Entrepreneurship Ch. 1 - 7
Which of the following is NOT one of the four main costs of losing a customer?
loss of competitive advantage
Expenses that vary directly with changes in the production or sales volume are called _____ costs.
variable
Which of the following factors is the most influential regarding choice of location and distribution systems?
type of business
Which of the following is defined as a startup company valued at over $1 billion?
unicorn
Which of the following BEST describes a small business?
One with fewer than 500 employees
Which element of a business definition addresses receiving payment?
Production and delivery capability
Which statement about publicity is true?
Publicity does not have to be paid for.
A(n) _____ is a financial statement showing cash receipts less cash disbursements for a business over a period of time.
cash flow statement
Emergency funds and a pool of cash resources are referred to as _________.
cash reserves
Which of the following is the practice of learning as much about purchasing an existing business as you possibly can before the purchase decision is made?
due diligence
Which of the following is NOT a primary role of the marketing plan?
identifying optimal production locations and operational channels
A drawback of using email or social networks to contact sales prospects is the _____.
potential to receive "flames" in response
Which of the following is NOT a step in the brand building process?
Develop brand pricing strategy.
The _____ section of a business plan answers the who, what, when, why, and how questions for the business.
Executive Summary
Which element of a business plan provides a snapshot of the business?
Executive Summary
Which of the following are models of a new product that will secure maximum customer feedback with minimal effort?
Minimum viable products
A ____ is a decision-making process in which the costs of taking an action are compared to the benefits.
cost/benefit analysis
What is the goal of market positioning?
to distinguish your product from others being offered to the market segments you have targeted
Which of the following is an example of primary research?
written surveys
Which sales person is most likely to succeed?
the one who focuses on the benefits of owning the product
Which of the following words or phrases should you use when dealing with customers?
"Consider this"
The simplest way to determine a promotional budget is __________.
percentage of sales
According to the text, which of the following is the accurate description of how entrepreneurs create a business idea?
Listen; Observe; Analyze
A company that is constantly matching or undercutting the prices of the competition is using a _______ approach to pricing.
meet-or-beat the competition
An elevator pitch should be about ________ long.
30 seconds to 2 minutes
According to the text, which statement is NOT true of business plans?
Business plans identify the competitive advantages of the future.
According to the text, which statement most accurately describes business plans?
Business plans should provide as much detail as possible on how investments will be used.
Which of the following is NOT one of the "five roots of opportunity"?
Implementation of new organizational designs
Which type of analysis provides a critical view of industry definition, industry size and growth (or decline), product and industry life cycle, and any current or anticipated legal or regulatory concerns?
Industry analysis
Understanding the product's features and the benefits they can create is part of which principle of selling?
Know your product or service
Logos are registered with the ________ to protect them from being used by others.
U.S. Patent and Trademark Office
The primary methods of calculating the value of a business are ____________.
asset valuation, earnings valuation, and cash flow valuation
A promotion that combines education and entertainment to make a more lasting impression upon an audience is called _______.
edutainment
According to the text, which of the following is a regional/community decision in regard to a location decision?
environmental regulations
Which of the following is NOT an industry force identified by Michael Porter?
future comparative advantage
_________ is a variable cost of doing business.
labor
Generally, what is the optimal location for a retail business?
near the target market
____________ refers to the remainder of revenues minus fixed and variable costs and taxes.
net profit
A company that uses secret shoppers is using ___________ as a research approach.
observation
The estimated time required to earn sufficient net cash flow to cover the start-up investment in a business is called the ______.
payback period
Which pricing strategy involves the firm setting high prices on its products or services to send a message of uniqueness or premium quality?
prestige pricing
If you conduct 100 interviews with students on your campus, what type of research have you completed?
primary
Which of the following are words that are appropriate to use when dealing with customers?
regret
The principles of entrepreneurship ________.
relate to all aspects of life
The term for unwanted Internet advertisements or emails is ______.
spam
Products Unlimited wants to learn more about the marketing strategies and promotion patterns of competitors. What type of research would be the best option for the company?
tracking
When a logo has been registered with the U.S. Patent and Trademark Office to protect it from being used by others, it becomes a _________.
trademark
Suppose your business requires a start-up investment of $1,000. The business is projecting a new cash flow per month of $400. How many months will it take for you to make back your start-up investment?
2.5 months
According to TARP Worldwide's study of negative word-of-mouth, about _____ of consumers who hear a negative word-of-mouth stop buying the product.
42%
Which statement is true of a business plan?
A business plan is used to analyze markets and opportunities in realistic terms before securing financing.
Which of the following is NOT an example of a fixed cost?
commissions
Which section of the business plan identifies the legal form of the business?
company description
The ___ approach to a promotional budget is often used in highly competitive markets to prevent market-share loss.
competitive spending
Which of the following should be counted as an asset in a seed capital estimate for a 24-hour fitness center?
computers and other technology
Which of the following is NOT a potential benefit of entrepreneurship?
dependency
_______ refers to the percentage of value of an asset subtracted periodically to reflect the declining value of the asset.
depreciation
Before meeting with bankers and other potential investors, entrepreneurs should __.
develop a business plan
According to the Customer Service Institute, it costs about _____ times as much to attract a new customer as it does to keep an existing one satisfied.
five
__________ are expenses that remain constant and must be paid regardless of whether sales are generated.
fixed costs
A _____ is typically composed of 10 to 12 people who meet screening criteria, such as being users or prospective users of a product.
focus group
The relative value of one currency to another is called the _______.
foreign exchange rate
Another term for population statistics is _______.
demographics
Which method of asset valuation establishes a minimum value for a firm?
liquidation value
You have been hired to help Buy Now improve its customer service. Some managers at Buy Now are skeptical of the value of investing in customer service. Which of the following facts might convince them that customer service really is important?
About 65% of a company's business comes from existing customers.
According to the text, which method of asset valuation generally excludes intangible assets?
Adjusted book value
Which of the following best describes a problem driven approach to a business opportunity decision process?
An entrepreneur has an idea for a product and searches for a market
According to Michael Porter, which of the following is NOT one of the key aspects of intense rivalry?
An industry experiencing fast growth
_____ is a method that analyzes the underlying value of a business's assets as a basis for negotiating a price.
Asset valuation
ABC Company anticipates start-up costs of $4,600. How much should the company keep in reserves?
At least $2,300
Which of the following is NOT a good tip for an entrepreneur who is making a business plan presentation?
Avoid using visual aids as they distract from your presentation.
Which statement is true about a company's vision?
A company's vision is built on the core values of the organization.
Which of the following is the market segment where brand loyalty or responsiveness to price is observed?
Behavioral
Which of the following refers to the cost of the direct labor used plus the cost of delivering a service?
Cost of services sold
_________ refers to the amount of gross profit that is earned on each unit of the product or service a business sells.
Economics of one unit of sale
A(n) ______ is a 30-second to 2-minute presentation that conveys in an engaging way what a business is proposing and why the listener should be interested.
Elevator pitch
A(n) _________ is someone who recognizes an opportunity to start a business that other people may not have noticed and acts on it.
Entrepreneur
Which of the following is NOT a question to ask before making an appointment for a sales call?
How should I advertise the product?
The first offering of corporate stock to investors on the open (public) market is referred to as a(n)__________.
Initial public offering
Which of the following statements is NOT true of customer service?
Investing in customer service is likely to have a low return.
Which of the following statements is NOT true of industry research?
It focuses on individual consumers.
Which statement about independent sales representatives is true?
They can be multi-line representatives.
Which of the following BEST represents the goal of customer relationship management?
To affirm that customer service is an aspect of marketing
Which of the following is the benefit of establishing a trademark for your product?
To create instant brand recognition
Which of the following is an example of a product benefit?
a coat keeps the wearer warm to 0 degrees
The plan for how an organization or individual intends to outperform competitors is known as ______.
a strategy
The act of giving up one thing for another is called _____.
a trade-off
The accounting method wherein transactions are recorded at the time of occurrence, regardless of the transfer of cash, is called the ______ method.
accrual
How much cash reserve should a start-up have?
at least half the start-up costs
Market research should be conducted _______.
before you open your business
A company's competitive strategy is a combination of its ______ with its competitive advantage.
business definition
A company's plan to generate revenue and make a profit from operations is referred to as a(n) ________.
business model
Another name for word-of-mouth marketing is ______.
buzz marketing
Which accounting method is a system wherein transactions are recorded when cash is paid out or received?
cash accounting method
A method of calculating the worth of a business by using projected future cash flows and the time value of money is called ______ valuation.
cash flow
According to the text, the ______ method of valuation is less likely to be used for an entrepreneurial venture.
cash flow
When managers plan and create steps towards a specific goal which is based on cause and effect, they are engaging in _____.
causal logic
How can a small business profit from the ideas, suggestions, and complaints of present and former customers?
conduct a satisfaction survey
According to Jay Conrad Levinson's study of the furniture industry, ______ is the primary influence on buying patterns.
confidence in the product
If an entrepreneur wants to analyze the cost of producing a tangible item, he or she should look at the ________.
cost of goods sold
Which of the following is an example of variable costs?
cost of goods sold
In which building block of the Osterwalder-Pigneur Business Model Canvas are economies of scale and economies of scope relevant?
cost structure
______refers to everything a business does to keep the customer happy.
customer service
Which of the following terms BEST describes total sales revenue minus total cost of goods sold?
gross profit
In which stage of the product life cycle do competitors begin to enter the market?
growth
According to the text, the three ways of looking at earnings valuations are ______.
historical earnings, future earnings under current ownership, and future earnings under new ownership
At which stage of the product life cycle are modifications to the design or technology made?
introduction
The free-enterprise system _________.
is based on voluntary exchange
Travel Now, a new last-minute travel agency, wants to generate some publicity and provide the "who, what, when, where, why, and how" details of the company. Travel Now should_____.
issue a press release
Mick Wood is considering buying a firm. Which method of valuation should he consider if he wants to identify the minimum value of the firm?
liquidation value
Any funds you have borrowed to start or operate the business are referred to as ______.
loans
The collection and analysis of data regarding target markets, industries, and competitors is known as ______.
market research
A group of consumers or businesses that have a similar response to a particular type of product or service is called a(n) _______.
market segment
The development and use of strategies for getting a product or service to customers and generating interest in it is referred to as _______.
marketing
Which business function identifies customers and their needs and wants?
marketing
A _____ is defined as a business with five or fewer employees, initial capitalization requirements of less than $50,000, and habitual operational involvement of the owner.
microenterprise
A company's _____ is a concise communication of its purpose, business definition, and values.
mission statement
As compared to typical products, fad products move ______ through the product life cycle.
more quickly
Which of the following is a secondary research method?
online searches
In which step of a SWOT analysis should an entrepreneur consider external events or circumstance that can help the entrepreneur gain an advantage over the competition?
opportunities
The value of what must be given up in order to obtain something else is called ______.
opportunity cost
Which method of determining a promotional budget involves spending more when you're selling more?
percentage of sales
The use of advertising and publicity to get a marketing message to customers is referred to as _______.
promotion
A person or organization that may be receptive to a sales pitch is a ______.
prospect
A ____ refers to a model or pattern that serves as an example of how a product would look and operate if it were produced.
prototype
If a newspaper writes an article about your business, it is _______.
publicity
What type of payment system is described in the text as a fixed payment made at regular intervals, such as every week or every month?
salary
According to the text, which of the following is NOT a common category of fixed expenses?
sales commission
What type of research is carried out indirectly through existing resources?
secondary
Which is NOT recommended in the context of communicating with sales prospects?
sending spam
Peter Drucker argued that for a business to be considered entrepreneurial it ___.
should exploit changes in the world
Which term describes the specific ways in which a business carries out its strategy?
tactics
What is the essence of selling?
teaching customers how the product will benefit them
You are opening a hot dog stand. According to the text, which of the following is NOT a typical start-up cost for your new business?
television advertisements
Which of the following is characteristic of causal logic?
the future is found or predicted
What is opportunity cost?
the value of what must be given up to obtain something else
Michael Porter argues that buyers have the most power when __________.
they are concentrated
Which three elements should be part of a solid business definition?
the offer, the target market, and the production and delivery capability
Which type of social entrepreneurship invests directly in business enterprises with the goal of encouraging entrepreneurial approaches to achieve social impact rather than monetary returns?
venture philanthropy
When making a sales call, visualizing your product or service fulfilling a need will help you _____.
identify what the customer needs
Which type of document summarizes income and expense activity over a specified period and shows net profit or loss?
income statement
At which stage of the product life cycle is it important to educate the consumer about the product?
introduction
Which section of the business plan is designed to hook potential investors and encourage them to read the rest of the business plan?
Executive summary
Which of the following is generally the strongest force in an industry?
Existing competitive rivalry
As compared to its mission, a company's vision is typically ______.
broader and more comprehensive
Money or property owned or used in business is called _____.
capital
In addition to achieving profitability, social entrepreneurship _______.
has a goal of attaining beneficial returns for society
In a free-market system, ____.
individuals and companies may compete for their own economic gains
Joseph Schumpeter expanded Say's definition of entrepreneurship by suggesting that _____.
innovation is the key to entrepreneurship
Effectual logic ________.
is also known as entrepreneurial thinking
A(n) ________ is a trusted advisor with whom a person forms a developmental partnership through which information, insight, skills, and knowledge are shared to promote personal and/or professional growth.
mentor
Which of the following is NOT typically found on the cover page of a business plan?
mission statement
An entrepreneur recognizes ________ where other people see only ________.
opportunity; problems
According to the text, it is important to write a business plan before starting a business in order to _______.
organize the entrepreneur's thoughts
Which element of a solid business definition answers the question, "How will you provide your offer to your targeted customers?"
production and delivery capability
The amount of earnings remaining after all costs are deducted from the income of a business is called ______.
profit
What is the sign that the entrepreneur has added value to the resources he or she is using?
profit
Which of the following is NOT a factor that creates competitive advantage?
profit
According to Michael Porter, a supplier has the least power when __________.
substitutes are readily available
A company's _________ refers to the distinctive features and benefits that set the company apart from the competition.
unique selling proposition
The Lean Startup approach _____.
works to ensure product-market fit
Which customer segment in the Osterwalder-Pigneur Business Model Canvas is composed of all the supplier and customer segments that are served?
Multi-sided markets
______ is the term for businesses using conventional approaches through print and broadcast media to drive traffic to their online sites.
brand spiraling
Which of the following is NOT included in the salaries category of fixed expenses?
commissioned sales reps
The selling price minus all variable costs is called the _______.
contribution margin
Bar Acezzories wants to know whether it should add a new product line of specialized beer glasses to its range of bar accessories. The cost of goods sold for each beer glass is $12 and the glasses can be resold for $20 each. The unit of sale is one glass and there are no additional labor costs. What is the gross profit assuming that Bar Acezzories sells 12 glasses?
$96
A brief, written statement that informs customers and employees what an organization's goal is and describes the strategy and tactics to meet it is referred to as ______.
A mission statement
_____ are measurements of the key drivers of a start-up business that guide informed decisions and steps.
Actionable metrics
If a company emphasizes paid promotions using media outlets, such as radio and magazines, which type promotion is the company focusing on?
Advertising
ShoesRUs is trying to define its target market for its new running shoe. Which of the following statements is the BEST definition of a target market for the company?
All runners in the United States
Which of the following statements is correct regarding ideas and opportunities?
An opportunity has a unique characteristic that distinguishes it from an ordinary idea.
Joseph Schumpeter described five basic ways that entrepreneurs can find opportunities to create new business? Which of the following is NOT included in Schumpeter's definition?
Carrying on a family business tradition
What describes the rate of failure for a new business venture?
One in five new businesses fails within the first eight years.
Which of the following is NOT one of the factors in the marketing mix?
Personnel
Which statement is true about deciding how to approach business opportunities?
The route of having an idea for a product or service and searching for a market is a problem-driven approach.
According to French economist Jean-Baptiste Say, entrepreneurs ________.
add value to scarce resources
Which of the following is NOT one of the four common standards of asset valuation?
adjusted replacement value
A method that assesses the value of a business based on a stream of earnings that is multiplied either by an agreed-upon factor or by the price/earnings ratio is called ______.
earnings valuation
_______ are individuals who recognize opportunities and organize and manage a business, assuming the risk for the sake of potential return.
entrepreneurs
A review that addresses the roles of the community, region, nation, or the rest of the world as they relate to a business is called a(n) _______.
environmental analysis
A study to assist in making the go/no go decision based on a close examination of product/service, market, industry, and financial data is called a(n) __________.
feasibility analysis
The U.S. Small Business Association defines a small business as having ____ employees and selling ______ worth of products or services annually.
fewer than 500, less than $5 million
_________ pricing takes the organization's product cost and adds a desired mark-up.
cost-plus
When you want to learn about your industry, competition, or markets, which type of research is generally best?
secondary
Another term for start-up investment is_____.
seed capital
______ refers to the one-time expense of opening a business.
seed capital
According to the text, which of the following statements is true?
Smart marketers emphasize product benefits instead of features.
According to the Customer Service Institute, about ___ of a company's business comes from existing customers.
65%
What type of entity is formed with the intention of addressing social or other issues, with any profits going back into the organization to support its mission?
A not-for-profit organization
Which of the following is a disadvantage of the Internet as an advertising media?
Banner ads feed click-throughs to full ads
Which principle of selling will help a salesperson make a good personal impression?
Be clean and well dressed.
According to the text, which is the best way to handle customer complaints?
Do not overreact to a negative comment.
Which of the following BEST describes breakeven?
Fixed costs are covered by sales but no profit has been made
Which of the following statements regarding fixed operating costs is NOT true?
Fixed operating costs do not change over time.
Which statement about franchising is true?
Franchises fail less often than fully independent businesses.
Which of the following is NOT an example of advertising?
Free mention of an event in a newscast
______ is an example of publicity.
Free mention of your company in a newspaper
Which earnings valuation method is likely to establish the upper limit of what a buyer is willing to pay?
Future earnings under new ownership
Which of the following describes a hypothesis-driven approach to business startups that includes iterative development?
Lean startup
Which statement is NOT true of market research?
Market research should only be conducted at the beginning of a venture.
Which of the following BEST represents a mission statement?
Our goal is to honor and empower wounded warriors.
According to the text, what is the common mistake made by many inexperienced sales people?
Thinking that an emphasis on product features will sell the product
What is the essence of good customer service?
To build positive relationships before and after a sale
According to the text, which of the following is NOT recommended as part of good financial record keeping for your business?
Use cash for business whenever possible.
According to the text, which of the following is NOT a guideline for business plans?
Use historical data and reports for your industry
An entrepreneur who receives a percentage of the value of a sale is being paid ______.
a commission
Which of the following is NOT part of a business plan?
a detailed description of the founders' abilities and experiences
In which step of the sales call should you offer discounts or other incentives to customers who help identify other potential customers for you?
asking for references
The factors that contribute to the ease or difficulty of a new competitor joining an established market are known as _________.
barriers to entry
_______ refers to business equipment that is expected to last a year or more.
capital equipment
The beliefs, values, and behavioral norms of an organization are known as its _______.
culture
Which of the following is a disadvantage of television advertising?
long lead time
Burger King's "Have It Your Way" campaign is an example of ______.
market positioning
Which approach to promotional budgeting funds expenditures according to the strategies and tactics developed to reach specific promotional objectives?
objective and task
Which is NOT one of the four basic ways to segment a market?
polygraphic
The _______ of a product is its relative place in the customer's mind compared with its competitors.
position
Distinguishing a product or service from similar products or services being offered to the same market refers to _______.
positioning
Research that is conducted directly on one or more specific subjects is referred to as _____ research.
primary
Undercover or deceptive marketing efforts that are intended to appear as if they happened naturally are referred to as ________.
stealth marketing
Which of the following do you NOT need in order to calculate net present value?
total sales
The basic unit of the product or service sold by a business is referred to as the _____.
unit of sale
Which term BEST describes business activities that avoid harm to the environment or help to protect it in some way?
Green entrepreneurship
Which of the following would NOT typically be considered a start-up expense?
Installation of equipment and furniture
_______ distinguishes goods or services through a design, symbol, name, term, or other features.
brand
Which of the following is/are NOT business-to-business sales promotional tools?
coupons
The term for money when it is exchanged internationally is _______.
currency
_________ refers to company-wide policies, practices, and processes that a business uses with its customers to generate maximum customer satisfaction and optimal profitability.
customer relationship management
In which area of business can a small business outperform its larger competitor?
customer service
Sell More Now is training its salespeople. Today's instruction is on how to make a sales call. Which step in the eight-step sales call method requires listening to and responding to concerns of the customer?
dealing with objections
Which type of market segmentation involves dividing a population based on a variable such as age or gender?
demographic
According to the text, which of the following is NOT one of the eight steps of a successful sales call?
development
Which of the following is NOT part of the eight-step sales call described in the text?
development
Employees who actively produce or deliver a product or service are called _______.
direct labor
Which of the following is NOT a category sales expert Brian Tracey recommends for classifying objections when the goal is to turn objections into advantages?
distribution
__________who sell multiple, non-competing product lines within a specific industry or geographical area can be used to quickly build a national presence while keeping commission as a variable cost.
independent sales representatives
Until the product is sold, expenses associated with materials and direct labor for production are referred to as ______.
inventory costs
Which of the following includes start-up money plus any money you or others contributed in the business in exchange for part ownership?
investment
Offering a clear and compelling vision for the organization that inspires others to commit to it is referred to as _____.
leadership
Reading messages and getting a feel for discussions on a website, newsgroup, or the like, without participating in the online conversation, refers to _____.
lurking
Nike's "Just Do It" advertising is an example of ______.
marketing
Which type of pricing approach uses a predetermined percentage applied to a product's cost to obtain its selling price?
markup
Promoting brand loyalty becomes essential in the ______ stage of the product life cycle.
maturity
A trusted advisor with whom a person forms a developmental partnership through which information, insight, skills, and knowledge are shared to promote personal and/or professional growth is known as a ______.
mentor
A _______ is a concise communication of strategy, including a business definition and an explanation of competitive advantage.
mission
Which of the following is used to determine the time needed to earn back initial disbursements?
payback period
Offering a product for a lower price during the early stages of the life cycle in order to gain market share is referred to as _____.
penetration pricing
_______ is a concern for human and social welfare that is expressed by giving money to charities and foundations.
philanthropy
Which type of research should you conduct when you need to ask questions specific to your product?
primary
_________ advertising is designed to create awareness, interest, purchasing behavior, and post-purchase satisfaction for specific products and services.
product
According to the text, which type of advertising is more common for small entrepreneurial companies?
product advertising
Which of the following is NOT one of the traditional four Ps of marketing?
production
Salesman Joe Girard's Law of 250 refers to _______.
treating everyone you sell to like gold
Which of the following are a fixed cost of doing business?
utilities
When a company advertises "more for less" and balances quality and price, the company is using a _____ pricing approach.
value
According to the text, the star salesperson ______.
views every sales call as an opportunity to improve selling skills
A transaction between two parties who willingly agree to trade money for a product or service is referred to as _____ exchange.
voluntary
Market research is the process of finding out all of the following EXCEPT ______
what the optimal production locations are
