Entrepreneurship Final 2

In general, manufacturing and production firms are organized as product- or process-focused organizations. T/F

True

Most ethical issues are not criminal acts but rather small dilemmas that present themselves with great regularity every day. T/F

True

Pricing is not designed to cover total costs but to maximize total contribution—that is, unit price minus unit variable costs. T/F

True

Strategies are the plans for achieving the goals and, ultimately, accomplishing the mission of a company. T/F

True

Once a new venture has passed the startup stage, additional value is created by all of the following EXCEPT

a low return on equity.

_____ benefits include such things as saving money or time, convenience, and health.

.Intangible

_____ is used to demonstrate that a company stands behind what it produces and the work that it does.

A warranty

Which of the following is NOT a characteristic of communication in an effective team?

Although conversations occur among all the members, the leader should dominate a majority of the discussions.

All products are appropriate for offshore manufacturing. T/F

False

An accountant is an advocate, but a lawyer is bound by rules and ethics that do not permit advocacy T/F

False

The marketing plan is quite similar to market analysis. T/F

False

The single best way to craft a viral strategy using social media is to provide free products and services. T/F

False

Which of the following is NOT part of operations management?

Hiring and firing

_____ are primarily interested in a company's margins and cash flow projections.

Lenders

Which of the following is an example of an indirect selling expense?

Postal charges

Building brand equity requires that customers form an emotional attachment to the brand. T/F

True

Which of the following is a service that consultants do NOT provide?

Representing the entrepreneur in any legal actions

____ refers to operating a business in a way that exceeds the ethical, legal, commercial, and public expectations that society has of the business.

Social responsibility

Launch objectives are the key goals for a marketing campaign. T/F

True

Boards of publicly owned corporations can be composed of inside or outside members or a combination of the two. T/F

False

It is normally a good idea for the entrepreneur to discuss what he or she thinks the business is worth in a business plan. T/F

False

Not all businesses are affected by logistics. T/F

False

Today it is much easier for a new venture to achieve total in-house control of its value chain. T/F

False

Product- or project-focused organizations generally are highly _____ so that they can respond better to market demands.

decentralized

An entrepreneur's personal _____ is really a function of the core values and vision that the entrepreneur has for his or her life.

definition of success

The length of a warranty depends on _____, whereas the components of the product or service depend on _____.

industry standards; the situation

The _____ for a startup is a living guide to how a company plans to build customer relationships over its life in order to fulfill the company's mission statement.

marketing plan

The _____ of a product/service is the price as compared to competing products—the expected price.

reference value

When entrepreneurs develop job descriptions, they should include _____ to prepare for the eventuality of hiring employees.

behavioral profiles

he American Marketing Association defines the term _____ as a "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct" from other sellers.

brand

In the context of outsourcing to reduce costs, which of the following is a lesson that should be learned while outsourcing operations overseas?

c. The regulatory requirements of an industry should be understood. Answers: a. Communicating by email and fax is enough. b. Only problematic projects should be outsourced. c. The regulatory requirements of an industry should be understood. d. Problems in the beginning that slow the process should not occur and are a sign that outsourcing is a mistake. e. All of these are correct.

All of the following are independent contractors that entrepreneurs use on a regular basis EXCEPT

c. advisory boards. Answers: a. consultants. b. manufacturers. c. advisory boards. d. distributors. e. employee leasing firms.

The _____ plan is simply a way of recognizing that sometimes even the "best laid plans" don't work the way they were intended to work.

contingency

Investors focus on the first 18 months to 2 years of a startup because during that time, the entrepreneur is

continually adjusting the business model as he or she responds to the market.

A payment model where the advertiser pays based on some manner of conversion such as a sale or site registration is known as

cost-per-action.

Which of the following factors does NOT play a role in the rate at which a new product is adopted across the various customer segments?

d. Customer relationship Answers: a. Usability b. Learning curve c. Switching costs d. Customer relationship e. Perceived benefit

Which of the following is one of the biggest problems with most marketing plans?

d. They are not followed long enough to achieve the desired results. Answers: a. They fail to identify the benefits offered to customers. b. They fail to take the customer relationship into account. c. They are driven primarily by the effort to overcome customer complaints. d. They are not followed long enough to achieve the desired results. e. None of these are correct.

All of the following are examples of poor ethics EXCEPT

d. getting to work late. Answers: a. cheating customers on price. b. lying to customers, employees, and suppliers. c. failing to pay bills on time. d. getting to work late. e. not reporting all cash receipts.

Internet ventures have unique metrics because they typically start with three types of "customers": visitors, contributors, and

distributors.

Which of the following is an advantage of using an inventory management company?

e. All of these are correct. Answers: a. They oversee storage. b. They track inventory numbers. c. They fill and ship orders. d. They allow inspection and control of inventory from any computer with Internet access. e. All of these are correct.

A well-written paragraph of a marketing plan includes all of the following EXCEPT the

e. sales forecast. Answers: a. company's convictions and identity. b. benefits of the product/service. c. target market. d. market niche. e. sales forecast.

Operations should be outsourced when all efforts to boost _____ and _____ at home have been exhausted.

efficiency; innovation

Today, manufacturers tend to produce one unit at a time serially in _____ manufacturing cells.

flexible

The real success or failure of a quality control effort is dependent on the _____ in the process.

human element

Industrial parks are common locations for

manufacturing companies.

A company's _____ is what brings everyone together to achieve a common objective and is closely related to the company's purpose.

mission

Management guru Peter Drucker always asserted that a company's _____ should "fit on a t-shirt."

mission

A _____ precisely identifies the environment in which the company operates and communicates the company's fundamental philosophy.

mission statement

A conflict of interest occurs when a person's private or personal interests clash with his or her

professional obligations.

The chances of success are greater when the lead entrepreneur and the team share the same _____ for a new venture.

vision

Software companies are a classic example of a(n) _____ organization.

distributed

Which of the following individuals would be the best fit as the chief executive officer (CEO) of a startup?

e. None of these are correct. Answers: a. Jamal, a Web developer b. Katelyn, an engineer c. Mia, a scientist d. All of these are correct. e. None of these are correct.

The marketing plan includes all of the following EXCEPT

e. the location strategy for the business. Answers: a. the market niche. b. a media plan for specific marketing tools. c. the business's identity. d. tools that will be used to reach the customer. e. the location strategy for the business.

The _____ of a region or community is simply the major source of income for the area.

economic base

All of the following are guidelines to consider when developing the executive summary EXCEPT

c. avoid puff words, phrases, and analogies. Answers: a. read each sentence multiple times to prune unnecessary words and to make sure that the summary is focusing on the critical points. b. keep the pitch deck to about 10 slides that contain only the key points in large fonts. c. avoid puff words, phrases, and analogies. d. include recognizable names if there is an established relationship with the person or company. e. avoid jargon and acronyms that might be foreign to the reader or listener.

All of the following are factors that are significant in team composition EXCEPT

c. reward structure. Answers: a. functionality. b. ecological constraints. c. reward structure. d. homophily. e. network constraints.

Which of the following is a characteristic of early adopters?

Early adopters are eager to adopt new products to solve problems and create a competitive advantage for themselves.

Which of the following refers to a basic ownership interest in a company whereby holders share in both the successes and the failures of the business and benefit through dividends and the appreciating value of the company?

Common Stock

_____ are the fundamental beliefs that a company holds about what is important in business and in life in general.

Core values

_____ is managing the flow of material and information from raw materials to finished goods.

Production

_____ and _____ are two of the most effective marketing tools around because they do not cost a company any money.

Publicity; word-of-mouth

Which of the following is considered the weakest proof of concept (POC) approach?

Working prototype

Which of the following would NOT be considered a stakeholder of a company?

a. A competitor Answers: a. A competitor b. An employee c. A supplier d. An investor e. A customer

Which of the following is NOT part of the "5 Ps" of marketing?

a. Purpose Answers: a. Purpose b. People c. Product d. Place e. Promotion

Banner exchange programs are an example of a(n)

affiliate program.

The strongest product proof of concept (POC) is a working prototype. T/F

False

There probably is no single best organizational structure for all types of ventures in all situations. T/F

True

Which of the following words or phrases should an entrepreneur avoid using in an executive summary?

e. All of these are correct. Answers: a. Core values b. Scalable c. Drinking the Kool-Aidd. Core competency e. All of these are correct.

Entrepreneurs need to remember that _____ costs are the biggest costs a business will bear because of all the associated taxes and any benefits offered.

employee

Entrepreneurs can reach a price that can be tested in a market by considering costs, any competitor pricing, and

feedback from customers and value chain partners.

The _____ represents how a startup uses its cash to cover its overhead before it generates a positive cash flow from operations.

monthly burn rate

In general, founders who bring the idea or seed capital to the venture will receive a premium on the share of stock they receive, typically between _____ and _____ percent.

10; 15

An entrepreneur should strive to effectively "pitch" the essence of his or her business in

15 seconds.

The general recommendation is to have no fewer than _____ and no more than _____ board members.

5; 15

Which of the following types of board member would be needed for a business in the maturity stage?

A catalyst for innovation

Which component of the business plan is used to include items such as résumés, calculations, and surveys that support your claims in the main body of the report?

Appendices

Which of the following is an important benefit of demonstrating proof of concept (POC) with a prototype?

Changes in the prototype can be made early in the process when changes are less costly.

Which of the following is perhaps the most critical factor in effective startup teams?

Communication

____ is found by subtracting variable costs from revenues and dividing the difference by revenues to yield a percentage.

Contribution margin

_____ refers to an organization's tendency to develop its own characteristic way of doing things.

Corporate culture

Founder's stock is not restricted. T/F

False

In startups, being chief executive officer (CEO) is arguably the best job of all. T/F

False

The Family and Medical Leave Act provides for up to 12 weeks of paid leave for employees who are dealing with family issues. T/F

False

The executive summary of a business plan should be no more than two pages. T/F

False

The income statement is called a "statement of financial position." T/F

False

Which of the following is NOT a strategy that can help entrepreneurs arrive at a realistic forecast of demand for their product or service?

Preparing revenue budgets

_____ is a strategy in which a company starts with a high price to capture uniqueness and competitive advantage, and then drops the price as competitors enter the market in order to stay ahead of competition.

Price skimming

Which of the following uses net income and net sales from the income statement to give the percentage of each dollar of sales remaining after all costs of normal operations are accounted for?

Profit margin

Which of the following common pricing strategies is a company using when it creates a complex pricing structure by combining multiple products and services into one package?

Psychological pricing

_____ is an amount of cash that is often based on the sales and collection cycle of a business.

The safety margin

At startup the goal is to create a mix of resources that will enable the new venture to start and operate until sales of the business's product or service produce a positive cash flow. T/F

True

In a wholly owned or closely held corporation, there really is no distinction between the functions of a board of directors and those of a board of advisors. T/F

True

Most entrepreneurs avoid hiring employees as long as possible, because employees are the single biggest expense in the business. T/F

True

Using a stock-vesting agreement is one way to make sure that only stock that has been earned will be distributed. T/F

True

Where a new venture lies in the value chain will determine what its profit margins are, who its customers are, and how much it can charge for its products and services. T/F

True

Which of the following employment laws applies to companies of any size?

a. Immigration Reform and Control Act Answers: a. Immigration Reform and Control Act b. Americans with Disabilities Act c. Fair Labor Standards Act Equal Pay Provisions d. Family and Medical Leave Act e. All of these are correct.

A(n) _____ is an informal panel of experts and other people who are interested in seeing a new venture succeed.

advisory board

All of the following are part of an entrepreneur's extended network EXCEPT

b. customers. Answers: a. sales support. b. customers. c. government agencies. d. personal advisors. e. manufacturing support.

The _____ looks at the financial health of a business at a single point in time.

balance sheet

A(n) _____ depends on a validated business model that has been market-tested and is reliable.

business plan

The bottom line for any new venture is

cash

In manufacturing businesses, forecasting expenditures is a bit more complex than in wholesale businesses because _____ must be derived first.

cost of goods sold

To ensure compliance with IRS regulations while hiring independent contractors, an entrepreneur should do all of the following EXCEPT

d. indicate the methods of accomplishing the work. Answers: a. verify that the independent contractor possesses the necessary licenses.b. verify that the independent contractor carries workers' compensation insurance.c. indicate the desired result of the work.d. indicate the methods of accomplishing the work. e. draw up a contract with each independent contractor.

For feasibility purposes, a(n) _____ statement, essentially a cash budget or sources and uses statement, is used so that cash inflows and outflows are easy to identify and examine.

direct cash flow

The entrepreneur and the founding team often perform all the functions when a business is starting, and much of the work is accomplished through a(n) _____ network of relationships.

informal

Many ventures start as _____ where the owners are considered "members" and "managers."

limited liability companies

In very simplistic terms, organizational culture is the _____ of an organization.

personality

Capital appreciation rights are also known as "_____ stock."

phantom

In service businesses, the cost of goods sold is equivalent to the time expended to _____ and _____ the service.

produce; deliver

For his new startup business venture, Amal has hired StaffRight to hire his employees and assume the payroll and human resources functions for his business for a fee. StaffRight is a(n)

professional employer organization (PEO)

With regard to pricing models, _____ products are defined as those whose price is transparent, easily identified, and most subject to downward pricing pressure.

simple

A way in which startups become more flexible and responsive, as well as grow more rapidly, is by forming _____, or teams of businesses, to share resources and reduce costs.

strategic alliances

In addition to explaining the business model, an executive summary should include a well-thought-out summary financial plan with _____ to _____ years of projected revenues, expenses, cash flow, and headcount or personnel requirements at various milestones.

three; five

A(n) _____ is the region from which you expect to draw customers

trade area

When creating a timeline, the lead times with respect to milestones that indicate a change in the current revenue pattern are known as

triggers.

A company's core values are based on the personal values and beliefs of the founder or the founding team. T/F

True

A process map details how information flows through a business. T/F

True

Identifying all the tasks in the production process makes it easier to determine what equipment and supplies are needed for completing the tasks. T/F

True

Which of the following is NOT a question that an entrepreneur should ask him- or herself if he or she is thinking about outsourcing operations?

What level of service am I expecting?

The process of developing _____ begins with a company's self-examination to identify values held by individuals and alert everyone to inconsistencies in how people deal with particular issues.

a code of ethics

Building a complex production system while the company is in startup or even later when it is rapidly growing is

a recipe for disaster.

Which of the following is NOT a primary flaw that investors commonly find in business plans?

a. Lack of enthusiasm Answers: a. Lack of enthusiasm b. Too much hype c. No demonstration of customer demand d. Overly optimistic financial projections e. Poor explanation of the business model

Which of the following is NOT a formal interdependent process?

a. Team building Answers: a. Team building b. Reward policies c. The planning system d. Control mechanisms e. Compensation

Which of the following is NOT one of the five most common types of ethical dilemmas in business?

b. Invasion of privacy Answers: a. Conflict of interest b. Invasion of privacy c. Stakeholder pressure d. Responding to initiatives e. Pushing the legal limit

At startup, the organization chart is more likely to be _____, reflecting the fact that the entrepreneur and the founding team often perform all the functions when the business is starting.

flat

The initial stock issued to the first shareholders of a corporation is sometimes referred to as _____ stock.

founder's

The intense effort required of a startup can be shared when the entrepreneur uses a

founding team.

In general, manufacturing and production firms are organized as _____ or _____ organizations.

product-focused; process-focused

The _____ process consists of a series of inputs, such as raw materials, labor, and machinery, which are then transformed through a series of processes into new products and services.

production

Which of the following approaches to avoiding ethical issues is best represented by the statement, "Everyone needs to look out for him- or herself."

Egoistic approach

How a product or service is priced is a function of a company's

goals.

Empirical research has provided evidence that firms founded by _____ are generally more successful than those founded by _____.

heterogeneous teams; individuals

In some industries, particularly labor-intensive ones, the only way to achieve competitive costs is to manufacture in a country where

labor costs are low.

In Eastern culture, ethical leaders are viewed as being

modest.

In Eastern culture, ethical behavior tends to be described in terms of appropriate behavior, moral standards, and compliance. T/F

False

In the new product adoption/diffusion cycle for technology products, the chasm is a period where there is more customer demand than the company can possibly manage. T/F

False

It is not possible for a company to be successful without a vision. T/F

False

Bill is a lender and is considering a loan for Joann and her new business venture. Which of the following would NOT be one of Bill's concerns?

The number of strategic partners the venture has

It has been reported that _____ percent of a company's business comes from current customers and of those customers, _____ percent will be the source of most of the company's profits.

65; 20

____ is a critical first step in identifying and assessing an ethical dilemma.

Awareness

Today, product/service warranties are not a competitive marketing tool. T/F

False

Today, spending money to find new customers is more important than retaining and maintaining current customers. T/F

False

_____ are the group of customers who tend to purchase a product only if they absolutely have to.

Laggards

_____ is the management and control of the flow of goods and resources from the source of production to the marketplace.

Logistics

_____ organizations are common among manufacturers with capital-intensive processes and among service companies.

Process-focused

Which of the following components of a customer journey map are essential?

Processes, needs, and perceptions

_____ is a tool for increasing the level of visibility of an entrepreneur's website when customers search for the company online.

Search engine optimization (SEO)

_____ is a data-driven approach to eliminating defects with a goal of 3.4 defects per million.

Six Sigma

Ellie is a pragmatic customer who tends to wait until a new product is proven and plenty of people are using it before she purchases it. Which of the following customer groups would Ellie most likely belong to?

The early majority

Which of the following is NOT an input in the production process?

b. Assembly Answers: a. Raw materials b. Assembly c. Machinery d. Facility e. Labor

All of the following are adopter groups EXCEPT

d. the late minority. Answers: a. the early majority. b. laggards. c. innovators. d. the late minority. e. the early adopters.

Abigail is preparing to interview candidates for an administrative assistant position at her new startup. Which of the following questions is OK for Abigail to ask?

e. None of these are correct. Answers: a. Are you married? b. What are the ages of your children? c. What is your age? d. What is your nation of origin? e. None of these are correct.

Entrepreneurs should keep in mind that the purpose for doing a(n) _____ is to sell the business.

executive summary

The best way, and sometimes the only way, to accurately gauge customer demand is to

go into business in a limited way.

In the context of ethics, most ethical dilemmas require balancing conflict among three perspectives: _____, obligations or duty, and utility or cost/benefit.

ideals

Which of the following statements best represents the subjectivist approach to avoiding ethical issues?

Ethics is simply a point of view."

Having a qualified _____ on the advisory team puts a startup in a better position to seek a line of credit for operating capital or a loan to purchase equipment once the business has a track record.

banker

Which of the following is NOT a component that makes up the design of an entrepreneurial company?

c. Location Answers: a. Processes b. People c. Location d. Culture e. None of these are correct.

In the context of the components of company vision, _____ are the means to execute the strategies for achieving the goals of a company.

tactics

Research has shown that the ethical behavior of employees is very much influenced by

the code of ethics of the company.

Any business that purchases raw materials or parts for production of goods for resale must carefully consider the quality, quantity, and _____ of those purchases.

timing

The Age Discrimination in Employment Act applies to all companies with _____ or more employees.

20

A process map notes key milestones that an entrepreneur expects to achieve from idea conception to the launch of the business and beyond. T/F

False

Which of the following is the formula for the current ratio?

Total current assets/Total current liabilities

During an interview, understanding who the candidate is can be effectively accomplished in part by asking

open-ended questions.

A(n) _____ consists of individuals who serve as a sounding board for ideas, act as coaches to raise your spirits, and warn you when you are heading down a wrong path.

personal mentor board

_____ employs a pull strategy, generally focusing on non-price benefits and targeting end-users.

Advertising

_____ are basically strategic partnerships with other companies that offer complementary products and services.

Affiliate programs

A(n) _____ is bound by rules and ethics that do not permit advocacy.

accountant

With _____, a series of goals are set by a company with input from an employee, and as the employee reaches each goal, the bonus is given.

a bonus plan

Geoffrey Moore's modification of the adoption/diffusion curve shows the _____, a period when the early adopters have been exhausted and the technology abruptly stops selling.

chasm

In the context of components of company vision, _____ are the foundation for all the decisions an entrepreneur will make as his or her company grows.

core values

To ensure that the code of ethics established for the company is implemented and maintained over time, an entrepreneur should do all of the following EXCEPT

d. publicly report ethical lapses. Answers: a. demonstrate commitment to the ethics program by mentioning it on a regular basis. b. provide examples of appropriate behavior that employees display during the course of their work. c. model the behavior expected of others in the company. d. publicly report ethical lapses. e. educate employees about ethics through workshops that put employees in hypothetical situations.

Today, most investors want to see a well-written _____ that tells a compelling story and grabs their interest.

executive summary

A _____ involves customer discovery and business model validation—testing your business model in the market with real customers to determine the conditions you must have in place to ensure a successful launch.

feasibility analysis