Ch 5
What is entrepreneurship?
c.Entrepreneurship is the process of planning, organizing, operating, and assuming the risks of a business venture.
What is created by a firm when it exploits an opportunity before any other firm?
c.First-mover advantage
When Hua opened his small business, he immediately had several regular clients, and the business was growing. Despite all this, Hua found that he was not making enough money to cover all expenses, let alone turn a profit. After three months, he couldn't pay supplies or pay his employees and he closed the business. What led to this business failure?
c.Lack of capital
Paramita, a recent college graduate, opened a small sandwich shop just off campus. She had never done this kind of thing before, but she enjoyed cooking and putting together creative combinations. Paramita did her research and knew what services to offer at what prices, and she was willing to put in the time and effort needed to succeed. Despite all this, her business failed. What reason for success is missing from this picture?
c.Managerial competence
Lack of effective control systems leads to what problem that causes businesses to fail?
c.Managers may be in serious trouble before more visible difficulties alert them.
Which of the following people is most likely to be an entrepreneur?
c.Myrna used her savings to start a computer repair service.
Approximately how many of the innovations introduced into the U.S. marketplace each year are supplied by small businesses?
c.Over half
In what way can a new start-up use e-commerce to do business?
c.Quickly expand a new business easily
Tamara is a retired executive who now offers free advice to new small business owners through a program established by the SBA. Tamara is a(n) _____.
c.SCORE volunteer
MollyMaids, a small business that cleans houses, is in which industry group?
c.Services
Ahmed has managed a company for seven years. He employs sixty people and has annual sales in excess of $20 million. The company he works for has no real influence in the market. Which type of business does Ahmed run?
c.Small business
Which of the following is true of trends in small businesses?
c.Small businesses suffer a higher mortality rate than larger concerns.
Woojin has been thinking about starting his own firm, but he is uncertain about the time and other resources he will need to devote to the process. What should be Woojin's first step in launching a new start-up?
a.Assess his commitment to becoming a business owner.
Which question should be answered by a business plan?
a.What are the entrepreneur's goals and objectives?
Approximately which percentage of businesses in the United States are owned by women?
b.29 percent
Approximately what percentage of the jobs in the high-technology sectors of the U.S. economy are filled by small businesses?
b.40 percent
Most experts recommend that a new business should have enough capital on hand to operate for at least how long without earning a profit?
b.6 months
Financial difficulties led to the closing of Aviva's software testing department, so Aviva decided to start her own business. She plans to make use of her extensive experience to succeed at this small-business start-up. Which of the following factors could work against Aviva?
b.Access to capital
Which is a contract between an entrepreneur and a parent company that requires the entrepreneur to pay the parent company for the use of its trademarks, products, formulas, and business plans?
b.Franchising agreement
Polani owns a small parts distributorship. While she is bigger than her local competitors, she is not big enough to really influence the environment. What can be said about Polani's small parts distributorship?
b.It is a small business.
Dezmon works for a large company, but lately he has been thinking about starting his own small manufacturing company. What should Dezmon keep in mind about the ability of small business owners to succeed in the manufacturing field?
b.It is not uncommon for small manufacturers to outperform big business in innovative-driven industries.
Kamiya plans to open a business writing software. While researching her strategy, Kamiya discovered a profitable niche in children's educational software. How will pursuing this niche help Kamiya outperform her competitors?
b.It will give her a distinctive competency.
Destani has a small business that is doing well, and she is ready to expand. Before she does, she would like to meet with other female business owners and get their feedback. How might Destani seek out information from other women to do this?
b.Join a networking group.
Nila wants to start a new business but wants to draw in customers immediately and take advantage of established working relationships. In terms of her new business, Nila is considering _____.
b.buying an existing business
All of the following are reasons for success EXCEPT _____.
b.poor analysis of market conditions
Approximately what percent of U.S. workers are employed by companies that have fewer than 20 people?
d.23.5 percent
Yui would like some advice about potentially starting a small business. Where could she go for free advice from retired executives who understand her industry?
d.A SCORE counselor
Mica was employed by the regional hospital system and decided to start her own business in the medical support field. She plans to make use of her extensive experience to succeed at this small-business start-up. Which type of entrepreneurial trend does this represent?
d.Crossover from big business
Which of the following is a recent trend in small-business start-ups?
d.Decline in the failure rate
What can be described as the process of planning, organizing, operating, and assuming the risk of a new venture?
d.Entrepreneurship
What does research suggest about the potential of success for new businesses and entrepreneurship?
d.Entrepreneurship yields a high level of business failure.
A regional mortgage company servicing a limited geographical area is a small business in which industry?
d.Finance
Which of the following is true regarding job creation?
d.Jobs are created by entrepreneurial companies of all sizes.
Which of the following are reasons for failure?
d.Launching the business in spare time
Kevin started a new lawn care business. He had a lot of experience in this field before starting out on his own, he did his research and knew what services to offer at what prices, and he was willing to put in the time and effort needed to succeed. Despite all this, his business failed. What reason for success is missing from this picture?
d.Luck
Raphael started a new financial consulting business on the side, with the hopes that it would someday become his full-time work. He had a lot of experience in this field before launching his company. He did his research and knew what services to offer at what prices. Raphael lined up a number of clients and hired workers to service the accounts. In spite of all this, his business failed. What led to this business failure?
d.Neglect
Which of the following is the most important source of money for financing a new business?
d.Personal resources
Which industry are entrepreneurs drawn to because the industry offers the highest return on time invested and appeals to the talent and innovation that many small enterprises typify?
d.Services
Which of the following best defines an entrepreneur?
d.Someone who plans, organizes, operates, and assumes the risk of a new business
Why do people who start small retail businesses tend to favor specialty shops?
d.They can focus limited resources on narrow market segments.
Most U.S. businesses employ _____.
d.fewer than 20 people
Which of the following is one of the most basic strategic challenges facing a start-up operation?
a.Choosing an industry
Which of the following statements about large and small businesses is true?
a.Most U.S. workers are employed by small firms.
Why are small businesses important to big businesses?
a.Most of the products made by big manufacturers are sold to consumers by small businesses.
Which business segment is the fastest-growing segment of small-business enterprise, with fewer than 20 employees?
a.Service
Olesia put up her personal money to start a business and hired a professional manager to run it. What can be said of Olesia?
a.She is assuming the risk of the venture.
Which of the following is true of small businesses' role in the economy?
a.Small business is a strong presence in the U.S. economy, as well as in virtually all of the world's mature economies.
Geert would like to open a cafeteria to provide meals to workers at the local hospital. However, he needs to find a source of financing. He has approached the hospital to discuss them providing and building the cafeteria. Which source of financing is Geert pursuing?
a.Strategic alliances
At what point should an entrepreneur ask the questions, "who are my customers, and where are they?"
a.When seeking an opening in the market for a start-up
Andy opened a business called Quality Textiles. He imports linen, silk, and high thread count cotton sheets and distributes them to bedding stores in the Midwest. Quality Textiles is a business in which industry group?
a.Wholesale
For a given volume of business, a firm in which industry group would typically need the fewest employees?
a.Wholesale
The choice of creating an entrepreneur-friendly environment is good public policy because small businesses _____.
a.are an important source of new jobs
Most successful entrepreneurs _____.
a.carefully analyze market conditions
Elaine has opened a donut shop. She invested her own resources to start the business. She makes all major decisions regarding what products it provides and at what prices. Elaine will be taking full responsibility for the success or failure of the donut shop. Elaine is most likely a(n) _____.
a.entrepreneur
Arayla plans to open a small business and estimates that the new operation will require $800,000 during the first three years. She has $100,000 in personal savings to invest in the new venture. The balance will be borrowed from the Second State Bank. Arayla is in the process of _____.
a.financing the business
While there are many businesses in the general area that offer lawn mower repair, they all require that the customer bring the equipment to the store. Diane realized that this is difficult for many consumers, and she started a business in which her service techs bring the repair shop to the customer. Diane is capitalizing on a(n) _____.
a.niche
Manoj wants to be able to choose lenders, equipment, inventories, locations, and other aspects of his new business. When starting his business, Manoj should _____.
a.start from scratch
Which of the following statements about small businesses in the United States is true?
b.Major innovations are as likely to come from small businesses (or individuals) as from big businesses.
Which source of management advice often has advisors who specialize in one area, such as start-ups or international business, and provide an objective and trained outlook to problems, but can be quite expensive to use?
b.Management consultants
Julius owns This'n'That, a shop in which nothing costs more than five dollars. He buys his products from a number of distributors to sell in his store. His customers are primarily people who live or work in the neighborhood. Julius's shop operates in which industry?
b.Retail
Which of the following is true of job creation?
b.Small firms eliminate jobs at a faster rate.
Which of the following is a disadvantage to owning a franchise?
b.Start-up costs
Which of the following best summarizes the relationship between necessary resources and the prevalence of small businesses in an industry group?
b.The more resources an industry requires, the harder it is to start a business and the less likely it is that the industry is dominated by small firms.
Which type of business buys products from manufacturers or other producers and then sells them to retailers?
b.Wholesale
One of the current trends in small business start-ups includes which group starting more new businesses?
b.Women
Jacque wants to open a diner in his community, but first he wants to learn more about the market, including the types of customers to expect and the food they might order. What is one of the best ways for Jacque to gain this knowledge?
b.Work in a diner before starting his own.
Once an entrepreneur has chosen an industry to compete in and determined which distinctive competencies to emphasize, these choices are usually included in a document called a _____.
b.business plan
When entering into a new business, having established supplier relationships is an advantage to _____.
b.buying an existing business
Under the SBA's guaranteed loan program, a small business can borrow money from a commercial lender, and the SBA guarantees to repay 75 to 85 percent of the amount, not to exceed _____.
c.$5 million
Reflecting a recent trend in small-business start-ups, the number of African American-owned businesses has increased by approximately what percent since 2007?
c.35 percent
Home builders, roofers, and painters are all examples of which type of firms?
c.Construction
Nour is planning to open a small retail shop in her town. Although she does not need to borrow money, a friend suggested she develop a business plan. What will a business plan help Nour accomplish?
c.Crystallizing her thinking about how to launch the business successfully
Which group is comprised of investors seeking to make profits on companies with rapid growth potential?
c.Venture capital companies
Which of the following is one of the basic questions that is answered in a business plan?
c.What strategies will the entrepreneur use to obtain his or her goals and objectives?
Middleboro, VT, has experienced a recent upsurge in new business development. Some of the economic progress has been the result of a community partnership with the local college that was created to stimulate entrepreneurship in the community. The most likely reason that the partnership chose entrepreneurship as a method of boosting the health of the town's economy was because it _____.
c.creates new jobs
Sources of advice regarding management include all EXCEPT _____.
d.information technology professionals
Junhua would like to start a business to sellcarry-out food in grocery stores and is looking for sources of financing. Junhua took out a second mortgage on his house and tapped into his savings to finance the new business. In this scenario, Junhua's source of financing falls into the category of _____.
d.personal resources
The most important source of money for people starting up a new business is _____.
d.personal resources
