44) All of the following are ways to identify gaps or business opportunities EXCEPT
A) discussing opportunities with family members.
B) interviewing successful entrepreneurs.
C) reading government documents.
D) examining trends.
45) Mark brings his friends together to generate ideas on his new business. Mark identifies his
skills and then asks his friends to generate a list of business ideas that he might start. This is called
________.
A) business meeting
B) gap analysis
C) brainstorming
D) focus group
46) Brainstorming works well in ________ groups.
A) technical
B) advisory
C) formal
D) informal
47) The process of generating ideas should occur in a(n) ________ environment and not in a(n)
________ environment.
A) process; interactive
B) interactive; linear
C) linear; interactive
D) linear; process
48) In the context of generating new business ideas, which of the following is an example of
brainstorming?
A) A family gathers after dinner to discuss the various small industries they can set up on their
family land.
B) A family gets together over a meal to discuss the possibility of selling the family business to a
larger player in the industry.
C) An entrepreneur brings his friends to a bar to celebrate the success of the first year of his
business.
D) An author approaches a publisher with a list of ideas for a book he or she intends to write.
49) In the context of identifying new business opportunities, which of the following is the
definition of brainstorming?
A) A creative process whereby an individual is asked to develop ideas based on gaps in a market
identified by venture capitalists
B) A simple process of systematically examining the difference between what is expected in a
business and what actually occurs during its operation
C) A creative process whereby a group of individuals are brought together and asked to generate
numerous ideas, with little or no effort made to evaluate the potential for each idea
D) A rational process by which a group of an entrepreneur’s peers evaluates his or her business
ideas based on several parameters, such as financial risk and capability gaps
50) An entrepreneur identifies a gap in the market for camping goods. He recognizes that ropes
with high stress tolerances would be very popular with campers. He gathers a group of his friends,
many of whom go camping regularly, and asks them to generate ideas for the best application of
ropes with high stress tolerances in camping. In this scenario, the entrepreneur
A) performs a due diligence analysis.
B) performs a gap analysis.
C) conducts a brainstorming session.
D) conducts a risk evaluation.
51) A potential business owner needs to convey his or her business idea to a prospective investor
or lender in ________ minutes.
A) 2
B) 5
C) 10
D) 12
52) When conducting a gap analysis, the first column should include the ________.
A) business ideas
B) categories
C) resources
D) resources required
53) Which of the following is NOT included in the second column of labeled categories in a gap
analysis?
A) Finances
B) Nonfinancial resources
C) Time
D) Inventory resources
54) All of these are threats to business success EXCEPT
A) profit margins.
B) sales generation schemes.
C) operational financing.
D) deficit gaps.
55) Threats to ________ are threats to the success of a new business related to its ability to
establish and maintain a high-margin product or service.
A) profit margins
B) sales generation schemes
C) operational financing
D) deficit gaps
56) Threats to ________ are threats to the success of a business regarding its opportunity to sell to
too many customers and to obtain repeat business.
A) profit margins
B) sales generation schemes
C) operational financing
D) deficit gaps
57) Threats to ________ are threats to the new business in financing its growth, including high
development cost.
A) profit margins
B) sales generation schemes
C) operational financing
D) deficit gaps
58) As a result of conducting a gap analysis, a potential entrepreneur proved there was a need for
the business. This is known as
A) operational financing.
B) performing a due diligence analysis.
C) formulating a basic market plan.
D) generating potential business ideas.
59) In the context of business risks, how can an entrepreneur identify competitors to a new
potential business?
A) By observing what potential customers do to satisfy their current needs or wants
B) By performing a gap analysis evaluation to identify potential competitors
C) By conducting a brainstorming session with other entrepreneurs
D) By observing the market and identifying companies that have seen the maximum growth in the
past quarter
60) In the context of risks to new businesses, identify a true statement about risk tolerance.
A) What constitutes a risk is determined by an entrepreneur by observing his or her own
tolerances.
B) Risks must be determined by entrepreneurs based on the findings of focus groups with other
entrepreneurs in the same industry.
C) In new markets, entrepreneurs must be willing to put up with risks that outweigh their personal
risk tolerance.
D) Entrepreneurs can avoid a majority of the risks associated with new start-ups by allowing
competitors to invest in their new businesses.
61) Miriam starts a new boutique that specializes in fashionable clothing made from
environmentally friendly materials. She prices her products competitively to attract customers.
However, she discovers that the revenue earned from each piece of clothing the boutique sells
barely makes back its labor and material costs. In this scenario, the threat to business success
experienced by Miriam’s boutique is
A) threat to profit margin.
B) threat from competitors.
C) threat to sales generation schemes.
D) threat to operational financing.
62) Identify a true statement about the process of generating new business ideas.
A) As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to
make it successful.
B) While generating business ideas, an entrepreneur needs to focus on exploitable market trends
rather than use personal experience to inform the process.
C) Family is generally the best source of ideas for a new business.
D) Entrepreneurs should focus on generating ideas and funding a new business based on them, but
they must not become personally involved in its success.
63) All of these are examples of nonfinancial resources EXCEPT
A) special contacts with suppliers or customers groups.
B) physical location of the business.
C) experience.
D) all of these.
64) ________ are examples of avocational pursuits that an individual can use to inspire new
business ideas.
65) ________ is defined as the connection between an entrepreneur’s skills, understanding of an
industry, and the ability to create a competitive advantage such that the sum of the parts of the new
business is greater than the individual parts alone.
66) ________ is a creative process where a group of individuals are brought together and asked to
generate ideas.
67) When conducting a(n) ________, a potential business owner examines the demand by
customers and the supply provided by competing firms in the marketplace.
68) High development costs, rapid expansion plans, and high inventory needs are all threats to
________.
69) The ability to attract customers to your business instead of your competitors is an example of a
threat to ________.
70) The ability of a competitor to meet or exceed the quality of your product or service is an
example of a threat to ________.
71) The process of determining if you have the resources necessary to take advantage of a business
opportunity is called ________.
72) Describe how someone comes up with an idea for a new business.
73) What is synergy?
74) Assume you have a hobby that you are passionate about. List and describe other kinds of skills
that are needed to turn your hobby into a successful business.
75) In the context of opportunity identification, briefly describe how entrepreneurs can use global
trends to inform entrepreneurial efforts.
76) How can patent files help a potential business owner come up with ideas for new businesses?
77) Identify and describe three ways of identifying gaps or business opportunities in the
marketplace.
78) How does a potential business owner decide that a new business opportunity exists?
79) All small businesses have an inherent amount of risk associated with starting the business. List
and explain two types of specific risks.
80) List and describe the three threats to business success.
81) Describe the key considerations an entrepreneur must make while performing a risk analysis of
a new business idea.