A mature industry is an industry that is experiencing slow increases in demand,
numerous repeat customers, and limited product innovation.
Answer:
There are two components to product/service feasibility analysis: product/service
desirability and total startup funds needed.
Answer:
The process of adapting a company’s core competencies to exploit new opportunities is
referred to as resource leverage.
Answer:
Business trends include economic trends, social trends, technological advances, and
political and regulatory changes.
Answer:
The income statement records all the revenues and expenses for a given period and
shows whether the firm is making a profit or is experiencing a loss.
Answer:
A statement of cash flows is a snapshot of a company’s assets, liabilities, and owners’
equity at a specific point in time.
Answer:
Focus groups typically involved a group of people who are unfamiliar with a topic and
are brought together to respond to questions.
Answer:
A business plan is a firm’s plan or diagram for how it competes, uses its resources,
structures its relationships, interfaces with customers, and creates value to sustain itself
on the basis of the profits it earns.
Answer:
Relevant industry experience is a poor predictor of future entrepreneurial performance.
Answer:
Fragmented industries are more receptive to new entrants than industries that are
dominated by a handful of large firms.
Answer:
Fulfillment and support describes the way a firm’s product or service “goes to market”
or how it reaches its customers.
Answer:
Geographic expansion is most common in retail settings.
Answer:
The process of writing a business plan greatly assists in developing growth-related
plans.
Answer:
An emerging industry is a new industry in which standard operating procedures have
yet to be developed.
Answer:
A narrow group of businesses are required to have a federal business license, including
investment advising, drug manufacturing, and interstate trucking.
Answer:
A subchapter S corporation combines the advantages of a partnership and a C
corporation.
Answer:
“Brand premium” is the term that denotes the set of assets and liabilities that are linked
to a brand and enable it to raise a firm’s valuation.
Answer:
Organizational feasibility analysis is conducted to determine whether a proposed
business venture has sufficient management expertise, organizational competence, and
resources to successfully launch its business.
Answer:
The fact that a corporation has a board of directors precludes it from having a board of
advisors.
Answer:
Stability is a company’s ability to meet its short-term financial obligations.
Answer:
A strategic alliance is a partnership between two or more firms that is developed to
achieve a specific goal and has no joint ownership involved.
Answer:
Most businesses need capital from time to time to invest in growth-enabling projects.
Answer:
A firm’s sales process depicts the steps it goes through to identify prospects and close
sales.
Answer:
Business success doesn’t always scale.
Answer:
The five competitive forces model is a framework for understanding the structure of an
industry.
Answer:
A firm’s marketing mix is the assortment of products and services that it sells.
Answer:
According to the consensus of the research, some people are genetically predisposed to
be entrepreneurs.
Answer:
The majority of franchisors are highly ethical individuals who are interested only in
making a fair return on their investment.
Answer:
An advantage of internal growth is that it is a rapid form of growth.
Answer:
Angel investors, private placement, venture capital, and initial public offerings are the
most common sources of equity funding.
Answer:
There is no standard business model that dictates how firms in a particular industry
should compete.
Answer:
Economic factors, social factors, technological advances, and political action and
regulatory changes are the most important trends to follow in trying to identify
opportunities.
Answer:
Corry Pierce is investigating the feasibility of a new type of electronic game targeting
middle school and high school-age boys. Which of the following is an example of
“gumshoe research” that Corry could conduct to get a sense of the likely demand for his
game?
A) Download electronic games industry reports from the Internet.
B) Administer a buying intentions survey.
C) Administer a concept test.
D) Look at the Web sites of a number of companies that sell electronic games.
E) Spend several days in electronic games arcades and stores to observe the types of
games that attract the interest of middle school age and high school age boys.
Answer:
Which of the following statements is incorrect regarding business format franchises?
A) Arby’s sells business format franchises.
B) A business format franchise can be very rigid and demanding.
C) Automotive services and convenience stores are well-known examples of business
format franchises.
D) In a business format franchise, the franchisor provides a formula for doing business
to the franchisee along with training and other forms of support.
E) The business format franchisor obtains the majority of its income from selling its
products to its dealers at a markup.
Answer:
In the WebHouse example included in Chapter 6, WebHouse failed because:
A) it did not complete a feasibility analysis
B) it did not write a complete business plan
C) it couldn’t motivate its suppliers or customers to participate at a sufficient scale to
support the overhead of the business
D) it charged too much for its services
E) it failed to focus on developing a core strategy
Answer:
________ are a special form of incentive compensation. These plans provide employees
the option or right to buy a certain number of shares of their company’s stock at a stated
price over a certain period of time.
A) Corporate options
B) Collective plans
C) Share plans
D) Stock options
E) Dividends
Answer:
Frank Patterson started a firm in 2011 that creates and manufactures accessories for
Apple iPhones. He started with four accessories, and after several months added three
new accessories that have been very successful. The fact that Frank recognized the
opportunity for the three new accessories only after he started his firm and become
immersed in the iPhone accessory industry is an example of the ________ at work.
A) opportunity tenet
B) opportunity rule
C) chance rule
D) access principle
E) corridor principle
Answer:
In ________, the list price of an item is determined by adding a markup percentage to a
product’s cost.
A) cost-based pricing
B) compliance-based pricing
C) value-based pricing
D) competitive-based pricing
E) economic-based pricing
Answer:
According to the textbook, there are three important things that a business can do to
prepare for growth:
A) plan for growth, adopt a growth-oriented business model, and stay committed to a
core strategy
B) appreciate the nature of business growth, stay committed to a core strategy, and plan
for growth
C) develop a viral marketing campaign, stay committed to a core strategy, and adopt a
growth-oriented business model
D) develop business partnerships, diversify beyond the company’s core strategy, and
appreciate the nature of business growth
E) retain or hire one or more business growth consultants, diversify beyond the
company’s core strategy, and plan for growth
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 Savvy Entrepreneurial Firm feature for Chapter 8 focuses on Wise Acre Frozen
Treats, a company that made organic popsicles from unrefined sweeteners. According to
the feature, Wise Acre Frozen Treats failed largely because:
A) it grew too quickly, which overwhelmed its cash flow
B) it was not careful enough in preparing its pro forma financial statements
C) it was not efficient in the way it utilized its assets
D) it spent too much money on marketing
E) it did not compare its financial ratios to industry peers
Answer:
Which of the following is not one of the four key forms of intellectual property
protection?
A) trade secrets
B) copyrights
C) trademarks
D) innovations
E) patents
Answer:
The members of heterogeneous teams are:
A) diverse in terms of their abilities and experiences
B) diverse in terms of their abilities, but very similar in terms of their experiences
C) similar in terms of their abilities and experiences
D) diverse in terms of their experiences, but very similar in terms of their abilities
E) sometimes diverse in terms of their abilities and experiences and sometimes similar
along the same dimensions
Answer:
The majority of businesses go through a discernable set of stages of growth referred to
as the:
A) business rotation cycle
B) business existence cycle
C) organizational sequence
D) business life cycle
E) organizational life cycle
Answer:
Which of the following was not identified in the textbook as one of the disadvantages of
franchising a business?
A) loss of control
B) friction with franchisees
C) franchisee motivation
D) differences in required business skills
E) legal expenses
Answer:
Firms that pursue a(n) ________ strategy compete for market share on a
country-by-country basis and vary their product or service offerings to meet the
demands of the local market.
A) inclusive
B) universal
C) multidomestic
D) contemporary
E) worldwide
Answer:
Jessica Smith is thinking about starting a chain of fitness centers for young adults ages
18-30. Which of the following is not an appropriate criteria for Jessica to test her idea
against?
A) Determine whether the “window of opportunity” is open.
B) Determine whether a fitness center for young adults ages 18-30 meets the threshold
of being a good idea.
C) Determine the extent to which the notion takes advantage of an environmental trend,
solves a problem, or fills a gap in the marketplace.
D) Determine whether opening a fitness center for young adults ages 18-30 is timely.
E) Determine whether opening a fitness center for young adults ages 18-30 is a concept
that creates value for its buyer or end user.
Answer:
A(n) ________ is a favorable set of circumstances that creates the need for a new
product, service, or business. A(n) ________ is a thought, an impression or a notion.
A) scheme, notion
B) opportunity, idea
C) idea, design
D) idea, opportunity
E) notion, scheme
Answer:
Rachael James just took a job with IKEA. As part of her employment agreement, IKEA
required Rachael to sign an agreement, which states that if she leaves IKEA, she will
not work for a firm that competes against IKEA for at least two years. The agreement
that Rachael signed is called a:
A) nondisclosure agreement
B) nonparticipate agreement
C) nonchallenge agreement
D) noncompete agreement
E) noncontend agreement
Answer:
Fulfillment and support describes:
A) how a firm manages its customer relationships
B) the way a firm’s product or service “goes to market” or how it reaches its customers
C) how a firm manages its employees
D) the products and markets on which a firm will compete
E) how a firm competes relative to its competitors
Answer:
PurBlue Beverages, the company profiled in the opening feature for Chapter 13, sells
bottled water, under the GIVE brand. GIVE bottled water has not one but two unusual
twists. First, 10 cents of every bottle sold is donated to charity. And second:
A) the bottles come in four colors (each color representing a charity), allowing the
buyer to choose which charity his or her donation would go to
B) the bottles come in four sizes, allowing the buyer to determine which size to buy
C) the bottles come in four shapes, each shape representing a different environmental
cause
D) the bottles are biodegradable and break down within six months of being used
E) the bottles come with seven different labels, each label providing information about
a local charity
Answer:
The term “window of opportunity,” as discussed in Chapter 2, is a metaphor that
describes the time period in which a firm can:
A) obtain funding or financing
B) hire new employees
C) complete a financial analysis
D) realistically enter a new market
E) write a business plan
Answer:
In the context of boards of directors, a(n) ________ is a person who is also an officer of
the firm.
A) outside director
B) junior director
C) inside director
D) expert director
E) senior director
Answer:
According to the textbook, it is:
A) not inevitable that a business enter the decline stage of the organizational life cycle
B) inevitable that a business enter the decline stage of the organizational life cycle
C) not inevitable that service firms enter the decline stage of the organizational life
cycle but is inevitable for manufacturing firms
D) not inevitable that manufacturing firms enter the decline stage of the organizational
life cycle but is inevitable for service firms
E) not inevitable that international firms enter the decline stage of the organizational
life cycle but is inevitable for strictly domestic firms
Answer:
The What Went Wrong feature in Chapter 12 focuses on Dippin’ Dots, a company that
sells ice cream snacks. Dippin’ Dots lost the patent on its small beads of ice cream
primarily because:
A) it failed to obtain permission from a patent holder that has “prior art” pertaining to
the claims in its patent
B) it had sold its ice cream product one year prior to applying for a patent
C) it filed its patent application incorrectly
D) its patent infringes on the patent of a competitor
E) it failed to renew its patent on time
Answer:
Twitter, Facebook and company blogs are examples of:
A) public media
B) group media
C) shared media
D) social media
E) community media
Answer:
According to the textbook, the most practical way to interpret or make sense of a firm’s
historical financial statements is through:
A) profit analysis
B) regression analysis
C) the preparation of pro forma financial statements
D) ratio analysis
E) percentage analysis
Answer:
Barb Campbell owns an entertainment company which has increased both its profits
and revenues over an extended period of time. Barb’s firm is experiencing:
A) resolute growth
B) unrelenting growth
C) sustained growth
D) unbroken growth
E) moderate growth
Answer:
In the five-stage creative process, the flash of recognition, or what is sometimes
referred to as the “eureka” experience, occurs in the:
A) insight stage
B) preparation stage
C) incubation stage
D) elaboration stage
E) evaluation stage
Answer:
Pat Walker owns an environmental services company. The way Pat prices her services is
to figure her cost and then add a 22 percent markup. The method that Pat uses to
determine her prices is called:
A) economic-based pricing
B) value-based pricing
C) competitive-based pricing
D) cost-based pricing
E) conformity-based pricing
Answer:
Which of the following represents the correct order of the five stages of the creative
process?
A) preparation, incubation, elaboration, insight, evaluation
B) insight, preparation, incubation, elaboration, insight
C) preparation, incubation, insight, evaluation, elaboration
D) incubation, evaluation, insight, preparation, elaboration
E) incubation, preparation, evaluation, elaboration, insight
Answer:
A(n) ________ involves the sale of a single franchise for a specific location.
A) individual franchise agreement
B) one-of-a-kind franchise agreement
C) pinpoint franchise agreement
D) specific franchise agreement
E) precise franchise agreement
Answer: