Firms that pursue a global strategy use the same basic approach in all foreign markets.
Answer:
There are four factors that determine the threat of new entrants: number and balance of
competitors, degree of difference between products, growth rate of an industry, and
level of fixed costs.
Answer:
The number of angel investors in the United States has decreased dramatically over the
past decade.
Answer:
In regard to management prowess, two of the most important factors in this area are the
passion that the solo entrepreneur or the management team has for the business idea and
the extent to which the management team or solo entrepreneur understands the markets
in which the firm will participate.
Answer:
It is generally believed that new ventures started by an individual have an advantage
over those started by a team.
Answer:
Social plugins are tools that Web sites can use to provide users with personalized social
experiences.
Answer:
As a business moves beyond its early growth stage and its pace of growth accelerates,
the need for structure and formalization decreases.
Answer:
An idea bank is a physical or digital repository for storing ideas.
Answer:
The average time for the approval of a patent is 19 months.
Answer:
Most boards of advisers have between 3 and 5 members.
Answer:
Joseph Schumpeter argued that entrepreneurs develop new products and technologies
that over time make current products and technologies obsolete, and this process, which
he called creative destruction, is good because it stimulates economic activity.
Answer:
The break-even point for a new restaurant or product is the point where the total
revenue received equals total costs associated with the output of the restaurant or the
sale of the product.
Answer:
A core competency is a resource or capability that serves as a source of a firm’s
competitive advantage over its rivals.
Answer:
To make the best impression, a business plan should follow a conventional structure.
Answer:
The proper sequence for developing successful business ideas is to first conduct a
feasibility analysis, then progress through the opportunity recognition stage, and finish
with the completion of a business plan.
Answer:
The majority of businesses go through a discernable set of stages referred to as the
organizational life cycle.
Answer:
The statement of cash flows summarizes the changes in a firm’s cash position for a
specified period of time and details why the change occurred.
Answer:
A new venture team is the group of founders, key employees, and advisers that move a
new venture from an idea to a fully functioning firm.
Answer:
The vast majority of founders contribute personal funds along with sweat equity to their
ventures.
Answer:
A management concept called agency theory refutes the value of franchising for
organizations with multiple units, like restaurant chains.
Answer:
Moral hazard means that as a firm grows and adds personnel, the new hires typically do
not have the same ownership incentives as the original founders, so the new hires may
not be as motivated as the founders to put in long hours or may even try to avoid hard
work.
Answer:
A firm’s working capital is defined as its fixed assets minus its long-term liabilities.
Answer:
Intellectual property is any product of human intellect that is intangible but has value in
the marketplace.
Answer:
The primary disadvantage of franchising is that an organization allows others to profit
from its trademark and business method.
Answer:
The ideal candidate for a bank loan is a firm with a strong cash flow, low leverage,
audited financial statements, good management, and a healthy balance sheet.
Answer:
There are two primary audiences for a firm’s business plan: a firm’s employees and
investors and other external stakeholders.
Answer:
Computer software is not covered by copyright law.
Answer:
The focus in organizational feasibility analysis is on financial resources.
Answer:
The idea that it’s important to get “everything in writing” in regard to business
agreements causes unnecessary work and can lead to an erosion of trust between
business partners.
Answer:
A business’s early growth stage is generally characterized by increasing sales and
heightened complexity.
Answer:
The term “liability of newness” refers to 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 firms lack “track records” with outside buyers and suppliers.
Answer:
Census Bureau data, analyst forecasts, and other pertinent information gleaned through
library and Internet research are examples of primary research.
Answer:
According to a Wells Fargo/Gallup Small Business Study cited in the book, a large
percentage of entrepreneurs write business plans for their ventures.
Answer:
Bootstrapping is the use of creativity, ingenuity, and any means possible to obtain
resources other than borrowing money or raising capital from traditional sources.
Answer:
A business plan can usually be completed in one to three days.
Answer:
A comparison analysis is a detailed evaluation of a firm’s competitors.
Answer:
The most important issues to consider in financial feasibility analysis are: total startup
cash needed, financial performance of similar businesses, and overall financial
attractiveness of the proposed venture.
Answer:
Which of the following selections is incorrect regarding a firm’s “positioning” strategy?
A) Position is concerned with how the firm is situated relative to its competitors.
B) A firm’s decision about how to position itself relative to its competitors starts with a
product or service idea that is tested and refined through feasibility analysis and
marketing research.
C) Position is concerned with how a firm is situated relative to competitors.
D) Once a firm positions itself in a certain way, it must be able to follow through with a
product or service offering that lives up to the image it has created.
E) After selecting a positioning strategy, the firm’s next step is to select a target market.
Answer:
Netflix is an established firm that encourages and emphasizes entrepreneurial behavior
throughout its various divisions. According to the textbook, Netflix practices:
A) tactical entrepreneurship
B) corporate entrepreneurship
C) strategic entrepreneurship
D) business entrepreneurship
E) enterprise entrepreneurship
Answer:
According to the basic model of firm growth articulated in Chapter 13, the ability to
increase managerial services to facilitate growth is not friction free but is constrained
and limited. Which of the following selections is not one of the factors that constrains
or limits a firm’s ability to increase its managerial services?
A) the time required to socialize new managers
B) how motivated entrepreneurs and/or managers are to grow the firm
C) adverse selection
D) moral hazard
E) benchmarking
Answer:
Which of the following is not one of the rules for a formal brainstorming session?
A) no criticism is allowed
B) the session moves quickly
C) freewheeling is encouraged
D) leapfrogging is encouraged
E) the session is used for decision making
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:
________ feasibility analysis is an assessment of the overall appeal of the industry and
market for the product or service being proposed.
A) Institutional
B) Financial
C) Organizational
D) Product/service
E) Industry/target market
Answer:
Which financial statement records all of a firms revenues and expenses for a given
period and shows whether the firm is making a profit or experiencing a loss?
A) balance sheet
B) owner’s equity statement
C) statement of cash flows
D) forecast
E) income statement
Answer:
The opening feature in Chapter 6 focuses on Stroome, an exciting new Web-based
service for editing and remixing video. The idea for Stroome emerged in:
A) a graduate communications class at the University of Southern California
B) a student-run incubator at the University of Illinois
C) a technology commercialization class at Cornell
D) a city-owned new business incubator in Cleveland
E) a business plan class at Kansas State
Answer:
A ________ is a resource or capability that serves as a source of a firm’s competitive
advantage over its rivals.
A) foundational competency
B) core competency
C) distinctive attribute
D) center attribute
E) core element
Answer:
A firm’s sales process:
A) is typically not put in place until a year or more after a startup launches
B) describes a firm’s branding strategy
C) depicts the steps it goes through to identify prospects and close sales
D) describes its social media strategy
E) depicts the steps it goes through to identify its target market and positioning strategy
Answer:
The most important issues to consider in financial feasibility analysis are:
A) resource sufficiency, industry attractiveness, and total startup cash needed
B) total startup cash needed, financial performance of similar businesses, and the
overall financial attractiveness of the proposed venture
C) target market attractiveness, resource sufficiency, and product/service demand
D) total startup cash needed, management prowess, and product/service demand
E) concept testing, total startup cash needed, and financial performance of similar
businesses
Answer:
According to the textbook, the first rule in making an oral presentation is to:
A) follow instructions
B) be creative
C) emphasize all the positive aspects of a business venture
D) appear confident
E) do something out of the ordinary
Answer:
Al Jenkins is in the process of developing an exciting new product in the smartphone
industry. He’d like to show a preliminary description of the product to industry experts
and prospective customers to solicit their feedback. Al should complete and distribute
a(n):
A) perception statement
B) usability statement
C) early adopter statement
D) concept statement
E) adoption risk-reward statement
Answer:
A buying intentions survey is typically administered as part of ________ feasibility
analysis.
A) financial
B) organizational
C) industry/target market
D) legal/regulatory
E) product/service
Answer:
The What Went Wrong feature in Chapter 3 is titled “eBay Drop-Off Stores: How
Feasible Were They?” What was it about the potential feasibility of eBay Drop-Off
stores that worried skeptics from the beginning?
A) that the stores would not have enough “quality” merchandise to sell on eBay and that
the variety of items the stores would be asked to sell would be too broad
B) that consumers were losing interest in eBay and that the stores would not have
enough “quality” merchandise to sell on eBay
C) that eBay was attracting too many competitors and that consumers were becoming
increasingly Internet savvy, making it easier for them to sell items at online auctions
themselves rather than relying on an intermediary like an eBay Drop Off store
D) that the variety of items the stores would be asked to sell would be too broad and
that consumers were losing interest in online auctions
E) that consumers were losing interest in online auctions and that eBay was declining in
terms of its popularity
Answer:
The Savvy Entrepreneurial Firm feature for Chapter 4 focuses on three companies:
Box.net, Pixability, and Groupon. The overarching point of the feature is:
A) most business plan require major changes after the business is launched and the
founder’s start getting customer feedback
B) the degree to which business plans pan out as their founders envisioned varies
C) most business plans require only minor changes after the business is launched and
the founders start getting customer feedback
D) the most effective business plans take four to eight weeks to complete
E) most business plans are quickly discarded after the business is launched
Answer:
The first sale of stock by a firm to the public is referred to as a(n):
A) original public submission
B) first unrestricted offering
C) preemptive initial offering
D) original open offering
E) initial public offering
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:
The first step in selecting a target market is to study the industry in which the firm
intends to compete and determine the different potential target markets in that industry.
This process is called:
A) market positioning
B) market splitting
C) market targeting
D) market subdividing
E) market segmentation
Answer:
A disadvantage of corporations is that they are subject to ________, which means that a
corporation is taxed on its net income and when the same income is distributed to
shareholders in the form of dividends it is taxed again on shareholders’ personal income
tax returns.
A) double taxation
B) dual toll
C) double duty
D) double assessment
E) dual harm
Answer:
Clark Jensen recently opened a Planet Smoothie franchise. So far, he is very satisfied
with Planet Smoothie because in exchange for an initial franchise fee and an ongoing
royalty payment, Planet Smoothie has provided Clark a formula for doing business
along with training, advertising, and other forms of assistance. Clark purchased a
________ franchise.
A) business extension
B) formula driven
C) sales extension
D) business format
E) product and trademark
Answer:
According to the textbook, a successful brand can increase the market value of a
company by:
A) 5 to 10 percent
B) 20 to 30 percent
C) 40 to 50 percent
D) 50 to 75 percent
E) 75 to 100 percent
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:
The What Went Wrong feature in Chapter 15 focuses on Curves International, the
fitness center for women. Over the past three years, nearly one-third of Curves’ 7,700
franchises have closed. Which of the following reasons was not identified in the feature
as one of the possible explanations for why so many Curves centers have closed?
A) a turnover in the company’s management
B) the poor economy
C) cheaper competition
D) the company failed to keep up with changing trends, including more flexible hours
for busy working women
E) the company sold too many franchises that are located too close together
Answer:
Franchisors are required by law to disclose all their costs in a document called the:
A) Fairness in Franchising Certificate
B) Consistent Franchise Offering Code
C) Standardized Franchise Code
D) Franchise Disclosure Document
E) Franchise Code of Conduct
Answer:
Because franchisees put their personal capital at risk, they are highly motivated to make
their franchise outlets successful. According to the textbook, this advantage of
franchising a business is referred to as:
A) franchisee owner-incentive
B) franchisee impulse
C) agency theory
D) institutional theory
E) franchisee motivation
Answer:
The Partnering for Success feature in Chapter 5 focuses on three things that are
important for startups to become active in to learn the ins and outs of their industries.
The three items focused on in the feature are?
A) local Chambers of Commerce, trade journals, and networking events
B) Facebook, industry-related e-mail listservs, and trade shows
C) trade associations, trade shows, and trade journals
D) networking events, blogs, and Facebook
E) local Chambers of Commerce, city or university-sponsored incubators, and trade
associations
Answer:
For most business plans ________ pages are sufficient.
A) 40 to 50
B) 30 to 40
C) 15 to 20
D) 25 to 35
E) 5 to 10
Answer:
According to the textbook, by studying a product’s or service’s value chain an
organization can:
A) identify ways to create additional value and assess whether it has the means to do so
B) determine if its business plan needs to be revised
C) determine if it is cost effective to manufacture the product or sell the service
D) determine if an attractive niche market is available
E) determine if a product or service will be successful in the marketplace
Answer:
In the context of firm growth, gazelles are:
A) firms that grow at a rate of 100% per year or more
B) firms that grow at a rate of 25% per year or more
C) rapid growth firms
D) slow growth firms
E) moderate growth firms
Answer: