Entrepreneurship - Midterm

A feasibility analysis consists of four interrelated components: an industry and market feasibility analysis, a product or service feasibility analysis, a financial feasibility analysis, and an entrepreneur feasibility analysis

True

A feasibility analysis is the process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business.

True

A product or service feasibility analysis determines the degree to which a product or service idea appeals to potential customers and identifies the necessary resources. Correct!

True

A well-prepared business plan forces an entrepreneur to assess the venture's chances of success more objectively. Correct!

True

Acting with integrity means that entrepreneurs do what is right no matter what the circumstances.

True

Although creativity sometimes involves generating something from nothing, it more likely results in elaborating on the present, putting old things together in new ways, or taking something away to create something simpler or better. Correct!

True

An effective tool used to help assess ideas is the idea sketch pad.

True

An idea assessment is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn that idea into a business.

True

Business ethics is a sensitive and highly complex issue, but it is not a new one.

True

Capital requirements, estimate earnings, and return on investment are three aspects of the financial feasibility analysis.

True

Creativity and innovation are the signature of small, entrepreneurial businesses. Correct!

True

Creativity is not only an important source for building a competitive advantage, but it also is necessary for survival.

True

Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.

True

Ethical behavior is doing what is "right."

True

Management is an example of a stakeholder.

True

The law is the narrowest level of ethical standards.

True

The purpose of a feasibility study is to determine whether a business idea is worth pursuing.

True

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

necessity entrepreneurs

The value test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that the business venture will provide lenders and investors a high probability of repayment or an attractive rate of return

Which of the following is required to form a partnership?

A general partner

Which of the following issues would a typical partnership agreement address?

All of these

Which of the following issues would influence an entrepreneur's choice of a form of business ownership?

All of these

Which of the following is not true of a limited liability partnership?

Although LLPs have many of the characteristics of partnerships, they are taxed as a corporation.

An idea assessment answers the question, "Should we proceed with this business idea?"

False

Creativity and innovation are the signature of large, entrepreneurial businesses.

False

Creativity is the ability to apply creative solutions to problems and opportunities to enhance or enrich people's lives.

False

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.

False

Entrepreneurs typically identify just one business idea for any given market need.

False

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

False

Innovation is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.

False

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

False

Social responsibility is a branch of philosophy that studies and creates theories about the basic nature of right and wrong, duty, obligation, and virtue.

False

The business plan helps an entrepreneur assess ideas in a relatively short period of time.

False

The competitive test that a business plan must pass to attract financing for lenders and investors involves proving to them that the venture offers a high probability of repayment or an attractive rate of return.

False

The primary purpose of building a business plan is to raise capital.

False

________ is a special type of limited partnership in which all partners who, in many states must be considered to be professionals, are limited partners. Correct!

Limited liability partnership (LLP)

What are some of the most important questions a feasibility analysis answers and what model may be of value in this process?

Should we proceed with this business idea? ; A business model

Which form of ownership generally has the least ability to accumulate capital?

Sole proprietorship

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

The typical profile of an entrepreneur includes a desire for responsibility, confidence in the ability to succeed, determination, a high level of energy, desire for immediate feedback, and a future orientation. The primary motivation for the typical entrepreneur is the opportunity to create your own destiny.

A business plan is a written summary of an entrepreneur's proposed venture, its operational and financial details, its marketing opportunities and strategy, and its managers' skills and abilities.

True

Changing from one form of ownership to another once a business is up and running can be difficult, expensive, and complicated.

True

Ethics and social responsibility simply set behavioral boundaries for decision makers.

True

First comes idea assessment, then comes feasibility analysis.

True

For every 5,000 to 10,000 new drug discoveries, only about five make it to clinical trials and only one typically gets to the market.

True

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

True

Innovation is the ability to apply creative solutions to problems and opportunities to enhance or enrich people's lives.

True

Innovation must be a constant process because most ideas do not work and most innovations fail. Correct!

True

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.

True

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

True

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.

True

The reality test that a business plan must pass to attract financing from lenders and investors involves proving that a market for the company's product or service actually does exist, and that the company actually can build it for the cost estimates in the plan.

True

The value test that a business must pass to attract financing from lenders and investors involves proving to them that the venture offers a high probability of repayment or an attractive rate of return. Correct!

True

To get external financing, an entrepreneur's business plan must pass the reality test, the competitive test, and the value test with potential lenders and investors. Correct!

True

Entrepreneurs typically possess ________.

a high level of commitment, have a tolerance for ambiguity, are flexible and tenacious

In a general partnership, ________.

each partner is held responsible for an agreement/decision made by any one of the partners

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

entrepreneurial spirit

________ is a branch of philosophy that studies and creates theories about the basic nature of right and wrong, duty, obligation, and virtue.

ethics

The process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business is known as a(n) ________.

feasibility analysis

The Kauffman Foundation reports that nearly one out of ________ entrepreneurs in the United States start businesses of their own because they cannot find jobs elsewhere.

five

Acme Corporation is chartered in Delaware, but its primary area of operation is in South Carolina. In South Carolina, Acme would be considered a(n) ________ corporation.

foreign

In a partnership, the ________ partner(s) has (have) unlimited liability for the partnership's debts.

general

A(n) ________ is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn the idea into a business.

idea assessment

The ability to apply creative solutions to problems and opportunities to enhance or to enrich people's lives is called ________.

innovation

Probably the most important reason to have a partnership agreement is that ________.

it resolves potential sources of conflict that, if not addressed in advance, could later result in partnership battles and dissolution of an otherwise successful business

A ________ partner is a person who makes financial investments in a partnership, does not take an active role in managing the business, and whose liability for the partnerships' debts is limited to the amount they have invested.

limited

A ________ partnership is composed of at least one general partner and at least one limited partner.

limited

A special type of partnership in which all partners, who in many states must be professionals, are limited partners is called ________ partnership.

limited liability

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

make a difference in an area important to them and be recognized for those efforts

A partnership agreement defines how the partners will be compensated. Normally, ________.

partners are not entitled to salaries or wages, but are compensated by a share of the profits of the business

All of the following are advantages of a partnership except ________.

partnerships have the greatest ability to accumulate capital of all of the forms of ownership

Potential investors tend to believe that if an entrepreneur cannot develop a good plan, the entrepreneur ________.

probably lacks the discipline to run a business

The three parts of the triple bottom line are ________.

profit, people, and planet

The ________ test that a business plan must pass to attract financing from lenders and investors involves proving that a market for the company's product or service actually does exist and that the company actually can build it for the cost estimates included in the plan.

reality

The three "tests" associated with a business plan are ________. Correct!

reality, competitive, and value

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

serial

________ responsibility is how an organization responds to the needs of the many elements in society.

social

________ sets behavioral boundaries for decision makers.

social responsibility

More women entering the workforce is an example of a(n) ________ change.

sociocultural

Marco is opening a new computer repair shop. He is owner and sole employee. He has paid the appropriate fees and licensing costs and begun his business. This is an example of a(n) ________.

sole proprietorship

The most common form of business ownership that is also the simplest to create is the ________.

sole proprietorship

The various groups and individuals who affect and are affected by a business are called ________.

stakeholders

The reality test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that a market for the company's product or service actually does exist and that the company can actually build it for the cost estimates included in the plan

The competitive test that a business plan must pass to attract financing from lenders and investors involves proving ________.

that the company can gain a competitive advantage over its key competitors

________ is/are the narrowest level of ethical standards.

the law

The most critical disadvantage of the sole proprietorship is ________.

the owner's unlimited personal liability

Harvard's Ted Levitt says that creativity is ________ new things, and innovation is ________ new things.

thinking; doing

The second essential purpose for creating a business plan is ________.

to attract lenders and investors

The key to choosing the right form of ownership is ________.

understanding the characteristics of each form and knowing how they affect your business and personal circumstances

To convince lenders and investors to put their money into the venture, a business plan must prove to them that it offers a high probability of repayment or an attractive rate of return. This is the ________ test.

value

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

value of money over achievement

Ethical behavior is doing what is ________.

"right"

There are ________ levels of ethical standards.

3

According to the KPMG's Integrity Survey, ________ percent of workers say that they observed ethical lapses in their companies within the last year.

73

A business plan ________.

All of these

A business plan is a written summary of ________.

All of these

A solid business plan ________.

All of these

Creativity often involves creating something from nothing. However, it is more likely to result in ________.

All of these

Entrepreneurs are characterized by ________.

All of these

Research shows that anyone can learn to be creative. The problem is ________.

All of these

Which of the following is not a stakeholder for an organization?

All of these are stakeholders

The profile of an entrepreneur includes ________.

All of these.

What is the entrepreneurial "secret" for creating value in the marketplace?

Applying creativity and innovation to solve problems

________ includes any assets an entrepreneur pledges to a lender as security for repayment of the loan.

Collateral

Which of the following is not one of the five Cs of credit?

Connections

________ is necessary for building a competitive advantage and for business survival.

Creativity

What are the parameters used in an idea sketch pad?

Customers - Clear un-addressed need Offering - Describe idea for product to offer to customers Value proposition - Explain why the product is important Core competencies - Determine if you really differentiate from competitors. People - Identify key people to launch this business

Which of the following is not a macro force that creates change in industries?

Entry barriers

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

False

Ethical behavior starts with society.

False

An entrepreneurial "secret" for creating value in the marketplace is ________.

applying creativity and innovation to solve problems

When developing creative solutions to modern problems, entrepreneurs must ________.

go beyond merely using whatever has worked in the past

________ consists of the fundamental moral values and behavioral standards that form the foundation for the people of an organization as they make decisions and interact with stakeholders.

business ethics

The Internet is an example of a(n) ________ force.

technological

An entrepreneur is one who ________.

creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities

The ability to develop new ideas and to discover new ways of looking at problems and opportunities is called ________.

creativity

Entrepreneurship is a constant process that relies on ________.

creativity, innovation, and application in the marketplace

Generation Y and Generation Z are examples of ________ changes.

demographic

________ sets behavioral boundaries for decision makers.

ethics

An effective tool used to help assess ideas is the ________.

idea sketch pad