Deck 6: Entrepreneurship and New Ventures

Question 1

Classic entrepreneurs are risk-taking individuals who take action to pursue opportunities others fail to recognize, or even view as problems or threats.

Answer 1

True

Question 2

A first-mover advantage comes from being first to exploit a niche or enter a market.

Answer 2

True

Question 3

Entrepreneurs are born, not made.

Answer 3

False

Question 4

Small businesses have a high success rate.

Question 5

Growing too fast is one of the reasons small businesses fail.

Question 6

Entrepreneurs' belief that they are in control of their own destiny shows that they have an internal locus of control.

Question 7

Classic entrepreneurship is a form of ethical entrepreneurship that seeks novel ways to solve pressing social problems.

Question 8

Serial entrepreneurship is one way for people, including women and minorities who have hit the "glass ceiling" in their careers or are otherwise cut off from other employment choices, to strike out on their own and gain economic independence.

Question 9

Social enterprises have a social mission to help make lives better for underserved populations.

Question 10

Entrepreneurs have a tolerance for ambiguity.

Question 11

Business incubators are also called business accelerators.

Question 12

Lean startups are permanent, cost-intensive organizations.

Question 13

Mompreneurs pursue business opportunities they spot as mothers.

Question 14

A startup is a new venture that the entrepreneur is hoping will take shape and prove successful as things move forward.

Question 15

In a franchise, the franchise parent receives a share of income or a flat fee from the franchisee.

Question 16

A family business feud is the issue of who will run the business when the current head leaves.

Question 17

Money is the key to entrepreneurial success.

Question 18

One of the most common ways to get involved in a small business is to buy and run a franchise.

Question 19

Having a succession plan helps avoid a succession problem.

Question 20

The vast majority of small businesses employ between 100 and 150 persons.

Question 21

Debt financing requires collateral that pledges business assets or personal assets, such as a home, to secure the loan in case of default.

Question 22

The breakthrough stage involves establishing the firm and fighting for its existence.

Question 23

Entrepreneurs need different leadership skills in the life cycle stages of entrepreneurial companies.

Question 24

Self-management is an ability to use objective understanding of personal strengths and weaknesses to keep growing-individually and career-wise.

Question 25

Entrepreneurs need more strategic leadership in the early life cycle stages of entrepreneurial companies than they do in later life cycle stages.

Question 26

A sole proprietorship is the most common form of small business ownership in the United States.

Question 27

A _____ entrepreneur is a risk-taking individual who takes action to pursue opportunities others fail to recognize, or even view as problems or threats.

A) serial
B) classic
C) follow-through
D) sustainer
E) social

Question 28

A sole proprietorship is simple to start, run, and terminate.

Question 29

You and a few of your friends want to help improve the lives of people who are homeless. You decide to start a non-profit organization to connect cooks with homeless shelters. You are classified as what kind of entrepreneur?

A) Minority
B) Ethical
C) Serial
D) Social

Question 30

A succession plan describes the direction for a new business and the financing needed to operate it.

Question 31

When establishing a corporation, a partnership agreement must be made.

Question 32

Business incubators aid in the development of startups.

Question 33

The life cycle of an entrepreneurial firm begins with the breakthrough stage.

Question 34

The main characteristic of _____ entrepreneurs is that they start and run new ventures over and over again, moving from one interest and opportunity to the next.

A) sustainer
B) classic
C) serial
D) first-mover
E) necessity-based

Question 35

You open a hot dog stand near the local high school. That business becomes so successful that you sell that to a friend and open an ice cream stand next to it. You are what kind of entrepreneur?

A) Ethical
B) Necessity-based
C) Minority
D) Social

Question 36

A first-mover advantage comes from:

A) making improvements to existing product lines.
B) being the first to exploit a niche or enter a market.
C) being the first to take a free-ride on the opportunity created by a pioneer.
D) the ability to poach trained personnel from an established business.
E) taking risks while strategizing to improve an existing market.

Question 37

In a business plan, the executive summary contains the mission of the company, the details of the owners, and the legal form of the organization.

Question 38

You need to telecommute (work from home) but cannot find a suitable telecommuting position with an existing company. You start your own business that you run from your home. You are what kind of entrepreneur?

A) Ethical
B) Necessity-based
C) Serial
D) Social

Question 39

The term _____ describes strategic thinking and risk-taking behavior that results in the creation of new opportunities.

A) business planning
B) partnership
C) entrepreneurship
D) proxemics
E) franchising

Question 40

A limited liability corporation combines the advantages of sole proprietorship, partnership, and corporation.

Question 41

_____ entrepreneurship is one way for people, including women and minorities who have hit the "glass ceiling" in their careers or are otherwise cut off from other employment choices, to strike out on their own and gain economic independence.

A) Classic
B) Necessity-based
C) Follow-through
D) Serial
E) Sustainable

Question 42

A(n) _____ necessarily has 500 or fewer employees, is independently owned and operated, and does not dominate its industry.

A) small business
B) social organization
C) non-profit organization
D) classic entrepreneurship
E) Internet entrepreneurship

Question 43

Entrepreneurs:

A) do not like situations with high degree of uncertainty.
B) thrive on performance feedback.
C) have an external locus of control.
D) are unwilling to admit problems and errors.
E) do not like autonomy.

Question 44

Which of the following is true of entrepreneurs?

A) They believe that their destiny is beyond their control.
B) They like to avoid risk.
C) They have a high need for achievement.
D) They are averse to autonomy.
E) They have a low tolerance for ambiguity.

Question 45

Lean startups:

A) aim to create a sophisticated product with a big budget.
B) focus on increasing their acquisitions.
C) establish a complex and detailed work structure.
D) aim to keep operations as simple as possible.
E) focus on making lives better for underserved populations.

Question 46

Which of the following is true about a franchise?

A) It is one of the least common ways to get involved in a business.
B) It runs under the franchisee's name and guidance.
C) The franchise parent receives a specified share of income or a flat fee from the franchisee.
D) It makes use of things like opensource software, while containing costs, staying small, and keeping operations as simple as possible.
E) It refers to a business in which material or goods are given to another person, but ownership is retained until the goods are sold.

Question 47

A _____ is a business in which the owner of a business sells to another the right to operate the same business in another location.

A) non-profit organization
B) franchise
C) joint venture
D) family business
E) wholly-owned subsidiary

Question 48

A business model is a:

A) plan that describes the organizational structure of the company.
B) plan for making a profit by generating revenues that are greater than costs.
C) plan to determine the strengths and viability of a company's organizational structure.
D) model that depicts the detail of an organization's workflow.
E) model that lists the details of all the employees of an organization.

Question 49

Which of the following is true about serial entrepreneurs?

A) They are born, not made.
B) They pursue innovations within the company that can change the organization in significant ways.
C) They make large investments in new ventures in return for an equity stake in the business.
D) They start and run businesses and nonprofits over and over again, moving from one interest and opportunity to the next.
E) They are primarily responsible for selling of shares of stock to the public at large.

Question 50

Yvette has recently lost her job and has not been able to find employment elsewhere. She has to support her children, and take care of her mortgage. She realizes a niche for chemical-free house cleaning services. Eventually she opens her own house cleaning service. This is an example of _____.

A) classic entrepreneurship
B) serial entrepreneurship
C) intrapreneurship
D) necessity-based entrepreneurship
E) social entrepreneurship

Question 51

Nadia is unemployment and is unable to pay her bills. She realizes she loves baking and soon opens up her own bakeshop with the help of a friend. Which of the following is true about Nadia?

A) She is a necessity-based entrepreneur.
B) She is a social entrepreneur.
C) She is a venture capitalist.
D) She is an intrapreneur.
E) She is a serial entrepreneur.

Question 52

Nailah had to quit her job to run her mother's bookstore when her mother passed away. The store was earning good profits and so she decided to open a new branch in another state. What kind of a business does Nailah own?

A) Limited liability corporation
B) Social enterprise
C) Family business
D) Corporation
E) Necessity-based enterprise

Question 53

Social entrepreneurs:

A) take risks and create enterprises whose missions is to help make lives better for underserved populations.
B) bring buyers and sellers together for online business transactions and take a percentage from the sales.
C) are wealthy individuals willing to invest in a new venture in return for an equity stake.
D) pursue innovations that can change the organization in significant ways.
E) start new ventures because they have few or no other employment and career options.

Question 54

Barbara, a florist, realized the need for easily accessible organic compost in her neighborhood. Her neighborhood consists mainly of senior citizens who are unable to procure their own gardening supplies. She quickly established "We Compost," a non-profit organization that delivers compost to each household in her neighborhood. This is an example of _____.

A) serial entrepreneurship
B) classic entrepreneurship
C) intrapreneurship
D) necessity-based entrepreneurship
E) social entrepreneurship

Question 55

A(n) _____ is a new and temporary venture that is trying to discover a profitable business model for future success.

A) family business
B) intrapreneurship
C) startup
D) business incubator
E) acquisition

Question 56

A(n) _____ refers to the issue of who will run the business when the current head leaves.

A) family business integration
B) family business feud
C) family disagreement
D) succession problem
E) role confusion

Question 57

_____ takes place because other employment options don't exist.

A) Classic entrepreneurship
B) Serial entrepreneurship
C) Intrapreneurship
D) An initial public offering
E) Necessity-based entrepreneurship

Question 58

In family businesses, _____ refers to the problem that arises when members of the family have major disagreements over how the business should be run.

A) budget deficit
B) debt financing
C) an ethical dilemma
D) a reverse culture shock
E) a family business feud

Question 59

New small business startups often fail because of:

A) lack of business expertise.
B) strict financial controls.
C) high ethical standards.
D) slow growth.
E) strategic leadership.

Question 60

Which of the following scenarios demonstrates an entrepreneur who has a tolerance for ambiguity?

A) Jean's decision to modify a pre-existing problem-tackling strategy in his private firm
B) Roger's decision to hire an experienced manager to head his new branch in another state
C) Karl's decision to expand his private firm overseas despite the risk of facing cultural differences
D) Sasha's decision to quit her job to enter into a partnership with a well-recognized firm
E) Giselle's decision to join her family's well-established business

Question 61

According to the life cycle of entrepreneurial firms, the maturity stage signifies the stage in which the:

A) entrepreneur struggles to get the new venture established and survive long enough to test the viability of the underlying business model in the marketplace.
B) business model begins to work well, growth is experienced, and the complexity of managing the business operation expands significantly.
C) entrepreneur recognizes a niche in the market and formulates an idea to take advantage of it.
D) entrepreneur experiences the advantages of market success and financial stability while facing the continuing management challenge of remaining competitive in a changing environment.
E) entrepreneur formulates a plan for making a profit by generating revenues that are greater than the costs of doing business.

Question 62

_____ leadership brings the venture into being and sees it through the early stages of an enterprise.

A) Transactional
B) Entrepreneurial
C) Bureaucratic
D) Transformational
E) Democratic

Question 63

Insufficient financing implies:

A) not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth.
B) not having enough money available to maintain operations while still building the business and gaining access to customers and markets.
C) not having expertise in the essentials of business operations, including finance.
D) not keeping track of the numbers, and failure to keep business finances to best advantage.
E) not making the best use of existing monies.

Question 64

According to the life cycle of entrepreneurial firms, the birth stage signifies the stage in which the:

A) entrepreneur recognizes a niche in the market and formulates an idea to take advantage of it.
B) entrepreneur experiences the advantages of market success and financial stability.
C) entrepreneur faces the continuing management challenge of remaining competitive in a changing environment.
D) business model begins to work well, growth is experienced, and the complexity of managing the business operation expands significantly.
E) entrepreneur struggles to get the new venture established and survive long enough to test the viability of the underlying business model in the marketplace.

Question 65

Daphne decided to open her first store in Dallas. Over time, she did not address new challenges to her business such as having to add 15 employees unexpectedly due to customer demand or the changing needs of her customers. After several bad decisions, she finally had to shut her business down. What was most likely the main reason for the failure of Daphne's business?

A) Lack of experience
B) Insufficient financing
C) Lack of commitment
D) Ethical failure
E) Growing too fast

Question 66

Habib, who owns a popular restaurant, plans to expand his business. After reading favorable reviews, he decides to invest in an acquisition unaware that it is a dummy corporation. This fraud leads to significant financial losses for him, and he is forced to shut down his business. Which of the following is most likely to be the main reason for the failure of Habib's business?

A) Lack of motivation
B) Lack of strategy
C) Lack of commitment
D) Ethical failure
E) Late entry into the business

Question 67

Stating that the failure of a small business was due to "ethical failure" implies:

A) not having expertise in the essentials of business operations, including finance, purchasing, selling, and production.
B) not avoiding the temptations of fraud, deception, and embezzlement.
C) not keeping track of the numbers, and failure to control business finances and use existing monies to best advantage.
D) not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth.
E) not having sufficient know-how to run a business in the chosen market or geographical area.

