial
D) constrained
E) fractional
Answer:
Amazon.com's one-click ordering system, Priceline.com's "name-your-price" business
model and Netflix's method for allowing customers to set up a rental list of movies they
want mailed to them are examples of:
A) copyright extension patents
B) utility patents
C) business process protection patents
D) trademark extension patents
E) business method patents
Answer:
Betty Harrington owns a floor covering firm. Her market research is telling her that she
is taking business away from the large home improvement stores in her trade area. One
thing that Betty is worried about is that the large stores might fight back by lowering
their prices, which hurts everyone except the consumer. The day-to-day challenge of
firm growth that this example is referring to is:
A) quality control
B) price stability
C) capital constraints
D) cash flow management
E) benchmarking
Answer:
Which of the following statements is untrue regarding a firm's sales process?
A) A formal sales process helps a firm fine tune its approach to sales and build
uniformity into the process.
B) Following a formal or structured process to generate and close sales benefits a firm.
C) A 'sales process" is equally valuable whether a firm is selling directly to customers
or through intermediaries.
D) A firm's sales process depicts the steps it goes through to identify its target market.
E) A formal sales process involves a number of identifiable steps.
Answer:
________ depict relationships between items on a firm's financial statements.
A) Financial proportions
B) Fiscal relations
C) Fiscal projections
D) Monetary balances
E) Financial ratios
Answer:
In a business model context, the three components of a firm's customer interface are
target customer, fulfillment and support, and:
A) pricing structure
B) product/market scope
C) basic for differentiation
D) strategic assets
E) business mission
Answer:
Two fatal flaws can render a business model untenable from the beginning. These are:
A) failure to complete a business plan and failure to get funding
B) a complete misread of the customer and utterly unsound economics
C) failure to copy the industry leader's business plan and a complete misread of the
customer
D) failure to complete a business plan and overemphasizing the importance of
feasibility analysis
E) overemphasizing the importance of feasibility analysis and utterly unsound
economics
Answer:
A firm's marketing mix consists of the following four elements:
A) product, price, promotion, and place
B) passion, pride, promotion, and place
C) passion, pleasure, product, and price
D) enthusiasm, passion, product, and price
E) place, promotion, passion, and product
Answer:
Which of the following statement is correct regarding entrepreneurial activity and age
ranges?
A) The highest percentage of entrepreneurs falls in the 19 years old and younger age
range.
B) The highest percentage of entrepreneurs falls in the 20 to 34 age range.
C) The highest percentage of entrepreneurs falls in the 35 to 44 age range.
D) The highest percentage of entrepreneurs falls in the 45 to 54 age range.
E) The highest percentage of entrepreneurs falls in the 55+ age range.
Answer:
A company's mission statement should be placed in the ________ section of its
business plan.
A) marketing plan
B) management team and company structure
C) company description
D) market analysis
E) industry analysis
Answer:
A competitor analysis should be included in the ________ section of a business plan.
A) market analysis
B) industry analysis
C) company description
D) management team and company structure
E) operations plan
Answer:
When evaluating a balance sheet, the two primary questions are:
A) whether a firm has sufficient short-term assets to cover its short-term debts and
whether it is profitable
B) whether a firm is profitable and whether a firm is financially sound
C) whether its costs of sales is going up and whether it is generating excess cash that
could be used to pay down debt or pay dividends
D) whether a firm has sufficient short-term assets to cover its short-term debts and
whether it is financially sound
E) whether a firm is profitable and whether it is generating excess cash that could be
used to pay down debt or pay dividends
Answer:
Which of the following was not identified in the textbook as an element of a new
venture team?
A) board of advisors
B) suppliers and vendors
C) key employees
D) lenders and investors
E) management team
Answer:
Which of the following is not one of the four steps of the entrepreneurial process?
A) deciding to become an entrepreneur
B) determining how to seize the spotlight
C) developing successful business ideas
D) moving from an idea to an entrepreneurial firm
E) managing and growing the entrepreneurial firm
Answer:
There are two distinctly different types of franchise systems:
A) product trademark franchise, business arrangement franchise
B) product plus franchise, business format franchise
C) business design franchise, product improvement franchise
D) product extension franchise, business design franchise
E) product trademark franchise, business format franchise
Answer:
Which of the following are the primary elements of a startup's core strategy?
A) target customer, fulfillment and support, pricing structure
B) suppliers, partners, other key relationships
C) pricing structure, suppliers, strategic assets
D) core competencies, strategic assets, funding model
E) mission statement, product/market scope, basis for differentiation
Answer:
According to the textbook, the ________ are the heart of the financial section of a
business plan.
A) financial ratios
B) pro forma financial statements
C) budgets
D) sources and uses of funds statements
E) break-even analyses
Answer:
BenchPrep, the company profiled in the opening feature for Chapter 2, sells an iPhone
app to help students prepare for the GMAT and other exams. The original idea for the
company stemmed from the founders' recognition that if people could use their iPhones
to study for the GMAT:
A) they wouldn't have to carry heavy study books around and they could maximize
their study time by catching a few minutes of studying between meetings and on similar
occasions
B) they could study more questions and a computer within the app could keep track of
their progress on practice exams
C) they could save money by not having to buy multiple study guides and a small
computer within the app could keep track of their progress on practice exams
D) they wouldn't have to carry heavy study books around and they could interact online
with other people preparing for the GMAT and similar exams
E) they could maximize their study time by catching a few minutes of studying between
meetings and on similar occasions and they could save money by not having to buy
multiple study guides
Answer:
The primary opportunity existing for startups in fragmented industries is to:
A) pursue a niche strategy, which focuses on a narrow segment of the industry that
might be encouraged to grow through product or process innovation
B) win customers by placing an emphasis on service and process innovation
C) capture a first-mover advantage
D) pursue a cost reduction strategy, which is accomplished through achieving lower
costs than industry incumbents through process innovation
E) consolidate the industry and establish industry leadership as a result of doing so
Answer:
According to the textbook, there are three types of startup firms: entrepreneurial firms,
lifestyle firms, and:
A) civil firms
B) salary-substitute firms
C) statutory firms
D) standard-of-living firms
E) innovative firms
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 of the following statements is not true regarding the day-to-day challenges of
growing a firm?
A) As a firm grows, it requires a decreasing amount of cash to service its customers.
B) If firm growth comes at the expense of a competitor's market share, price
competition can set in.
C) Most businesses, regardless of their industry, need capital from time to time to invest
in growth-enabling projects.
D) Although most businesses are started fairly inexpensively, the need for capital is
typically the most prevalent in the early growth and continuous stages of the
organizational life cycle.
E) One of the most difficult challenges that businesses encounter as they grow is
maintaining high levels of quality and customer service.
Answer:
Opportunities for leadership, niche, harvest and divestment are associated with
________ industries.
A) mature
B) emerging
C) declining
D) fragmented
E) global
Answer:
Kentucky Soup and Salad is a casual dining restaurant that has been owned by Kenneth
Peterson for the past 11 years. The restaurant offers a menu that is typical for casual
dining restaurants and affords Kenneth a level of income that is similar to what he
would earn in a conventional job. According to the textbook, Kentucky Soup and Salad
is an example of a(n):
A) salary-substitute firm
B) entrepreneurial firm
C) quality-of-life firm
D) lifestyle firm
E) industry-standard firm
Answer:
For startup firms, some products are under development for years before they generate
earnings. The upfront costs often exceed a firm's ability to fund these activities on its
own. 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) capital investments
D) personnel costs
E) lengthy product development cycles
Answer:
In regard to firm growth, evidence shows that:
A) relatively few firms generate sustained and profitable growth
B) the majority of firms generate sustained and profitable growth
C) an equal number of firms generate sustained and profitable growth than firms that
don't
D) firms in the manufacturing sector are more likely to achieve sustained and profitable
growth than firms in the service sector
E) firms in the service sector are more likely to achieve sustained and profitable growth
than firms in the manufacturing sector
Answer:
Amy Phillips founded a cosmetics firm several years ago. Her firm has grown rapidly
and is financially successful. One thing that Amy attributes her success to is that early
on she assembled a panel of experts who provided her ongoing direction and advice
about her business. What Amy created is called a(n):
A) consultation panel
B) suggestion panel
C) idea board
D) accountability panel
E) advisory board
Answer:
Describe each of the four primary financial objectives of firms.
Answer:
What is meant by the statement, "A firm's business model takes it beyond its own
boundaries"? Provide an example to illustrate your answer.
Answer:
Describe the term "liability of newness" and suggest several ways that a new venture
can overcome this handicap.
Answer:
Experienced entrepreneurs often refer to business plans as "living, breathing
documents." What is meant by this characterization of business plans?
Answer:
What is a strategic asset? Provide an example of a strategic asset that is utilized by an
entrepreneurial firm.
Answer:
Do most firms want to grow or are they reluctant to grow? What are the advantages of
growth?
Answer:
What are the primary advantages and disadvantages to establishing a franchise system
(from the franchisor's point of view)?
Answer:
Why do most firms need funding? Provide a brief explanation of each reason.
Answer:
What are the two primary rules of thumb for determining whether intellectual property
protection should be pursued for a particular intellectual asset?
Answer:
Describe the difference between historical and pro forma financial statements.
Answer:
Briefly describe the four main components of a business model. Identify the
subcomponents of each the four main components of a business model.
Answer:
