The Savvy Entrepreneurial Firm feature in Chapter 2 focuses on a technique through
which entrepreneurs can learn about emerging trends. The technique focused on in the
chapter is ________.
A) online databases
B) newspapers and magazines
C) targeted Internet searches
D) social media
E) radio and television
Answer:
Sarah Green, who plans to open a garden and lawn business, is working on the portion
of the Barringer/Ireland Business Model template that focuses on how her products and
services will be produced. Sarah is working on the ________ section of the template.
A) basis of differentiation
B) product/or service production
C) product/market scope
D) core competency
E) channels
Answer:
Which of the following is not one of the standards that a business must meet to qualify
for status as a subchapter S corporation?
A) The business must be a subsidiary of another corporation.
B) All shareholders must agree to have the corporation formed as a subchapter S
corporation.
C) It can have no more than 100 members (husbands and wives count as one member).
D) It can have only one class of stock issued and outstanding.
E) The shareholders must be U.S. citizens.
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:
Which of the following is not a personality trait or characteristic common among
entrepreneurs?
A) Promoter
B) Visionary
C) Short attention span
D) Alert to opportunities
E) Self-starter
Answer:
Hulu.com allows people to watch television shows and movies on the Internet.
Hulu.com’s business opportunity was made possible by ________ that enhanced the
ability of television shows and movies to be uploaded to the Internet and played by
anyone with a suitable computer and an Internet connection.
A) social forces
B) technological advances
C) legal changes
D) regulatory changes
E) economic forces
Answer:
Which of the following is not an individual, group or institution that normally reads a
company’s business plan?
A) Board of directors
B) Potential alliance partners and major customers
C) State and local government officials
D) Key recruits for jobs with the new firm
E) Rank-and-file employees
Answer:
The What Went Wrong? feature in Chapter 10 focuses on DrawQuest. DrawQuest
captured the attention of venture capitalists, gained 25,000 users, and still failed.
According to the feature, the main reason DrawQuest failed is that the founders
________.
A) couldn’t work together effectively
B) were ineffective in managing their investment capital
C) never figured out the business side of the venture
D) fell out of favor with their investors
E) were ineffective in raising follow-on rounds of funding
Answer:
The three primary reasons that people become entrepreneurs and start their own firms
are to ________.
A) gain prestige, realize financial rewards, and eliminate risk in their lives
B) do what they were “born” to do, be their own boss, and gain prestige
C) take big risks, be their own boss, and do what they were “born” to do
D) be their own boss, pursue their own ideas, and realize financial rewards
E) take advantage of government subsidies, pursue their own ideas, and realize
financial rewards
Answer:
Amy Clark just opened a soup and salad restaurant near Golden Gate Park in San
Francisco, CA. Rather than borrow money or raise funds from investors, Amy used her
creativity and ingenuity and figured out how to get her business up and running without
the need for external funding. Amy is utilizing a technique referred to as ________.
A) networking
B) reaching
C) scrounging
D) prospecting
E) bootstrapping
Answer:
Venture capital firms are ________ of money managers who raise money in “funds” to
invest in startups and growing firms.
A) limited partnerships
B) finance associations
C) consortiums
D) collations
E) strategic partnerships
Answer:
The main difference between the SBIR and the STTR programs is that the STTR
program requires the participation of ________.
A) an attorney
B) a venture capitalist
C) researchers working at universities or other research institutions
D) a certified public accountant
E) a government agency in conducting the research
Answer:
According to the textbook, there are three issues about business growth that
entrepreneurs should appreciate. These issues are ________.
A) not all businesses have the potential to be aggressive growth firms, business success
scales, and business growth is a top priority of most entrepreneurial firms
B) business growth is a top priority of most entrepreneurial firms, a business can’t grow
too fast, and businesses that price their products aggressively grow the fastest
C) a business’s valuation increases with its growth, a business can grow too fast, and
business growth is a top priority of most entrepreneurial firms
D) the majority of businesses have the potential to be aggressive growth firms, a
business can’t grow too fast, and business success scales
E) not all businesses have the potential to be aggressive growth firms, a business can
grow too fast, and business success doesn’t always scale
Answer:
________ business models depict existing plans or recipes firms can use to determine
how they will create, deliver, and capture value for their stakeholders.
A) Revolutionary
B) Normal
C) Customary
D) Disruptive
E) Standard
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:
According to the textbook, which of the following statements is inaccurate regarding
the size and composition of the founding team of a firm?
A) There is no relationship between a founding team’s size and its effectiveness.
B) A founding team larger than four people is typically too large to be practical.
C) The members of a homogeneous founding team are similar in terms of their abilities
and experiences.
D) The members of a heterogeneous founding team are diverse in terms of their abilities
and experiences.
E) A founding team can be too big, causing communication problems and increasing
potential for conflict.
Answer:
Which of the following was not identified in the textbook as a nontraditional barrier to
entry?
A) Strength of management team
B) First-mover advantage
C) Unique business model
D) Product differentiation
E) Internet domain name
Answer:
Which of the following was not identified in the textbook as a key to effective new
product development?
A) Develop products that add value.
B) Get quality and pricing right.
C) Find a need and fill it.
D) Conduct ongoing feasibility analysis.
E) Focus on broad target markets.
Answer:
A company’s ability to productively utilize its assets relative to its revenue and its
profits is referred to as ________.
A) efficiency
B) effectiveness
C) stability
D) liquidity
E) profitability
Answer:
According to the textbook, many investors and others who read business plans look first
at the executive summary and then go directly to the ________ section of the business
plan to make their preliminary assessment.
A) management team and company structure
B) product (or service) design and development plan
C) industry analysis
D) marketing plan
E) operations plan
Answer:
Copyright law is governed by the ________.
A) U.S. Constitution
B) 1946 Intellectual Property Act
C) 1966 Trademark and Copyright Act
D) 1955 Inventors and Writer’s Protection Act
E) Copyright Revision Act of 1976
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:
Suppose you are a Small Business Development Center counselor and you’re looking at
the personality profiles of five potential entrepreneurs. Based on the profiles, which
individual has the most desirable mix of personal characteristics to become a successful
entrepreneur?
A) Candidate A: visionary, energetic, moderate risk taker
B) Candidate B: seeks recognition, self-starter, creative
C) Candidate C: visionary, high-risk taker, energetic
D) Candidate D: high-risk taker, achievement-motivated, networker
E) Candidate E: tolerant for ambiguity, seeks recognition, motivated primarily by
money
Answer:
Which of the following is a disadvantage of a C Corporation?
A) Income is subject to double taxation.
B) Limited liability
C) Raising capital is easier than a partnership or sole proprietorship.
D) Stock is liquid if traded on a major stock exchange.
E) No restrictions exist on the number of shareholders.
Answer:
Which of the following is an example of a long-term liability?
A) Accounts payable
B) Real estate mortgage
C) Accrued expenses
D) Current portion of real estate mortgage
E) Owners’ equity
Answer:
A(n) ________ is a snapshot of a company’s assets, liabilities, and owners’ equity at a
specific point in time.
A) income statement
B) statement of cash flows
C) effectiveness statement
D) balance sheet
E) efficiency statement
Answer:
Merchandise and character licensing is the licensing of a recognized trademark or brand
that the licensor typically controls through a registered ________.
A) trade secret or copyright
B) patent or copyright
C) trademark or patent
D) patent or trade secret
E) trademark or copyright
Answer:
________ refers to the number of subscribers that a subscription-based business loses
each month.
A) Agitate
B) Churn
C) Erosion
D) Attrition
E) Stir
Answer:
Jenna Page recently entered into an agreement with Anytime Fitness to open five
Anytime Fitness franchises. According to the agreement that Jenna entered into, she has
the right to open up to five Anytime Fitness franchises within the city limits of
Lawrence, Kansas. Jenna has entered into a(n) ________ franchise agreement,
A) individual
B) district
C) locality
D) area
E) city
Answer:
Which of the following business plans matches 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 – 40-100 pages
E) Operational business plan – 25-35 pages
Answer:
The main challenges for a business in the introduction stage of the organizational life
cycle is ________.
A) beginning the process of transitioning the owner from a hands-on supervisor to a
more managerial role and developing business partnerships
B) developing business partnerships and making sure the initial product or service is
right
C) determining whether the owner of the business and the current management team is
capable of taking the business further and developing systems and procedures
D) developing systems and procedures and beginning the process of transitioning the
owner from a hands-on supervisor to a more managerial role
E) making sure the initial product or service is right and starting to lay the groundwork
for building a larger organization
Answer:
Which of the following statements is incorrect about grant programs?
A) Granting agencies are very visible and well-known, so it’s normally not hard to find
one.
B) The federal government has grant programs beyond the SBIR and STTR programs.
C) It’s important to avoid grant-related scams.
D) There are a limited number of organizations that offer new businesses grants.
E) There are private foundations that grant money to both existing and startup firms.
Answer: