Deck 7: Entrepreneurship

Question 1

Most entrepreneurs start their own firms because they

A)have failed at everything else they have done.
B)are gamblers at heart and thrive on risk.
C)feel satisfaction in creating something from nothing.
D)want to get rich quickly and then sell the company.
E)have unrealistic expectations about what it will entail.

Answer 1

C

Question 2

A business having fewer than 500 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices is a(n)

A)matrix venture.
B)small business.
C)franchise.
D)entrepreneurial venture.
E)consortium.

Answer 2

B

Question 3

An individual who establishes a new organization without the benefit of corporate support is called a(n)

A)intrapreneur.
B)entrepreneur.
C)sole proprietor.
D)franchisee.
E)licensee.

Answer 3

B

Question 4

Entrepreneurs manage ________ and develop ________ strategies, practices, and products.

A)conservatively; innovative
B)conservatively; imitative
C)conservatively; traditional
D)aggressively; innovative
E)aggressively; imitative

Question 5

Bad economic conditions make it especially difficult for an entrepreneurial organization to expand.

Question 6

The entrepreneurial strategy matrix allows one to conceptualize ventures along two dimensions: investment and risk.

Question 7

Diego worked as an engineer for KuttingEdge. He had many innovative ideas for the company, but most were never explored to his satisfaction. Therefore, he left the corporation to start his own business. He applied his ideas and thoughts to this business and finally succeeded. This is an example of

A)entrepreneurship.
B)domain selection.
C)corporate espionage.
D)vertical integration.
E)franchising.

Question 8

After years of hearing about how much he hates his job at a grill and bar, Raja's friends all tell him he should strike out on his own and start his own restaurant. Raja is unsure, however, and needs some convincing. What is one truthful statement they might use to entice him into becoming an entrepreneur?

A)Opening a restaurant is a great way to make a quick profit.
B)If you own your own restaurant, you will never have to look for a job.
C)Think of how satisfying it will feel to watch the restaurant grow in popularity.
D)If you start the restaurant now, you will be able to retire before you are 30.
E)Once you hire a few servers, you will be able to sit back and relax.

Question 9

Pam's father told her, "I admire your boldness, but I'm not sure that you should open that business. I've heard that entrepreneurs are ________." Pam replied, "That's a common myth. In fact, entrepreneurs take very careful, calculated risks and are not afraid to act on those decisions."

A)inventors
B)gamblers
C)promoters
D)planners
E)investors

Question 10

Entrepreneurs are frequently challenged by an aversion to record keeping.

Question 11

________ occurs when an enterprising individual pursues a lucrative opportunity.

A)Bootlegging
B)Franchising
C)Intrapreneurship
D)Entrepreneurship
E)Business incubation

Question 12

The best business plans convey five key factors: the financing, the opportunity, the competition, the succession plan, and risk and reward.

Question 13

While working at Advance Corp., Samantha has created a new venture based solely on her idea and Enterprisers' proprietary technology. Samantha can be described as a(n)

A)intrapreneur.
B)independent entrepreneur.
C)sole proprietor.
D)venture capitalist.
E)franchisee.

Question 14

Using his own money and resources, Shawnee-who had recently been laid off from his job-started a new business based on the innovative ideas that he himself had generated. This is an example of a(n)

A)entrepreneurship.
B)joint venture.
C)business incubation.
D)diversification strategy.
E)bootlegging venture.

Question 15

Nora works for a corporation and is using the company's resources to build a new line of business for her employers. Nora is a(n)

A)entrepreneur.
B)intrapreneur.
C)extrapreneur.
D)interpreneur.
E)pseudopreneur.

Question 16

Frankie is more deliberate and slower to act; he follows or modifies routines that others have established. He tends to avoid risk, and he typically does not create or initiate ideas for new products and services. Frankie is better suited to be a(n)________ than a(n)________.

A)franchisee; franchisor
B)manager; entrepreneur
C)franchisor; franchisee
D)entrepreneur; manager
E)entrepreneur; small business owner

Question 17

Tilly independently owns and operates QuestInfo, Inc., a company with 14 employees. She manages aggressively and expects rapid sales and profit growth. Tilly's company is considered a(n)________ venture.

A)entrepreneurial
B)intrapreneurial
C)franchise
D)small business
E)dependent

Question 18

Large corporations are merely passive bystanders watching entrepreneurs create new businesses.

Question 19

Which of the following would be classified as an entrepreneurial venture?

A)Angelo expects growth and high profitability from his new business.
B)Pauline expects growth and moderate profitability from her new business.
C)Jeanne expects stability and minimal profitability from her new business.
D)Selim expects stability and moderate profitability from his new business.
E)Cara expects stability and high profitability from her new business.

Question 20

Which of the following statements about entrepreneurs and risk is the most accurate?

A)Entrepreneurs are best characterized as gamblers in their approach to risk.
B)Entrepreneurs usually avoid taking risks in their ventures.
C)Successful entrepreneurs do not consider whether their ventures are risky.
D)Entrepreneurs alternate between pursuing and retreating from risk.
E)Successful entrepreneurs take very careful, calculated risks.

Question 21

An entrepreneur who is decisive, tenacious, disciplined, and willing to make sacrifices demonstrates which of the following characteristics?

A)leadership
B)commitment and determination
C)opportunity obsession
D)creativity, self-reliance, and ability to adapt
E)motivation to excel

Question 22

Which of the following e-commerce models is an online newspaper most likely to use?

A)affiliate
B)intermediary
C)advertising support
D)subscription
E)transaction fee

Question 23

NewTimes requires regular viewers of its online articles to pay a monthly fee to maintain uninterrupted access to its content. This is an example of the ________ model.

A)bootlegging fee
B)advertising support
C)intermediary
D)affiliate
E)subscription

Question 24

Isabel interviews several entrepreneurs to learn what characteristics contributed to their success. Which of the following characteristics is most likely to be mentioned in the interviews?

A)unwillingness to sacrifice
B)intolerance of ambiguity
C)avoidance of risky situations
D)dislike of uncertainty
E)opportunity obsession

Question 25

A new technique for extracting oil and gas-called "fracking"-spurred an economic boom in the formerly sleepy town of Smallburg, located in what had been thought to be a depleted oil field. Workers swarmed into the town, and Jeanie started a laundry service to meet their needs. In this case, Jeanie had spotted an entrepreneurial opportunity created by the new extraction technique, or a ________, which in turn created an oil boom, or a(n)________.

A)technological discovery; economic dislocation
B)technological discovery; government initiative
C)government initiative; lifestyle change
D)technological discovery; lifestyle change
E)calamity; economic dislocation

Question 26

________ is an entrepreneurial alliance between two organizations.

A)Bootlegging
B)An affiliate model
C)Skunkworks
D)Franchising
E)A business incubator

Question 27

James worked as a teacher for several years before starting an educational games company. He has a clear vision of the result he is working to get. Moreover, he is aware of his strengths and weaknesses, and he always sets realistic goals. In this case, which of the following characteristics of successful entrepreneurs does James possess?

A)leadership
B)risk tolerance
C)opportunity obsession
D)self-reliance and ability to adapt
E)motivation to excel

Question 28

Rhonda spotted, created, and exploited a(n)________ for ride-sharing services for disabled customers that big companies had ________ and, in so doing, she captured the market with her simpler, cheaper, more accessible, and more convenient services.

A)business incubator; exploited and monopolized
B)opportunity; missed or avoided
C)intrapreneurship; missed or avoided
D)opportunity; minimized and rejected
E)intrapreneurship; tried but failed at

Question 29

Katya is evaluating whether she has the right personality to be an entrepreneur. Which of the following characteristics should she have if she wants to succeed?

A)commitment to work-life balance
B)tolerance of risk and uncertainty
C)discounting of own weaknesses
D)comfort with the status quo
E)obsession with earning money

Question 30

According to many entrepreneurs and observers, when creating a new business, one should start with

A)strategic positioning.
B)social capital.
C)great ideas.
D)domain selection.
E)social responsibility.

Question 31

Dr. Elbridge began helping women in Bajukistan obtain microloans for small business start-ups. This act is a typical example of

A)social entrepreneurship.
B)skunkworks.
C)the subscription model.
D)bootlegging.
E)business incubation.

Question 32

"Miguel, I believe that you will succeed," said Pablo, his mentor. "When an entrepreneur is contemplating a new business, the very first step is to have ________. You are on the right track."

A)a great idea
B)financial capital
C)a good location
D)family support
E)investors

Question 33

Sinead is considering opening a flower and gift shop in her small town. Before she begins writing her business plan, she conducts some research into the market and finds that there are already four other flower and gift shops operating within a few miles of each other. Given this information, what should Sinead do?

A)decide to stick to her personal gardening instead of opening the shop
B)realize that she lacks the skills necessary to create a unique product
C)open the shop as planned, assuming that customers will prefer her offerings
D)add one-hour delivery service for rush orders at no extra charge
E)discard her goal of opening a flower shop and take a job working for her old boss

Question 34

Marta decided that a growing Latino population has created an opportunity to market her family's salsa recipes. Which type of opportunity is she focusing on?

A)technological discoveries
B)demographic change
C)economic dislocations
D)calamities
E)government initiatives

Question 35

A(n)________ is an innovator who has created at least one successful store and seeks partners to operate the same concept in other local markets.

A)franchisor
B)franchisee
C)bootlegger
D)intrapreneur
E)ally

Question 36

Which of the following descriptions of entrepreneurs is true?

A)Entrepreneurs must have an idea for an original product.
B)Entrepreneurs usually have a placid personality.
C)Entrepreneurs have little awareness of the market.
D)Entrepreneurs know how to capture opportunities.
E)Entrepreneurs prefer to be lone wolves.

Question 37

Helga believes there is an opportunity to start up a business that produces sports equipment using greener technologies, thereby keying into two consumer trends. Into which category does this opportunity best fit?

A)technological discoveries
B)demographic changes
C)lifestyle and taste changes
D)economic dislocations
E)government initiatives

Question 38

FastWheels, a car manufacturer, has started to sell electric cars in response to the rising fuel prices. In which of the following categories has FastWheels specifically spotted opportunities?

A)economic dislocations
B)demographic changes
C)lifestyle and taste changes
D)calamities
E)government initiatives

Question 39

Nadi is interested in running a business and decides to open a branch of a successful falafel shop that her sister owns in another town. In this case, Nadi could be best described as a(n)

A)business incubator.
B)innovator.
C)franchisor.
D)franchisee.
E)intrapreneur.

Question 40

The essential ingredients in any recipe for entrepreneurial success are a great product or idea, a viable market, and

A)a rich backer.
B)good timing.
C)a cautious personality.
D)a large income reserve.
E)unexpected luck.

Question 41

Protected environments for new, small business are known as

A)business incubators.
B)business accelerators.
C)business shelters.
D)skunkworks.
E)bootleggers.

Question 42

Bad economic times can

A)offer more opportunities to expand.
B)make it easier to start a company.
C)make it easier for survival.
D)make it difficult to recruit talent.
E)often provide early success to entrepreneurs.

Question 43

Benefits of business incubators typically include

A)free rent.
B)high security.
C)venture capital.
D)shared services.
E)guaranteed profitability.

Question 44

Success of entrepreneurial ventures is often jeopardized by the death of the founder. Which of the following is an important strategy to minimize this problem?

A)conservative use of funds
B)succession planning
C)systematic recordkeeping
D)decreased delegation
E)going public

Question 45

IPO is an acronym that stands for

A)instant public obligation.
B)initial public obligation.
C)initial public stock offering.
D)immediate principal obligation.
E)innovative process for organizing.

Question 46

Xavi decides to open a Mexican restaurant serving street tacos and fajitas. This will be one of several such restaurants in his small town. This entrepreneurial venture, like most small businesses, is characterized by ________ risk and ________ innovation.

A)moderate; moderate
B)moderate; high
C)low; high
D)high; low
E)high; high

Question 47

Initial public stock offerings provide a way to raise capital through

A)offering a partnership to someone with a lot of money to invest.
B)the unadvertised sale of stock to acquaintances and friends of the owner.
C)the merger of two different companies that agree to share ownership.
D)federally registered and underwritten sales of shares in the company.
E)the purchase of one company by another that is usually larger and better funded.

Question 48

Entrepreneurs, in part because they are very busy, often fail to use

A)formal control systems.
B)benchmarking.
C)emotional intelligence.
D)cost competencies.
E)social capital.

Question 49

Selena, a low-level employee at a software development firm, has always been obsessed with making computers more user-friendly, and she has invented several programs designed to help her friends resolve their computer crash issues. The friends have raved about the results and say her abilities as a computer program innovator are outstanding. She knows that she needs to develop herself in the other areas that create success for entrepreneurs before she takes her hobby to the next level. Of the following steps, which one can Selena choose to skip and still have a reasonable expectation of success as an entrepreneur?

A)taking computer programing classes at the local community college
B)joining the local chamber of commerce and getting to know the members
C)signing up for business management courses at the community college
D)seeking a promotion to management at her current company to gain experience
E)educating herself on the business plans of other successful entrepreneurs

Question 50

According to Peter Drucker, who should help plan succession for a family-managed business?

A)family members only
B)family members and board members only
C)nonfamily business managers only
D)someone outside the family and the business
E)government succession agencies

Question 51

Which of the following is one of the major liabilities of start-ups?

A)acuteness
B)completeness
C)validness
D)complexness
E)smallness

Question 52

Juan comes up with a highly unusual but appealing idea for a new phone application. He would require a substantial amount of money to pay for developing the required graphics and technology. His idea can be categorized as involving

A)high innovation/low risk.
B)high innovation/high risk.
C)low innovation/low risk.
D)low innovation/high risk.
E)low innovation/uncertain risk.

Question 53

Two major liabilities of start-ups are

A)newness and complexity.
B)newness and smallness.
C)oversaturation and smallness.
D)oversaturation and inexperience.
E)inexperience and complexity.

Question 54

Marina is developing a new software company. She locates her business in an industrial park that offers low rent and shared support staff to start up companies. This is an example of a

A)skunkworks.
B)spin-off.
C)franchise.
D)bootlegging operation.
E)business incubator.

Question 55

One of the most common reasons that entrepreneurial ventures fail is

A)a lack of adequate start-up capital.
B)improperly spending start-up capital.
C)not buying the highest-quality equipment.
D)tying spending too closely to revenues.
E)the unpredictability of the stock market.

Question 56

Most small-business ventures are in the ________ category of the entrepreneurial strategy matrix.

A)high innovation/high risk
B)low innovation/low risk
C)high innovation/low risk
D)low innovation/high risk
E)high investment/low risk

Question 57

In order for family-managed businesses to survive and prosper, management guru Peter Drucker advises them to

A)hire only family members to make profit division easy.
B)stop hiring family members after the initial hiring round.
C)fill at least one key position with a nonfamily member.
D)exclude outsiders while planning succession.
E)allow for minimal performance by family members.

Question 58

Anders wishes to open a new landscaping company that will have no services that are particularly distinctive compared to competitors in this well-established field; because of the need for trucks and equipment, the business will require a sizable investment. In which part of the entrepreneurial strategy matrix is new company likely to be located?

A)upper-left quadrant
B)lower-left quadrant
C)upper-right quadrant
D)lower-right quadrant
E)center

Question 59

The ________ quadrant in the entrepreneurial strategy matrix depicts ventures of truly novel ideas with little risk.

A)upper-left
B)lower-left
C)upper-right
D)lower-right
E)central

Question 60

A product that represents a novel idea requiring little financial investment would be displayed in the ________ of the entrepreneurial strategy matrix.

A)upper-left quadrant
B)lower-left quadrant
C)upper-right quadrant
D)lower-right quadrant
E)center

Question 61

________ are a way for a business to raise capital through federally registered and underwritten sales of shares in the company.

A)Initial public stock offerings
B)Venture capital funds
C)Microloans from social entrepreneurs
D)Dividends from employee stock
E)Social capital networks

Question 62

Renaldo is creating a business plan. His first formal step should be to

A)secure financing.
B)write a business plan.
C)conduct an opportunity analysis.
D)get others to support one's ideas.
E)hire the right people.

Question 63

Kit's new business rocketed upwards in its first year, but its progress stagnated thereafter. His mentor noted that Kit was having a hard time "letting go"-giving his two best employees responsibility to take on assignments that they were obviously ready to handle. In fact, Kit was needlessly and constantly "looking over their shoulder" to check their work. As evidenced by these reasons, Kit's entrepreneurial venture was being threatened by his failure to

A)delegate.
B)plan.
C)go public.
D)use formal control systems.
E)properly use funds.

Question 64

Keiko prepares a document that outlines her plan to open a new essential oils company, including descriptions of the product, the market, her strategies, and the future direction she envisions for the company. This document is a(n)

A)entrepreneurial orientation.
B)opportunity analysis.
C)business incubator.
D)initial public offering.
E)business plan.

Question 65

People's judgment of a company's acceptance, appropriateness, and desirability, generally stemming from company goals and methods that are consistent with societal values, is known as

A)social capital.
B)venture capital.
C)legitimacy.
D)reliability.
E)consistency.

Question 66

Ryan has a wide network of relationships, and most of his acquaintances have a positive opinion of his intelligence and integrity. This is an example of

A)social capital.
B)venture capital.
C)legitimacy.
D)authenticity.
E)consistency.

Question 67

________ provides a lasting source of competitive advantage.

A)Social capital
B)Venture capital
C)Bootlegging
D)Horse trading
E)Emotional intelligence

Question 68

________ is a competitive advantage that exists in your relationships with other people and the image other people have of you.

A)Value-added production
B)Business economics
C)Affiliation
D)Entrepreneurial orientation
E)Social capital

Question 69

Sam's new business is failing. In desperation, he asks his most experienced investor, Esteban, for advice. Esteban says, "Sam, I'm glad you asked. As a(n)________ investor, I've seen other businesses struggle, and I believe that I can help your business recover. In fact, I'll probably be willing to make further investments if I can have some say-so in what steps you take to recover."

A)sophisticated
B)nonprofessional
C)affiliate model
D)intermediary model
E)junior

Question 70

Global Crafts has made the decision to "go public" through an initial public stock offering (IPO). Global Crafts' executive management undertook this process to

A)reduce capital, reduce debt, improve the balance sheet, and enhance net worth.
B)raise capital, reduce debt, improve the balance sheet, and dissolve net worth.
C)raise capital, reduce debt, improve the balance sheet, and enhance net worth.
D)raise debt, raise capital, improve the balance sheet, and enhance net worth.
E)raise debt, reduce capital, improve the balance sheet, and enhance net worth.

Question 71

Anil is the owner of Brick and Mortar, a construction company in a growing city. Anil has been in the construction business his whole life and takes pleasure in the day-to-day operations of the business. Brick and Mortar has quickly become popular, largely because Anil almost always comes in at a lower bid for the work than his competitors. Anil has hired trustworthy employees to whom he can grant ever-growing responsibilities, and he has built a state-of-the-art cafeteria and gym for them to enjoy. He is meticulous and thorough with his filing system and has designated his vice president, a long-time colleague, as his successor in the event of his death. Based on this scenario, what management issue is Anil most likely to experience as a result of his actions?

A)His long-time colleague might not be a strong manager or be a good record keeper.
B)Anil has over-delegated responsibility and will likely lose control of his business.
C)His low bids and gym and cafeteria construction could possibly leave him short of cash.
D)The growth of the city may attract other builders, leaving him without adequate business.
E)The satisfaction and joy Anil finds in the construction business may wane over time.

Question 72

If a business's goals and methods are consistent with societal values, it is considered

A)legitimate.
B)competitive.
C)conventional.
D)reactionary.
E)cooperative.

Question 73

A(n)________ is a formal planning step that focuses on an entire venture and describes all the elements involved in starting it.

A)business plan
B)operational plan
C)opportunity analysis
D)trend analysis
E)strategic plan

Question 74

Which of the following nonfinancial resources is crucial to the success of a new business?

A)transaction fees
B)bootleggers
C)cheerleaders
D)top management teams
E)horse traders

Question 75

Which of the following is a reason why companies go public?

A)to become a franchisee
B)to gain more control
C)to evade government taxation
D)to raise more capital
E)to reduce payment of dividends

Question 76

A(n)________ includes a description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, a specification of activities and resources needed to translate the idea into a viable business, and your source(s)of capital.

A)SWOT analysis
B)situational assessment
C)opportunity analysis
D)PERT chart
E)organization chart

Question 77

Gil has asked Leon to be a primary investor in his entrepreneurial start-up. Leon first wants to carefully study Gil's business plan, in particular these key factors:

A)the clients, the opportunity, the competition, the context, and the risk/reward.
B)the people, the opportunity, the competition, the context, and the risk/reward.
C)the clients, the other investors, the suppliers, the context, and the opportunities/threats.
D)the people, the other investors, the suppliers, the context, and the opportunities/threats.
E)the people, the threats, the partners, the context, and the risk/reward.

Question 78

A disadvantage of going public is the

A)declining interest in the stock price necessary to run the business.
B)absence of interest in capital gains in favor of focus on the company.
C)creation of a long-term relationship with nonbeneficial banking institutions.
D)pursuit of otherwise unaffordable opportunities, which can lead to overextension.
E)increase in the amount of company debt as a result of third-party stock sales.

Question 79

Which of the following is the fundamental reason for creating an opportunity analysis?

A)to obtain financing
B)to negotiate agreements with suppliers
C)to excite potential customers
D)to analyze whether or not to act
E)to work out the details of marketing, finance, and manufacturing

Question 80

Which of the following key planning elements should provide a competitive advantage that can be defended?

A)opportunity
B)risk and reward
C)people
D)competition
E)context