Two major disadvantages of going public are the increased reporting requirements and
potential loss of control.
The indirect method of projecting cash flow is the most popular.
Early-stage financing is usually the least costly type of financing to obtain.
It is important for an entrepreneur to understand all aspects of the environment. Part of
this ability is reflected in the individual’s level of creativity, which generally increases
with age and education in most individuals.
A patent is a contract between the government and an inventor.
The simplest approach to gathering primary information is by developing a
questionnaire.
The proprietor is only personally liable for all aspects of the business when gross
negligence occurs.
Firms that are more entrepreneurial are likely to have fewer failures than those firms
that are more traditionally managed.
In most of the significant public offerings, the company technically sells the shares to
the underwriters, who then resell the shares to the public investors.
Nonverbal or hidden language of the culture can be thought of in terms of several
components – time, intangible value, and business relationships.
Long-term loans from commercial banks are usually readily available to small startup
firms.
The S corporation cannot have more than 75 shareholders.
An entrepreneurial strategy is the set of decisions, actions, and reactions that protect the
firm from new entrants.
The best way to address the concerns of all potential audiences when writing the
business plan is to rely exclusively on a computer software package.
About 50 percent of family firms successfully make the transition to the second
generation.
A recognition of the need to change personal attitudes and habits regarding the
allocation of time is known as the principle of desire.
As a firm grows, higher volume increases production efficiency and increases its
bargaining power with suppliers.
Shares of stock are issued to members of a limited liability company.
ESOPs account for about 20% of the nation’s 10 million employees.
Shareholders in an S corporation have the same liability protection as shareholders in a
C corporation.
The McMullen-Shepherd Model explains how knowledge and motivation influence two
stages of entrepreneurial action.
In a limited partnership, the limited partners are equally liable for the debts of the
partnership.
If employees are involved in the decision-making process, they are more motivated to
implement the decided course of action.
A marketing plan need not provide for the use of existing resources, allocation of all
equipment, financial resources, and human resources, since this is part of a production
plan.
About 90 percent of the value of finished goods inventory can be used as collateral for a
commercial bank loan.
Knowledge is the basis of the entrepreneurial resource.
The standard term of a limited liability company is 30 years.
Synergy is defined as “the intangible benefits of mergers and acquisitions”.
An S Corporation combines the tax advantages of the partnership and the corporation.
One advantage of an ESOP is that it is easy to establish.
The _________ element of the marketing mix involves decisions as to what is the most
appropriate channel.
A.product
B.price
C.distribution
D.promotion
Identify and describe the major parts of a patent application.
Motivation to launch a new venture can arise from all of the following except:
A.lack of prior experience.
B.boredom.
C.a lack of challenge.
D.frustration.
The first step in establishing corporate entrepreneurship in an organization is:
A.finding mid level managers to champion ideas
B.developing ways to get closer to customers
C.learn to be more productive with fewer resources
D.securing commitment from top management
Which group in a professional network helps keep a new venture competitive?
A.Clients or buyers
B.Mentors
C.Trade associations
D.Suppliers
Which among the following political risks is considered the biggest risk of all?
A.Transfer risk
B.Ownership risk
C.Investment risk
D.Operating risk
Which of the following was not one of the top industries where venture capital was
invested in 2011?
A.Software
B.Biotechnology
C.Industrial/energy
D.Telecommunications
The simplest approach to gathering primary information is:
A.observation.
B.focus groups.
C.experimentation.
D.interviewing.
A ________ occurs when an entrepreneur or an employee group uses borrowed funds to
purchase an existing venture for cash.
A.leveraged buyout
B.merger
C.franchise agreement
D.integrated task
Negative cash flow:
A.results when cash receipts exceed cash payments.
B.can cause a firm to fail.
C.is included in the pro forma income statement.
D.is common for a business during its phase of expansion.
Using the __________ method of evaluating the firm, cash flow is adjusted for the time
value of money.
A.present value of future cash flow
B.replacement value
C.book value
D.earnings approach
An error of omission occurs when an entrepreneur:
A.enters a market but overestimates the customer demand.
B.develops a product for a market that is too narrow.
C.decides not to enter a market that is, in fact, desirable.
D.fails to understand the limitations of a market.
When an entrepreneur pursues a new entry opportunity only to find out later that he or
she had overestimated his or her ability to create customer demand it is a(n):
A.technological error.
B.window of opportunity.
C.error of omission.
D.error of commission.
Motivations for going global, discussed in the text, include all the following except:
A.cheap shipping costs
B.excess production capacity
C.technological advantage
D.competitive pressures
_____________ have unlimited liability for the actions of the business.
A.Limited liability company members
B.Corporate shareholders
C.General partners
D.Limited partners
Regarding entry into a new market, which of the following is(are) true?
A.First movers gain expertise through participation.
B.First movers are not able to detect changes in the market.
C.First movers suffer a cost disadvantage.
D.First movers face more competitive rivalry.
Which of the following would NOT occur in the second stage of establishing corporate
entrepreneurship in an organization?
A.Ideas that top management is interested in supporting are identified.
B.Identify an evaluation system for involved employees.
C.The amount of risk money available is specified.
D.Overall program expectations and target results of each corporate venture are
established.
The moral support network is different from the professional support network in that:
A.a professional support network includes finding a mentor.
B.moral support is less important than professional support.
C.only the “cheering squad” provides moral support.
D.a moral support network comprises only of personal contacts.
The major interacting components that enable a firm to successfully provide products to
the marketplace are called the:
A.marketing plan.
B.marketing mix.
C.marketing system.
D.marketing structure.
Market segmentation is the process of:
A.describing market conditions.
B.dividing the market into smaller homogeneous groups.
C.presenting future opportunities.
D.exploring new market opportunities.
A common procedure to determine the value of a merger candidate is to estimate the
present value of discounted cash flows and the expected after-tax earnings attributable
to the merger. This can be done on all of the following levels except:
A.Optimistic.
B.Pessimistic.
C.Probable scenarios.
D.Logical scenarios.
A vertical merger is the combination of two firms that produce one or more of the same
or closely related products in the same geographical area.
The basic building blocks to a firm, or the inputs into the production process, are:
A.competition.
B.strategy.
C.liabilities.
D.resources.
______ is a nonprofit organization that provides free online and in-person assistance to
entrepreneurs in the form of training, consulting and mentoring provided mainly by
retired executives and entrepreneurs.
A.CSBC
B.NAICS
C.SCORE
D.SIC
Private offerings:
A.must comply with Regulation D.
B.involve more time and expense than public offerings.
C.do not involve the SEC.
D.are not a viable option for new ventures.
Which of the following is not an advantage of franchising?
A.No entry cost
B.Availability of management expertise
C.Product acceptance
D.Knowledge of the market
A trust receipt is a:
A.type of accounts payable loan.
B.type of real estate loan.
C.type of inventory loan.
D.type of cash flow financing loan.
Which factor in valuing your company is the most important?
A.Future earnings capacity
B.Book value
C.Outlook of the economy
D.Market price of similar companies’ stocks
The largest source of new product ideas is:
A.the U.S. Patent Office.
B.the entrepreneur’s research and development.
C.customers.
D.the federal government.
A “commitment fee” is used in arranging for a:
A.commercial loan.
B.character loan.
C.installment loan.
D.line of credit.
If the total fixed costs are $850,000, the sale price is $110 and the variable cost per unit
is 25, what is the breakeven volume?
A.17,000
B.10,000
C.7,000
D.1,000
In regards to thinking structurally, superficial similarities:
A.exist when the underlying mechanisms of the technology resemble (or match) the
underlying mechanisms of the market.
B.exist when supply is less than demand.
C.exist when entrepreneurs engage in bricolage.
D.exist when the basic (relatively easy to observe) elements of the technology resemble
the basic elements of the market.