Deck 9: Starting a New Business

Question 1

Innovation is a necessary part of entrepreneurship.

Answer 1

False

Question 2

history of the facsimile technology demonstrates that innovation alone does not lead to commercial success.

Answer 2

False

Question 3

most commonly cited source of ideas for starting a new business in the Inc. survey was brainstorming.

Answer 3

False

Question 4

Inc. survey showed the importance of working in the industry as in influence on the businesses people start.

Question 5

inside-out approach to searching for opportunities to start a business is called idea generation.

Question 6

inside-out approach to searching for opportunities to start a business is called opportunity recognition.

Question 7

requirement of the opportunity recognition approach is environmental scanning.

Question 8

Serendipity is defined as the faculty of making happy chance finds.

Question 9

marketing is taking over from the traditional market segmentation approach in most successful businesses.

Question 10

One of the barriers to entering an industry is switching costs.

Question 11

One of the difficulties of starting a business by introducing an entirely new product to the market is the predictably low demand.

Question 12

Lower production cost is the advantage most small firms bring into market competition.

Question 13

The great majority of businesses are started as sole proprietorships.

Question 14

Which of the following is not one of the primary ways by which people go into business for themselves?

A) Buying an existing business
B) Buying a franchise
C) Starting an independent business
D) Taking over part a business spun off by a large company as its downsizes

Question 15

Which of the following are questions that should be explored as a business start is planned?

A) What product or service will be provided?
B) Why will our prospective customers buy from our business?
C) How will we go about our task?
D) all of the above

Question 16

The failure of Federal Express to develop its ZapMail initiative is an example of

A) technology innovation not succeeding in the marketplace.
B) inadequate financing.
C) governmental regulations creating insurmountable barriers.
D) foreign competition being too much to handle.

Question 17

The success of Federal Express can be traced to the company's

A) innovative hub-and-spoke system of package delivery.
B) creative contracts with foreign corporations.
C) long-term government grants for package delivery to the Armed Forces.
D) lucrative land developments.

Question 18

Which of the following questions are concerned with the issue of why a new business should be started?

A) How is the competition not serving the market?
B) Why will our prospective customers buy from us?
C) What are we going to give customers that is not already available?
D) All of the above
E) None of the above

Question 19

The relationship between entrepreneurship and innovation is best described as

A) simple; innovation causes entrepreneurship.
B) simple; entrepreneurship causes innovation.
C) entrepreneurship depending solely on innovation.
D) entrepreneurship being often, but not always, accompanied by innovation.

Question 20

The role of industry experience as a source of ideas for business start-ups

A) leads to the conclusion that the most promising preparation for an entrepreneur may be a conventional job.
B) shows that conventional jobs are a waste of time for entrepreneurs.
C) is quite limited.
D) is critical.
E) none of the above.

Question 21

The successful opening of a Chinese restaurant is an example of

A) innovation leading to commercial success.
B) innovation leading to artistic success.
C) innovation leading to entrepreneurship.
D) entrepreneurship leading to innovation.
E) none of the above.

Question 22

People who start a business because they saw someone else trying it and figured I could do better

A) show a confidence level enjoyed by many entrepreneurs.
B) feel their abilities and perseverance will give them the edge to succeed.
C) often are dissatisfied with what is currently on the market.
D) all of the above.
E) none of the above.

Question 23

Sometimes entrepreneurs base their idea for a new business on an unfilled niche in the consumer market; this approach

A) is used in about 1 in 10 cases.
B) depends heavily on brainstorming.
C) is the basis for virtually all business starts today.
D) all of the above.
E) none of the above.

Question 24

One of the idea sources in the Inc. survey of sources of ideas for business starts was "Brainstorm, can't really explain it"; how significant was it?

A) Not very, only about 5 percent cited it.
B) It was very significant, well over half of the respondents gave it as their answer.
C) It was not included as a response category.
D) It was far more significant for female respondents than for males.

Question 25

Which of the following is a possible limitation of the Inc. survey of sources of ideas for business starts?

A) There is a gender bias.
B) There is a racial bias.
C) The people surveyed were members of the Inc. 500, and therefore not representative of most small business owners.
D) All of the above
E) None of the above

Question 26

Despite its limitations the Inc. survey of sources of ideas for business starts allows us to draw which of the following general conclusions?

A) Past experience is the most important source of ideas.
B) Women are far more creative than men in developing ideas for new businesses.
C) Men are far more creative than women in developing ideas for new businesses.
D) There is no discernible difference in the creativity of men relative to that of women.
E) None of the above

Question 27

Entrepreneurs who use idea generation to determine what business to go into are using which approach?

A) Inside-out
B) Programmed logic
C) Intuitive-rational nexus
D) None of the above

Question 28

At its most basic level, the idea generation approach toward developing a business idea

A) has an inside-out orientation.
B) involves identifying the entrepreneur's most promising skill.
C) includes generating ideas as to how the entrepreneur's skills might be shaped into the foundation of a business.
D) all of the above.
E) none of the above.

Question 29

The advice If you build a better mousetrap, the world will beat a path to your door

A) reflects the inside-out approach
B) is based on the logic that if you provide something good that sets you apart you may have the basis for a sound business.
C) is consistent with the idea generation approach.
D) all of the above.

Question 30

Entrepreneurs who use opportunity recognition to determine what business to go into are using which approach?

A) Inside-out
B) Programmed logic
C) Intuitive-rational nexus
D) None of the above

Question 31

One approach used by many entrepreneurs in the pre-venture stage is called opportunity recognition; it is largely a process of

A) finding financial sources.
B) translation of general conditions, or trends, into specific opportunities for starting a business.
C) identifying and qualifying sales prospects.
D) using technology to gather data.
E) none of the above.

Question 32

The success of the home shopping networks is based on which two broad economic or societal conditions or trends?

A) Low employment and increasing consumer affluence
B) Widespread access to cable television and high inflation
C) High inflation and some degree of consumer mobility
D) All of the above
E) None of the above

Question 33

Environmental scanning

A) requires night-vision devices.
B) is best done through the appropriate governmental agencies.
C) should be done by hired licensed professionals.
D) typically is a big waste of time.
E) none of the above

Question 34

Newspapers, business periodicals, trade journals, and government publications are

A) examples of sources of information on economic opportunities.
B) all being made obsolete by electronic media.
C) too biased in their reporting to be of much use.
D) all of the above.
E) none of the above.

Question 35

With regard to news sources of economic developments that will provide economic opportunities, entrepreneurs

A) stick to traditional sources.
B) rely heavily on government documents.
C) have gone electronic.
D) do their planning in cyberspace.
E) none of the above.

Question 36

The following is an example of serendipity:

A) finding a $20 bill on the sidewalk.
B) being the winner of a jackpot drawing.
C) barely making it to the airport gate on time and being greeted with the news that your seat has been upgraded to first class.
D) taking over a business rather unexpectedly.
E) all of the above.

Question 37

If a manager loses her job and then is offered and signs an agreement to operate as an independent contractor for her former employer her business start was based on

A) the opportunity recognition approach.
B) the idea generation approach.
C) serendipity.
D) none of the above.

Question 38

The source of business ideas has many forms including

A) self-appraisal in the hope of finding something upon which to base a business.
B) a systematic search of the environment for opportunities.
C) being in the right place at the right time.
D) all of the above.
E) none of the above.

Question 39

The relationship between firms and new markets is

A) new firms must establish new markets.
B) new firms usually establish new markets.
C) new firms seldom establish new markets.
D) new firms never establish new markets.

Question 40

The issue of why a new business is needed can be defined by

A) customer needs and corporate history.
B) customer history and corporate needs.
C) competitor needs and customer capabilities.
D) customer needs and competitor capabilities.
E) none of the above.

Question 41

The approach to marketing that recognizes that no business can serve every customer in the market is called

A) market segmentation.
B) market serialization.
C) customer referendum.
D) customer referencing.
E) none of the above.

Question 42

Commonly used methods of _______are demographic, benefit, geographic, and socioeconomic.

A) market mapping
B) market pointing
C) customer devolution
D) customer evolution
E) none of the above

Question 43

The breakfast cereal market is an example of one which

A) can be segmented in a variety of ways.
B) consists of a homogeneous group of buyers.
C) is under attack from foreign producers.
D) all of the above.

Question 44

To market their products effectively, car manufacturers must recognize that

A) all prospective buyers do not have the same needs or interests.
B) a car offering dependable low-cost transportation will not be guaranteed success.
C) certain attributes, such as outstanding safety, have great appeal to some buyers and little or no appeal to others.
D) all of the above.

Question 45

Benefit segmentation is based on the idea that

A) certain groups will give suppliers the benefit of their loyalty; others will not.
B) an important segment of the market is receiving many forms of retirement benefits.
C) people who buy products because of the benefits they expect them to provide.
D) none of the above.

Question 46

For the entrepreneur to use market segmentation he must

A) understand that markets can be broken down into distinctive groups.
B) analyze the needs of the groups.
C) identify the needs of his company's target customers.
D) all of the above.

Question 47

The effective marketing of Cadillac automobiles, as executed by General Motors under Chairman Alfred Sloan,

A) redefined the competition for Cadillac.
B) positioned the car as a status symbol.
C) took into account alternative customer purchases such as ocean cruises and expensive fur coats.
D) all of the above.

Question 48

Among the barriers to entering an industry are

A) customer attitudes and habits.
B) switching costs.
C) response of existing competitors.
D) all of the above.
E) none of the above.