Deck 7: Entrepreneurship

Question 1

In the subscription model for e-commerce, fees are charged to bring buyers and sellers together.

Answer 1

False
Explanation: In e-commerce, the intermediary model has eBay as the premier example, bringing buyers and sellers together and charging a commission for each sale. Websites using the subscription model charge a monthly or annual fee for site visits or access to site content.

Question 2

Entrepreneurship occurs when an enterprising individual pursues a lucrative opportunity.

Answer 2

True
Explanation: Entrepreneurship occurs when an enterprising individual pursues a lucrative opportunity. To be an entrepreneur is to initiate and build an organization, rather than being only a passive part of one.

Question 3

Successful entrepreneurs are innovators and also have good knowledge and skills in management, business, and networking.

Answer 3

True
Explanation: As shown in Figure 7.1, successful entrepreneurs are innovators and also have good knowledge and skills in management, business, and networking.

Question 4

Natural disasters can provide an attractive opportunity for entrepreneurs.

Question 5

A small business is typically defined as having fewer than 20 employees and being in the first 10 years of its existence.

Question 6

There is a difference between a small business and an entrepreneurship venture.

Question 7

An example of the intermediary model of e-commerce is eBay.

Question 8

In e-commerce, the advertising support model involves advertisers paying for access to the demographic group that visits the operator's site.

Question 9

An entrepreneur's primary motivation to start his or her own firm is most often to get rich quickly.

Question 10

Online travel agents typically use the transaction fee model for e-commerce.

Question 11

Allegra independently owns and operates Southwest Style, a small business with about 30 employees. She is happy with the size of her business, the profits it generates, and also with the type of products it sells. Allegra's business would be considered an entrepreneurial venture.

Question 12

A great idea is one of the essential ingredients in a successful entrepreneurial venture.

Question 13

New venture creators working inside big companies are called intrapreneurs.

Question 14

An entrepreneurial venture is a new business having growth and high profitability as primary objectives.

Question 15

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

Question 16

Franchising is an entrepreneurial alliance between two organizations, one of which benefits from growth and one of which benefits from the other's experience.

Question 17

Magazines and newspapers that are available online frequently use an affiliate model for e-commerce.

Question 18

Entrepreneurs spot, create, and exploit opportunities.

Question 19

Entrepreneurs are best characterized as gamblers in their approach to risk.

Question 20

Early failures are nearly a guarantee that a venture will not succeed; don't be tempted to throw good money after bad.

Question 21

Skunkworks are project teams designated to produce new, innovative products.

Question 22

Entrepreneurs often exhibit creativity, self-reliance, and the ability to adapt.

Question 23

Entrepreneurs are frequently challenged by an aversion to record keeping.

Question 24

Legitimacy for a new venture means that the entrepreneur is part of a social network and has a good reputation.

Question 25

Start-ups have at least two major liabilities: being new and growing too fast.

Question 26

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

Question 27

Organizations can never have too many small, entrepreneurial efforts under way.

Question 28

An entrepreneurial orientation includes being proactive and competitively aggressive.

Question 29

Initial public stock offerings provide a way to raise capital through federally registered and underwritten sales of shares in the company.

Question 30

A business plan would best be described as the initial rough sketch of an idea for starting a new venture.

Question 31

Bootlegging refers to creating official job assignments for employees to create new products and processes of their own choosing.

Question 32

Organizations that encourage intrapreneurship face the obvious risk that the effort can fail.

Question 33

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

Question 34

Social capital is a competitive advantage in the form of relationships with other people and the image other people have of you.

Question 35

The pursuit of lucrative opportunities by enterprising individuals is called

A) Intrapreneurship.
B) Independence.
C) Business incubating.
D) Entrepreneurship.
E) Social experimentation.

Question 36

Because of the nature of entrepreneurship, large corporations are forced to remain passive bystanders rather than participate themselves.

Question 37

Protected environments for new, small businesses are known as business incubators.

Question 38

The reason for nearly all financial failures of entrepreneurial ventures is the lack of adequate start-up capital.

Question 39

The best business plans convey five key factors: the people, the opportunity, the competition, the context, and risk and reward.

Question 40

Acquiring venture capital is not essential to the success of most start-up businesses; in fact, it is rare.

Question 41

Howard Berke started Konarka Technologies to create solar cells in response to rising oil prices, which is an example of what category of possibilities when spotting opportunities?

A) Economic dislocations.
B) Demographic changes.
C) Lifestyle and taste changes.
D) Calamities.
E) Government initiatives and rule changes.

Question 42

Capitalizing on new clothing and music trends, the desire for fast food, and growing interest in sports are examples of which category of possibilities when spotting opportunity?

A) Technological discoveries.
B) Demographic changes.
C) Lifestyle and taste changes.
D) Economic dislocations.
E) Calamities.

Question 43

The New York Times requires regular viewers of its online articles to pay a fee to maintain uninterrupted access. This is an example of the

A) Transaction fee model.
B) Advertising support model.
C) Intermediary model.
D) Affiliate model.
E) Subscription model.

Question 44

A friend is interested in starting her own clothing line, and everyone has been giving her different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell her is true?

A) Anyone can start a business.
B) Entrepreneurs are their own bosses and completely independent.
C) Money is the most important start-up ingredient.
D) Successful entrepreneurs take very careful, calculated risks.
E) All of these are true about entrepreneurs.

Question 45

A new business having growth and high profitability as primary objectives is a(n)

A) Start-up.
B) Corporation.
C) Governmental agency.
D) Entrepreneurial venture.
E) Business speculation.

Question 46

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

A) Intrapreneur.
B) Entrepreneur.
C) Sole proprietor.
D) Management novice.
E) Licensee.

Question 47

While working at Google, Kelly has created a new venture based solely on her idea and Google's proprietary technology. Kelly can be described as a(n)

A) Intrapreneur.
B) Independent entrepreneur.
C) Spin-off.
D) Venture capitalist.
E) Outsider.

Question 48

Which of the following is an important reason why entrepreneurs start their own firms?

A) Entrepreneurs are lone wolves and cannot work with others.
B) Entrepreneurs want the whole show to themselves.
C) Entrepreneurs seek long-term security and stability.
D) Entrepreneurs are interested in the challenge and the potential for satisfaction.
E) Entrepreneurs seek power and control over others.

Question 49

Charging fees to direct Internet site visitors to other companies' sites is called the

A) Transaction fee model.
B) Advertising support model.
C) Intermediary model.
D) Affiliate model.
E) Subscription model.

Question 50

Dr. Muhammad Yunus began helping women in South Asia obtain microloans, which is an example of

A) Social entrepreneurship.
B) A skunkworks.
C) The subscription model.
D) Bootlegging.
E) Opportunity analysis.

Question 51

Entrepreneurs differ from inventors in that they

A) Have greater skills in management, business, and networking.
B) Are more innovative and creative.
C) Are less innovative and creative.
D) Have additional marketing and selling skills.
E) Have limited ability to ensure efficient operations.
According to Figure 7.1, successful entrepreneurs are innovators and also have good knowledge and skills in management, business, and networking. In contrast, inventors may be highly creative but often lack the skills to turn their ideas into a successful business.

Question 52

Justin recently started his own business. He has nearly recreated a company he worked for when he was in college, except that with his great business acumen he has been able to run the company much more efficiently and thus profitably. Justin would best be classified as a

A) Promoter.
B) Entrepreneur.
C) Manager-administrator.
D) Intrapreneur.
E) Inventor.
According to Figure 7.1, successful entrepreneurs are innovators and also have good knowledge and skills in management, business, and networking. In contrast, manager-administrators may be great at ensuring efficient operations but aren't necessarily innovators.

Question 53

Intrapreneurs are

A) Independent entrepreneurs.
B) Bootleggers.
C) Corporate entrepreneurs.
D) External entrepreneurs.
E) Business incubators.

Question 54

Leah is interested in running a business and wants to open the same type of store her sister has in another town, a Bliss Spa, a popular new chain. Leah wants to become a(n)

A) Business incubator.
B) Innovator.
C) Franchisor.
D) Franchisee.
E) Intrapreneur.

Question 55

Casey worked as an engineer for Kent Solutions, a company that produced household appliances. He had many innovative ideas for the company, but most were never explored to his satisfaction. He left the corporation to pursue his own business and try his own ideas. His new business venture would be considered

A) Entrepreneurship.
B) A spin-off.
C) Corporate espionage.
D) A corporate skunkworks.
E) Corporate theft.

Question 56

The practice of charging fees to advertise on an Internet site is called the

A) Transaction fee model.
B) Advertising support model.
C) Intermediary model.
D) Affiliate model.
E) Subscription model.

Question 57

A business having fewer than 100 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices is a(n)

A) Nonprofit opportunity.
B) Small business.
C) Speculative start-up.
D) Entrepreneurial venture.
E) Incubator.

Question 58

New venture creators working inside big corporations are called

A) Entrepreneurs.
B) Intrapreneurs.
C) Independent entrepreneurs.
D) Subsidiaries.
E) Franchisees.

Question 59

When creating a new business, one should start with

A) An untapped market.
B) A product.
C) A great idea.
D) Good timing.
E) Social responsibility.

Question 60

Bringing buyers and sellers together and charging a commission for each sale is called the

A) Transaction fee model.
B) Advertising support model.
C) Intermediary model.
D) Affiliate model.
E) Subscription model.

Question 61

_________ are protected environments for new, small businesses offering low rents and shared costs.

A) Skunkworks
B) Spin-offs
C) Bootleggings
D) Global start-ups
E) Business incubators

Question 62

Based on the entrepreneurial strategy matrix, which of the following products is most likely to have the highest risks and returns?

A) Velcro fasteners.
B) A tax preparation service.
C) A new pharmaceutical drug.
D) A new restaurant.
E) A lawn-mowing service.

Question 63

Entrepreneurs face failure in which of the following situations?

A) Only the public sector.
B) Only the private sector.
C) Only in less developed nations.
D) Only in not-for-profits.
E) In any organization.

Question 64

Svyt worked in a hospital for several years before starting a medical equipment company. He was successful because he understood the problems that existed in the hospital environment, had clever solutions from which his customers benefited, and worked hard every day to find more. Which of the following characteristics does Svyt have?

A) Leadership.
B) Commitment and determination.
C) Opportunity obsession.
D) Creativity, self-reliance, and ability to adapt.
E) Motivation to excel.

Question 65

Successful entrepreneurs who are decisive, tenacious, disciplined, and willing to sacrifice possess which characteristics of successful entrepreneurs?

A) Leadership.
B) Commitment and determination.
C) Opportunity obsession.
D) Creativity, self-reliance, and ability to adapt.
E) Motivation to excel.

Question 66

Benefits of business incubators include

A) Free rent.
B) High security.
C) Venture capital.
D) Access to shared services.
E) Guaranteed profitability.

Question 67

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
According to Figure 7.2, in the upper left quadrant, innovation is high (ventures are truly novel ideas), and there is little risk.

Question 68

The odds of survival of a small business decrease if

A) It employs over 10 to 20 people.
B) The venture has revenues of more than $2 to $3 million.
C) The company is pursuing opportunities with growth potential.
D) The business is a successful franchise.
E) The economy is weak.

Question 69

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

A) Grow as aggressively as possible.
B) Discontinue hiring family members.
C) Fill at least one key position with a non-family member.
D) Sell the business as soon as possible.
E) Allow for some diminished performance by family members.

Question 70

Which of the following characteristics contributes to entrepreneurs' success?

A) Commitment to work-life balance.
B) Tolerance of risk, ambiguity, and uncertainty.
C) Discounting of own weaknesses.
D) Comfort with the status quo.
E) Obsession with earning money.

Question 71

Which of the following characteristics increase the likelihood of an entrepreneur's success?

A) Commitment and determination.
B) Tolerance of risk, ambiguity, and uncertainty.
C) Motivation to excel.
D) Opportunity obsession.
E) All of these are characteristics that contribute to the entrepreneur's success.

Question 72

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

A) Conservative use of funds.
B) Adequate succession planning.
C) Thorough recordkeeping.
D) Decreased delegation.
E) Going public.

Question 73

Benjamin wishes to open a new home furnishings company that will have no services that are particularly distinctive compared with competitors in this well-established field, and the business will require a sizable investment. Which part of the entrepreneurial strategy matrix would the new company be located in?

A) Top left quadrant.
B) Top right quadrant.
C) Bottom left and top left quadrants.
D) Bottom right quadrant.
E) Bottom right and top left quadrants.
Most small business ventures are in the lower right section of Figure 7.2, where innovation is low and risk is high. They are fairly conventional entries in well-established fields. New restaurants, retail shops, and commercial outfits involve a sizable investment by the entrepreneur and face direct competition from similar businesses.

Question 74

Economic forces that may favor the formation of new businesses include all but which one of the following?

A) Increases in the money supply.
B) Rising interest rates.
C) Real economic growth.
D) Improved stock market performance.
E) Increased supply of bank loans.

Question 75

Entrepreneurs, in part because they are very busy, often fail to use __________________, resulting in inadequate margins to support growth.

A) formal control systems
B) a forward-thinking orientation
C) opportunity analysis
D) venture capital
E) TQM

Question 76

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

A) Family members only.
B) Family members and the board of directors only.
C) Nonfamily business managers only.
D) Someone outside both the family and the business.
E) Government succession agencies.

Question 77

A novel product idea that involves a large financial investment would be described as

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.
In the upper right quadrant in Figure 7.2, novel product ideas (high innovation) are accompanied by high risk because the financial investments and competition are great. A new drug or a new automobile would likely fall into this category.

Question 78

When an entrepreneur starts a new venture, he or she may get used to doing everything, and doing all of it with a high level of motivation. That may be a common source of difficulty for entrepreneurs, resulting in

A) Failure to contain unreasonable growth.
B) Inadequate monitoring of financial performance.
C) Failure to delegate.
D) Misuse of funds.
E) Failure to plan for contingencies.

Question 79

Most small business ventures are in the _________ entrepreneurial strategy matrix.

A) upper left quadrant
B) lower left quadrant
C) upper right quadrant
D) lower right quadrant
E) center
Most small business ventures are in the lower right section of Figure 7.2, where innovation is low and risk is high. They are fairly conventional entries in well-established fields. New restaurants, retail shops, and commercial outfits involve a sizable investment by the entrepreneur and face direct competition from similar businesses.

Question 80

Census Bureau statistics indicate that most start-up businesses with employees are financed through

A) The Small Business Administration.
B) Venture capital.
C) Personal assets or those of family.
D) The owners' credit cards.
E) Skunkworks.