The 1976 Copyright Revision Act governs copyright law in the United States.
Answer:
Variable costs are the costs a company incurs as it generates sales.
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A firm’s “position” is concerned with how it is situated relative to its rivals.
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Efficiency is the ability to earn a profit.
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Two fatal flaws can render a business model untenable from the beginning: a complete
misread of the customer and underutilization of the Internet.
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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:
Historical financial statements reflect past performance and are usually prepared on a
quarterly and annual basis.
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An opportunity has four essential qualities: it is (1) rare, (2) attractive, (3) timely, and
(4) resilient.
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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.
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Internal growth strategies involve efforts taken within the firm itself, such as new
product development, other product-related strategies, and international expansion.
Answer:
Adverse selection 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.
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Utility patents are the most common type of patent and cover what we generally think
of as new inventions.
Answer:
The same financial ratios used to evaluate a firm’s historical financial statement should
be used to evaluate the pro forma financial statements.
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The vast majority of corporations in the United States are public corporations.
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Technology licensing is the licensing of a recognized trademark or brand that the
licensor typically controls through a registered trademark or copyright.
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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:
The four forms of feasibility analysis include: product/service feasibility, industry/target
market feasibility, organizational feasibility, and financial feasibility.
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A founders’ agreement is a written document that deals with issues such as the relative
split of the equity among the founders of the firm.
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Weak-tie relationships are characterized by infrequent interaction and ties between
casual acquaintances.
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The entrepreneurial process consists of four steps: deciding to become an entrepreneur,
developing successful business ideas, moving from an idea to an entrepreneurial firm,
and divesting or selling the entrepreneurial firm.
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Homogeneous teams are diverse in terms of their abilities and experiences.
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In the context of a firm’s statement of cash flows, operating activities include the
purchase, sale, or investment in fixed assets, such as real estate, equipment, and
buildings.
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The pro forma balance sheet 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.
Answer:
In regard to acquisitions, many firms have found that the process of assimilating
another company into their current operations is not easy and can stretch finances to the
brink.
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Most business angels remain fairly anonymous and are matched up with entrepreneurs
through referrals.
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Trademark law falls under the Lanham Act, which passed in 1946.
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A clearly articulated business model articulates a company’s core logic to all
stakeholders, including the firm’s employees.
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An advisory board can be established for general purposes or can be set up to address a
specific need.
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An ethical dilemma is a situation that involves doing something that is beneficial to
oneself or the organization, but may be unethical.
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Opportunity recognition may be an innate skill or cognitive process.
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Mediation is the process in which an impartial third party helps those involved in a
dispute reach an agreement.
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An organizational chart is a graphic representation of how authority and responsibility
are distributed within a company.
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Creativity and innovation are almost identical concepts.
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Historically, it has been difficult for a new venture to use a differentiation strategy.
Answer:
In value-based pricing, the list price is determined by estimating what customers are
willing to pay for a product and then backing off a bit to provide a cushion.
Answer:
A corporation is formed by filing ________ with the Secretary of State’s office in the
state of incorporation.
A) certificate of intent to incorporate
B) articles of business
C) corporate credentials
D) a corporation permit
E) articles of incorporation
Answer:
________ is a form of business ownership in which a firm that already has a successful
product or service licenses its trademark and method of doing business to other business
in exchange for an initial franchise fee and an ongoing royalty.
A) Licensing
B) Joint Venturing
C) Contracting
D) Subcontracting
E) Franchising
Answer:
The most notable SBA program available to small businesses is the:
A) SBA 1060 Guaranty
B) Code 604 Guaranty Program
C) 7(A) Guaranty Program
D) SBA 101 Program
E) Small Business 401 Program
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:
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:
Large firms like 3M, Google, Oracle, and Microsoft, that trade on organized stock
exchanges, are:
A) limited partnerships
B) limited liability companies
C) subchapter S corporations
D) C corporations
E) general partnerships
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:
According to the textbook, the most important function of the pro forma statement of
cash flows is to project whether the firm will have sufficient:
A) income to meet its payroll on a weekly or monthly basis
B) income to exceed industry norms
C) cash to meet its needs
D) inventory to meet its sales and production forecasts
E) short-term assets to cover its short-term liabilities
Answer:
Which of the following statements about advisory boards is incorrect?
A) If a firm has a board of directors it is not permitted to have an advisory board.
B) Many people are more willing to serve on a company’s board of advisors than its
board of directors because it requires less time and there is no potential legal liability
involved.
C) Most boards of advisers have between 5 and 15 members.
D) A growing number of startups are forming advisory boards.
E) An advisory board can be established for general purposes or can be set up to
address a specific issue or need.
Answer:
A(n) ________ is a group of firms producing a similar product or service, such as soft
drinks, electronic games, or computers.
A) cluster
B) division
C) sector
D) industry
E) network
Answer:
Which of the following statements is incorrect regarding product and trademark
franchises?
A) Rather than obtaining a royalty or franchise fee, the product and trademark
franchisor obtains the majority of its income from selling its products to its dealers or
distributors at a markup.
B) General Motors establishes product trademark rather than business format
franchises.
C) Product trademark franchises are by far more popular than business format
franchises.
D) Product and trademark franchisees are typically permitted to operate in a fairly
autonomous manner.
E) A product trademark franchise typically connects a single manufacturer with a
network of dealers or distributors.
Answer:
According to the Global Entrepreneurship Monitor (GEM) 2007 study, the majority of
people in high-income countries are drawn to entrepreneurship:
A) to take advantage of an attractive opportunity
B) due to lack of career prospects
C) as a result of government incentives
D) because an important role model was an entrepreneur
E) to gain prestige
Answer:
The two primary issues to consider in organizational feasibility analysis are:
A) target market attractiveness and financial rate of return
B) management prowess and resource sufficiency
C) capital requirements and industry attractiveness
D) concept testing and financial rate of return
E) industry attractiveness and overall attractiveness of the investment
Answer:
Which of the following is a disadvantage of a C Corporation?
A) Income is subject to double taxation.
B) limited liability
C) Raising capital is easier than a partnership or sole proprietorship.
D) Stock is liquid if traded on a major stock exchange.
E) No restrictions exist on the number of shareholders.
Answer:
The focus in organizational feasibility analysis is on:
A) financial resources for manufacturing firms and nonfinancial resources for service
firms
B) financial resources for service firms and nonfinancial resources for manufacturing
firms
C) nonfinancial and financial resources equally
D) nonfinancial resources
E) financial resources
Answer:
According to Chapter 7, which of the following forms of misconduct or unethical
behavior was observed by the highest percentage of the U.S. workforce?
A) company resource abuse
B) employee privacy breach
C) health or safety violations
D) lying to outside stakeholders
E) discrimination
Answer:
Which of the following statements is incorrect regarding equity funding?
A) Equity investors expect to get their money back, along with a substantial capital
gain, through the sale of their stock.
B) Angel investors are a common source of equity funding.
C) Equity funding is not a loan.
D) Equity investors are very demanding.
E) Equity investors fund the majority of the plans they consider.
Answer:
According to current regulations, any copyrightable work created on or after January 1,
1978, is protected by copyright law for the life of the author plus:
A) 5 years
B) 101 years
C) 40 years
D) 55 years
E) 70 years
Answer:
Which of the following is an example of a certification mark?
A) ModCloth
B) International Franchise Association
C) Underwriter’s Laboratories
D) Rotary International
E) 1-800-FREE-411
Answer:
The three primary reasons that people become entrepreneurs and start their own firms
are to:
A) gain prestige, realize financial rewards, and eliminate risk in their lives
B) do what they were “born” to do, be their own boss, and gain prestige
C) take big risks, be their own boss, and do what they were “born” to do
D) be their own boss, pursue their own ideas, and realize financial rewards
E) take advantage of government subsidies, pursue their own ideas, and realize
financial rewards
Answer:
Which element of the marketing mix is the only one that produces revenue?
A) product
B) place (or distribution)
C) advertising
D) price
E) promotion
Answer:
According to the textbook, only ________ of the 600 entrepreneurs that participated in
a recent Wells Fargo/Gallup Small Business Study indicated that they had started their
venture with a business plan.
A) 12 percent
B) 31 percent
C) 20 percent
D) 6 percent
E) 48 percent
Answer:
Which of the following statements about limited partnerships is incorrect?
A) A limited partnership is a modified form of a general partnership.
B) Limited partnerships are common in real estate and oil and gas exploration.
C) A limited partnership is usually formed to raise money or to spread out the risk of a
venture without forming a corporation.
D) Both the limited partners and the general partners are responsible for the debts and
obligations of the partnership.
E) A limited partnership contains two classes of owners: general partners and limited
partners.
Answer:
Kelly Andrews owns a company that makes office furniture. Recently, a favorable
article was written about Kelly’s company in a business magazine, and as a result, Kelly
has seen a spike in his orders. Although Kelly is grateful for the additional orders, he is
worried about one thing. An increase in activity means that his firm must handle more
service requests and paperwork and contend with more customers, stakeholders, and
vendors. Kelly knows that if he doesn’t handle this increased activity properly, the
workmanship of his products could decline. The day-to-day challenge of firm growth
that this example illustrates is:
A) quality control
B) price stability
C) capital constraints
D) benchmarking
E) cash flow management
Answer:
Which of the following issues should be considered in industry/target market feasibility
analysis?
A) gaps in the marketplace
B) financial performance of similar businesses
C) resource sufficiency
D) industry attractiveness
E) management prowess
Answer:
Which of the following is correct regarding opportunities and ideas?
A) An opportunity and an idea are essentially the same thing.
B) An idea almost always meets the criteria of an opportunity.
C) An opportunity is a thought, an impression, or a notion.
D) An idea is a favorable set of circumstances that creates a need for a new product,
service, or business.
E) It’s important to discern whether a particular idea meets the criteria for an
opportunity.
Answer:
A trademark is renewable:
A) every 10 years, as long as the mark remains in use
B) indefinitely, regardless of whether the mark remains in use
C) every 20 years from the date of application for the trademark
D) every 3 years
E) every 33 years
Answer:
Which of the following was not identified in the textbook as one of the common traits
and characteristics of entrepreneurs?
A) has a strong work ethic
B) intolerant of ambiguity
C) visionary
D) promoter
E) decisive
Answer:
According to the textbook, research results over time consistently suggest that
somewhere between ________ of those who start businesses got their ideas through
social contacts.
A) 10 percent and 20 percent
B) 20 percent and 30 percent
C) 30 percent and 40 percent
D) 40 percent and 50 percent
E) 50 percent and 60 percent
Answer:
International opportunities for franchising are becoming:
A) less prevalent
B) neither more nor less prevalent
C) more prevalent for product and trademark franchise systems and less prevalent for
business format franchise systems
D) more prevalent
E) less prevalent for product and trademark franchise systems and more prevalent for
business format franchise systems
Answer:
The federal Economic Espionage Act, passed in 1996, criminalizes:
A) copyright infringement
B) utility patent violations
C) trademark violations
D) design patent violations
E) the theft of trade secrets
Answer:
A business plan is important for two reasons: it forces the founding team to
systematically think through every aspect of their new venture and:
A) it is a budget
B) it is a public relations document that can be used to promote the firm
C) it is a contract that is signed by the founders of the firm
D) it is a financial analysis
E) it communicates the merits of a new venture to outsiders, such as investors and
bankers
Answer:
Brenda Berry is thinking about starting a computer company. After doing some
research, she has decided that the computer industry can be divided into the following
product categories: handheld computers, laptops, tablet computers, PCs,
minicomputers, and mainframes. She is now trying to decide which product category
she is the most interested in competing in. The process that Brenda is going through is
called:
A) market splitting
B) market subdividing
C) market segmentation
D) market dividing
E) market separating
Answer:
Identify and briefly describe the three types of patents.
Answer:
List and explain three of the common misconceptions about franchising.
Answer:
Define the term “market leadership.” Why do firms work hard to obtain market
leadership?
Answer:
What is entrepreneurship? What is the essence of entrepreneurial behavior?
Answer:
Describe the three separate ways that entrepreneurs identify new business, product, and
service opportunities?
Answer:
What is an emerging industry? What is the primary opportunity available to
entrepreneurial firms in emerging industries? Name three examples of firms in
emerging industries.
Answer:
Describe the purpose of industry/target market feasibility analysis, and identify the two
primary issues that should be considered. What is the difference between a firm’s
industry and its target market?
Answer:
Identify the three types of startup firms, and discuss how they differ. Provide examples
of each type of firm.
Answer:
What are the two main reasons for writing a business plan?
Answer:
What is an exclusive distribution agreement? Why do firms enter into exclusive
distribution agreements with other firms?
Answer:
Describe what a concept statement is, and what it should include.
Answer:
Describe the difference between an idea and an opportunity. Why is the distinction
important?
Answer:
Why is the “management team and company structure” section of the business plan
often given disproportionate weight among investors?
Answer:
Describe what a product line extension strategy is. What are the advantages of this
strategy? Describe a company you are familiar with that utilizes a product line
extension growth strategy.
Answer:
Describe how brainstorming can help facilitate the generation of ideas, and outline the
four rules for conducting a brainstorming session.
Answer: