External growth strategies involve efforts taken within the firm itself, such as new
product development, other product-related strategies, and international expansion.
Answer:
A product attribute map illustrates the strength of a firm’s niche (or target) market
relative to competing markets.
Answer:
It is usually easier for a corporation to raise investment capital than a sole
proprietorship or a general partnership because the shareholders are not liable beyond
their investment in the firm.
Answer:
The most important thing that any entrepreneur, or team of entrepreneurs, can do to
build a strong ethical culture in their organization is to hire an aggressive attorney.
Answer:
Few businesses need access to capital to fuel their growth.
Answer:
According to Penrose, entrepreneurial services generate new market, product, and
service ideas.
Answer:
The three common sources of “personal” financing for a startup firm are personal funds,
friends and family, and bootstrapping.
Answer:
Prior entrepreneurial experience, relevant industry experience, and networking are
attributes that strengthen the chances of a founder’s success.
Answer:
A management concept called agency theory refutes the value of franchising for
organizations with multiple units, like restaurant chains.
Answer:
Adverse selection 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 disadvantage of a general partnership is that the liquidity of each partner’s investment
is low.
Answer:
The income statement records all the revenues and expenses for a given period and
shows whether the firm is making a profit or is experiencing a loss.
Answer:
Many startups emphasize advertising over public relations primarily because it’s
cheaper and helps build the firm’s credibility.
Answer:
The first step in a competitor analysis is to determine who the competition is.
Answer:
The focus in organizational feasibility analysis is on financial resources.
Answer:
It is generally believed that new ventures started by an individual have an advantage
over those started by a team.
Answer:
The temptation to show a concept statement to friends and family members should be
avoided because they are predisposed to give positive feedback.
Answer:
Pro forma financial statements are projections for future periods based on forecasts and
are typically completed for 2 to 3 years into the future.
Answer:
A firm’s future competitors are its most important ones.
Answer:
In a scale joint venture, the position of the parties is not symmetrical, and the objectives
of the partners may diverge.
Answer:
The four major categories in the Barringer/Ireland Business Model Template are: core
strategy, resources, financials, and operations.
Answer:
According to the results of the GEM 2013 survey, about 1 out of every 8 American
adults is actively engaged in starting a business or is the owner/manager of a business
that is less than 3 1/2 years old.
Answer:
A prospective franchisee should fully understand all the information contained in the
Franchise Disclosure Document before a franchise agreement is signed.
Answer:
The Franchise Disclosure Document is the document that consummates the sale of a
franchise.
Answer:
As a business moves beyond its early growth stage and its pace of growth accelerates,
the need for structure and formalization decreases.
Answer:
While stealing trade secrets is widely considered to be unethical, it is not a criminal
offense.
Answer:
The first rule in making oral presentations is to follow instructions.
Answer:
A firm’s marketing mix is the assortment of products and services that it sells.
Answer:
According to the opening feature on Pure Fix Cycles, one of the biggest challenges the
startup now faces is an increasingly competitive marketplace.
Answer:
A skills profile is a chart that depicts the most important skills that are needed and
where skills gaps exist.
Answer:
Organizational feasibility analysis is conducted to determine whether a proposed
business venture has sufficient management expertise, organizational competence, and
resources to successfully launch its business.
Answer:
An ethical dilemma is a situation that involves doing something that is beneficial to
oneself or the organization, but may be unethical.
Answer:
Moral hazard 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.
Answer:
Similar to a board of directors, an advisory board possesses legal responsibility for the
firm.
Answer:
Evaluation is the stage of the creative process during which the idea is put into its final
form.
Answer:
In which form of business ownership are the owners called “members”?
A) general partnership
B) limited partnership
C) limited liability company
D) subchapter C corporation
E) C corporation
Answer:
Which of the following is the correct sequence of events to the process of selecting a
target market and position strategy?
A) Create a unique positioning strategy, Select a target market, Segment the market
B) Segment the market, Create a unique positioning strategy, Select a target market
C) Segment the market, Select a target market, Create a unique positioning strategy
D) Select a target market, Create a unique positioning strategy, Segment the market
E) Create a unique positioning strategy, Segment the market, Select a target market
Answer:
Supplier concentration, switching costs, attractiveness of substitutes, and threat of
forward integration are factors that have a direct impact on ________.
A) threat of new entrants
B) bargaining power of buyers
C) rivalry among existing firms
D) threat of substitutes
E) bargaining power of suppliers
Answer:
A(n) ________ is a group of firms producing a similar product or service. A firm’s
________ is the limited portion of the industry that it goes after or to which it wants to
appeal.
A) target market; industry
B) trade group; industry
C) industry; trade group
D) competitive group; target market
E) industry; target market
Answer:
Which of the following statements is incorrect regarding the marketing plan section of a
business plan?
A) The marketing plan focuses on how the business will market and sell its product or
service.
B) The two most important items to include in a marketing plan are (1) overall
marketing strategy and (2) the nuts and bolts of marketing a firm’s product in terms of
product, price, promotion, and place.
C) The best way to describe a company’s marketing plan is to begin by talking about its
competitors.
D) A firm’s marketing strategy refers to its overall approach for marketing its products
and services.
E) A firm’s overall approach to marketing typically boils down to how it positions itself
in its market and how it differentiates itself from its competitors.
Answer:
A firm’s ________ is its current assets divided by its current debt.
A) working share
B) present share
C) working capital
D) owners’ equity
E) current ratio
Answer:
A computer-generated image of an invention that displays the invention as a 3D model
that can be viewed from all sides and rotated 360 degrees is called a(n) ________.
A) virtual prototype
B) concept visualization
C) abstract prototype
D) virtual design
E) usability test
Answer:
A(n) ________ industry is an industry that is experiencing slow or no increase in
demand.
A) declining
B) global
C) mature
D) emerging
E) fragmented
Answer:
While franchise agreements vary, each agreement typically contains these sections: the
________ agreement and the ________ agreement.
A) statutory; purchase
B) franchise; buy
C) buy; membership
D) procurement; statutory
E) purchase; franchise
Answer:
The Google program called ________ allows advertisers to buy keywords on the
Google Home Page.
A) AdSense
B) Adcenter
C) AdWords
D) Search Marketing
E) AdGoogle
Answer:
Which of the following was not identified in the textbook as one of the day-to-day
challenges involved with growing a firm?
A) Cash flow management
B) Channel conflict
C) Capital constraints
D) Quality control
E) Price stability
Answer:
A company’s ________ scope defines the products and markets on which it will
concentrate.
A) product/market
B) offering/industry
C) business/market
D) business/industry
E) offering/market
Answer:
Peggy Owens owns a store that sells exercise equipment. Each January 1, she makes a
very accurate account of all her merchandise and products waiting to be sold that are in
her store. On January 1, Peggy is taking account of her store’s ________.
A) long-term assets
B) owners’ equity
C) accounts payable
D) accounts receivable
E) inventory
Answer:
An opportunity has the following four essential qualities ________.
A) attractive; timely; durable; and anchored in a product, service, or business that
creates or adds value for its buyer or end user
B) practical; opportune; appropriate; and anchored in a product, service, or business
that is efficient and effective
C) realistic; striking; timely; and anchored in a product, service, or business that is
timely
D) attention-getting; attractive; timely; and anchored in a product, service, or business
that creates or adds value for its buyer or end user
E) attractive, durable, resilient, and opportune
Answer:
Southwest Airlines uses its assets very productively. Its turnaround time, or the time
that its airplanes sit on the ground while they are being loaded and unloaded, is the
lowest in the airline industry. In terms of the primary financial objectives of a firm, this
attribute is a measure of Southwest’s ________.
A) efficiency
B) effectiveness
C) stability
D) liquidity
E) profitability
Answer:
Modcloth, Zappos and Sir Kensington’s are examples of firms that are growing via
________ growth strategies.
A) in-house
B) external
C) internal
D) central
E) derivative
Answer:
Equity financing (or funding) means ________.
A) exchanging partial ownership in a firm, usually in the form of stock, for funding
B) getting a grant or outright gift
C) getting a loan
D) getting a lease
E) getting a loan guarantee
Answer:
________ licensing is the licensing of proprietary technology that the licensor typically
controls by virtue of a utility patent.
A) Skill
B) Intellectual property
C) Utility
D) Technology
E) Expertise
Answer:
As new products that are better than the existing generation of products are introduced,
sales normally increase because the new products provide consumers increased value or
worth. This process, which is called ________, stimulates economic activity, which is a
good thing for the economy.
A) creative destruction
B) repetitive destruction
C) iterative replacement
D) inventive replacement
E) iterative destruction
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, Justin’s in peanut butter, Pure Fix Cycles in bicycles, and
Flings Bins in trash bags are examples of entrepreneurial firms who are exploiting
opportunities in ________ industries.
A) emerging
B) fragmented
C) declining
D) mature
E) consolidated
Answer:
In the context of boards of directors, a(n) ________ director is someone who is not
employed by the firm.
A) outside
B) inside
C) external
D) impartial
E) peripheral
Answer:
Kendell Adams owns a software development company. When he first launched his
firm, he was careful to hire employees who had the experience he was looking for, were
good matches for the positions he had available, and could be properly supervised. As
Kendell’s firm has grown, and his need for employees has increased, he is finding that it
is increasingly difficult to find employees who have the qualifications he is looking for,
are good matches for the positions he has available, and fit within the supervisory
framework he has developed. Kendell is dealing with an issue referred to as ________.
A) adverse hazard
B) adverse selection
C) complicated hazard
D) ethical hazard
E) moral selection
Answer:
In ________ pricing, the list price is determined by estimating what consumers are
willing to pay for a product and then backing off a bit to provide a cushion.
A) value-based
B) tactical
C) strategic
D) cost-based
E) economic-based
Answer:
The price of prescription medicine is high, partly because when someone is sick there is
no real alternative to buying medicine if they want to get better. Which of Porter’s five
forces explains how this aspect of the prescription medicine industry helps keep
profitability high?
A) Rivalry among existing firms
B) Threat of new entrants
C) Threat of substitutes
D) Bargaining power of buyers
E) Bargaining power of suppliers
Answer:
Shelly Brunner owns a sports-themed restaurant which is located in an upscale business
district in Chicago. One advantage that Shelly has is that she bought the lot she built her
restaurant on 25 years ago when lots in the area were selling for $50,000. Shelly knows
that several potential competitors have looked at bare lots near his business but haven’t
been willing to pay the asking prices, which are as high as $500,000. Which of the six
major sources of barriers to entry is causing a disincentive for new firms to enter
Shelly’s industry?
A) Capital requirements
B) Economies of scale
C) Product differentiation
D) Government and legal barriers
E) Cost advantage independent of size
Answer:
Casey Griggs is a very capable computer engineer. Recently, he noticed a problem that
computer engineers have, and thought of a solution to the problem that might represent
an opportunity for a new software product. Casey’s idea for a new software product is
an example of a(n) ________ discovery.
A) chance
B) serendipitous
C) traditional
D) conventional
E) opportune
Answer:
Some firms feel that they can better appeal to their customers if they can advertise that
they are the “Number 1 firm” in their industry. This sentiment is motivated by the
reason for growth labeled ________.
A) economies of scope
B) need to accommodate the growth of key customer
C) economies of scale
D) market leadership
E) influence, power, and survivability
Answer:
The ________ stage of the organizational life cycle is the startup phase, where a
business determines what its core strengths and capabilities are and starts selling its
initial product or service.
A) introduction
B) launch
C) ramp-up
D) early growth
E) continuous growth
Answer:
Conner Brandshaw is investigating the feasibility of a new type of electronic game
targeting middle school and high school-age boys. Which of the following is an
example of “gumshoe research” that Conner could conduct to get a sense of the likely
demand for his game?
A) Download electronic games industry reports from the Internet.
B) Administer a buying intentions survey.
C) Administer a concept test.
D) Look at the Web sites of a number of companies that sell electronic games.
E) Spend several days in electronic games arcades and stores to observe the types of
games that attract the interest of middle school age and high school age boys.
Answer:
An entity created by two or more firms pooling a portion of their resources to create a
separate, jointly-owned organization is called a ________.
A) trade association
B) network
C) joint venture
D) consortia
E) strategic alliance
Answer:
The Savvy Entrepreneurial Firm feature in Chapter 7 focuses on the topic of vesting
company stock. According to the feature, a typical startup’s vesting schedule lasts
________ and includes a 12-month cliff.
A) 12 months
B) 12 months to 24 months
C) 24 months to 36 months
D) 36 months to 48 months
E) 48 months to 60 months
Answer:
FundersClub and Crowdfunder.com are examples of ________-based crowdfunding
sites.
A) debt
B) reward
C) government
D) equity
E) industry
Answer:
Birchbox’s phrase “The Box is Monthly, the Discoveries are Endless” is an example of
a(n) ________.
A) tagline
B) grabline
C) notice-line
D) catchline
E) attention-line
Answer:
What is a founders’ agreement? Describe the purpose of a buyback clause and why it’s
important?
Answer:
What is the difference between equity funding and debt financing? What are the most
common sources of equity funding and debt financing?
Answer:
Describe the difference between an idea and an opportunity. Why is the distinction
important?
Answer:
What are the two primary rules of thumb for determining whether intellectual property
protection should be pursued for a particular intellectual asset?
Answer:
Discuss the nontraditional barriers to entry identified in the chapter. Why is it important
that entrepreneurial firms utilize one or more of these forms of barriers to entry?
Answer: