A hub and wheel configuration with a local firm at the hub organizing the
interdependencies of a complex array of firms is referred to as a:
A) trade association
B) strategic alliance
C) network
D) joint venture
E) consortia
Answer:
Which of the following is the primary disadvantage of licensing as a foreign market
entry strategy?
A) high transportation costs
B) quality control
C) It is usually a one-time activity.
D) A firm loses partial control of its business operations.
E) A firm in effect “teaches” a foreign company how to produce its proprietary
products.
Answer:
In the context of a firm’s statement of cash flows, ________ include the purchase, sale,
or investment in fixed assets, such as real estate, equipment, and buildings.
A) operating activities
B) investing activities
C) capital activities
D) financing activities
E) liquidity activities
Answer:
The two components of product/service feasibility analysis are:
A) product/service value and product/service affordability
B) product/service demand and product/service timeliness
C) product/service timeliness and product/service value
D) product/service durability and product/service value
E) product/service desirability and product/service demand
Answer:
The What Went Wrong? feature in Chapter 1 focuses on YouCaster, a company that was
launched in 2006 but eventually went out of business. According to the feature,
YouCaster failed for two primary reasons:
A) a poorly equipped team of entrepreneurs and a lack of passion
B) too few customers and a lack of intellectual property protection
C) a lack of resolve and poor execution intelligence
D) a lack of execution intelligence and a poor product/customer focus
E) a lack of passion and too few customers
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:
The granting of permission by one company to another company to use a specific form
of its intellectual property under clearly defined conditions is referred to as:
A) verifying
B) confirming
C) endorsing
D) licensing
E) certifying
Answer:
________ are limited partnerships of money managers who raise money in “funds” to
invest in startups and growing firms.
A) Venture capital firms
B) Business angels
C) Institutional investors
D) Investment bankers
E) Business capitalists
Answer:
The statement of cash flows is divided into three separate activities:
A) profitability activities, stability activities, and investing activities
B) stability activities, earning activities, and financing activities
C) operating activities, capital activities, and liquidity activities
D) spending activities, earning activities, and capital activities
E) operating activities, investing activities, and financing activities
Answer:
Which of the following is not a disadvantage of buying a franchise?
A) cost of the franchise
B) duration and nature of the commitment
C) restrictions on creativity
D) availability of financing
E) potential for failure
Answer:
Andy Zackery just launched a firm in the sporting goods industry. On the day the
company was launched, Andy issued a press release, indicating that the vice president
of Brunswick, a highly respected sporting goods company, had agreed to serve on his
board of directors. Andy knows that such a high quality appointment will send an
important message to his potential clientele. This phenomenon is referred to as:
A) championing
B) signaling
C) profiling
D) indicating
E) trumping
Answer:
Kendra Johnson is starting a firm in the shoe industry. Her shoes will be very high
quality and will be priced at the top end of the market. Kendra has chosen the generic
strategy referred to as:
A) value pricing
B) differentiation
C) competitive superiority
D) separation
E) quality plus
Answer:
The network of companies that participate in the production of a product, from the
acquisition of raw materials to the final sale, is referred to as the:
A) input chain
B) participation chain
C) supply chain
D) involvement network
E) contribution chain
Answer:
If a new firm was launched to help public schools comply with The No Child Left
Behind Act of 2002, that opportunity was created by:
A) changes in economic forces
B) demographic changes
C) changes in social forces
D) changes in technological forces
E) political actions and regulatory changes
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:
Industry structure refers to how:
A) concentrated or fragmented an industry is
B) traditional or progressive an industry is
C) innovative or conservative an industry is
D) hierarchical or flat an industry is
E) large or small an industry is
Answer:
Which of the following is an example of an internal growth strategy?
A) licensing
B) merger
C) new product development
D) strategic alliance
E) acquisition
Answer:
GiftZip, the company profiled in the opening feature for Chapter 1, makes money via:
A) payments from companies that offer gift cards for displaying their cards on the site
B) the direct sale of gift cards displayed on its site
C) monthly subscription fees
D) online advertising
E) earning an affiliate fee for gift card purchases that originate from its site
Answer:
The facilities and equipment that a business needs should be described in the ________
section of its business plan.
A) marketing plan
B) management team and company structure
C) company description
D) market analysis
E) operations plan
Answer:
A(n) ________ is a written document that deals with issues such as the relative split of
the equity among the founders of the firm, how individual founders will be
compensated for the cash or the ‘sweat equity” they put into the firm, and how long the
founder will have to remain with the firm for their shares to fully vest.
A) entrepreneurs’ agreement
B) creators’ agreement
C) founders’ agreement
D) initiators’ agreement
E) originators’ agreement
Answer:
In the context of competitor analysis, ________ offer close substitutes to the product
sold by the firm completing the analysis.
A) potential competitors
B) direct competitors
C) indirect competitors
D) impending competitors
E) future competitors
Answer:
Which of the following is not an advantage of a general partnership?
A) Business losses can be deducted against the partners’ other sources of income.
B) The skills and abilities of more than one individual are available to the firm.
C) The liquidity of each partner’s investment is low.
D) Creating one is relatively easy and inexpensive compared to a c corporation or
limited liability company.
E) It is not subject to double taxation.
Answer:
In ________, 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 pricing
B) tactical pricing
C) strategic pricing
D) cost-based pricing
E) economic-based pricing
Answer:
According to the textbook, the best approach to utilizing a library for
entrepreneurship-related research is to:
A) discuss your general area of interest with a reference librarian
B) focus your efforts on studying newspapers and periodicals
C) focus your efforts on browsing through industry-related materials
D) discuss your general area of interest with other library patrons
E) focus your efforts on academic journals
Answer:
According to the textbook, the five competitive forces included in the five-forces model
determine:
A) the average rate of new business starts in an industry
B) the average growth rate for the firms in an industry
C) the average rate of return for the firms in an industry
D) the average sales for the firms in an industry
E) the average failure rate for the firms in an industry
Answer:
Which of the following is not one of the five common myths about entrepreneurs?
A) Entrepreneurs are tenacious.
B) Entrepreneurs are moderate risk takers.
C) Entrepreneurs should be young and energetic.
D) Entrepreneurs love the spotlight.
E) Entrepreneurs are born not made.
Answer:
The What Went Wrong? feature in Chapter 10 focuses on GoCrossCampus, a company
that developed a strategy game in which students from opposing schools competed
online to conquer each other’s campuses. Which of the following was not identified as
one of the reasons that led to GoCrossCampus’s failure?
A) The company never generated the revenue it needed to be a viable ongoing business.
B) The fund-raising process was time-consuming.
C) Products were released quickly, and in some cases before they were ready.
D) Having five cofounders proved to be problematic.
E) The company was never able to raise investment capital.
Answer:
College Nannies and Tutors, the company profiled in the opening feature for Chapter
15, was started by Joseph Keeley, a student at St. Thomas University in St. Paul,
Minnesota. According to the feature, Keeley met Peter Lytle, the angel investor who
funded his startup, at:
A) an alumni event for a community college they both attended
B) a Small Business Development Center workshop
C) a Chamber of Commerce event in Minneapolis
D) the awards ceremony for a business plan competition that Keeley won
E) a social event for aspiring entrepreneurs and investors sponsored by the city of St.
Paul
Answer:
There are two primary advantages to buying a franchise over other forms of business
ownership. First, franchising provides an entrepreneur the ability to own a business
using tested and refined business methods, and second:
A) franchising is almost a sure way of making a profit
B) a franchise agreement is typically easy to exit if expectations aren’t met
C) franchisors typically encourage creativity on the part of franchisees
D) the franchisor typically provides training, technical expertise, and other forms of
support
E) franchise organizations are consistently more profitable than non- franchise
organizations in the same industry
Answer:
According to the textbook, ________ are common in real estate development, oil and
gas exploration, and motion picture ventures.
A) sole proprietorships
B) limited liability companies
C) Subchapter S Corporations
D) limited partnerships
E) general partnerships
Answer:
Which of the following is the primary advantage of exporting as a foreign market entry
strategy?
A) No foreign currency risk is involved.
B) Exporting requires little knowledge of foreign markets.
C) Exporting is a relatively inexpensive way for a firm to become involved in foreign
markets.
D) The exporting company’s customers put up most of the capital needed to establish
the export operation.
E) Exporting involves very little effort on the part of a firm.
Answer:
Venture capital firms are ________ of money managers who raise money in “funds” to
invest in startups and growing firms.
A) limited partnerships
B) finance associations
C) consortiums
D) collations
E) strategic partnerships
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:
A utility patent is good for ________ from the date of the original application, a design
patent is good for ________ from the date the patent is granted, and a plant patent is
good for ________ from the date of the original application.
A) 14 years, 14 years, 20 years
B) 20 years, 20 years, 14 years
C) 20 years, 20 years, 20 years
D) 20 years, 14 years, 20 years
E) 14 years, 20 years, 14 years
Answer: