The primary opportunity available to firms in fragmented industries is consolidation.
The most common way to do this is through a geographic roll-up strategy, in which one
firm starts acquiring similar firms that are located in different geographic areas.
Answer:
In the context of a firm’s statement of cash flows, operating activities include the
purchase, sale, or investment in fixed assets (e.g., real estate, equipment, and buildings).
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 three ways to identify an opportunity include observing trends, solving a problem,
and finding gaps in the marketplace.
Answer:
The five competitive forces model is a framework for understanding the structure of an
industry.
Answer:
Industry analysis is business research that focuses on the potential of an industry.
Answer:
The three types of competitors a business will face are direct competitors, indirect
competitors, and future competitors.
Answer:
Studies show that more than one individual starts 50 to 70 percent of all new firms.
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:
In the terminology of the Barringer/Ireland Business Model Template, a key asset is a
specific factor or capability that support a firm’s business model and sets it apart from
its rivals.
Answer:
Core strategy describes what causes consumers to pick one company’s products over
another.
Answer:
Although interest in entrepreneurship remains high nationwide, the number of
women-owned businesses is decreasing.
Answer:
Prior entrepreneurial experience is a poor predictor of future entrepreneurial
performance.
Answer:
The three reasons that most firms need to raise money during their early life are cash
flow challenges, capital investments, and lengthy product development cycles.
Answer:
Kickstarter, Indiegogo and RocketHub are examples of equity-based crowdfunding
sites.
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:
The percentage of the profits the venture capitalist gets is called the “carry.”
Answer:
A patent is a grant from the federal government conferring the rights to exclude others
from making, selling, or using an invention for the term of the trademark.
Answer:
A firm’s operating leverage is an analysis of its debt versus its equity.
Answer:
A firm’s revenue streams describe the ways in which it makes money.
Answer:
First Screen is a template for completing industry analysis
Answer:
Business format franchises typically allow franchisees substantial flexibility in how
they run their individual franchise units.
Answer:
Industry/target market feasibility is an assessment of the overall appeal of the industry
and the target market for the product or service being proposed.
Answer:
All businesses have the potential to be aggressive growth firms.
Answer:
Consultants fall into two categories-paid consultants and consultants who are made
available for free or at a reduced rate through a nonprofit or government agency.
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:
The same financial ratios used to evaluate a firm’s historical financial statement should
be used to evaluate the pro forma financial statements.
Answer:
Bootstrapping is the process of combining personal funds, equity investments, and bank
financing to launch a business.
Answer:
The executive summary is a lengthy overview of the entire business plan.
Answer:
It is important to understand that there are several perfect business models.
Answer:
A commercialization plan is a written narrative that describes what a new business
plans to accomplish and how it plans to accomplish it.
Answer:
New product development is a low-risk growth strategy.
Answer:
A strategic alliance is an entity created by two or more firms pooling a portion of their
resources to create a separate, jointly-owned organization.
Answer:
A tagline is a phrase that a business uses to reinforce its position in the marketplace.
Answer:
Efficiency is the ability to earn a profit.
Answer:
The people who buy franchises from master franchisees are typically called
employee-franchisees.
Answer:
Which of the following issues should be considered in industry/target market feasibility
analysis?
A) Gaps in the marketplace
B) Financial performance of similar businesses
C) Resource sufficiency
D) Industry attractiveness
E) Management prowess
Answer:
Which of the following is not one of the four areas of feasibility analysis discussed in
the textbook?
A) Product/service feasibility
B) Financial feasibility
C) Societal feasibility
D) Organizational feasibility
E) Industry/market feasibility
Answer:
An example of a valuable library resource is IBISWorld, which is a(n) ________.
A) business publication
B) academic journal
C) Census Bureau publication
D) trade journal
E) database of industry-related information
Answer:
“Don’t be evil” is the corporate motto for ________.
A) Facebook
B) Google
C) Apple
D) Microsoft
E) Amazon.com
Answer:
To avoid making a hasty judgment, a franchisee may not purchase a franchise for
________ days from the time the Franchise Disclosure Document is received.
A) 3
B) 5
C) 10
D) 14
E) 30
Answer:
According to the textbook, many entrepreneurs go about the task of raising capital
haphazardly because they ________.
A) are uncomfortable talking about money and they haven’t written a business plan
B) lack experience in this area and because they don’t know much about their choices
C) are focused on the nuts and bolts of starting their business
D) haven’t completed a feasibility analysis or business plan
E) are intimidated by the process and they are unsure of how much money they need
Answer:
According to the textbook, prior entrepreneurial experience ________.
A) is one of the poorest predictors of future entrepreneurial performance
B) is one of the most consistent predictors of future entrepreneurial performance for
entrepreneurs under 50 years of age, but not for entrepreneurs over 50 years of age
C) is one of the most consistent predictors of future entrepreneurial performance
D) is one of the most consistent predictors of future entrepreneurial performance in
service firms, but not in manufacturing firms
E) has no relationship to future entrepreneurial performance
Answer:
In regard to firm growth, evidence shows that ________.
A) relatively few firms generate sustained growth
B) the majority of firms generate sustained growth
C) about 50 percent of firms generate sustained growth
D) manufacturing firms tend to generate sustained growth while service firms do not
E) service firms tend to generate sustained growth while manufacturing firms do not
Answer:
The number one characteristic shared by successful entrepreneurs is ________.
A) a desire to achieve financial rewards
B) a passion for the business
C) a desire to employ other people
D) a desire to fulfill a lifetime dream
E) a desire to bring a revolutionary new product or service to market
Answer:
Which of the following is not an industry in which business format franchises
predominate?
A) Soft drink bottlers
B) Business services
C) Hotels and motels
D) Quick service restaurants
E) Automotive service and repair
Answer:
International new ventures are ________.
A) businesses that have employees located in two or more countries
B) businesses that sell products in two or more countries
C) businesses that, from inception, seek to derive significant competitive advantage by
using their resources to sell products or services in multiple countries
D) businesses that are headquartered in a foreign country and export their products to
the United States
E) new ventures that export at least one-third of their products to foreign countries
Answer:
Mark White is the founder of a firm that builds iPhone apps. Mark is very technically
savvy, which allows him to build apps quickly and with minimal bugs or problems. In
the terminology of the Barringer/Ireland Business Model Template, Mark’s technical
savvy is a(n) ________ of his firm.
A) primary capability
B) core competency
C) essential asset
D) staple proficiency
E) key aptitude
Answer:
Which of the following statements is incorrect about business plans?
A) Writing a business plan forces a firm’s founders to systematically think through each
aspect of their new venture.
B) For most new ventures, the business plan is a dual-purpose document used both
inside and outside the firm.
C) A business plan is typically 25 to 35 pages long.
D) A large percentage of entrepreneurs do not write business plans for their new
ventures.
E) The business plan should be written while the feasibility analysis is being completed.
Answer:
What section of the business plan deals with the day-to-day operations of a company?
A) Financial plan
B) Marketing plan
C) Operations plan
D) Industry analysis
E) Executive summary
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:
In regard to patent activity (issuance), which of the following statements is correct?
A) Small businesses outperform their larger counterparts.
B) Small businesses underperform their larger counterparts.
C) Small businesses and large businesses are relatively equal.
D) Small businesses are not active in patent activity.
E) Large businesses are not active in patent activity.
Answer:
The What Went Wrong feature in Chapter 15 focuses on Curves International, the
fitness center for women. Since 2006 Curves has closed more than 4,000 locations.
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) An inability to find enough potential franchisees
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:
A trademark is registered with the ________.
A) U.S. Commerce Department
B) Federal Trade Commission
C) Securities and Exchange Commission
D) Federal Patent, Copyright, and Trademark Office
E) U.S. Patent and Trademark Office
Answer:
The Savvy Entrepreneurial Firm feature in Chapter 8 focuses on a scenario involving
the selection of a new CEO for New Venture Fitness Drinks. The lesson learned from
the feature was ________.
A) compare a firm’s financial ratios against its primary competitors and industry norms
to fairly assess how well a firm is performing financially
B) income statements are more effective in assessing how well a firm is performing
financially than are balance sheets and statements of cash flow
C) the most powerful instrument for understanding how well a firm is performing
financially is the statement of cash flows
D) ratio analysis is ineffective
E) look at multiple years of an income statement rather than a single year to fairly
assess how well a firm is performing financially
Answer:
A business plan is important as it forces the founding team to systematically think
through every aspect of their new venture and ________.
A) it is a budget
B) it is a public relations document that can be used to promote the firm
C) it is a contract that is signed by the founders of the firm
D) it is a financial analysis
E) it communicates the merits of a new venture to outsiders, such as investors and
bankers
Answer:
If the owners of a corporation don’t file their annual paperwork, neglect to pay their
annual fees, or commit fraud, a court could ignore the fact that a corporation has been
established and the owners could be held personally liable for the actions of the
corporation. This chain of events is referred to as ________.
A) vacating the corporate status
B) yielding the corporate privilege
C) surrendering the corporate shield
D) piercing the corporate veil
E) capitulating the corporate doctrine
Answer:
Real estate, buildings, equipment and furniture are classified as ________ assets on a
company’s balance sheet.
A) intermediate term
B) fixed
C) other
D) permanent
E) current
Answer:
Economic forces impact the opportunities available to entrepreneurs. Which of the
following alternatives reflects a set of economic forces that would be of interest to
entrepreneurs?
A) Level of disposable income, new uses of old technologies, and new laws and
regulations
B) New technologies, consumer spending patterns, and new laws
C) Interest rates, consumer spending patterns, and level of disposable income
D) Social and cultural trends, level of interest rates, and what people think is “in”
E) New changes in political areas, new laws, and level of disposable income
Answer:
According to the textbook, in many instances an investor will first ask for a copy of a
firm’s ________ and will request a copy of the full business plan only if that portion of
the plan is sufficiently convincing.
A) appendix
B) industry analysis
C) operations plan
D) financial plan
E) executive summary
Answer:
The first step in the formal sales process described in the book is ________.
A) qualify the lead
B) make the sales presentation
C) prospect for sales leads
D) meet objections and concerns
E) make the initial contact
Answer:
A(n) ________ is an early user of a firm’s product who is willing to give a testimonial
regarding his or her experience with the product.
A) tribute account
B) reference account
C) approval report
D) appreciation account
E) acknowledgment report
Answer:
A(n) ________ is a written agreement in which the owner of a piece of property allows
an individual or business to use the property for a specified period of time in exchange
for payments.
A) assurance
B) loan
C) guarantee
D) warranty
E) lease
Answer:
Kellen West recently launched a firm in the fruit drink industry, and has already
exported his fruit drinks to 11 different countries. One thing that Kellen’s firm is doing
is that it is varying the tastes of the fruit drinks it sells on a country-by-country basis to
meet the demands of the local markets. Kellen’s firm is pursuing a ________ strategy.
A) global
B) home
C) universal
D) contemporary
E) multidomestic
Answer:
The two components of industry/target market feasibility analysis are ________.
A) industry status and target market status
B) industry attractiveness and target market attractiveness
C) industry sufficiency and target market demand
D) industry attractiveness and product/service demand
E) industry evolution and target market attractiveness
Answer:
According to a recent Gallop survey, about ________ percent of kids in grades 5-12 say
they plan to start their own business.
A) 10
B) 20
C) 30
D) 40
E) 50
Answer:
The focus in organizational feasibility analysis is on ________.
A) financial resources for manufacturing firms and nonfinancial resources for service
firms
B) financial resources for service firms and nonfinancial resources for manufacturing
firms
C) nonfinancial and financial resources equally
D) nonfinancial resources
E) financial resources
Answer:
A firm’s pro forma financial statements are similar to its historical financial statements
except that they ________.
A) do not include the income statement
B) are required by the SEC in all cases
C) look back rather than forward
D) look forward rather than back
E) do not include the statement of cash flows
Answer: