Loss of proprietary information is a disadvantage of participating in strategic alliances
and joint ventures.
Answer:
Angel investors, private placement, venture capital, and initial public offerings are the
most common sources of equity funding.
Answer:
The royalty fees a franchisee pays are usually around four to five percent of gross
income.
Answer:
Over the past 10 years, the demographic makeup of entrepreneurial firms has remained
fairly stable in the United States and around the world.
Answer:
Entrepreneurs are usually moderate, rather than high, risk-takers.
Answer:
Few entrepreneurial firms start as subchapter S corporations.
Answer:
The four main characteristics of successful entrepreneurs are: passion for the business,
execution intelligence, product/customer focus, and tenacity despite failure.
Answer:
The Barringer/Ireland Business Model Template has five major categories and 14
individual parts.
Answer:
An advantage of franchising, from the franchisors point of view, is that franchising
helps a venture grow because the franchisees provide the majority of the capital.
Answer:
Venture capital involves getting a loan or selling corporate bonds.
Answer:
Historically, commercial banks have been viewed as an excellent source of financing
for startup firms.
Answer:
Home Depot is an example of an organization that is perfectly suited for franchising.
Answer:
Computer software is not covered by copyright law.
Answer:
A Pepsi Cola bottling dealership is an example of a business format franchise.
Answer:
The SBIR and STTR programs provide entrepreneurs access to mentors, advisors and
potential investors rather than cash.
Answer:
Fragmented industries are more receptive to new entrants than industries that are
dominated by a handful of large firms.
Answer:
In the financing/funding section of the Barringer/Ireland Business Model Template,
there are three categories of costs to consider: capital costs, one-time expenses, and
provisions for ramp-up expenses.
Answer:
Sustained growth is defined as growth in both revenues and profits over an extended
period of time.
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:
Business success doesn’t always scale.
Answer:
Licensing is the granting of permission by one company to another company to use a
specific form of its intellectual property under clearly-defined conditions.
Answer:
A product and trademark franchise typically connects a single manufacturer with a
network of dealers or distributors.
Answer:
The mechanics for filling out a First Screen worksheet are complicated.
Answer:
A company’s target market is a place within a larger market segment that represents a
narrower group of customers with similar interests.
Answer:
The major categories of assets listed on a balance sheet include current, fixed, and other
assets.
Answer:
Feasibility analysis is the process of determining if a business idea is viable.
Answer:
Market leadership occurs when a firm holds the number one or number two position in
an industry or niche market in terms of sales volume.
Answer:
The vast majority of founders contribute personal funds along with sweat equity to their
ventures.
Answer:
According to reliable statistics, 9 out of 10 businesses fail in their first few years of
existence.
Answer:
Value-driven businesses focus on minimizing costs wherever possible.
Answer:
In an acquisition, the surviving firm is called the acquirer, and the firm that is acquired
is called the target.
Answer:
A firm’s sales process depicts the steps it goes through to identify prospects and close
sales.
Answer:
The two components to product/service feasibility analysis are product/service
desirability and total startup funds needed.
Answer:
A tagline is a catchy phrase that’s used consistently in a company’s literature,
advertisements, and even invoices and thus becomes associated with a company to
reinforce its position in the market.
Answer:
Certification marks 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.
Answer:
A virtual assistant is a freelancer who provides administrative, technical, or creative
assistance to clients remotely from a home office.
Answer:
If the buyers are concentrated and they buy from a large number of suppliers, then the
bargaining power of buyers is increased.
Answer:
A brand is the set of attributespositive or negativethat people associate with a company.
Answer:
Weak-tie relationships are characterized by infrequent interaction and ties between
casual acquaintances.
Answer:
Which of the following factors is a positive as it pertains to the financial feasibility of a
business venture?
A) Inconsistent and slow growth in sales during the first five to seven years in a clearly
defined market niche
B) High percentage of recurring revenue
C) Inability to forecast income and expenses with a reasonable degree of accuracy
D) Reliance on externally generated funds to finance and sustain growth
E) Absence of an existing opportunity for investors to convert equity into cash
Answer:
A(n) ________ is a favorable set of circumstances that creates a need for a new
product, service, or business.
A) idea
B) scheme
C) design
D) proposal
E) opportunity
Answer:
According to the example provided in Chapter 5, www.1800contacts.com possesses a
nontraditional barrier to entry referred to as ________.
A) unique business model
B) strength of management team
C) access to distribution channels
D) Internet domain name
E) first-mover advantage
Answer:
________ is the process of determining whether a business idea is viable.
A) Feasibility analysis
B) Opportunity recognition
C) Viability analysis
D) Achievability analysis
E) Scenario analysis
Answer:
The Partnering for Success feature in Chapter 11 focuses on Caribou Coffee and
Bruegger’s Bagels, two companies that have established a cobranding relationship.
Cobranding is when two companies ________.
A) pool their resources to buy advertising space to market their individual brands
B) locate their businesses in close proximity to one another because their brands are
complementary
C) form a partnership to combine their brands
D) employ the same advertising agency to promote their brands
E) pool their resources to license a brand from a third company
Answer:
Operating leverage is highest in companies that have ________.
A) a service rather than a manufacturing emphasis
B) virtually no fixed costs
C) equal variable and fixed costs
D) a high proportion of variable costs relative to their fixed costs
E) a high proportion of fixed costs relative to their variable costs
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 items is typically not included in a concept statement?
A) A brief description of the company’s management team
B) A description of how the product or service will be sold and distributed
C) A description of how much money the new venture needs
D) The benefits of the product or service
E) The intended target market
Answer:
A ________ is a firm’s plan or recipe for how it creates, delivers, and captures value for
its stakeholders.
A) commercialization plan
B) business model
C) business plan
D) launch plan
E) tactical model
Answer:
International opportunities for franchising are becoming ________.
A) less prevalent
B) neither more nor less prevalent
C) more prevalent for product and trademark franchise systems and less prevalent for
business format franchise systems
D) more prevalent
E) less prevalent for product and trademark franchise systems and more prevalent for
business format franchise systems
Answer:
Pure Fix Cycles, the company profiled in the opening feature of Chapter 1, was
launched by four co-founders and sells ________.
A) fixed gear, single speed bikes
B) entry level bikes that sell in the $100 price range
C) bikes the are durable enough that they almost never need to be fixed
D) high quality bikes that sell in the $1,000+ price range
E) multiple gear, multiple speed bikes
Answer:
The document that does the best job of introducing potential investors and other
stakeholders with the business opportunity the firm is pursuing and how it plans to
pursue it is the ________.
A) business plan
B) feasibility analysis
C) opportunity analysis
D) industry analysis
E) marketing plan
Answer:
Pacific Fishing LLC is a startup that is working on a new technology for the fishing
industry. Because the technology it’s working on is highly proprietary, the company is
located in the warehouse district of a large western city. Pacific’s founder, Ray Sims,
rarely gives interviews and is careful to not divulge much about what the company is
doing. Which of the following common myths about entrepreneurs does the behavior of
its founder, Ray Sims, dispel?
A) Entrepreneurs are born, not made.
B) Entrepreneurs are gamblers.
C) Entrepreneurs are motivated primarily by money.
D) Entrepreneurs should be young and energetic.
E) Entrepreneurs love the spotlight.
Answer:
Trade journals, industry-related publications, government statistics, and competitors’
Web sites are examples of ________ research.
A) secondary
B) action
C) principal
D) legacy
E) vertical
Answer:
________ marks 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
B) Intangible
C) Examination
D) Service
E) Subtle
Answer:
Which of the following is not an example of intellectual property?
A) Proactiv’s formula for acne medication
B) Apple’s trademark
C) Internet domain name www.dripcatch.com
D) Microsoft’s Windows operating system
E) A computer monitor
Answer:
Shelby Collins owns a firm that designs and sells women’s clothing. She is currently
trying to grow her firm by developing new product lines. Shelby is pursuing a(n)
________ growth strategy.
A) in-house
B) center
C) domestic
D) external
E) internal
Answer:
Jason Andersen just finished writing a business plan for a new type of office supply
store. One thing Jason included in the “Management Team & Company Structure”
section of his business plan is a chart that depicts the most important skills that are
needed for his business and where skills gaps exist. Jason included a(n)________ in his
business plan.
A) skills profile
B) talent report
C) abilities profile
D) expertise report
E) talent summary
Answer:
Jessica Marsh just took a job with Instagram. As part of her employment contract,
Jessica signed an agreement that states that he will not disclose any of Instagram’s trade
secrets. The agreement that Jessica signed is called a(n) ________ agreement.
A) nondisclosure
B) non breach-of-trust
C) ethics
D) binding confidentiality
E) legitimacy
Answer:
Which of the following is not a type of trademark?
A) Trademark
B) Certification mark
C) Documentation mark
D) Collective mark
E) Service mark
Answer:
A firm’s profit margin, or return on sales, is computed by dividing ________.
A) net income by net sales
B) gross profit by net sales
C) net income by gross profit
D) net income by cost of sales
E) operating income by gross profit
Answer:
A separate legal entity organized under the authority of a state is referred to as a
________.
A) limited partnership
B) conglomerate
C) general partnership
D) sole proprietorship
E) corporation
Answer:
There are two primary rules of thumb for deciding if intellectual property protection
should be pursued for a particular intellectual asset. First, a firm should determine if the
intellectual property has value in the marketplace. Second, a firm should determine if its
intellectual property ________.
A) is directly related to its competitive advantage
B) could be licensed to another company
C) is more than three years old
D) is something that was developed “in-house”
E) rightfully belongs to the firm or the employees who developed it
Answer:
A grant from the federal government conferring the rights to exclude others from
making, selling, or using an invention for a specific period of time is referred to as a(n)
________.
A) trademark
B) patent
C) idea secret
D) innovation
E) copyright
Answer:
________ research is research that is collected by the person or persons completing the
analysis. ________ research probes data that is already collected.
A) Primary, Derivative
B) Secondary, Primary
C) Primary, Secondary
D) Indirect, Direct
E) Direct, Indirect
Answer:
According to the textbook, opportunities are ________.
A) easy to spot
B) easy to spot in fast growing industries, but tough to spot in slow growing industries
C) easy to spot in the manufacturing sector, but tough to spot in the service sector
D) tough to spot
E) neither easy nor tough to spot
Answer:
A(n) ________ is a graphic representation of how authority and responsibility are
distributed within a company.
A) organizational chart
B) personnel chart
C) human resources chart
D) administrative chart
E) directional chart
Answer:
TempoRun, the company profiled in the opening feature of Chapter 4, makes an iPhone
app that syncs the songs on a user’s phone with his or her running pace. In 2013, the
founders won a business plan competition that they later characterized as Shark Tank
times 10. The judges were executives and well-known entrepreneurs from companies
like Google, Square, and TechStars. The competition was ________.
A) Student Startup Madness held at the South by Southwest Festival in Austin, Texas
B) CES Student Pitch Day held at the Consumer Electronics Show in Las Vegas,
Nevada
C) Student Startup Weekend held in Portland, Oregon
D) World Student Pitch Event held at the United Nations in New York, New York
E) California Cup Student Pitch Event sponsored by the City of Los Angeles, California
Answer:
Alex and Patty Webb launched a firm several years ago and have been particularly
successful in introducing new products to the marketplace. One thing that Alex and
Patty are particularly good at is translating their thoughts, creativity, and imaginations
into products that reach the marketplace. The ability to make this happen is most
closely related to which of the following characteristics of successful entrepreneurs?
A) A passion for the business
B) Execution intelligence
C) Tenacity despite failure
D) Product/market focus
E) A desire for recognition
Answer:
Clothing boutiques and specialty shops often start because there is a need for a
particular product, but large retailers like Wal-Mart and Costco can’t sell enough of the
item to stock it on their shelves. If a clothing boutique started to sell designer clothes or
clothing for hard-to-fit people because the clothing wasn’t being offered by a larger
retailer, the best way to describe how that idea was recognized is ________.
A) finding a gap in the marketplace
B) brainstorming
C) observing trends
D) solving a problem
E) talking to consumers
Answer:
Which of the following statements is not true regarding the day-to-day challenges of
growing a firm?
A) As a firm grows, it requires a decreasing amount of cash to service its customers.
B) If firm growth comes at the expense of a competitor’s market share, price
competition can set in.
C) Most businesses, regardless of their industry, need capital from time to time to invest
in growth-enabling projects.
D) Although most businesses are started fairly inexpensively, the need for capital is
typically the most prevalent in the early growth and continuous stages of the
organizational life cycle.
E) One of the most difficult challenges that businesses encounter as they grow is
maintaining high levels of quality and customer service.
Answer:
Which of the following is the primary advantage of exporting as a foreign market entry
strategy?
A) Provides a firm total control over its foreign operations
B) Ability to generate revenue
C) Exporting is a relatively inexpensive way for a firm to become involved in foreign
markets.
D) The exporting company’s customers put up most of the capital needed to establish
the export operation.
E) Exporting involves very little effort on the part of a firm.
Answer:
Stacey Wills, who is at heart a craftsperson, recently started a firm to manufacturer a
new innovative food blender. Stacey’s desire is to sell her food blender to as many
people as possible because she firmly believes in the merits of her product. Stacey’s
story best illustrates which of the following characteristics, or attributes, of a successful
entrepreneur?
A) Product/customer focus
B) Execution intelligence
C) Tenacity despite failure
D) A desire to please consumers
E) A desire to gain financial rewards
Answer:
If a business enhances the quality of a product, makes it more convenient to use,
improves its durability, or makes it more up-to-date, any one of those initiatives fall
under the category of ________.
A) increasing the market penetration of an existing product or service
B) extending product lines
C) geographic expansion
D) licensing
E) improving an existing product or service
Answer:
Describe the difference between historical and pro forma financial statements.
Answer:
What is an “executive summary?” Why is the executive summary often called the most
important part of a business plan?
Answer:
Describe the three primary reasons that people become entrepreneurs and start their
own firms.
Answer:
What is SCORE? What is its role in helping a firm fill out its new venture team?
Answer:
Describe what licensing is. What type of intellectual property can be licensed? Identify
the two types of licensing pursued by entrepreneurial firms.
Answer:
What is industry analysis? Why is it important for a new venture to complete a
thorough analysis of the industry it is entering?
Answer:
Identify and discuss the three primary reasons that entrepreneurial behavior has a strong
impact on the United States economy.
Answer:
Describe the internal growth strategy of new product development. Why is it a
competitive necessity in some industries that entrepreneurial firms focus on this form of
growth?
Answer:
Do most firms want to grow or are they reluctant to grow? What are the advantages of
growth?
Answer:
Describe the three separate ways that entrepreneurs identify new business, product, and
service opportunities?
Answer:
What is the difference between a heterogeneous and a homogeneous founding team?
Which type of team has the advantage?
Answer:
Briefly describe the four main components of the Barringer/Ireland Business Model
Template. Identify the subcomponents of each the four main components of a business
model.
Answer:
What is a brand? How does a new firm develop a brand?
Answer:
What are forecasts? What role do they play in the preparation of pro forma financial
statements?
Answer:
When is franchising appropriate (from the business owner’s point of view)? Provide an
example of when franchising is appropriate and when it is inappropriate.
Answer:
What is the difference between standard business models and disruptive business
models? Include examples of both in your answer.
Answer:
Describe what a concept statement is, and what it should include.
Answer:
Identify the three types of startup firms, and discuss how they differ. Provide examples
of each type of firm.
Answer:
What is a tagline? Provide an example of a popular tagline, and discuss why you think
it has been effective?
Answer:
There is an emerging school of thought that opposes the idea of writing a business plan
and advocates experimentation and trial-and-error learning gleaned through customer
feedback and formal planning. How does the approach to writing a business plan
described in this book differ from this philosophy? How does trial-and-error learning
figure into the approach to writing a business plan advocated in this book?
Answer: