Entrepreneurship is the process by which individuals pursue opportunities within the
constraints of the resources they control.
Answer:
The major revenue drivers, which are the ways a business earns money, should be first
identified in “The Economics of the Business” section of the business plan.
Answer:
Creating buzz means creating awareness and a sense of anticipation about a company
and its offerings.
Answer:
The average time for the approval of a patent is approximately seven months.
Answer:
A subchapter S corporation combines the advantages of a partnership and a C
corporation.
Answer:
A business’s early growth stage is generally characterized by increasing sales and
heightened complexity.
Answer:
The single most important thing the founders of an entrepreneurial venture can do to
avoid ethical misconduct is to establish a strong ethical culture for their firms.
Answer:
Product/service feasibility analysis is an assessment of the overall appeal of the product
or service being proposed.
Answer:
Standard business models depict existing plans or recipes firms can use to determine
how they will create, deliver, and capture value for their stakeholders.
Answer:
Opportunity recognition may be an innate skill or cognitive process.
Answer:
For most business plans, 25 to 35 pages are sufficient.
Answer:
A firm’s working capital is defined as its fixed assets minus its long-term liabilities.
Answer:
Venture capital is money that is invested by venture capital firms in startups and small
businesses with exceptional growth potential.
Answer:
The number one characteristic shared by successful entrepreneurs is passion for the
business.
Answer:
Markets can be segmented in a number of ways, including by geography, demographic
variables, psychographic variables, behavioral variables, and product type.
Answer:
A fragmented industry is an industry that is experiencing slow increases in demand,
numerous repeat customers, and limited product innovation.
Answer:
Incubation is the stage of the creative process during which an idea is subjected to
scrutiny and analyzed for its viability.
Answer:
The resources section of the Barringer/Ireland Business Model Template includes three
parts: core competency, key assets, and revenue streams.
Answer:
In terms of the “types” of startup firms, entrepreneurial firms bring new products and
services to market.
Answer:
The term “window of opportunity” is a metaphor describing the time period in which a
firm can realistically raise money.
Answer:
Factoring is a financial transaction whereby a business sells its accounts receivable to a
third party at a discount in exchange for cash.
Answer:
In many fast-paced industries, new product development is a competitive necessity.
Answer:
According to studies citied in the book, a large percentage of entrepreneurs write
business plans for their ventures.
Answer:
Unfortunately, statistics show that there is very little interest in entrepreneurship among
young people in the United States.
Answer:
Since the first patent was granted in 1790, the USPTO has granted 8.7 million patents.
Answer:
Because of the weaknesses associated with advertising, most startups do not advertise
their products broadly.
Answer:
One of the most important questions a prospective franchisor should consider is
whether the fees and royalties charged by a franchisor are consistent with the franchise’s
value or worth.
Answer:
An advantage of internal growth is that it is a rapid form of growth.
Answer:
A sources and uses of funds statement is a document that lays out specifically how
much money a firm needs, where the money will come from, and what the money will
be used for.
Answer:
The pro forma income statement shows the projected flow of cash into and out of the
company during a specified period.
Answer:
A trademark is a word, name, symbol, or device used to identify the source or origin of
products or services and to distinguish those products or services from others.
Answer:
A firm’s “position” is concerned with how it is situated relative to its rivals.
Answer:
An idea is a thought, impression, or notion. It may or may not meet the criteria of an
opportunity.
Answer:
One of the most difficult challenges that businesses encounter as they grow is
maintaining high levels of quality and customer service.
Answer:
The amount of money consumers pay to buy a product is its ________.
A) price
B) fee
C) value
D) cost
E) charge
Answer:
A ________ sets forth the rights and duties of the general and limited partners, along
with the details of how the partnership will be managed and eventually dissolved.
A) partnership accord
B) restricted partnership agreement
C) business partnership agreement
D) limited partnership concurrence
E) limited partnership agreement
Answer:
A(n) ________ details the responsibilities and the ownership shares of the partners
involved with an organization.
A) partnership agreement
B) industry contract
C) business pledge
D) business agreement
E) partnership pledge
Answer:
The What Went Wrong feature in Chapter 14 focuses on the failure of Crumbs Bake
Shop, a specialty-restaurant chain that sold gourmet cupcakes. According to the feature,
Crumbs failed due to ________.
A) lack of funding to facilitate expansion, high real estate costs, management turnover,
poor operating margins
B) no pivot or change in strategy, lack of international expansion, trademark dispute
with a competitor, failure to franchise
C) increasingly crowded market, consumers started losing interest in cupcakes, high
real estate costs, and no pivot or change in strategy
D) lack of funding to facilitate expansion, management turnover, increasingly crowded
market, and high fixed costs
E) high operating costs, trademark dispute with a competitor, consumers started losing
interest in cupcakes, and failure to franchise
Answer:
________ are a special form of incentive compensation. These plans provide employees
the option or right to buy a certain number of shares of their company’s stock at a stated
price over a certain period of time.
A) Corporate options
B) Collective plans
C) Share plans
D) Stock options
E) Dividends
Answer:
Which of the following was not given in the textbook as a reason for the increase in the
number of senior entrepreneurs?
A) Seniors tend to be more passionate about new business ideas than middle-aged or
younger prospective entrepreneurs.
B) Many seniors have extensive business experience and other qualities that equip them
for an entrepreneurial career.
C) Growing worries among seniors that they need to earn additional income to pay for
future health care services and other expenses
D) An increasing desire among older workers for more personal fulfillment in their
lives
E) Corporate downsizing
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:
Corporations that trade their stock on organized exchanges like the New York Stock
Exchange and the NASDAQ are called ________ corporations.
A) national
B) civil
C) public
D) premier
E) common
Answer:
Does it make sense? Is it reasonable? Is it something consumers will get excited about?
Does it take advantage of an environmental trend, solve a problem, or fill a gap in the
marketplace? These are the types of questions asked during the ________ feasibility
component of a complete feasibility analysis.
A) financial
B) industry/target market
C) organizational
D) concept
E) product/service
Answer:
Which of the following is the primary advantage of a wholly owned subsidiary as a
foreign market entry strategy?
A) Provides a firm total control over its operations
B) Easier to raise capital to implement than other foreign market entry strategies
C) Gaining an appreciation of local customs and market preferences
D) Low transportation costs
E) The ability to give employees foreign market experience
Answer:
A master franchisee, in addition to having the right to open and operate a specific
number of locations in a particular area, also has the right to ________.
A) stop making royalty payments if its sales decline
B) sell products made by companies other than the franchisor
C) offer and sell the franchise to other people in its area
D) use its own operating manuals to run its franchise outlets
E) stop making royalty payments if it is losing money
Answer:
In general, industries are more attractive when the ________.
A) majority of the threats are high
B) majority of the threats are low
C) threat of each of the forces is neutral-neither low nor high
D) threat of each of the five forces is high
E) threat of each of the five forces is low
Answer:
The two distinctly different types of franchise systems are ________ franchise and
________ franchise.
A) product trademark; business arrangement
B) product plus; business format
C) business design; product improvement
D) product extension; business design
E) product trademark; business format
Answer:
The final step in the formal sales process described in the book is ________.
A) qualify the lead
B) make the sales presentation
C) follow-up
D) closing the sale
E) meeting objections and concerns
Answer:
________ feasibility analysis is conducted to determine whether a proposed business
has sufficient management expertise, organizational competence, and resources to
successfully launch its business.
A) Industry/market
B) Institutional
C) Financial
D) Organizational
E) Product/service
Answer:
Which of the following is an incorrect approach to administering a concept test?
A) The concept statement shouldn’t exceed one page.
B) After the concept statement is developed, it should be shown to at least 10 people.
C) The best candidates to distribute a concept statement to are family and friends.
D) If time permits, a concept statement should be used in an iterative manner and
distributed to several groups of people.
E) A short survey should be attached to the concept statement to solicit feedback.
Answer:
Which of Porter’s five forces is most closely associated with the concept “barrier to
entry”?
A) Bargaining power of suppliers
B) Rivalry among existing firms
C) Threat of new entrants
D) Bargaining power of buyers
E) Threat of substitutes
Answer:
In the book The Theory of Economic Development, ________ argued that entrepreneurs
develop new products and technologies that, over time, make current products and
technologies obsolete. This process is called creative destruction.
A) Malcolm Gladwell
B) Seth Godin
C) Joseph Schumpeter
D) Thomas Friedman
E) Jim Collins
Answer:
Cynthia Hamilton is launching a chain of smoothie restaurants. Among Cynthia’s key
partners will be firms that provide her the ingredients needed to make her smoothies. In
the terminology of the Barringer/Ireland Business Model Template, these partners are
called ________.
A) dealers
B) suppliers
C) merchants
D) traders
E) brokers
Answer:
A company’s merchandise, raw materials, and products waiting to be sold are called its
________.
A) set aside
B) accumulation
C) reserve
D) inventory
E) stock
Answer:
James Ryan has been a Coors Beer distributor for the past 20 years. James owns a
________ franchise.
A) business format
B) product and trademark
C) business design
D) product plus
E) product and business format
Answer:
According to the textbook, most entrepreneurial firms ________.
A) are ambivalent about growth
B) want to grow
C) do not want to grow
D) want to grow if the economy is strong but do not want to grow if the economy is
weak
E) want to grow if they are a service firm but do not want to grow if they are a
manufacturing firm
Answer:
Which of the following is the correct sequence for the four steps in the entrepreneurial
process?
A) Deciding to become an entrepreneur, developing successful business ideas, moving
from an idea to an entrepreneurial firm, managing the growing entrepreneurial firm
B) Developing successful business ideas, deciding to become an entrepreneur, moving
from an idea to an entrepreneurial firm, managing and growing the entrepreneurial firm
C) Developing successful business ideas, moving from an idea to an entrepreneurial
firm, deciding to become an entrepreneur, managing and growing the entrepreneurial
firm
D) Deciding to become an entrepreneur, moving from an idea to an entrepreneurial
firm, developing successful business ideas, managing and growing the entrepreneurial
firm
E) Managing and growing the entrepreneurial firm, developing successful business
ideas, deciding to become an entrepreneur, moving from an idea to an entrepreneurial
firm
Answer:
Which of the following statements is incorrect regarding franchising?
A) In some industries, such as automotive and retail food, franchising is a dominant
form of business ownership and growth.
B) There are some instances in which franchising is not appropriate.
C) Franchising is a relatively new form of business organization.
D) Franchising, by its very nature, involves the sharing of knowledge between a
franchisor and a franchisee.
E) Franchising is a relatively poorly understood form of business ownership and
growth.
Answer:
Katlyn Williams owns a company that makes specialized components for the aerospace
industry. Her most important customer is a company that is growing at a rate of 33%
per year. Katlyn is working hard to grow her firm, because she knows that unless her
company continually grows it will not be able to keep pace with the growth of its most
important customer. This example illustrates the reason for growth referred to as
________.
A) capturing economies of scope
B) executing a scalable business model
C) market leadership
D) influence, power, and survivability
E) need to accommodate the growth of a key customer
Answer:
The process of building and maintaining relationships with people whose interests are
similar or whose relationship could bring advantages to the firm is called ________.
A) linking
B) socializing
C) networking
D) associating
E) connecting
Answer:
Which of the following is a disadvantage of growth by means of external growth
strategies?
A) Diversification of business risk
B) Economies of scale
C) Getting access to proprietary products or services
D) Reducing competition
E) Loss of organizational flexibility
Answer:
The pro forma ________ provides a firm a sense of how its activities will affect its
ability to meet its short-term liabilities and how its finances will evolve over time.
A) balance sheet
B) statement of cash flows
C) income statement
D) expense statement
E) statement of owners’ equity
Answer:
A firm’s pace of growth is the rate it is growing ________.
A) compared to industry norms
B) compared to a national index of all firms
C) on an annual basis
D) compared to the national economy
E) compared to its closest competitor
Answer:
When Red Bull was first being introduced into the United States, the company would
hand out free samples of its product at extreme sports events (e.g., skateboarding,
wakeboarding and mountain biking competitions). Red Bull’s objective was to create
________ surrounding its product.
A) buzz
B) noise
C) clatter
D) clamor
E) ruckus
Answer:
Which of the following is an advantage of a C Corporation?
A) Setting up and maintaining one is more difficult than for a sole proprietorship or a
partnership.
B) Stock is liquid if traded on a major stock exchange.
C) Business losses cannot be deducted against the shareholders’ other sources of
income.
D) Income is subject to double taxation.
E) Small shareholders typically have little voice in the management of the firm.
Answer:
Which of the following statements regarding survival rates of entrepreneurial firms in
the United States is correct?
A) As high as 50 percent after four years
B) As high as 60 percent after four years
C) As high as 70 percent after four years
D) As high as 80 percent after four years
E) As high as 90 percent after four years
Answer:
________ patents are the second most common type of patent and cover the invention
of new, original, and ornamental designs for manufactured products.
A) Aesthetic
B) Utility
C) Visual
D) Blueprint
E) Design
Answer:
Which of the following is the primary disadvantage of licensing as a foreign market
entry strategy?
A) A firm in effect “teaches” a foreign company how to produce its proprietary
products.
B) High transportation costs
C) It is usually a one-time activity.
D) A firm loses partial control of its business operations.
E) Quality control
Answer:
A(n) ________ statement describes why a company exists and what it aspires to
become.
A) tactical
B) values
C) mission
D) operations
E) strategic
Answer: