Test 2

An additional consideration to keep in mind when negotiating to purchase an existing business includes requesting that the seller retain _____ in the firm. a. a minority interest b. a majority interest c. either a minority or majority interest d. none of these

a. a minority interest

An approach developed as a criteria selection list from which entrepreneurs can gain insights into the viability of their venture is the a. feasibility criteria approach. b. time-essence of a venture approach. c. marketability feasibility approach. d. comprehensive feasibility approach.

a. feasibility criteria approach.

The individual who buys the franchise is the a. franchisee. b. franchisor. c. franchisette. d. franchatter.

a. franchisee.

Which of the following is an intangible asset? a. goodwill b. inventory c. plant d. machinery

a. goodwill

Who must negotiate a final deal to purchase a business? a. A lawyer b. A CPA c. The potential buyer d. All of these

c. The potential buyer

Researchers developed a "Newness Framework" to help depict the differing dimensions of newness that ventures could exhibit, which include which of the following dimensions: a. Technology newness b. Scientific newness c. Analytical newness d. None of the above

a. Technology newness

Creativity, in the entrepreneurial context, is the generation of ideas that result in the improved efficiency or effectiveness of a system. a. True b. False

a. True

Franchisees have the option of whether to use the logo and symbols of the franchisor. a. True b. False

b. False

Most entrepreneurs are well schooled in the technology associated with their ventures. a. True b. False

b. False

The prospective investor should get as much information as possible on the franchisor. a. True b. False

a. True

There is a great abundance of reliable data concerning the start-up, performance, and failure of new ventures. a. True b. False

b. False

When should a potential franchisee receive the FDD (Franchise Disclosure Document)? a. two days before signing a contract or paying any money b. at least ten days before signing a contract or paying any money c. two days before signing a contract d. at least ten days before paying any money

b. at least ten days before signing a contract or paying any money

The social and economic environment affecting the local and regional entrepreneurship is now commonly referred to as: a. venture incubator b. entrepreneurial ecosystem c. new venture accelerator d. venture ecology

b. entrepreneurial ecosystem

Venture classifications include which of the following types of venture? a. hobby ventures b. smaller copycat ventures c. high-growth ventures d. survival ventures

c. high-growth ventures

The phase of the creative process when the idea or solution the individual is seeking is discovered is the a. background or knowledge accumulation. b. incubation process. c. idea experience. d. evaluation and implementation.

c. idea experience.

Which of the following is critical to a product's success? a. timing b. marketing approach c. objectivity d. all of these

d. all of these

Which of the following learning mechanisms are important for converting ideas into form in design methodology? a. feedback b. prototyping c. qualitative research d. all of these

d. all of these

An advantage to buying an ongoing business is a. reduced concern over future operations. b. time and effort are reduced. c. it may be purchased at a bargain price. d. all of these.

d. all of these.

Synthesis is the combining of existing concepts into a new formulation. a. True b. False

a. True

The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions. a. True b. False

a. True

The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture. a. True b. False

a. True

The left hemisphere of the brain is responsible for logical and analytical skills. a. True b. False

a. True

The rise of incubators, accelerators, and entrepreneurial ecosystems may be an important pathway for entrepreneurs to pursue. a. True b. False

a. True

The person who sells the franchise is usually required to do all of the following except: a. pay a fee. b. provide professional management training to the unit's staff. c. help out with financial assistance. d. provide continuing aid and a guidance to the person buying the franchise.

a. pay a fee.

A common pitfall in selecting a new venture is a. poor financial understanding. b. proper objective evaluation. c. real insight into the market. d. none of these.

a. poor financial understanding.

Three specific phases that a new venture goes through are a. prestart-up, start-up, poststart-up. b. start-up, poststart-up, evaluation. c. beginning start-up, start-up, ending start-up. d. prestart-up, start-up, evaluation.

a. prestart-up, start-up, poststart-up.

Which of the following is a factor contributing to new-venture failure? a. product/market problems. b. family issues. c. personality clashes. d. good management/poor product.

a. product/market problems.

Solid analysis and evaluation of the feasibility of the product/service idea are critical tasks in starting a new business. a. True b. False

a. True

When purchasing an existing business, the prospective owner should conduct an assessment of the business's current group of employees. a. True b. False

a. True

Logical and analytical skills are developed in the a. left hemisphere of the brain. b. right hemisphere of the brain. c. central hemisphere of the brain. d. anterior hemisphere of the brain.

a. left hemisphere of the brain.

