Deck 1: The Foundations of Entrepreneurship

Question 1

One study conducted by the Global Entrepreneurship Monitor (GEM) reports that nearly one in eight people in the United States is working to start a business.

Answer 1

True

Question 2

All of the following are characteristics of the typical entrepreneur except ________.

A) confidence in his/her ability to succeed
B) value of money over achievement
C) desire for immediate feedback
D) a future orientation

Answer 2

B

Question 3

Serial entrepreneurs repeatedly start businesses and grow them to a sustainable size before striking out again.

Answer 3

True

Question 4

Globally, one in eight adults is actively engaged in launching a business.

Question 5

What is an entrepreneur? Give a brief profile of a typical entrepreneur. What is the primary motivation for the typical entrepreneur?

Question 6

The opportunity to reap impressive profits is the primary motivation for most entrepreneurs.

Question 7

Surveys show that small business owners believe that, as entrepreneurs, they work harder, earn more money, and are happier than if they worked for a large company.

Question 8

One of the most significant economic developments in recent business history relates to the ________.

A) growth of blue-chip corporations
B) development of Pacific Rim countries
C) entrepreneurial spirit
D) additional employment opportunities offered by government institutions

Question 9

Current competitive conditions favor large companies over smaller ones because of their flexibility combined with their ability to use their size to achieve efficiency and economies of scale.

Question 10

Increased entrepreneurial activity is a phenomenon unique to the U.S.

Question 11

Entrepreneurs who repeatedly start businesses and grow to a sustainable size before striking out again are known as ________ entrepreneurs.

A) opportunistic
B) persistent
C) serial
D) classic

Question 12

In addition to the opportunity to create their own destiny and enjoy what they do, entrepreneurs also benefit from the ability to ________.

A) earn tremendous wealth without risk and uncertainty
B) make a difference in an area important to them and be recognized for those efforts
C) create wealth without providing true value
D) exploit the opportunities that the free enterprise system offers

Question 13

An entrepreneur is one who ________.

A) is willing to attempt to implement a business concept and then give up if it does not meet immediate expectations
B) understands the process of developing an idea and does not need to understand what it means to bring that idea to a viable business concept
C) knows that the concept they are about to develop will result in a profitable business
D) creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities

Question 14

Entrepreneurs are characterized by ________.

A) skill at organizing
B) desire for immediate feedback
C) high energy levels
D) All of the above

Question 15

Research has isolated a set of characteristics that can predict who will succeed as an entrepreneur.

Question 16

Mini Case 1-1: Hudson's Dilemma
Bill Hudson was a real craftsman when it came to being a machinist. Bill had learned almost all that he knew from Hugo Huffman, his first and only employer. Bill Hudson was married and had three young children. He was 33 years old and had worked for Hugo ever since he finished his tour in the Army. In 12 years, Bill had polished his skills under the watchful and critical eye of Hugo Huffman. Hugo was quick to recognize Bill's talent for the trade. Bill had a positive attitude about learning and displayed a drive for perfection that Hugo admired.
Hugo's Machine Shop was a successful small business. Its success was based mostly on the reputation for quality that had been established over its 42 years in operation. Hugo had come to this country with his new wife, Hilda, when he was in his late twenties. Now the business was a success, but Hugo remembered the early years when he and Hilda had to struggle. Hugo wanted the business to continue to produce the highest quality craftsman products possible. On a Friday evening, he called Bill into his office at closing time, poured him a cup of half-day-old coffee, and began to talk with him about the future.
"Bill, Hilda and I are getting old and I want to retire. It has been 42 years of fun but these old hands need a rest. In short, Hilda and I would like you to buy the business. We both feel that your heart is in this craft and that you would always retain the quality that we have stood for." Bill was taken back by the offer. He, of course, knew Hugo was getting older, but had no idea Hugo would retire. Bill and his wife, Anna, had only $4,200 in the bank. Most of Bill's salary went for the normal costs of rearing three children. Hugo knew Bill did not have the money to buy the business in cash, but he was willing to take a portion of the profits for the next 15 years and a modest initial investment from Bill.
Bill had, for the past four years, made most of the technical decisions in the shop. Bill knew the customers and was well respected by the employees. He had never been involved in the business side of the operation. He was a high school graduate but had never taken business courses. Bill was told by Hugo that even after deducting the percentage of the profits he would owe under the sales agreement, he would be able to almost double his annual earnings. Bill would have to take on all the business functions himself because Anna had no business training either.
Which entrepreneurial characteristics does Bill have that may be important to his success? Which characteristic could lead to his failure?

Question 17

Entrepreneurs typically possess ________.

A) the ability to easily access capital
B) a set of unique skills that is usually accompanied by advanced degrees in several areas
C) a high level of commitment, have a tolerance for ambiguity, are flexible and tenacious
D) specialized technical abilities

Question 18

The profile of an entrepreneur includes ________.

A) a desire for responsibility and moderate risk
B) confidence in the ability to succeed and determination
C) a high level of energy, a desire for immediate feedback and a future orientation
D) All the above

Question 19

Entrepreneurs who start businesses because they cannot find work any other way are ________.

A) necessity entrepreneurs
B) serial entrepreneurs
C) opportunity entrepreneurs
D) corporate cast-offs

Question 20

The recent number of job losses in large corporations compared to the jobs created by small business has changed the perception of ________ for launching a new business.

A) prestige
B) risk
C) financing opportunities
D) short-term potential

Question 21

Technology offers a significant advantage for entrepreneurs.

Question 22

Within five years, ________ percent of new businesses will fail.

A) 21
B) 45
C) 51
D) 65

Question 23

Entrepreneurs choose to enter their particular business fields because they have an interest in them and enjoy those lines of work. They have often made their hobbies their business.

Question 24

________ entrepreneurs are business builders who seek innovative solutions to some of society's most vexing problems.

A) Social
B) Opportunistic
C) Serial
D) Necessity

Question 25

Which of the following is NOT one of the forces driving the entrepreneurial trend in our country?

A) Shift away from a service economy.
B) Independent lifestyle.
C) International opportunities.
D) E-commerce and the World Wide Web.

Question 26

Which of the following is a benefit of entrepreneurship?

A) The opportunity to gain control over your own destiny.
B) The opportunity to reach your full potential.
C) The opportunity to do what you enjoy.
D) All of the above

Question 27

One advantage of being your own boss and owning a small business is that work hours are very flexible and leisure time is abundant.

Question 28

International opportunities are ________.

A) clearly out of reach for entrepreneurial businesses
B) now within the reach of entrepreneurial businesses and may present significant opportunities
C) highly limited for entrepreneurs
D) risky and do not merit serious consideration by the entrepreneur

Question 29

Entrepreneurs are not willing to give up a steady paycheck.

Question 30

Which of the following technological forces is driving the entrepreneurial trend in our nation?

A) Cloud computing.
B) Mobile marketing.
C) The Internet.
D) All of the above

Question 31

The majority of new business owners work fewer than 40 hours per week.

Question 32

Factors that feed the economic boom behind entrepreneurship include ________.

A) demographic and economic factors
B) technology and cloud computing
C) the shift to a service-based economy and international opportunities
D) All of the above

Question 33

It is estimated that ________ percent of new businesses fail within two years, while ________ percent fail within five years.

A) 21; 51
B) 51; 64
C) 35; 41
D) 51; 31

Question 34

Potential drawbacks of entrepreneurship may include ________.

A) uncertainty of income, risk, long hours, and high stress
B) uncertainty of income, risk, easy hours, and frequent vacations
C) uncertainty of income, risk, long hours, and the immediate accumulation of wealth
D) certainty of income, risk, long hours, and high stress

Question 35

The majority of new business owners devote more than 40 hours per week to their companies.

Question 36

Entrepreneurs may find benefit from the Internet due to its potential ________.

A) if the organization is willing to invest millions of dollars in this effort
B) only if the entrepreneur has a high level of technical abilities
C) as a relatively low-cost solution to expand its revenue-generating abilities
D) to take all pressure off other attributes of the business venture

Question 37

The majority of new business owners work ________.

A) fewer than 40 hours per week
B) more than 40 hours per week
C) more than 70 hours per week
D) more than 80 hours per week

Question 38

Nearly ________ of entrepreneurs start their businesses between the ages of 20 and 44 and the number of Americans in that age range currently is ________ .

A) one-half; 8.5 million
B) two-thirds; 85,000
C) three-fourths; 103 million
D) one-fourth; 85 million

Question 39

Social entrepreneurs use their skills to create profitable businesses and also achieve economic, social and environmental goals for the common good.

Question 40

There is concern over the future of entrepreneurship because so few high school and college students want to start their own companies.

Question 41

Women in business still experience ________ as they attempt to break the "glass ceiling."

A) success
B) opportunities
C) discrimination
D) ease of navigation

Question 42

Women now own 30.4 percent of all privately-held businesses in the United States.

Question 43

Discuss the potential benefits and drawbacks of entrepreneurship.

Question 44

The demographic attributes of successful entrepreneurs are ________.

A) limited to specific ages, genders, and ethnic backgrounds
B) uncertain and have not been fully studied or analyzed
C) are key predictors that determine how long the business will survive
D) highly diverse relating to age, gender, and ethnicity

Question 45

Which of the following is a characteristic of copreneurs?

A) Mutual respect
B) Complementary business skills
C) A clear division of roles and authority
D) All of the above

Question 46

Small companies that operate globally from their inception are referred to as ________.

A) micromultinationals
B) intrapreneurial ventures
C) global companies
D) international companies

Question 47

Which of the following statements is not true regarding the diversity of entrepreneurs?

A) Minority-owned businesses have come a long way in the past decade, and their success rate is climbing.
B) Minority-owned businesses now account for approximately 22 percent of all businesses in the U.S.
C) Immigrants with more education and experience than those of the past are coming to the U.S. and succeeding in entrepreneurial ventures.
D) The numbers of part-time and home-based entrepreneurs are rising.

Question 48

Cloud computing allows businesses to use a variety of applications and has reduced costs and added flexibility.

Question 49

Small companies that have expanded successfully into foreign markets tend to rely on all but which of the following strategies?

A) Research foreign markets thoroughly.
B) Focus on many countries initially.
C) Utilize government resources designed to help small companies establish an international presence.
D) Forge alliances with local partners.

Question 50

Which of the following is not a characteristic of a successful working relationship between copreneurs?

A) A clear definition of one partner as "boss" and the other as "subordinate".
B) Compatible business and life goals.
C) Complementary business skills.
D) A clear division of roles and authority based on each partner's skills and abilities.

Question 51

Approximately ________ percent of corporate managers who are "cast off" as companies downsize become entrepreneurs.

A) 5
B) 15
C) 20
D) 45

Question 52

Which of the following statements concerning small businesses and international markets is false?

A) Although terrorism and global recession have slowed the growth of international trade somewhat, global opportunities for small businesses have a long-term positive outlook.
B) Although the U.S. is an attractive market, approximately 95 percent of the world's population lives outside its borders.
C) Because exporting is so complex and requires a company to have so many international experts on staff, exporting is not feasible for small businesses.
D) Small companies comprise 97 percent of all businesses engaged in exporting, yet they account for only 30 percent of the nation's export sales.

Question 53

Melinda and John Perez, both corporate attorneys in New York City, have grown tired of their lengthy daily commute, the stress of their jobs, and the overbearing policies of their employers. They have decided to leave their six-figure jobs and together open a guide service in Wyoming. Melinda and John are examples of ________.

A) corporate castoffs and corporate dropouts
B) corporate dropouts and copreneurs
C) corporate castoffs and copreneurs
D) copreneurs and serial entrepreneurs

Question 54

________ percent of all U.S. businesses are family-owned and managed.

A) Twenty-five
B) Fifty
C) Seventy
D) Ninety

Question 55

The shift to a service economy has not had a significant impact on entrepreneurial opportunities.

Question 56

Entrepreneurial couples who work together as co-owners of their business are referred to as ________.

A) dual entrepreneurs
B) corporate dropouts
C) corporate cast-offs
D) copreneurs

Question 57

Describe the factors that are driving the current entrepreneurial trend in the U.S. economy.

Question 58

"Copreneurs" are defined as ________.

A) entrepreneurs that work part-time
B) highly successful entrepreneurs with prior company experience and background
C) those entrepreneurs that will eventually combine their business with another venture
D) entrepreneurial couples that work together as co-owners of their business

Question 59

The average age of the first-time entrepreneurs in the United States is nearly ________.

A) 44
B) 25
C) 19
D) 31

Question 60

Which of the following statements about women-owned businesses is false?

A) The businesses women start tend to be smaller than those men start.
B) Women own about 28 percent of all privately-held businesses in the U.S.
C) The number of women-owned businesses is growing slower than the national average.
D) Women-owned companies are far less likely to attract equity capital investments as those that men start.

Question 61

About 20 percent of downsized corporate managers have become entrepreneurs.

Question 62

Most family businesses survive to the fourth generation.

Question 63

Not all family-owned businesses are small; in fact, approximately one-third of the Fortune 500 companies are family businesses.

Question 64

Most home-based businesses are simple cottage industries such as crafts or sewing.

Question 65

The nation's small businesses ________.

A) employ more than 49 percent of the nation's private sector workforce
B) create more jobs than do big businesses
C) account for 47 percent of business sales
D) All of the above

Question 66

A major advantage of launching a business part-time is the lower risk it offers in case the business fails.

Question 67

Corporate downsizing has spawned a generation of entrepreneurs known as "corporate castoffs."

Question 68

Because they have college degrees, a working knowledge of business, and years of management experience, both corporate castoffs and corporate dropouts who become entrepreneurs will most likely increase the small business survival rate.

Question 69

Ninety-percent of businesses in the United States are family-owned and managed and account for 62 percent of total U.S. employment.

Question 70

Family-owned and managed businesses account for 78 percent of all new jobs.

Question 71

Diversity may be considered a characteristic of entrepreneurs, as they don't fit any statistical norm.

Question 72

Of the 28 million businesses in the United States, more than ________ percent are considered small.

A) 50
B) 75
C) 88
D) 99

Question 73

According to the U.S. Small Business Administration, a common delineation of a small business is one that employs fewer than ________ people.

A) 50
B) 100
C) 250
D) 500

Question 74

Discuss the role that the following groups are playing in leading the ongoing surge in entrepreneurial activity:
∙ women
∙ minorities
∙ immigrants
∙ part-time entrepreneurs
∙ home-based entrepreneurs
∙ family businesses
∙ copreneurs
∙ corporate castoffs
∙ corporate dropouts

Question 75

Women play a minor role in the entrepreneurial arena.

Question 76

Successful "copreneurs" create a division of labor based on expertise.

Question 77

Starting a part-time business is a popular gateway to entrepreneurship.

Question 78

Minority-owned businesses have come a long way in the past decade, and their success rate is climbing.

Question 79

Increasing numbers of women are discovering that the best way to break the "glass ceiling" that prevents them from rising to the top of many organizations is to start their own companies.

Question 80

Of the 27 million businesses in the U.S., about 40 percent are family owned and managed.