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Management, 9e (Kinicki)
Learning Module 1: Entrepreneurship
1) Which of following statements regarding business start-ups and exits in the United States is
false?
A) The number of start-up businesses has been shrinking steadily since the year 2000.
B) A business exits the market when it remains closed for one year and has no employees.
C) Starting a new business requires taking risks and embracing change.
D) The growth of new businesses is adding net new jobs to the U.S. economy.
E) New businesses demand long hours and a certain amount of financial uncertainty.
2) You work as an advisor at the Small Business Administration. Sally Sheridan has come to you
seeking your advice. She is an aesthetician who is just thinking about starting her own business.
She wants to own a beauty-services salon that provides manicures, pedicures, massages, hair
styling, make-up, and other services. What is the best piece of advice you can give her?
A) Quit your current job so that you can devote all of your time to researching and planning the
type of business you want to open.
B) At the start, plan to hire only friends and family—the people most likely to help your business
become successful.
C) Learn the importance of budgeting and understand how to read a balance sheet and income
statement.
D) As you begin to think about your business, your key long-term goal should be to have as
many employees as possible.
E) Assume that the local market wants and needs the service that you plan to offer; the fact that
you see a need for that service means that the community does, too.
3) ________ means the taking of risks to create a new enterprise. It can also increase the
standard of living around the world.
A) Economic growth
B) Investment
C) Issuing stock
D) Intrapreneurship
E) Entrepreneurship
4) Many companies start with the founder's ________. For example, Jeff Bezos, the founder of
Amazon.com and the world's wealthiest man, has said that he intends for Amazon to be "Earth's
most customer-centric company" and to be "a place where people can come to find and discover
anything they might want to buy online."
A) desire to work for a large corporation
B) vision and goals
C) academic background
D) family wealth
E) ethical framework
5) What is not a core component of entrepreneurship?
A) recognizing opportunities to create new ventures
B) using existing products and services as starting points for new product offerings
C) uncovering opportunities to create new types of value
D) deciding to take advantage of market-driven opportunities
E) taking advantage of market opportunities in order to create value and earn a profit or
contribute to society
6) Who would be considered an intrapreneur?
A) Siobhan, who loves dogs; she realizes that dog lovers need a way to keep track of their pets'
health care, so she sets out to create a cell phone-based app that helps pet lovers keep track of
their pets' health needs.
B) Jamal, a biology lab manager at a major university; he hears many of the scientists
complaining that the lab's chemicals constantly ruin their shoes, so he sets out to invent and sell a
protective shoe covering that scientists can use when they're working in labs.
C) Marisol, who works for 3M Corporation; she is a huge fan of the company's Post-It Notes,
and she thinks that the company can greatly expand its Post-It Notes line by customizing them
for people who work in different types of organizations, such as sports teams.
D) Ahmad, who works as a certified public accountant; he realizes that the Arab American
community in Detroit needs more people who speak Arabic to help them prepare their taxes, so
he starts a firm that specializes in working with members of the Arab American community.
E) Sheila, who is a professional chef; she works in an upscale restaurant and realizes guests love
exotic ingredients that they've never heard of before, so she starts a business in which she
purchases exotic ingredients from abroad. She then travels among the restaurants in her state,
talking to the chefs and selling them those ingredients for a profit.
7) Who is least likely to describe himself or herself as self-employed and most likely to
self-identify as an entrepreneur?
A) a freelance editor who sells his services to various publishing companies
B) a scientist who has developed a process for converting the garbage in landfills into useful
energy, thereby decreasing pollution and reducing society's reliance on fossil fuels
C) an electrician who owns his own business and who specializes in outdoor lighting
D) an accountant who goes to people's homes to help them prepare their income tax returns
E) a hair stylist who rents a chair at a salon and sees about 20 clients per week, who pay her
directly
8) Unlike self-employed people, entrepreneurs tend to
A) hire people who have expertise that the entrepreneurs do not.
B) stay in one geographic area.
C) seek to influence markets, industries, and large numbers of people.
D) do most of the work themselves.
E) avoid risk.
9) Unlike entrepreneurs, self-employed people tend to
A) hire people who will work with them to implement their vision for the company.
B) stay in one geographic area.
C) seek to influence markets, industries, and large numbers of people.
D) delegate responsibilities to people they trust, who are smarter than and more experienced than
they are in particular areas.
E) take the risks necessary to grow the business and make an impact on society.
10) What is not a key difference between self-employed people and entrepreneurs?
A) When a self-employed person retires or quits, the business generally closes; an entrepreneur's
company continues even if the entrepreneur dies or moves on.
B) Self-employed people tend to work virtually and avoid taking risks; entrepreneurs tend to take
risks, and they think on a global scale.
C) The self-employed are experts who do much of the work themselves; entrepreneurs realize
they can't do everything themselves, so they hire and delegate responsibilities to people they
trust.
D) Self-employed people can incorporate or organize as sole proprietors; entrepreneurs have a
broader set of legal requirements, along with insurance and tax considerations.
E) Self-employed people have broad aspirations aimed at influencing industries and markets;
entrepreneurs are more focused on operating a business in a specific geographic area and market.
11) Rick has met with the Small Business Administration, which analyzed his entrepreneurial
skills and provided him with a summary of the results. Out of these findings of the SBA, what
might challenge Rick in his quest to become a successful entrepreneur?
A) Rick has an external locus of control.
B) Rick is comfortable with a moderate level of risk, and he has the confidence to act decisively.
C) Rick has a high need for autonomy and wants to shape his own destiny.
D) Rick is conscientious and emotionally stable.
E) Rick has some tolerance for ambiguity because he knows he is trying to do things that haven't
been done before.
12) Research has uncovered several important differences between managers and entrepreneurs.
One of these differences is that
A) managers possess a greater need for autonomy than entrepreneurs do.
B) entrepreneurs tend to be more agreeable than managers.
C) managers tend to have a stronger internal locus of control than managers do.
D) managers are more motivated by promotions and organizational perks than entrepreneurs are.
E) managers are generally more innovative and creative than entrepreneurs.
13) According to the Global Entrepreneurship and Development Index, which country ranks first
in terms of the environment for cultivating entrepreneurship?
A) India
B) China
C) the United States
D) the United Kingdom
E) Sweden
14) Which example best fits the definition and expectations of a start-up company?
A) NoConcussion, a company that manufactures equipment to be placed inside football players'
helmets to prevent concussions
B) MeID, a company that uses sophisticated blockchain technology to provide ID verification for
all human beings based on their individual physiological (biometric) characteristics, such as
fingerprints and eyeball scans
C) A New Leash on Life, which creates and sells diamond-studded leashes for dogs owned by
the world's wealthiest people
D) Live or Die, a vacation company that specializes in dropping people off in remote locations
with no supplies, and forcing them to life off the land or die trying
E) Umbi, a small company that offers a kit that allows new parents to preserve their babies'
umbilical cords for life
15) Marvella has created a high-frequency buzzer that prevents dogs from barking. The moment
dogs hear the buzzer's high-pitched squeal, they stop barking. Extensive market testing has
shown Marvella that the buzzer works across all breeds and on dogs of all ages. This product can
be a lifesaver for people who live in apartment buildings and whose neighbors complain about
barking dogs! Marvella should immediately apply for a
A) patent.
B) copyright.
C) trademark.
D) government-sponsored monopoly.
E) noncompete clause.
16) Small businesses in the United States
A) have fewer than 500 employees, according to the Small Business Administration.
B) hold only about 10 percent of U.S. patents.
C) have struggled with sales and profitability in recent years.
D) employ approximately 75 percent of all U.S. employees.
E) comprise only 10 percent of U.S. firms.
17) ________ is the level of necessaries, comforts, and luxuries that a person is accustomed to
enjoying.
A) Economic development
B) HDI (human development index)
C) GDP (gross domestic product)
D) Capital accumulation
E) Standard of living
18) If you were giving an aspiring entrepreneur advice, which statement would you avoid?
A) "Identify a need for an opportunity, and then fill that need."
B) "Avoid risk, don't rock the boat, and think conservatively."
C) "Study customer complaints, and a find a way to solve to them."
D) "Identify a problem or frustration, and then develop a solution."
E) "Identify your skills, talents, or passions, and use them as the basis for your business."
19) In 2007, Joe Gebbia and Brian Chesky realized they could not afford the rent on their pricey
San Francisco apartment, so they decided to put an air mattress in their living room and offer
people an alternative to an expensive hotel room. This is the story of how Airbnb got started. In
other words, Airbnb began when Gebbia and Chesky ________; the company grew because it
________.
A) identified their passions; was technologically based
B) studied consumer complaints; was based on idealism
C) broke the law; successfully lobbied to get the laws changed
D) identified a problem or frustration; identified an opportunity or need
E) sought to put their competitors out of business; was based on their desire to change the world
20) A business plan will likely not answer this question.
A) "How will I fund my business?"
B) "What opportunities will my business take advantage of?"
C) "What is my vision?"
D) "What resources does my business require?"
E) "What types of office supplies (staples, paper clips) will I use in my office?"
21) In general, a company that starts with a business plan is ________ to succeed than a
company that does not start with a business plan.
A) much less likely
B) somewhat less likely
C) much more likely
D) somewhat more likely
E) equally likely
22) Your name is Joanne Warren, and you are writing a business plan for a coffee house that you
plan to open in the downtown district of your city. Your business will be called A Cup of Joanne,
and you plan to distinguish yourself from your competitors by offering blends from all around
the world. You will also sponsor international coffee tastings and sell one-pound bags of freshly
ground fair-trade coffee. The bank from which you are seeking to borrow $20,000 has asked you
for a full business plan. ________ is/are not required in your business plan.
A) A market analysis
B) Interior decoration plans and merchandising
C) Sales strategies
D) Funding requirements and financial projections
E) A business description and organization
23) The following is an excerpt from a business plan: "To open our new upscale toy store, We R
Toys, we require a total of $225,000. The owners will be providing $100,000 of this amount
from their own savings, and their friends and families have promised an additional $25,000.
Therefore, We R Toys requires a bank loan of $100,000."
In which section of We R Toys' business plan would this information be found?
A) Executive Summary
B) Funding Requirements
C) Market Analysis
D) Sales Strategies
E) Financial Projections
24) A ________ is a legal structure that can sell rights of ownership in the form of stocks or
shares.
A) sole proprietorship
B) general partnership
C) corporation
D) limited liability company (LLC)
E) limited partnership
25) Vincenzo Martin and Sasha Boudrakis have started a new firm, The Fan Base. Vincenzo is a
well-known marketing guru who advises major league sports franchises on how to maximize the
revenue from their teams' brands and logos. Sasha, meanwhile, is mostly silent in the operation.
He has invested $2 million to get The Fan Base off the ground, and in return he receives 25% of
the firm's annual profits. The Fan Base is organized as a
A) sole proprietorship.
B) general partnership.
C) corporation.
D) limited liability company (LLC).
E) limited partnership.
26) We Are the World is an importing company that specializes in importing hand-made arts and
crafts from crafters and artisans around the world. The company has about $4 million worth of
stock outstanding. Due to its desire to avoid double taxation, it is structured so that its individual
shareholders pay taxes on all of the company's income. The shareholders report the flow-through
of income and losses on their personal tax returns and are assessed at their individual tax rates.
We Are the World is a(n)
A) C corporation.
B) G corporation.
C) S corporation.
D) limited liability company (LLC).
E) investment trust.
27) Although estimates vary widely, it seems reasonable to suggest that start-up costs for the
average business are approximately
A) $10,000–$80,000.
B) $25,000–$100,000.
C) $250,000.
D) $300,000–$500,000.
E) over $1 million.
28) Businesspeople who start new businesses sometimes say that part of their initial funding was
"love money." Who are the usual sources of love money?
A) the business owner himself or herself
B) parents, friends, and other relatives
C) charitable organizations
D) the SBA (Small Business Association)
E) venture capitalists
