The What Went Wrong? feature in Chapter 7 focuses on Fitbit. Fitbit makes wearable
activity trackers that measure data such as number of steps walked, quality of sleep, and
other personal metrics. The feature centered on a product that Fitbit made (the Fitbit
Force) that caused some users to develop skin rashes. The ethical issue at stake was
whether Fitbit ________.
A) cut corners and used inferior material in producing the product
B) acted quickly enough in stopping production of the product
C) misrepresented the nature of the problem to the people affected
D) placed unfair blame on a supplier
E) placed unfair blame on a small number of employees
Answer:
The ________ is the company that owns the intellectual property. The ________ is the
company purchasing the right to use it.
A) endorsee; endorser
B) licensor; licensee
C) licensor; endorsee
D) endorser; endorsee
E) licensee; licensor
Answer:
Which of the following statements regarding business licenses and permits is incorrect?
A) Most business licenses and permits can wait until after a business is launched to be
obtained.
B) A business license can typically be obtained at the city clerk’s office in the
community where the business will be located.
C) If a business will be run out of a home, a home occupation business license is often
required.
D) Some business licenses are hard to get.
E) The business licenses and permits that are needed vary by city, county, and state.
Answer:
Which of the following is true regarding common and preferred stock?
A) Preferred stock is rarely issued.
B) Common stock is rarely issued.
C) Common stock is issued more broadly than preferred stock.
D) Preferred stock is issued more broadly than common stock.
E) Common stock and preferred stock are issued in the same amount.
Answer:
Which of the following statements is incorrect regarding the personal characteristics of
entrepreneurs?
A) Some people think that entrepreneurs have a ‘sixth sense” that allows them to see
opportunities that others miss.
B) The extent and depth of an individual’s social network affects opportunity
recognition.
C) Several studies show that prior experience in an industry actually blinds an
entrepreneur to the recognition of new opportunities in the same industry.
D) Creativity is the process of generating novel or useful ideas.
E) The corridor principle states that once an entrepreneur starts a firm, he or she begins
a journey down a path where “corridors” leading to new venture opportunities become
apparent.
Answer:
The term “window of opportunity,” as discussed in Chapter 2, is a metaphor that
describes the time period in which a firm can ________.
A) obtain funding or financing
B) hire new employees
C) complete a financial analysis
D) realistically enter a new market
E) write a business plan
Answer:
Corporations are organized as either ________ corporations or ________ corporations.
A) permanent; temporary
B) general; limited
C) voluntary; statutory
D) C; subchapter S
E) regular; limited liability
Answer:
In addition to FTC disclosure requirements, ________ states have laws providing
additional protection to franchisees.
A) 6
B) 10
C) 15
D) 33
E) 47
Answer:
According to research in this area, it is more likely that an entrepreneur will get a new
business idea through a ________ relationship than the alternatives.
A) weak-tie
B) moderate-tie
C) vertical-tie
D) lateral-tie
E) strong-tie
Answer:
A business’s ________ describes why it exists and what its business model is supposed
to accomplish.
A) values statement
B) importance statement
C) differentiation statement
D) mission statement
E) significance statement
Answer:
Work that is done for a company by people other than the company’s full-time
employees is referred to as ________.
A) insourcing
B) farming-out
C) personnel extension
D) outsourcing
E) capacity enhancement
Answer:
LuminAid, the company profiled in the opening feature of Chapter 3, was started to
produce solar pillows, which are solar powered devices that are simple and can be
easily and affordably shipped to disaster locations. The feature describes how
LuminAid sought to validate its business idea. According to the feature ________.
A) LuminAid was unable to validate its business idea and the idea was dropped
B) LuminAid’s feasibility analysis was incomplete, and the company has struggled ever
since it was launched
C) LuminAid’s feasibility analysis was flawed, and the company failed
D) LuminAid did an exemplary job validating its business idea, and its solar pillow is
now available via the company’s Web site, Amazon.com, LL Bean and several similar
outlets
E) LuminAid’s feasibility analysis was well done, and the company was acquired by
Coleman before it could launch its solar pillow as an independent company
Answer:
A board of directors is typically made up of both ________ and ________ directors.
A) junior; senior
B) inside; outside
C) experienced; inexperienced
D) novice; expert
E) paid; unpaid
Answer:
Financial management deals with two things-managing a company’s finances and
________.
A) operations management
B) inventory control
C) raising money
D) production management
E) supply chain management
Answer:
According to the textbook, the businesses that have the potential to grow the fastest
over a sustained period of time are ones that ________.
A) solve a significant problem or have a major impact on their customers’ productivity
or lives
B) are cost leaders and promote themselves aggressively
C) have a major impact on their customers’ lives and sell high quality products
D) take advantage of environmental trends and are cost leaders
E) solve a significant problem or sell high quality products
Answer:
The four major categories in the Barringer/Ireland Business Model Template are
________.
A) core strategy, resources, financials, and operations
B) core strategy, value proposition, customers and channels
C) value proposition, resources, customers and partners
D) activities, partners, customers, and competitors
E) value proposition, cost structure, financials, and operations
Answer:
Which of the following selections is incorrect regarding a firm’s “positioning” strategy?
A) Position is concerned with how the firm is situated relative to its competitors.
B) A firm’s decision about how to position itself relative to its competitors starts with a
product or service idea that is tested and refined through feasibility analysis and
marketing research.
C) Determining which position in a market to occupy and compete in is a strategic call
on the part of a company based on its mission, its overall approach to the marketplace,
and its competitive landscape.
D) Once a firm positions itself in a certain way, it must be able to follow through with a
product or service offering that lives up to the image it has created.
E) After selecting a positioning strategy, the firm’s next step is to select a target market.
Answer:
Which of the following business plans matches with its appropriate emphasis?
A) Summary business plan – works best for companies who are at the point where they
need funding or financing; serves as a “blueprint” for the company’s operations
B) Operational business plan – works best for companies in the early stages of
development that want to “test the waters” to see if investors are interested in their idea
C) Full business plan – works best for companies in the early stages of development that
want to “test the waters” to see if investors are interested in the idea
D) Summary business plan is meant primarily for an internal audience – works best as a
tool for creating a blueprint for a company’s operations and providing guidance to
operational managers
E) Summary business plan – works best for companies in the early stages of
development that want to “test the waters” to see if investors are interested in their idea
Answer:
Which of the following is the main purpose for writing a business plan?
A) The plan helps the company develop a “road map” to follow.
B) The plan introduces potential investors and other stakeholders to the business
opportunity.
C) Both A and B are equally important.
D) Neither A nor B captures the true purpose of a business plan.
E) Reason A is the most important for experienced entrepreneurs and reason B is the
most important for inexperienced entrepreneurs.
Answer:
Broadway Dance Center in New York City targets serious dancers who aspire to earn a
living dancing in Broadway plays. This specific portion of the overall dance industry is
referred to a ________ market.
A) gap
B) task
C) position
D) hole
E) niche
Answer:
The Savvy Entrepreneurial Firm feature in Chapter 3 focuses on Bill Gross, and how a
company he was leading, Knowledge Adventure, made a 180-degree turn on the
positioning of a product. According to the feature, Gross and his team made the change
as a result of ________.
A) observing how customers acted when buying their product
B) studying industry trends
C) conducting Internet research
D) administering a concept test and a buying intentions survey
E) hiring consultants to provide them advice
Answer:
According to the textbook, most boards of advisers have between ________ and
________ members.
A) 5; 15
B) 2; 4
C) 10; 18
D) 2; 3
E) 4; 7
Answer:
A(n) ________ is a written document that describes all the aspects of a business venture
in a concise manner.
A) business plan
B) business model
C) operations plan
D) corporate plan
E) contingency plan
Answer:
Many firms benefit from an increasing ability to outsource manufacturing or service
functions to lower-cost foreign countries. This trend is referred to in the textbook as
a(n) ________ trend.
A) business
B) environmental
C) commerce
D) statutory
E) economic
Answer:
Which of the following was identified in the textbook as a disadvantage of participating
in strategic alliances and joint ventures?
A) Risk and cost sharing
B) Economies of scale
C) Partial loss of decision autonomy
D) Gain access to a foreign market
E) Neutralizing or blocking competitors
Answer:
A(n) ________ is a chart that depicts the most important skills that are needed in a new
venture and where skills gaps exist.
A) expertise report
B) talent profile
C) abilities summary
D) skills profile
E) talent summary
Answer:
Karen Simon recently purchased a digital camera. She considered three cameras-a Sony
that was priced at $239.00, a Canon priced at $319.00, and a Nikon priced at $399.00.
Karen couldn’t tell much difference between the cameras, so she bought the Nikon,
figuring that because it was the most expensive of the three, it must be the best.
According to the textbook, Karen was making a ________.
A) price-quality attribution
B) price-merit attribution
C) cost-value acknowledgement
D) cost-worth attribution
E) price-worth acknowledgement
Answer:
________ business models are ones that do not fit the profile of standard business
models, and are impactful enough that they disrupt or change the way business is
conducted in an industry or an important niche within an industry.
A) Disruptive
B) Normal
C) Unique
D) Incomparable
E) Exceptional
Answer:
A multiple-unit franchisee is a person who owns ________.
A) franchise outlets from more than one franchisor
B) both product and trademark franchise outlets and business format franchise outlets
C) and operates more than one outlet of the same franchisor
D) more than 10 franchise outlets
E) franchise units from multiple franchisors
Answer:
The Savvy Entrepreneurial Firm feature in Chapter 12 focused on provisional patent
applications. The main point of the feature is to illustrate that filing a provisional patent
application effectively takes ________.
A) substantial financial resources
B) a substantial commitment of time and effort
C) very little effort
D) some finesse
E) substantial expertise
Answer:
Which of the following selections correctly matches the financial statement with its
description?
A) Income statement tells how much a firm is making or losing
B) Income statement depicts the structure of a firm’s assets and liabilities
C) Balance sheet shows where a firm’s cash is coming from
D) Balance sheet tells how much a firm is making or losing
E) Statement of cash flows depicts the structure of a firm’s assets and liabilities
Answer:
Roominate, the company profiled in the opening feature of Chapter 10, makes toys that
are intended to encourage young girls to enter engineering. The company was
co-founded by Alice Brooks and Bettina Chen. Which of the following is not true about
Roominate’s founding story?
A) In 2013, Brooks and Chen appeared on the Today Show to talk about Roominate.
B) In 2013 and 2014, Brooks and Chen attempted to raise money for angel investors,
but were unable to convince any angels to invest.
C) Brooks and Chen raised money for Roominate via a Kickstarter campaign.
D) At the same time Brooks and Chen were conceiving Roominate they were taking a
Lean Launchpad class at Stanford taught by Steve Blank.
E) Brooks and Chen met while they were engineering master’s students at Stanford
University.
Answer:
A common way that gaps in the marketplace are recognized is ________.
A) by observing changing environmental trends
B) by recognizing problems that need to be solved
C) via studying industry reports
D) when people become frustrated because they can’t find a product or service that they
need and recognize that other people feel the same way
E) via combined focus groups and brainstorming sessions
Answer:
According to the textbook, which of the following is not a cost that is typically
associated with buying a franchise?
A) Advertising fees
B) Continuing royalty payments
C) Trademark acquisition fee
D) Initial franchise fee
E) Capital requirements
Answer:
According to the 2013 National Business Ethics Survey, a total of ________ percent of
the employees surveyed said they had observed misconduct or unethical behavior in the
past year.
A) 7
B) 15
C) 24
D) 33
E) 41
Answer: