Exam 1- EEE 2023
An individual who is thinking about leaving a $75,000-per-year job to start a new firm requires _____ rate of return than a person thinking about leaving a $50,000-per-year job.
higher.
An emerging industry is one _____________.
in which standard operating procedures have yet to be developed
The most common type of franchise arrangement is a(n) ______ franchise agreement.
individual
PepsiCo, Coca-Cola, Dr. Pepper, and Schweppes are a group of firms that produce carbonated beverages. Together, these firms constitute a(n) ______.
industry. similar products.
Women-owned business made up more than 60 percent of the total in the _____ sector.
health care and social assistance. This sector is dominated by women-owned businesses.
When firms resist ____, employees are left with good ideas that go unfulfilled.
innovation. Because of their passion and commitment, some employees may choose to leave the firm that resists innovation.
If a firm introduces a new business process, _____ is a key resource.
intellectual property protection.
One study of 120 business founders revealed that _______ fully developed their products without getting feedback from potential buyers.
more than half.
An industry is attractive if it sells products or services that customers "______" rather than "want to have."
must have.
That entrepreneurs are gamblers is a ____.
myth. because entrepreneurs are usually moderate risk takers.
The final section of First Screen is called ______.
overall potential
CitySlips makes portable, comfortable shoes that fit into most women's purses. The opportunity for CitySlips came from ______.
solving a problem.
Jay Sorensen dropped a cup of coffee in his lap because the paper cup was too hot. This led Sorensen to invent an insulating cup sleeve and to start a company Java Jacket to sell it. Sorensen found his opportunity in _____
solving a problem.
Which is the first section of First Screen?
strength of business idea.
Spouses typically have a _______ relationship.
strong-tie
____ led to a number of senior entrepreneurs.
Corporate Downsizing.
_____ firms often resist innovation.
Established. Established firms are probably too set in their ways and so may resist innovation.
Which of the following is NOT a primary characteristic of successful entrepreneurs?
Lack of persistence. Entrepreneurs are persistent in that they are tenacious despite facing failures.
_____ is rarely the primary reason entrepreneurs start new firms and persevere.
Money.
Which one of the following is NOT a common trait or characteristic of an entrepreneur?
Pessimistic deposition. Entrepreneurs have to be of optimistic disposition because of the many challenges they encounter.
Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to _____ they currently control for the purpose of exploiting future goods and services.
Resources. An entrepreneur may not have access to all the resources required to launch the venture, and organizing resources is a critical step.
Which one of the following is NOT a common trait and characteristic of an entrepreneur?
Short attention span
_____ bias is the tendency to search for information that validates one's preconceptions.
confirmation.
Over the course of the last few years, Etsy has built a network of over 1.7 million sellers of artisanal goods. The fact that it would take a tremendous effort on the part of a competitor to match Etsy's network of sellers makes Etsy's business model difficult to _____.
copy
A(n) _____ creates something new
an inventor
Omega Vacuums routinely sends teams of testers to homes of its users to see how its product is working and to seek insight for new product ideas. Omega Vacuums day-in-the-life research is an example of ______ research.
anthropology. studies between humans and their work.
Conservative firms ________.
are risk-averse. Conservative firms are risk-averse in contrast to entrepreneurial firms.
The most common reason why people become entrepreneurs is to:
be their own boss
Although there are many important things to consider when launching a new venture, nothing else matters if the product or service ________.
doesn't sell.
For feasibility analysis, a(n) ______ financial assessment is sufficient.
preliminary.
An opportunity cannot be pursued until it's _______.
recognized.
The most important issues to consider in financial feasibility analysis are ________, financial performance of similar businesses, and the overall financial attractiveness of the proposed venture.
total start-up cash needed. A key part of financial feasibility analysis is to identify the total cash needed to prepare the business to make its first sale.
Which of the following relationships is more likely to spark a new idea?
weak-tie.
Bing entered the search engine market long after the ______ had closed, making it difficult for it to get market share.
window of opportunity
The term ______ is a metaphor describing the time period in which a firm can realistically enter a new market.
window of opportunity. A window signifies something that, when open, allows entry. It also indicates that what can be opened can also be shut.
An attractive industry is _____ rather than _____.
young; old.
By 2020, ____ billion people are expected to own mobile phones.
2.87
An entrepreneur assembles and then integrates all the resources needed to transform an invention into a viable business. Which of the following is NOT a resource assembled by an entrepreneur?
A. Confidence B. Business model C. Money D. Strategy E. People Confidence is not a resource that an entrepreneur assembles; it is something that an entrepreneur already has.
A bug report is a popular technique that is used in classrooms to teach______.
brainstorming.
Linda Tethers gathered a group of people at a designated spot. Linda, the leader of the group asked the participants to share their ideas. One person shared an idea, another person reacted to it, another person reacted to the reaction, and so on. What Linda was doing is an example of a ________.
brainstorming. it's free-flowing.
The ability to effectively execute a business idea means developing a ______.
business model. Along with developing a business model, execution requires a team, raising money, and developing partnerships, among other things.
Once the business idea cuts muster at the First Screen stage, the next step is to complete a ______.
business plan.
A _____ is more focused on planning and selling.
business plan. used to plan the venture and to raise capital.
A one-page document that includes, among other things, a description of the product or service and its intended target market is called the _______.
concept statement. this is used for early feedback on a business idea.
A ____ test involves showing a preliminary description of a product or service idea.
concept.
Established firms with an orientation toward acting entrepreneurially practice _____
corporate entrepreneurship
3M, a company with more than $30 billion in revenues in 2016, encourages its employees to constantly look for business opportunities in terms of future goods and services. What 3M is doing is called _____.
corporate entrepreneurship. Established firms with an orientation toward acting entrepreneurially practice corporate entrepreneurship. 3M is encouraging its employees to act like entrepreneurs
Uber provides transportation service for people by quickly connecting riders with the owners of private cars who are willing to provide rides. As far as local taxis are concerned, Uber's business model ___ their business.
disrupts
Level of disposable income is a part of ____ forces.
economic.
Airbnb is a first-of-a-kind business that provides an interface to connect people with homes to rent and those who are looking for a place to stay. Airbnb is a(n) ____ firm.
entrepreneurial firm. Airbnb capitalized on an opportunity to offer a new form of renting and so is an entrepreneurial firm.
By connecting drivers and passengers, Uber took on the taxi market and brought a new option to customers. Uber is a(n) ____ firm.
entrepreneurial. Uber capitalized on an opportunity to offer a new form of car travel and so is an entrepreneurial firm.
In the idea-generation process, insight is also called the "___" experience.
eureka.
The Chinese saying "To open a business is very easy, to keep it open is very difficult" indicates the importance of ________.
execution intelligence
Which of the following is NOT a step to generating new ideas?
execution.
In 1994, Jeff Bezos quit his lucrative job at a New York investment firm and headed for Seattle with a plan to find an attractive opportunity and launch an e-commerce company. He founded Amazon. Amazon is an example of a(n) ______ venture.
externally-stimulated. Bezos wanted to launch a business and then he found an opportunity
An opportunity is a(n) ___ set of circumstances that creates a need for a new product, service, or business.
favorable. What this means is that circumstances favor a situation that results in a need.
First Screen is a template entrepreneurial firms use to complete a _______.
feasibility analysis
Many entrepreneurs make the mistake of identifying a business idea and then jumping directly to developing a business model without doing the ________.
feasibility analysis. feasibility has to be examined before a business model is developed.
______ analysis is the process of determining whether a business idea is viable.
feasibility. If a business idea falls short on one or more of the components of feasibility analysis, it should be dropped or rethought.
____ is a template entrepreneurial firms use to complete a feasibility analysis.
first screen.
Dick Certo gathered 8 amateur athletes who were selected because of their relationship to the issue being discussed, which was finding a quick cure to a pulled hamstring. Dick was forming a ________ group.
focus.
In examining resource sufficiency, the focus in organizational feasibility analysis is on ____ resources.
nonfinancial. Financial resources are part of the financial feasibility analysis and not organizational feasibility analysis.
The proper time to determine a company's business model is following the initial validation of the business idea and prior to fleshing out the _________.
operational details.
A(n) _____ is a favorable set of circumstances that creates a need for a new product, service, or business.
opportunity.
Social networking sites aren't popular because they can be used to post information and photos on a website. They are popular because they allow people to connect and communicate with each other, which is a natural human tendency. This is an example of finding an opportunity by observing trends in _____.
social forces.
Demographic changes are an example of ____ forces.
social.
The word "entrepreneur" was originally used to describe people who "_______" between buyers and sellers.
take on the risk (key element of what entrepreneurs do)
Shelter Pups makes eco-friendly plush animals. The company aims its product at parents who are willing to pay a premium for super-safe, environmentally friendly, educational toys. This is Shelter Pups' ______.
target market.
A firm's _____ is the limited portion of the industry that it goes after or to which it wants to appeal.
target market. This is the segment or slice of the market that the firm is after.
Which of the following is NOT a factor against which a start-up's projected rate of return should be weighed?
the returns required by the venture capital firms.
Sun Tzu's quote "Time spent in reconnaissance is seldom wasted" is relevant to ______.
competitor analysis
The five forces model provides a picture of an industry ______.
"as is"
The typical royalty percentage in franchising is ____ percent.
5%
In The Hartford 2015 survey, a total of __ percent rated themselves as conservative rather than risky.
76%. This was the response in the survey and suggests that most entrepreneurs are moderate risk takers.
Low-overhead home-based and service businesses typically charge an initial franchise fee of ____ percent to ____ percent of gross sales.
8; 10
Which one of the following is a question an entrepreneur has to ask before pursuing the idea of starting a firm?
Is the industry a realistic place for a new venture to enter?
Before deciding to franchise, a firm should consider a number of things. Which one of the following is NOT one of them?
The soundness of the firm's business model.
The franchise business plan should follow the format of a(n) _____ plan.
conventional business plan
Which of the following is NOT a disadvantage of franchising as a method of business expansion?
cost savings
A bed and breakfast is an example of a(n) ______.
lifestyle firm. A bed and breakfast provides the owner the opportunity to pursue a lifestyle and earn a living while doing so.
Ryanair, like Southwest Airlines, provides point-to-point, no-frills airline service, in Ryanair's case across Europe. This is an example of _______ disruption.
low-end. Ryanair capitalizes on "performance oversupply" that increases the price of airline flights.
A(n) ____ franchise agreement is similar to an area franchise agreement, with one major difference.
master. A master franchise agreement is similar to an area franchise agreement, except that a master franchisee has the right to offer and sell the franchise to other people in the area.
A hairstyling salon is an example of a(n) _____ firm.
salary-substitute. A hairstyling salon would yield a level of income for its owner(s) that is similar to what they would earn when working for an employer.
The vast majority of small businesses are _____ firms.
salary-substitute. Salary-substitute firms offer common, easily available, not particularly innovative products or services to fit customers. The vast majority of small businesses fit into this category.
Getting data from industry studies is a type of _____ research.
secondary.
Studies show that people with parents who were ________ are more likely to become entrepreneurs.
self-employed. After witnessing a father's or mother's independence in the workplace, an individual is more likely to find independence appealing.
The litmus test for entrepreneurs is their ability to persevere through _______.
setbacks and failures. Because entrepreneurs are typically trying something new, the possibility of failure exists. Tenacity is a hallmark of the entrepreneur.
Which is the last step an entrepreneur should take to successfully set up a franchise system?
Help franchisees with site selection and the grand opening of their franchise outlets.
Women-owned businesses in the United States generated over ____ in revenues in 2016.
1.6 Trillion. Not only did such businesses generate large revenues, they also employed nearly 9 million people.
The Bouqs company succeeded in the cut-to-order flower delivery business because of execution intelligence. As an indication of this, Bouqs has raised over $ ____million in funding since 2012.
19 million.
Using the freemium model, Dropbox currently has ______ million customers.
200
According to IBISWorld, the market for e-books is expected to grow at an annual rate of ___ percent over the next 5 years.
3.7%
According to the Minority Business Development Agency, in 2012 the average gross receipts for minority-owned firms was $ ______.
58,119.
According to the American Express OPEN study in 2016, women-owned businesses employed nearly ____ people.
9 million people
___ theory argues that for organizations with multiple units (such as restaurant chains), it is more effective for the units to be run by franchisees than by managers who run company-owned stores.
Agency
Which of the following is NOT a question to ask in determining whether franchising is a good fit for people thinking about starting their own entrepreneurial venture?
Are you willing to give orders? A franchisee has to be willing to take orders from the franchisor, not so much to give orders.
Companies that feature a subscription-based business model normally offer a high level of customer service to ________.
Churn. Churn refers to the number of subscribers lost each month. Customer service is in place to minimize churn.
______ is an opportunity in fragmented industries.
Consolidation
Which of the following is NOT a common misperception about franchising?
Franchising is not a safe investment
_____ competitors are businesses that offer products or services that are identical or highly similar to those of the firm in question.
Direct
______ occur(s) when mass-producing a product results in lower average costs.
Economies of scale
Which of the following is NOT a step in purchasing a franchise?
Examine the franchisor's business model.
Which of the following is NOT an advantage of franchising as a method of business expansion?
Facilitating agency issues
There are several rules of thumb for writing mission statements. Which one of the following is NOT a rule of thumb?
How much profits should we make? A mission doesn't measure profitability; it simply defines the firm's purpose.
An in-depth analysis of a(n) _____ helps a firm determine whether the niche or target markets it identified during its feasibility analysis are accessible and which ones represent the best points of entry for the new firm.
Industry. Industry analysis is the next step to determine an entry point for the firm.
Franchising may be a particularly good choice for someone who wants to start a business but ______.
has no prior business experience
John Banega developed a drug that offers a potential cure for pediatric blindness. However, he finds a number of government and legal issues that make it difficult for him to launch his drug company. Which of the following force is he facing in the five forces model of industry analysis?
Threat of stakeholders.
Which is the first step in purchasing a franchise?
Visit several of the franchisor's outlets.
Amy Noonan bought three salon franchises from a master franchisee. Amy Noonan is called a ____ franchisee.
sub
When an organization has multiple units, it is more effective for the units to be run by franchisees than by managers who run company-owned stores. This is based on a concept called _____ theory.
agency
It is useful for a new venture to think about its position at ____ the company level and the product or service level.
both.
The five forces model helps a firm determine whether it should enter a particular industry and whether it can _____________.
carve out an attractive position in that industry.
Netflix has a subscription business model, where it adds and loses subscribers each month. One of the disadvantages of the subscription business model is ____.
churn
Etsy generates its revenues by bringing two parties together to complete a sale. Its revenue stream is based on ____.
commissions.
A(n) _________ helps identify a firm's primary source of competitive advantage.
competitive analysis grid
The information that is gathered by a firm to learn about its competitors is called _______.
competitive intelligence
Prior to launching his Korean-Mexican fusion restaurant, Gregory Kim is making a detailed evaluation of the restaurants in his market area. Gregory Kim is doing a ____ analysis.
competitor
A(n) _____ industry is an industry or a part of an industry that is experiencing a reduction in demand.
declining
Google's AdWords program _____ Yahoo's business model that required advertisers to spend at least $10,000 for a minimum ad buy.
disrupted. AdWords completely changed the way the Internet ad market worked.
Because a high level of uncertainty characterizes _____ industries, any opportunity that is captured may be short-lived.
emerging
Gio Franco wanted to explore the possibility of starting a party center for kids in his small town. To get an idea of the attractiveness of the idea, Gio invited six set of parents of young children to discuss what they liked and what they disliked about the options available for children's playtime. The group of parents assembled is a _______.
focus group. new business ideas.
A(n) ____ industry is one that is characterized by a large number of firms of approximately equal size.
fragmented. Here, market share is divided among many firms, none of which is dominant.
Franchisors are required by law to disclose all their costs in a document called the _____.
franchise disclosure document (which has 23 categories of information)
Which one of the following is NOT a common rule for brainstorming?
freeloading.
Pandora uses a business model where the firm provides a basic version of its service for free and makes money by selling a premium version of the service. It is using the ______ business model.
freemium
Most of the standard business models, with the exception of the ______ model, have been in place for some time.
freemium. Only recently have companies like Dropbox used this model.
For the start-up Her Campus, there are 4,000-plus college females volunteering in chapters across the country writing articles in which they believe other college females will be interested. The volunteer group is an example of ______ in Her Campus's business model.
key assests
The three important elements of a firm's business model are its target market, its basis for differentiation, and its _______.
key assests
If a start-up requires employees with specialized skills, the community's labor pool is a ______.
key resource.
"Click here to rent an Omega car," is an example of a _______..
landing page. provides direct sales copy.
Airbnb connects someone who wants temporary access to an apartment with someone who owns an apartment. Its revenue stream is called _____.
matchmaking. Airbnb acts as a match maker
Slow increases in demand are a feature of _____ industries.
mature. This is because there are primarily repeat rather than new customers.
Microsoft's statement "to enable people and businesses throughout the world to realize their full potential" is an example of a company's _____.
mission.
John and Andy identified their business idea through social contacts. John and Andy are ______ entrepreneurs.
network.
The final section of First Screen is called "_______."
overall potential.
Some entrepreneurs transition from a traditional job to owning their own business more gradually by starting their business ___ to begin with.
part-time. By starting a business part-time, individuals can gain valuable experience, tuck away the money they earn, and find out whether they really like the business before deciding to leave their job.
It is useful for a new venture to think about its _____ at both the company level and the product or service level.
position
Getting feedback from industry experts is a type of _____ research.
primary.
_____ research is research collected by the person(s) completing the analysis.
primary. Primary research includes talking to prospective customers, getting feedback from industry experts, conducting focus groups, and administering surveys.
Entrepreneurial firms are typicaly _____ innovators.
proactive. Entrepreneurial firms are not averse to taking calculated risks.
Spiro's Gyros established a network of stores that sell Spiro's Gyros products and use the Spiro's Gyros trademark in their advertising and promotions. This is an example of a(n) _____ franchise.
product and trademark
Buffy's Pastries is generally concerned more with maintaining the integrity of its products than with monitoring the day-to-day activities of its dealers. Buffy's Pastries is likely to use _______ franchising.
product and trademark. The franchisor controls the use of the product and the trademark and not the day-to-day operations.
The two most important elements in any business are ________.
products and customers. No business function would make a difference if a firm did not have good products with the capability to satisfy customers.
The five forces in the five forces model determine the threat to industry _______.
profitability.
In financial statements, pro forma is another term for _____.
projected.
Pongomania is a start-up that makes a popular online game. To test resource sufficiency, Pongomania wanted to identify its most critical nonfinancial resources. Which of the following is NOT a type of nonfinancial resource critical for a start-up like Pongomania?
recreational facilities.
The two primary issues to consider in organizational feasibility analysis are management prowess and _______.
resource sufficiency. It is important to determine whether the proposed venture has or is capable of obtaining sufficient resources to move forward.
An organizational feasibility analysis is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and _____ to successfully launch.
resources.
John Dexter started "Dexter's Dry Cleaning" about six years ago and today he earns about what he was making as the manager of a large dry cleaning store before he launched his firm. Dexter's Dry Cleaning is an example of a _______ firm.
salary-substitue. Such firms yield a level of income for their owner that is similar to what they would earn when working for an employer.
A dry-cleaning business is an example of a(n) ______.
salary-substitute firm.
A firm's business model is its plan or recipe for how it creates, delivers, and captures value for its ______.
stakeholders
At a very broad, 50,000-foot level, a mission statement indicates how a firm intends to create value for _______.
stakeholders. A mission statement articulates a business's overarching priorities and how the firm can create value for its stakeholders.
Which of the following is NOT a characteristic of an attractive industry?
the industry is crowded. A crowded industry may mean lots of players and would be one where you would have to compete intensely for market share.
A start-up's projected rate of return should be weighed against _____ to assess whether the venture is financially feasible.
the risks assumed in launching the business. risks and returns go hand in hand.
Access to distribution channels are a relevant factor in which of the five forces?
threat of new entrants
The term window of opportunity is a metaphor describing the ____ in which a firm can realistically enter a new market.
time period
