As part of drumming up support for an IPO, the investment bank typically takes the top
management team of the firm wanting to go public on a ________, which is a
whirlwind tour that consists of meetings in key cities where the firm presents its
business plan to groups of investors.
A) pitch show
B) road show
C) pitch tour
D) road trip
E) tornado tour
Answer:
The What Went Wrong feature in Chapter 11 focuses on Ugobe, the company that made
Pleo, a small robotic baby dinosaur. Ugobe failed primarily because it didn’t establish a
clear:
A) positioning strategy
B) branding strategy
C) social media strategy
D) financial strategy
E) advertising strategy
Answer:
Scripped, the company profiled in the opening feature for Chapter 9, offers Web-based
screenwriting software. Which of the following statements best reflects Scripped’s
personnel policy?
A) Scripped has hired aggressively and now has approximately 40 employees.
B) Its three cofounders are its only employees.
C) Scripped was founded by two UCLA MBA students and quickly grew to 10
employees.
D) Its founder is its only employee.
E) It has avoided building a large staff. Its formal employees consist of its three
cofounders and an individual obtained in a merger.
Answer:
According to the textbook, in 2007 over ________ individual franchise outlets were
operating in the United States.
A) 510,000
B) 765,000
C) 880,000
D) 3 million
E) 0 million
Answer:
________ means that as the number of employees a firm needs increases, it becomes
increasingly difficult for it to find the right employees, place them in appropriate
positions, and provide adequate supervision.
A) Difficult hazard
B) Adverse hazard
C) Adverse selection
D) Moral selection
E) Moral hazard
Answer:
According to the textbook, the key to effective merchandise and character licensing is:
A) get licensing income monthly rather than yearly
B) resist the temptation to license a trademark too widely
C) licensing a trademark very widely
D) restrict licensing agreements to one year
E) restrict licensing to product categories that have no relevance and appeal to a firm’s
core customers
Answer:
According to the textbook, many entrepreneurs go about the task of raising capital
haphazardly because:
A) they are uncomfortable talking about money and they haven’t written a business plan
B) they lack experience in this area and because they don’t know much about their
choices
C) they are focused on the nuts and bolts of starting their business
D) they haven’t completed a feasibility analysis or business plan
E) they are intimidated by the process and they are unsure of how much money they
need
Answer:
In the context of boards of directors, a(n) ________ is someone who is not employed by
the firm.
A) outside director
B) inside director
C) external director
D) impartial director
E) peripheral director
Answer:
Trevor Parsons just took a job with Twitter. As part of his employment contract, Trevor
signed an agreement that states that he will not disclose any of Twitter’s trade secrets.
The agreement that Trevor signed is called a(n):
A) nondisclosure agreement
B) non breach-of-trust agreement
C) ethics agreement
D) binding confidentiality agreement
E) legitimacy agreement
Answer:
________ refers to the activities the firm takes to communicate the merits of its product
to its target market.
A) Sponsorship
B) Advertising
C) Endorsement
D) Promotion
E) Price
Answer:
A(n) ________ is the set of attributespositive or negativethat people associate with a
company.
A) emblem
B) logo
C) symbol
D) brand
E) trade name
Answer:
In various studies, researchers have found that from ________ of the variation in firm
profitability is directly attributable to the industry in which a firm competes.
A) 4 to 12 percent
B) 8 to 30 percent
C) 18 to 42 percent
D) 22 to 56 percent
E) 34 to 70 percent
Answer:
Which form of business ownership is a particularly poor choice for an aggressive
entrepreneurial firm?
A) C corporation
B) sole proprietorship
C) subchapter S corporation
D) limited partnership
E) limited liability corporation
Answer:
The What Went Wrong feature in Chapter 13 focuses on Wesabe, a Web-based company
that was launched in 2006 to help people manage their personal finances. According to
Marc Hedlund, one of Wesabe’s cofounders, the company failed for two primary
reasons. First, it misunderstood its users. Second:
A) it didn’t allow a partner to provide it with an essential service that it decided to build
on its own
B) it didn’t achieve a large enough critical mass of users
C) it didn’t implement a revenue model fast enough
D) it didn’t utilize both internal and external growth strategies
E) it didn’t hire an experienced CEO
Answer:
Amanda Still owns a seafood restaurant in Clearwater, Florida. She is currently owed
$19,000 by a corporation that she catered a meeting for and $2,000 on an overdue
account. Amanda has $21,000 in:
A) accounts receivable
B) inventory
C) accounts collectable
D) accounts obtainable
E) accounts payable
Answer:
According to the textbook, the biggest jump in entrepreneurial activity, by age range,
from 1996 to 2010 is among entrepreneurs in the:
A) 19 years old and younger age range
B) 20 to 34 age range
C) 35 to 44 age range
D) 45 to 54 age range
E) 55 to 64 age range
Answer:
The main exclusion from copyright laws is that copyright laws cannot protect:
A) ideas
B) dramatic works
C) computer software
D) musical compositions
E) literary works
Answer:
In 2010, venture capital firms funded ________ deals .
A) 800
B) 3,276
C) 1,265
D) 6,211
E) 7,255
Answer:
There are two major advantages of getting a loan versus investment capital:
A) the money doesn’t have to be paid back and lenders typically take an active interest
in their borrowers
B) banks are reliable sources of funding for startups and interest payments are tax
deductible
C) the money doesn’t have to be paid back and no ownership in the firm is surrendered
D) no ownership in the firm is surrendered and interest payments are tax deductible
E) banks are reliable sources of funding for startups and lenders typically take an active
interest in borrowers
Answer:
Amy Clark just opened a soup and salad restaurant near Golden Gate Park in San
Francisco. 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:
In startup firms, inventory must be purchased, employees must be trained and paid, and
advertising must be paid for before cash is generated from sales. 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) personnel costs
D) capital investments
E) lengthy product development cycles
Answer:
The major advantage of leasing is that:
A) it enables a company to have access to average or above average facilities and
equipment
B) it enables a company to acquire the use of assets with little or no down payment
C) it is cheaper in the long run than purchasing
D) a lease agreement is easier to negotiate than a purchase agreement
E) it is easier to obtain credit on a lease than a purchase
Answer:
Which of the following statements is incorrect regarding the industry analysis portion
of a firm’s business plan?
A) It is important to focus simultaneously on a business’s industry and its target market.
B) Industry structure refers to how concentrated or fragmented an industry is.
C) Most industries have 6 to 10 key success factors that should be reported in the
industry analysis.
D) Industry trends should be discussed, which include both environmental and business
trends.
E) The industry analysis should conclude with a brief statement of your beliefs
regarding the long-term prospects for the industry.
Answer:
Which of the following statements is incorrect regarding the franchisor-franchisee
relationship?
A) A franchisee may be charged a fee for additional training.
B) Some franchisors require a new franchisee to pay a “grand opening” fee.
C) Franchisees are often required to pay into a national or regional advertising fund.
D) Weekly or monthly royalty fees are usually around 2% of net income.
E) Franchisees may have to pay a monthly royalty even if the business is losing money.
Answer:
Macy is a very creative person. Often, when trying to generate a novel or useful idea,
she spends several days “mulling over” the idea, which is her way of thinking it
through, at both the conscious and unconscious level. The stage of the creative process
that Macy is in while she is mulling over an idea is referred to as:
A) preparation
B) insight
C) evaluation
D) elaboration
E) incubation
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:
The statute that regulates franchising at the federal level is:
A) Federal Trade Commission Rule 436
B) Congressional Statute 399
C) SEC Statute 23
D) Congressional Amendment 442
E) SEC Fairness in Franchising Act
Answer:
Which of the following companies would not be suitable for franchising?
A) College Nannies & Tutors
B) Smoothie King
C) McDonald’s
D) H&R Block
E) Home Depot
Answer:
________ is the licensing of a recognized trademark or brand that the licensor typically
controls through a registered trademark or copyright.
A) Goods and character licensing
B) Products and trademark licensing
C) Products and brand licensing
D) Merchandise and character licensing
E) Products and services licensing
Answer:
According to the textbook, InstyMeds in prescription drug sales, Fresh Healthy Vending
in food vending, and Daisy Rock in guitars are example of entrepreneurial firms who
are exploiting opportunities in ________ industries.
A) emerging
B) fragmented
C) declining
D) mature
E) emerging
Answer:
Andy Sanders owns a sporting goods store that appeals to hunters and fishermen. The
market that Andy is trying to appeal to is called his:
A) focal market
B) objective market
C) target market
D) critical market
E) intention market
Answer:
Which of the following is a ‘support” activity in the value chain?
A) inbound logistics
B) service
C) marketing and sales
D) outbound logistics
E) resource procurement
Answer:
The fact that companies often falter because the people who start the firms can’t adjust
quickly enough to their new roles and because the firm lacks a “track record” with
outside buyers and sellers, is referred to as the:
A) liability of preparedness
B) liability of newness
C) burden of novelty
D) burden of freshness
E) millstone of innovation
Answer:
A(n) ________ industry is an industry that is experiencing significant international
sales.
A) global
B) mature
C) fragmented
D) declining
E) emerging
Answer:
According to our textbook, the seed money that gets a company off the ground typically
comes from:
A) angel investors
B) venture capitalists
C) commercial banks
D) governmental agencies
E) the founders of the firm
Answer: