There is more risk involved in financing a business’s early operations, therefore, higher
rates of return are expected.
The process of writing the business plan provides a self-assessment for the
entrepreneur.
Entrepreneurs have stronger intentions to act when taking action is perceived to be
impossible and risky.
When resources are limited, the entrepreneur can offer a lawyer stock in exchange for
legal services.
Entrepreneurs’ intentions are based on their perception of feasibility rather than
someone else’s impression of whether it is feasible.
When a manufacturer buys a chain of retail stores that carry its products, it is an
example of backward integration.
Bankruptcy can be used as a bargaining chip with creditors to allow the venture to
voluntarily reorganize.
An entrepreneur’s recovery from grief is detrimental to society.
With the enactment of the Sarbanes-Oxley Act in 2002, the expense and administrative
responsibilities of being a public company, as well as the liability risks of officers and
directors, are significantly greater.
A short-term, internal source of funds can be obtained by reducing short-term assets
such as inventory, cash, and other working-capital items.
The board of directors should be an even number of members.
Robert Mondavi Winery was the first Californian to produce and market premium
wines that were expected to compete with European wines.
In private venture capital firms, limited partners provide the funding and the general
partner manages the fund.
Like the focus group, problem inventory analysis focuses on specific problems in a
general product category.
Only the test marketing phase of product planning provides actual sales results to judge
the product’s customer appeal.
Transfer risk is the risk in attempting to shift assets or other funds out of the country.
An example of a business method patent is Amazon.com’s single clicking feature used
by a buyer to order products.
It is common for a buyer to purchase a business using notes based on future profits.
The Bankruptcy Act of 1978 was designed to protect creditors from receiving nothing
in bankruptcy.
Debt financing requires the entrepreneur to repay the amount borrowed plus interest.
Demographics, ethnic origin, and marital status are examples of segmentation variables.
Research and development limited partnerships provide small businesses funds from
investors looking for tax shelters.
Income from the partnership is taxed twice: once at the business level and once as
personal income.
Angel investors typically invest between $500,000-$1,000,000.
The product Spanx is an example of an ordinary innovation.
European online retail sales are expected to continue to grow by about 10% each year
until 2018.
In 2011 venture capital deals were concentrated in the three areas of software,
biotechnology and industrial/energy.
An extension of the earnings approach is the book value method.
The late mover is able to operate in the industry for a grace period under conditions of
limited competition.
In the checklist method, a new idea is developed through a list of related issues or
suggestions.
Entrepreneurial action can be defined as those situations in which new goods, services,
raw materials and organizing methods can be sold at greater than their production cost.
Making long-term decisions can be difficult in publicly traded companies where sales
and profit evaluations indicate the capability of management via stock values.
Most R&D limited partnerships are not successful.
Cultural differences between international joint venture partners can create management
difficulties.
New products may be classified from the viewpoint of either the consumer or the firm.
Corporate ventures are totally independent units, hence the equity portion of the
compensation is particularly difficult to handle.
First movers face:
A.market rigidities.
B.high entry barriers.
C.cost disadvantages.
D.demand uncertainty.
________ is an arrangement whereby the manufacturer or sole distributor of a
trademarked product or service gives exclusive rights of local distribution to
independent retailers in return for their payment of royalties and conformance to
standardized operating procedures.
A.A joint venture
B.Franchising
C.A merger
D.A leveraged buyout
What type of agreement must always be in writing in order to be a legally binding
contract?
A.Client
B.Distributor
C.Supplier
D.Real estate
What type of innovation is illustrated by the ideas of the airplane and penicillin?
A.ordinary innovation
B.continuous innovation
C.technological innovation
D.breakthrough innovation
_______ identifies potential hazards and alternative strategies to meet business plan
goals and objectives.
A.Assessment of risk
B.Financial planning
C.Alternative planning analysis
D.The financial plan
The stage in the product planning and development process in which actual sales results
are available is the:
A.idea stage.
B.concept stage.
C.product development stage.
D.test marketing stage.
Sole proprietorships:
A.have no time limit on how long they may exist.
B.are perpetual.
C.continue even upon the death of the owner.
D.allow a member of the deceased partner’s family take over as a partner.
Which of the following is not one of the five C’s of lending?
A.Caution
B.Character
C.Conditions
D.Capacity
Franchising opportunities have often evolved from changes in the environment as well
as important social trends. This is not one of the factors responsible:
A.good health.
B.environmental consciousness.
C.acceptance of different cultures.
D.the second baby boom.
Which of the following is true regarding the Sarbanes-Oxley Act?
A.It only applies to companies that make over $10 million in gross revenue.
B.Private companies are not included in this act.
C.The act does not cover fraud via TV or radio.
D.The act only covers a narrow range of corporate governance activity.
Equipment would be included on the balance sheet in which section?
A.current assets
B.fixed assets
C.retained earnings
D.owner’s equity
A business angel’s investment time horizon is usually:
A.1-2 years.
B.3-4 years.
C.5-6 years.
D.7-10 years.
Licensing can be used by the entrepreneur to:
A.protect the Board of Directors from liability.
B.insulate management from liability.
C.protect confidentiality of a trade secret.
D.copy a competitor’s patent.
When establishing corporate entrepreneurship in an organization rewards should:
A.be tied to the department in which the idea originated
B.be tied to the parent company’s stock performance
C.be tied to the performance of the entrepreneurial unit created from the idea
D.not be changed from whatever current system is being used so that risk is encouraged
______ is the volume of sales needed to cover total variable and fixed costs.
A.Cash flow
B.Depreciation
C.Revenue
D.Breakeven
Density, in regards to a social network, refers to:
A.the extensiveness of ties between two individuals.
B.the total number of individuals in the network.
C.the distance of connection between the entrepreneur and contact.
D.the fact that most networks are informal and not well organized.
In the ________ method a new idea is developed through a list of related issues or
suggestions.
A.Gordon
B.checklist
C.collective notebook
D.matrix charting
Which statement about capital requirements in franchising is not true?
A.Franchisees pool monies to lower the costs for advertising and sales promotion.
B.Most franchisors will offer managerial assistance on the basis of need upon the start
of the franchisee.
C.Newsletters and other publications reflecting new ideas and developments are
continuously sent to franchisees.
D.The franchisee has to spend resources to establish the credibility of the business.
Venture capital firms expect returns in the range of:
A.15-20%.
B.25-35%.
C.40-60%.
D.100%.
A board of directors should not:
A.have members with unlimited terms.
B.have an odd number of members.
C.be comprised of external advisors.
D.be compensated with anything other than stock.
Acknowledgment that only a small amount of time is actually under one’s control and
that most of one’s time is taken up by others is known as the:
A.principle of desire.
B.principle of teamwork.
C.principle of analysis.
D.principle of prioritized planning.
Distribution, pricing, and promotion of the product are discussed in which section of the
plan?
A.Marketing
B.Production
C.Merchandising
D.Organization
A turn-key project is best defined as:
A.a method of doing business whereby a foreign entrepreneur supplies the
manufacturing technology or infrastructure for a business and then turns it over to local
owners
B.giving a foreign manufacturer the right to use a patent in return for the payment of a
royalty
C.a method in which an entrepreneur contracts his or her management techniques and
skills to a (foreign) purchasing company
D.a form of direct foreign investment in which the investing entrepreneur holds a
minority ownership position in the foreign venture
The formula for break-even analysis is:
A.total fixed costs divided by selling price minus variable cost per unit.
B.total variable costs divided by marginal contribution.
C.total sales divided by selling price plus variable cost per unit.
D.total fixed costs divided by selling price plus marginal contribution.
According to the Small Business Administration, the failure rate of new businesses
within the first few years is:
A.less than 25%.
B.about 70%.
C.50%.
D.about 33%.
Information that already exists is called:
A.secondary data.
B.primary data.
C.marketing data.
D.target data.
Financial resources and the management team are both examples of the:
A.external environment.
B.marketing mix decision variables.
C.internal environment.
D.feedback system.
Primary data is:
A.data that has been collected by the private sector.
B.data collected by the government.
C.original information collected by the entrepreneur.
D.data that is hard to find.
In 2014 both business and non-business bankruptcy filings were:
A.Below 1 million
B.About 1 million
C.About 1.5 million
D.More than 2 million
An increase in supplier prices may require:
A.raising the price of products/services.
B.purchase of lesser inventory.
C.an increase in the purchasing budget.
D.reviewing all other expenses and perhaps institute tighter controls.
Which of the following types of credit does not require the pledging of an individual’s
collateral or a cosigner?
A.Line of credit
B.Character loan
C.Trust receipts
D.Mortgage loan
Which of the following is not an exit strategy?
A.an IPO
B.a private sale of stock
C.liquidation
D.franchising
A limited liability corporation:
A.has unlimited liability.
B.is automatically taxed as a partnership.
C.is decreasing in popularity among venture capitalists.
D.had been the most popular choice of organization structure by new ventures and
small businesses.
Give examples of internal and external sources of funding.
List three sources of Financial and Industry Operating Ratios from the text.
What types of information might an entrepreneur needs in regards to manufacturing
operations?
In regards to negotiation, define the following: distribution task, integration task and
reservation price.
Give examples of what types of goals should be set in the goals and objectives section.
Identify the seven leadership characteristics of a corporate entrepreneur.
Explain the benefits, or practical implications, of using the dual process model of
coping with negative emotions.
Identify and briefly describe the 4 major parts of corporate entrepreneurship.