According to the opening feature on GiftZip, raising funding was the biggest challenge
that Sam Hogg experienced in making his company a success.
Answer:
The percentage of the profits the venture capitalist gets is called the “carry.”
Answer:
A disadvantage of a sole proprietorship is that it is subject to double taxation.
Answer:
Networking is building and maintaining relationships with people whose interests are
similar or whose relationship could bring advantages to a firm.
Answer:
Outsourcing is work that is done for a company by people other than the company’s
full-time employees.
Answer:
A firm’s profit margin, or return on sales, is computed by dividing net income by net
sales.
Answer:
Product/service feasibility analysis is an assessment of the overall appeal of the product
or service being proposed.
Answer:
One of the most difficult challenges that businesses encounter as they grow is
maintaining high levels of quality and customer service.
Answer:
An increasingly important approach for recruiting employees is via social media sites
like LinkedIn, Facebook, and Twitter.
Answer:
The main challenges for a business in the early growth stage are to make sure the initial
product or service is right and to start laying the groundwork for building a larger
organization.
Answer:
An idea is a thought, impression, or notion. It may or may not meet the criteria of an
opportunity.
Answer:
The majority of entrepreneurial firms first enter foreign markets via joint ventures.
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 best industry to enter is an industry where the threat of each of Porter’s five-forces
is low.
Answer:
A commercialization plan is a written narrative that describes what a new business
plans to accomplish and how it plans to accomplish it.
Answer:
Price is the only element in the marketing mix that produces revenue; all other elements
represent costs.
Answer:
A company’s industry analysis and target market analysis are usually included in the
same section of its business plan.
Answer:
Few entrepreneurial firms start as subchapter S corporations.
Answer:
Internally generated growth is often called organic growth because it does not rely on
outside intervention.
Answer:
In terms of the “types” of startup firms, entrepreneurial firms bring new products and
services to market.
Answer:
The two trends that are most important to focus on in an industry analysis are business
trends and environmental trends.
Answer:
A product attribute map illustrated the strength of a firm’s niche (or target) market
relative to competing markets.
Answer:
A niche market is a place within a market segment that represents a narrow group of
customers with similar interests.
Answer:
In most industries, the major determinant of industry profitability is the level of
competition among the firms already competing in the industry.
Answer:
A lease is a written agreement in which the owner of a piece of property allows an
individual or business to use the property for a specified period of time in exchange for
payments.
Answer:
Consultants fall into two categories: paid consultants and consultants who are made
available for free or at a reduced rate through a nonprofit or government agency.
Answer:
Strategic assets are anything rare and valuable that a firm owns.
Answer:
For most business plans, 25 to 35 pages are sufficient.
Answer:
Despite its advantages, franchising is not a popular form of business growth.
Answer:
A new venture team is the group of founders, key employees, and advisers that either
manage or help manage a new business in its startup years.
Answer:
Franchisors are required by law to disclose all their costs in a document called the
Franchise Disclosure Document.
Answer:
Brainstorming is used to generate a number of ideas quickly.
Answer:
The executive summary is a lengthy overview of the entire business plan.
Answer:
A resource chain is the network of all the companies that participate in the production
of a product, from the acquisition of raw materials to the final sale.
Answer:
Debt financing means exchanging partial ownership in a firm in exchange for cash.
Answer:
A network is a hub-and-wheel configuration with a local firm at the hub organizing the
interdependencies of a complex array of firms.
Answer:
An advisory board is a panel of experts who are asked by a firm’s managers to provide
counsel and advice on an ongoing basis.
Answer:
Industry analysis is business research that focuses on the potential of an industry.
Answer:
The business format franchise is a more popular approach to franchising than the
product and trademark franchise.
Answer:
Which of the following was not given in the textbook as a reason for the increase in the
number of senior entrepreneurs?
A) Seniors tend to be more passionate about new business ideas than middle-aged or
younger prospective entrepreneurs.
B) Many seniors have extensive business experience and other qualities that equip them
for an entrepreneurial career.
C) Growing worries among seniors that they need to earn additional income to pay for
future health care services and other expenses
D) An increasing desire among older workers for more personal fulfillment in their
lives
E) corporate downsizing
Answer:
If a startup pioneers an industry or a new concept within an industry, the name
recognition the startup establishes may create a formidable nontraditional barrier to
entry referred to as a(n):
A) unique business model
B) aggressive supremacy
C) competitive superiority
D) first-mover advantage
E) aggressive tactical advantage
Answer:
A solo entrepreneur is an individual who identified his or her business idea ________. A
network entrepreneur is an individual who identified his or her business idea ________.
A) through social contacts, on their own
B) through a business incubator program, through social contacts
C) on their own, through social contacts
D) through the assistance of a paid consultant, through social contacts
E) with one or more partners, on their own
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:
Which of the following was not identified in the textbook as an attribute of an effective
board of directors?
A) homogeneous set of experiences and talents
B) customer-focused point of view
C) ability and willingness to stand up to the CEO and top managers of the firm
D) strong communication with the CEO
E) decisiveness
Answer:
Real estate, buildings, equipment and furniture are classified as ________ on a
company’s balance sheet.
A) intermediate term assets
B) fixed assets
C) other assets
D) permanent assets
E) current assets
Answer:
Does it make sense? Is it reasonable? Is it something consumers will get excited about?
Does it take advantage of an environmental trend, solve a problem, or fill a gap in the
marketplace? These are the types of questions asked during the ________ component of
a complete feasibility analysis.
A) financial feasibility
B) industry/target market feasibility
C) organizational feasibility
D) concept feasibility
E) product/service feasibility
Answer:
________ is (are) used to generate a number of ideas quickly.
A) Insight groups
B) Competitive intelligence gatherings
C) Examination groups
D) Survey groups
E) Brainstorming
Answer:
The What Went Wrong? feature in Chapter 15 focuses on StumbleUpon, an Internet
startup which sold itself to eBay for $75 million. Surprisingly, just two years after eBay
bought StumbleUpon:
A) it licensed the technology underlying StumbleUpon’s unique method of finding Web
sites to Yahoo
B) it changed StumbleUpon’s name to “eBay Surprise”
C) it sold it to Google for $95 million
D) it closed StumbleUpon and retired its name
E) its founder and a group of investors bought it back
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:
Partnerships are organized as either:
A) specific or general partnerships
B) narrow or broad partnerships
C) inward or outward partnerships
D) general or limited partnerships
E) partial or full partnerships
Answer:
A ________ illustrates a firm’s positioning strategy relative to its major rivals.
A) product attribute map
B) positioning analysis grid
C) positioning plot
D) competitive analysis grid
E) positioning diagram
Answer:
In an acquisition, the surviving firm is called the ________, and the firm that is
acquired is called the ________.
A) target, acquirer
B) goal, objective
C) objective, aggressor
D) acquirer, target
E) aggressor, objective
Answer:
In the context of international franchising, under a ________ franchise arrangement, the
U.S. firm grants the rights to an individual or company (the master franchisee) to
develop one or more franchise businesses and to license others to develop one or more
franchise businesses within the country.
A) master
B) direct
C) subordinate
D) concurrent
E) multinational
Answer:
Zappo’s competence in customer service, Apple’s competence in designing consumer
products, and Netflix’s competence in supply chain management are examples of
________, which serve as each of these respective firms’ competitive advantage of their
rivals.
A) foundational competencies
B) core competencies
C) core elements
D) distinguishing attributes
E) foundational attributes
Answer:
According to the textbook, trade secret disputes arise most frequently when:
A) one firm alleges that it can legally use another firm’s trade secrets because they were
“voluntarily” disclosed
B) an employee leaves a firm to join a competitor and is accused of taking confidential
information with him or her
C) one firm claims that another firm outright stole its trade secrets
D) one firms claims that what another firm is claiming as a trade secret is common
knowledge
E) one firm claims that it obtained another firm’s trade secrets through legal means
Answer:
Alex has a number of casual acquaintances that he interacts with infrequently. The
relationships that Alex has with these people are referred to as:
A) strong-tie relationships
B) moderate-tie relationships
C) lateral-tie relationships
D) weak-tie relationships
E) multiple-tie relationships
Answer:
________ is the process of adapting a firm’s core competencies to exploit new
opportunities.
A) Resource leverage
B) Capacity proficiency
C) Ability leverage
D) Aptitude embellishment
E) Capacity extension
Answer:
Nike’s familiar phrase “Just do it” is an example of a(n):
A) attention-line
B) tagline
C) notice-line
D) catchline
E) grabline
Answer:
Karen Simon recently purchased a digital camera. She considered three cameras, a
Kodak that was priced at $139.00, a Panasonic priced at $189.00, and a Nikon priced at
$229.00. Karen couldn’t tell much difference between the cameras, so she bought the
Nikon, figuring that because it was the most expensive of the three, it must be the best.
According to the textbook, Karen was making a:
A) price-quality attribution
B) price-merit attribution
C) cost-value acknowledgement
D) cost-worth attribution
E) price-worth acknowledgement
Answer:
If a local band wrote their own rendition of a Celine Dion song, the band could try to
copyright their rendition of the song as a(n):
A) imitative work
B) offshoot work
C) derivative work
D) subsequent work
E) supplemental work
Answer:
Which of the following statement is incorrect regarding how balance sheets are
prepared?
A) The left hand side of a balance sheet shows a firm’s assets.
B) The assets on a balance sheet are shown in order of liquidity.
C) Assets are recorded at fair market value rather than cost.
D) The right hand side of a balance sheet shows a firm’s liabilities and its owners’
equity.
E) Intellectual property receives value in some cases and in some cases it does not.
Answer:
Match the financial objective with its correct definition.
A) stability/the overall health of the financial structure of the firm, particularly as it
relates to its debt-to-equity ratio
B) profitability/how productively a firm utilizes its assets
C) liquidity/a company’s ability to make a profit
D) efficiency/a company’s ability to meet its short-term obligations
E) profitability/the overall health of the financial structure of the firm, particularly as it
relates to its debt-to-equity ratio
Answer:
The Franchise Disclosure Document is accepted in (or by):
A) 11 states
B) all 50 states, all of Canada, and parts of Mexico
C) 39 states and all of Canada
D) all 50 states and parts of Canada
E) all nations participating in the North America Free Trade Agreement
Answer:
Once a venture capitalist makes an investment in a firm, subsequent investments are
made in rounds and are referred to as:
A) later funding
B) successive funding
C) subsequent backing
D) follow-on funding
E) ensuing backing
Answer:
Which of the following is not one of the purposes of a business model?
A) serves as an ongoing extension of feasibility analysis
B) serves as a template for conducting industry analysis
C) focuses attention on how all the elements of a business fit together
D) describes why the network of participants needed to make a business idea viable is
willing to work together
E) articulates a company’s core logic to all stakeholders
Answer:
Which of the following is not one of the major sources of barriers to entry?
A) economies of scale
B) cost advantages independent of size
C) buyer group concentration
D) access to distribution channels
E) government and legal barriers
Answer:
A company’s customer list is most commonly protected under ________ regulations.
A) patent
B) copyright
C) trade secret
D) trademark
E) collective mark
Answer:
________ are similar to ordinary trademarks, but they are used to identify the services
or intangible activities of a business rather than a business’s physical product.
A) Creative marks
B) Intangible marks
C) Examination marks
D) Service marks
E) Subtle marks
Answer:
According to the textbook, the four characteristics of successful entrepreneurs are:
A) passion for the business, on the cutting edge of technological change, very
charismatic, and tenacity despite failure
B) young and energetic, passion for the business, product/customer focus, and seeks
recognition
C) passion for the business, tenacity despite failure, product/customer focus, and
execution intelligence
D) on the cutting edge of technological change, forward thinking, tenacity despite
failure, and product/customer focus
E) passion for the business, seeks recognition, young and energetic, and execution
intelligence
Answer:
Trade journals, industry-related publications, government statistics, and competitors’
Web sites are examples of:
A) secondary research
B) action research
C) principal research
D) legacy research
E) vertical research
Answer:
An example of a valuable library resources is IBISWorld, which is a(n):
A) business publication
B) academic journal
C) Census Bureau publication
D) trade journal
E) database of industry-related information
Answer:
Describe the purpose of feasibility analysis. When should a feasibility analysis be
conducted relative to opportunity recognition and the development of a business plan?
Answer:
What is a business plan?
Answer:
Describe the two potential fatal flaws of business models.
Answer:
Identify and discuss the three primary reasons that entrepreneurial behavior has a strong
impact on the United States economy.
Answer:
Briefly describe the purpose of the First Screen and how it’s used.
Answer:
According to Chapter 13, business success doesn’t always scale. What is meant by this
statement?
Answer:
What is ratio analysis? Why is it important?
Answer:
Describe the concept of guerrilla marketing. Why is guerrilla marketing particularly
suitable for entrepreneurial firms?
Answer:
What is a business angel? Describe the prototypical business angel. How much money
do business angels typically invest in a single company?
Answer:
Discuss the nontraditional barriers to entry identified in the chapter. Why is it important
that entrepreneurial firms utilize one or more of these forms of barriers to entry?
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:
What is the difference between equity funding and debt financing? What are the most
common sources of equity funding and debt financing?
Answer:
What is an “executive summary?” Why is the executive summary often called the most
important part of a business plan?
Answer:
Describe how library and Internet research can be used to generate new business ideas.
Answer:
How can a person tell if franchising is right for them?
Answer: