To implement participative management the entrepreneur should have open
communication with employees.
A reasonable profit that is earned with conservative estimates is not considered to be an
initial success for a new venture.
By understanding more about the other party, the entrepreneur has a greater opportunity
to achieve integration in negotiation.
In evaluating the potential profit for a new franchise the entrepreneur should request
data from the franchisor so they can develop pro forma income and cash flow
statements.
SCORE is a for-profit organization that provides online and in-person assistance in
about 100 locations throughout the United States.
Health insurance premiums are less expensive if there is a large group of insured
participants.
Quantitative methods of analyzing the fairness of an LBO’s asking price include
price-earnings ratios, present value of future earnings and book value.
Building customers’ switching costs decreases barriers to entry for other firms.
The product life cycle consists of five main stages.
Discontinuous innovations have the least disrupting influence on established
consumption patterns.
The marketing system identifies the major interacting components, both internal and
external to the firm.
An oral agreement is enforceable indefinitely.
The Federal Trade Commission requires franchisors to make full presale disclosure of
about 20 separate aspects of a franchise offering.
Planning the new venture is a process that never ends.
Customers always embrace change in products and services.
Focus groups have been used for a variety of purposes since the 1920’s.
Long-term debt financing is normally used to provide working capital to finance
inventory, accounts receivable, and operation of the business.
The three major parts of a patent application are the introduction, description and
warranty sections.
The marketing plan is designed to answer three basic questions: where have we been,
where do we want to go, and how do we get there?
Break-even analysis is a technique to determine the total liabilities of the firm.
A lawyer may work on a retainer basis by which he or she provides office and
consulting time, which includes court time and other legal fees related to the action.
An entrepreneur with loss-orientation would talk about the business-failure with a close
friend or relative.
The five C’s of credit are character, capacity, collateral, capital and competence.
In projecting the operating expenses for the second and third year, it is helpful to first
look at those expenses that will likely change over time.
Lack of synergy is one of the most frequent causes of an acquisition’s failure to meet its
objectives.
If an entrepreneur recognizes the warning signs of bankruptcy early, he or she may be
able to prevent it from occurring.
Lack of informal communication systems is one of the assets of newness.
Creativity tends to decrease with age.
Useful government sources of information include Business Source Complete and
Mergent.
If the amount of money provided by family members or friends is small and in the form
of equity financing, they do not have an ownership position in the venture.
The S corporation can deduct most fringe benefits for shareholders.
Manufacturer’s agents take title to products and resell them.
Which of the following would not typically be part of a private venture capital fund?
A.Money from state governments
B.Money from insurance companies
C.Money from pension funds
D.Money from college endowment funds
Questions designed to increase an entrepreneurs’ understanding of the nature of the
environment are known as:
A.Strategic questions
B.Connection tasks
C.Reflection tasks
D.Comprehension questions
______ financing entails obtaining funds for the company in exchange for ownership.
A.Bootstrap
B.Equity
C.Debt
D.Commercial
The North American Free Trade Agreement (NAFTA) increases trade barriers and
quotas among the U.S., Canada, and Mexico.
Licensing is best described as:
A.a nonequity method of international business in which an entrepreneur contracts his
or her management techniques and skills to a (foreign) purchasing company.
B.a method of doing international business whereby a foreign entrepreneur supplies the
manufacturing technology or infrastructure for a business and then turns it over to local
owners.
C.a method that involves giving a foreign manufacturer the right to use a patent,
technology, production process, or product in return for the payment of a royalty.
D.an equity partnership that involves selling patents to foreign governments.
Which of the following are not factors in the success of joint ventures according to the
text?
A.Chemistry and symmetry.
B.Symmetry and reasonable expectations.
C.Finance and education.
D.Timing and chemistry.
The most often used method of transporting goods is:
A.air transport.
B.truck and rail transport.
C.barge transport.
D.tanker transport.
Which of the following would be a source of funds?
A.An equipment purchase
B.Retiring a long term liability
C.Inventory
D.Personal funds of founders
Which of the following statements is(are) true?
A.The business plan describes both internal and external elements.
B.The preliminary business plan should be prepared by a lawyer.
C.Most business plan resources on the Internet are too complex and expensive to be of
use to the new venture.
D.Once made, a business plan should not be changed.
The SBA’s 7(a) Loan Guarantee program helps qualified small businesses obtain
financing when they can’t get a business loan through regular lending channels.
Currently ESOPs account for ____ of the private sector workforce.
A.5%
B.10%
C.15%
D.20%
In which of the legal forms of ownership is transferability of interest the easiest?
A.Sole proprietorship
B.Limited partnership
C.General partnership
D.Corporation
What type of cash flow financing loan can make funds available for up to 10 years?
A.Character loans
B.Real estate loans
C.Long-term loans
D.Installment loans
The strategy for growth in which the entrepreneur encourages existing customers to buy
more of the firm’s current product is a:
A.penetration strategy.
B.product development strategy.
C.market development strategy.
D.diversification strategy.
Sales of stock within an individual state are regulated by:
A.the Securities and Exchange Commission.
B.the NASD.
C.the Internal Revenue Service.
D.blue sky examiners.
Around ____ of businesses make it to the third generation.
A.5%
B.12%
C.30%
D.60%
In a limited liability partnership (LLP) death or withdrawal of a partner:
A.results in automatic transfer of ownership to surviving partner(s).
B.may result in problems trying to find a market for the shares.
C.always results in termination of the partnership.
D.has no effect on the partnership.
Parameter analysis consists of two main aspects which are:
A.creative synthesis and parameter identification.
B.breakthrough innovation and forced association.
C.attribute listing and parameter identification.
D.parameter variation and verification.
In a factoring arrangement, the factor:
A.takes no risk and sustains no losses.
B.”buys” the accounts receivables of a firm.
C.receives no interest payment.
D.pays a premium for the firm’s assets.
Philip Morris acquiring Miller Brewing is an example of what type of merger?
A.Market extension merger
B.Horizontal merger
C.Product extension merger
D.Vertical merger
_____ strategies involve selling a new product to a new market.
A.Penetration
B.Market development
C.Product development
D.Diversification
As long as the selling price is greater than the _______________ cost per unit, some
contribution can be made to cover ________________.
A.fixed; variable costs
B.variable; fixed costs
C.total; expenses
D.fixed; negative cash flow
_____ refers to the probability, and magnitude, of downside loss.
A.Reward
B.Risk
C.Liability of newness
D.Technology error
Which of the following is not true about the costs and benefits of R&D limited
partnerships?
A.Most are not successful
B.Risk is reduced
C.Costs can be high to create the partnership
D.Most take at least 3 months to establish
In Stage One of the McMullen-Shepherd Model:
A.the entrepreneur decides whether or not there is an opportunity for someone.
B.the entrepreneur consults experts in the market area of interest.
C.the entrepreneur decides whether the opportunity that exists is a match with their own
knowledge and motivation.
D.the entrepreneur engages in bricolage.
________ financing does not require any collateral.
A.Commercial bank loan
B.Line of credit
C.Equity
D.Character loan
Entrepreneurs who have the necessary abilities for the transition to more professional
management practices and the aspiration to grow their business:
A.have little potential for firm growth.
B.will achieve growth only if the entrepreneur replaces himself or herself with a
professional manager.
C.are the most likely to achieve growth.
D.usually form life-style firms.
In establishing goals and objectives, it is important to:
A.quantify all aspects of the goals.
B.limit the number of goals.
C.set standards that are ideal.
D.measure it for control purposes.
Standard & Poor’s and Bloomberg are good sources of industry and market data.
S corporation status means:
A.shareholders do not have limited liability.
B.the corporation is subject to a minimum tax of 34 percent.
C.consent by a majority of shareholders is required for the election of this form of
business.
D.the corporation pays no tax.
The term of a copyright is the author’s life plus:
A.20 years.
B.30 years.
C.50 years.
D.70 years.
In a private venture capital firm, the _______ manages the fund in exchange for a
management fee and a percentage of profits.
A.limited partner
B.general partner
C.entrepreneur
D.referral source
List the four requirements of filing for a trademark.
Discuss three major ways in which managerial and entrepreneurial decision making
differs.
What are the 4 major factors in joint venture success?
List the seven various aspects of culture.
In relation to calculating a break-even point, identify two costs that are considered fixed
and two costs considered variable.
When negotiating, the entrepreneur should make only one offer and stick to it.
Explain the dual process model of coping with negative emotions.
Explain what constitutes a new entry.
Identify 5 of the 9 skill areas an entrepreneur should review in order to determine
whether or not they need help writing parts of the business plan.
Explain what makes a contract legally enforceable
Identify the four important considerations/strategies in recruiting and assembling an
effective team and organizational culture outlined in the text.
Draw the Upside-Down Pyramid Approach to Gathering Market Information.
Explain the major factors an entrepreneur needs to consider in choosing the best
distribution channel in a foreign country.
Explain the purpose and content of the executive summary of the business plan.
What are some of the warning signs of bankruptcy?
Discuss the informal risk-capital market and key characteristics of business angels.
Entrepreneurs that have a high ability to institute professional management practices
but have low growth aspirations have “little potential” for growth.
List, in order, the stages of the product planning and development process.