Technological uncertainty is eliminated by a superior technology.
The sale of the company to employees is an exit strategy.
A trademark is given a 50-year registration with no renewal.
The files of the U.S. Patent Office are kept confidential and entrepreneurs cannot study
their contents.
In parameter analysis a new idea is developed through a list of related issues or
suggestions.
In establishing a price for a management buyout the entrepreneur should not include the
goodwill value established from past revenue because it can’t be quantified.
Often, when a business changes hands, key employees move into the acquiring
company.
Since a corporation is recognized as a separate tax, it has the advantage of being able to
take many deductions and expenses that are not available to the proprietorship or
partnership.
Extending payments to suppliers is an example of generating funds internally.
Entrepreneurial activities tend to immediately affect the bottom line, and hence are
seldom overlooked and receive extensive funding and support.
When developing operating and capital budgets, the entrepreneur can seek advice from
experts, but should retain the final say so.
One advantage of franchising is that the entrepreneur usually enters into a business that
has an accepted name and product.
The corporate entrepreneur to have the ability to encourage teamwork and use a
multidisciplined approach, which violates organizational practices and structures taught
in most business schools.
When a bank grants a line of credit, a “commitment fee” is assessed at the start of the
loan.
One important advantage of buying a franchise is that the entrepreneur incurs no risk.
An entrepreneur should seek a patent attorney who has experience in their product line.
Environmental changes are highly unlikely in emerging industries.
The period of time when the environment is favorable for entrepreneurs to exploit a
particular new entry is called the window of opportunity.
To attract venture capital funding, an investment must have significant capital
appreciation potential.
Under Rule 504 of Regulation D, a company can sell up to $1,000,000 of securities to
any number of investors, regardless of their sophistication, in any 12-month period.
When borrowing from friends and family, the entrepreneur should avoid putting
agreements in writing to avoid future disagreements.
Most entrepreneurs have little difficulty with gathering market information.
Revenue sources such as sales and any externally available funds should be included in
the budget.
The long-run performance of a firm is dependent upon the ability to generate and
exploit numerous new entries.
The largest source of new ideas is the U.S. Patent Office.
In creating a culture for corporate entrepreneurship leadership is important.
The three main categories of patents are design, utility and provisional patents.
Before writing the business plan an entrepreneur should conduct an objective
self-assessment of his or her abilities which includes areas such as planning and sales
skills.
Adaptations necessary to meet changes in market demand are difficult because an
organization resists change.
Is the example “Curry in a Hurry” is an example of the effectuation process?
The corporation has the most continuity of the forms of business.
Corporate entrepreneurship is most strongly reflected in entrepreneurial activities as
well as in top management orientations in organizations.
Terminating a franchise results in more lawsuits than any other issue in franchising.
The only source of capital for a corporation is the sale of shares of stock.
Transferability of interest is easiest in a limited partnership.
Market research, such as surveys, has limited effectiveness because it is often difficult
for customers to articulate the underlying problems they have with a product or service.
A disadvantage of using licensing as an entry strategy for a foreign market is the high
amount of risk involved.
If a company has a superior product, customers will always be willing to pay a higher
price for higher value.
Copyright law does not apply to music, especially when downloaded from the Internet.
For an organization with a traditional environment, it is best to facilitate an external
process to establish an entrepreneurial environment.
Which of the following statement is(are) true?
A.Rule 505 permits the sale of $10 million of unregistered securities in the private
offering in any 12-month period.
B.Rule 504 and 505 permit no general advertising or solicitation through public media.
C.Rule 506 provides the first exemption to a company seeking to raise a small amount
of capital from numerous investors.
D.The entrepreneur issuing the private offering is spared the burden of proving that the
exemptions granted have been met.
In most cases, the venture capitalist:
A.seeks control of the company.
B.would prefer to not be a part of the board of directors.
C.is not involved in developing strategic plans.
D.expects the management team to run the daily operations.
The contribution margin is:
A.Selling price minus variable cost per unit.
B.Selling price minus total fixed costs.
C.Variable cost per unit plus selling price.
D.Selling price minus total costs.
Which among the following aspects affects an entrepreneur’s perception of feasibility?
A.Locus of control
B.Learning style
C.Perceived desirability
D.Self-efficacy
Creativity declines with
A.training and tradition.
B.education and work experience.
C.age, education and lack of use.
D.mental health and work experience.
__________ are designed to stimulate thought about entrepreneurs’ understanding and
feelings as they progress through the entrepreneurial process.
A.Strategic questions
B.Connection tasks
C.Reflection tasks
D.Comprehension questions
Intensive, selective and exclusive are all part of which major consideration in channel
selection?
A.Degree of directness
B.Number of channel members
C.Criteria in selection of channel members
D.Number of channels
The early signs of bankruptcy include all of the following except:
A.key personnel leave the company.
B.payroll taxes are not paid.
C.suppliers demand payment in cash.
D.all of these are early signs of bankruptcy.
A computer company buys a hard-drive manufacturer. This is an example of:
A.Backward integration
B.Horizontal integration
C.Forward integration
D.Conglomerate integration
Early stage financing is typically:
A.easier to obtain than expansion financing.
B.called seed or start-up capital.
C.where venture capitalists are highly involved.
D.used as working capital to support initial growth.
Entrepreneurs in the _____________ quadrant of firm growth possess the abilities to
grow but do not aspire to grow their businesses.
A.Constrained growth
B.Unused potential for growth
C.Actual growth
D.Little potential
A potential franchisee should seek answers to all of the following questions while
assessing the financial stability of the franchisor, except:
A.How many franchises are in the organization?
B.Are most of the profits of the franchise a function of fees from the sale of franchises
or from royalties based on profits of franchisees?
C.What are the chances of further expansion of the company?
D.Does the franchisor have management expertise in production, finance, and
marketing?
Given the cultural climate of the U.S., business failure and bankruptcy:
A.mean the entrepreneur can never hope to start over.
B.carry such a stigma that the entrepreneur is disgraced and ostracized.
C.do not have to be the end for the entrepreneur.
D.means that there would be a change in the outlook of the people.
Which of the following is likely to be a fixed cost?
A.Materials
B.Commissions
C.Depreciation
D.Direct labor
The costs that must be borne by customers if they are to stop purchasing from the
current supplier and begin purchasing from another is(are):
A.customer switching costs.
B.lead time.
C.resource costs.
D.resource bundle errors.
The board of directors:
A.lacks voting authority.
B.has responsibilities to represent all shareholders.
C.is less objective than the entrepreneur.
D.are always volunteers and need not be compensated.
The _______ is defined as the stages each product goes through from introduction to
decline.
A.entrepreneurial decision making process
B.test marketing process
C.product planning and development process
D.product life cycle
The waiting period is the time between:
A.hiring an underwriter and waiting to file the registration statement.
B.filing the registration statement and the SEC’s reviewing to determine the adequacy
of the disclosure.
C.the initial filing of the registration statement and its effective date.
D.after the initial public offering has been sold and before the listing.
Mortgage financing is another term for:
A.large equipment asset-based financing.
B.real-estate asset-based financing.
C.sale-leaseback financing.
D.unsecured financing.
___________ is not one of the main perspectives an entrepreneur should consider when
writing the business plan.
A.The employee’s perspective
B.The marketing perspective
C.The investor’s perspective
D.The entrepreneurs own perspective
Which of the following is not true about Steve Hafner featured in the opening profile of
chapter 7?
A.Graduated from Dartmouth College
B.Founded Expedia early in his career
C.Worked for Boston Consulting Group after completing his Masters Degree
D.Founded Kayak Corporation
Changes needed to adapt to environmental changes:
A.are easier in established organizations because of inertia.
B.can be avoided by late entry.
C.are more difficult because of the tendency to escalate commitment.
D.don’t affect smaller organizations.
The integrative aspect of negotiation:
A.focuses on decreasing the “size of the pie.”
B.is more beneficial than a conflict resolution approach.
C.requires the entrepreneur to lower the reservation price.
D.requires the negotiator to not decrease the price and not back down.
Market conditions, product attributes, cost benefits and venture attributes are all part of
which major consideration in channel selection?
A.Degree of directness
B.Number of channel members
C.Criteria in selection of channel members
D.Number of channels
Entrepreneurial Opportunities are defined as:
A.new market entry through entrepreneur action.
B.the entrepreneur’s mental processes in deciding whether or not to act on a potential
opportunity.
C.a feasibility assessment.
D.situations in which new goods, services, raw materials and organizing methods can
be sold at greater than their production cost.
Which form of promotion is too expensive for most entrepreneurs to use?
A.TV
B.Print Ads
C.Radio
D.Webpage
The Family Business Institute indicates that about ___ percent of successful ventures
make it to the second generation of ownership.
A.40
B.20
C.30
D.10
_______ strategies involve developing and selling new products to people who are
already purchasing the firm’s existing products.
A.Penetration
B.Product development
C.Market development
D.Diversification
In an S corporation, the transfer of interest can occur:
A.only with the consent of the other shareholders.
B.only if there is a charter provision for doing so.
C.only as long as the buyer is an individual.
D.depending on the agreement.
Business angels usually find their deals through:
A.the internet.
B.referral sources.
C.venture capitalists.
D.cold calling.
Organization costs in a proprietorship are:
A.amortizable over a period of 60 months.
B.not amortizable.
C.amortizable over a period of 45 months.
D.amortizable for a period of a year.
Which of the following is(are) not a key element in the pricing strategy?
A.Cost
B.Margin or markup
C.Competition
D.Distribution
All of the following are questions that should be considered in the environmental and
industry analysis section of the business plan except:
A.What are total industry sales over the past five years?
B.Who are the nearest competitors?
C.What is my promotional strategy?
D.What is anticipated growth in this industry?