Question 68

Stating that the failure of a small business was due to "growing too fast" implies:

A) not having expertise in the essentials of business operations, including finance, purchasing, selling, and production.
B) not avoiding the temptations of fraud, deception, and embezzlement.
C) not keeping track of the numbers, and failure to control business finances and use existing monies to best advantage.
D) not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth.
E) not having sufficient know-how to run a business in the chosen market or geographical area.

Question 69

Which of the following best describes lack of strategy and strategic leadership?

A) Not taking the time to craft a vision and mission, nor to formulate and properly implement a plan
B) Not having enough funding to maintain operations while still building the business and gaining access to customers and markets
C) Not having sufficient know-how to run a business in the chosen market or geographical area
D) Falling prey to the temptations of fraud, deception, and embezzlement
E) Not having expertise in the essentials of business operations, including finance, purchasing, selling, and production

Question 70

Stating that the failure of a small business was due to "lack of experience" implies:

A) not having expertise in the essentials of business operations, including finance, purchasing, selling, and production.
B) not taking the time to craft a vision and mission, nor to formulate and properly implement a strategy.
C) not keeping track of the numbers, and failure to control business finances and use existing monies to best advantage.
D) not taking the time to consolidate a position, fine-tune the organization, and systematically meet the challenges of growth.
E) not having sufficient know-how to run a business in the chosen market or geographical area.

Question 71

Which of the following is true of small business development centers?

A) They concentrate on establishing social enterprises.
B) They exclusively support all non-profit organizations in the U.S.
C) They are supported by the U.S. Small Business Administration.
D) They offer guidance to entrepreneurs trying to invest in acquisitions.
E) They aid in the development of public sectors.

Question 72

_____ implies that a business owner does not have the skill-sets required in the essentials of business operations, including finance, purchasing, selling, or production.

A) Lack of experience.
B) Insufficient financing
C) Lack of expertise
D) Ethical failure
E) Growing too fast

Question 73

The goal of business incubators is to:

A) ensure that established businesses retain their competitive advantage.
B) aid third generation family businesses resolve family business feuds.
C) formulate a succession plan for established family businesses.
D) increase the survival rates for new startups.
E) establish social enterprises.

Question 74

Aisha has been successfully running a salon for over a year. She decided to use her profits and expand her business by selling her homemade organic hair care products. This involved miscellaneous costs that exhausted her funds, and she had to file for bankruptcy. Which of the following is most likely the main reason for Aisha's failure?

A) Lack of commitment
B) Poor financial control
C) Ethical failure
D) Late entry into the business
E) Lack of motivation

Question 75

A(n) _____ plan describes how the leadership transition and related financial matters will be handled when the time for changeover arrives.

A) partnership
B) startup
C) succession
D) liability
E) equity

Question 76

Which of the following best describes lack of commitment?

A) Not having enough funding to maintain operations while still building the business and gaining access to customers and markets
B) Not having sufficient know-how to run a business in the chosen market or geographical area
C) Not having expertise in the essentials of business operations, including finance, purchasing, selling, and production
D) Falling prey to the temptations of fraud, deception, and embezzlement
E) Not devoting enough time to the requirements of running a competitive business

Question 77

_____ offer space, shared services, and advice to help get small businesses started.

A) Business councilors
B) Business incubators
C) Succession plans
D) Social advisors
E) Internet entrepreneurships

Question 78

According to the life cycle of entrepreneurial firms, the breakthrough stage signifies the stage in which the:

A) entrepreneur recognizes a niche in the market and formulates an idea to take advantage of it.
B) entrepreneur experiences the advantages of market success and financial stability.
C) entrepreneur faces the continuing management challenge of remaining competitive in a changing environment.
D) business model begins to work well, growth is experienced, and the complexity of managing the business operation expands significantly.
E) entrepreneur struggles to get the new venture established and survive long enough to test the viability of the underlying business model in the marketplace.

Question 79

Toby and William are both general managers at Alton & Sons, their father's business. After a heart attack, their father decides to retire. He is faced with the challenge of choosing between one of his two equally capable sons to replace him in the business. Which type of problem related to family businesses is the father facing?

A) Family business integration
B) Succession problem
C) Family disagreement
D) Role confusion
E) Family business feud

Question 80

Daphne decided to open her first store in Dallas. Being new to the business, she was unable to cope with the demands of running her store, and after several bad decisions, she finally had to shut it down. What was most likely the main reason for the failure of Daphne's business?

A) Lack of experience
B) Insufficient financing
C) Lack of commitment
D) Ethical failure
E) Growing too fast