When one designs a unique good or service, the individual is said to have used a(n) _____ approach to starting the business. a. new-new b. old-old c. old-new d. new-old

a. new-new

Which of the following is NOT one of the phases in the creative process? a. background or knowledge accumulation b. evaluation and implementation c. the incubation process d. preliminary investigation

d. preliminary investigation

Many entrepreneurs lack _____ for their new venture. a. innovation b. intelligence c. objectivity d. commitment

c. objectivity

Incongruities are gaps or differences between expectations and reality. a. True b. False

a. True

Innovation is the process by which entrepreneurs convert opportunities into marketable ideas. a. True b. False

a. True

Many inventions and innovations are a result of inventors seeing new and different relationships among objects, processes, materials, technologies, and people. a. True b. False

a. True

New venture legitimacy is a major challenge for every entrepreneurial start-up. a. True b. False

a. True

Obtaining external financing is considered one of the major types of problems for a new venture during its first year. a. True b. False

a. True

Surprisingly, growth of sales is generally not considered a critical factor in assessing new ventures. a. True b. False

b. False

Overnight package delivery is illustrative of which source of innovation? a. incongruities b. unexpected occurrences c. process needs d. change in perception

a. incongruities

The combination of existing concepts and factors into a new formulation would define which of the following terms? a. synthesis b. extension c. invention d. analysis

a. synthesis

Using the failure prediction model discussed in the chapter, the risk of failure can be reduced by: a. using less debt as initial financing and generating revenue in the initial stages. b. using more debt as initial financing and generating less revenue in the initial stages. c. using more revenue to enhance more debt in the initial stage. d. all of these.

a. using less debt as initial financing and generating revenue in the initial stages.

The cognitive ability of entrepreneurs to acquire and transform information has yet to be studied. a. True b. False

b. False

An agreement not to compete is also known as a. a trade restriction clause. b. a legal restraint of trade. c. a waiver of competition clause. d. a deferential sale of business clause.

b. a legal restraint of trade.

Looking for different or unorthodox relationships among elements and people is one way to develop creativity. How might a person develop this capacity? a. by perceiving in a relational mode b. by perceiving in a restraining mode c. by perceiving in a restructured mode d. by perceiving in a retinal mode

a. by perceiving in a relational mode

Which of the following mental habits inhibit creativity and innovation? a. either/or thinking, stereotyping b. functional perspective, mind-sets c. security hunting, risks d. stereotyping, incubation

a. either/or thinking, stereotyping

Feasibility analysis includes technical, market, financial, organizational, and competitive analysis. a. True b. False

a. True

One of the most helpful avenues for developing one's own creative talents is to be aware of the habits and mental blocks that stifle creativity. a. True b. False

a. True

Perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, is that the franchisor will usually provide both training and guidance to the franchisee. a. True b. False

a. True

Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach. a. True b. False

a. True

What are the four types of innovation? a. invention, extension, synthesis, duplication b. extension, retention, analysis, duplication c. synthesis, extension, retention, analysis d. analysis, synthesis, duplication, retention

a. invention, extension, synthesis, duplication

Which of the following are sources of innovation? a. unexpected occurrences and incongruities b. duplication and processes c. synthesis and technology d. industry changes and extension

a. unexpected occurrences and incongruities

The decision of an entrepreneur to ignore the market is a safe one if he or she is sure that the idea will be a success. a. True b. False

b. False

Which of the following statements is true? a. The right brain helps people analyze and verbalize. b. The right brain helps people understand analogies and imagine things. c. The left brain helps people understand analogies and imagine things. d. Right and left brain concepts are meaningless.

b. The right brain helps people understand analogies and imagine things.

Which of the following statements is true? a. Innovation is the specific function of entrepreneurship. b. Innovation is the process by which entrepreneurs consume marketable ideas. c. Innovation does not involve change. d. Innovation is the government's responsibility.

a. Innovation is the specific function of entrepreneurship.

Which of the following is NOT true of creative people? a. They must be gifted or highly intelligent. b. Some people have a greater aptitude for creativity than others. c. They are able to see relationships among things that others have not seen before. d. They have been taught to think and act creatively as well as encouraged to develop their creativity.

a. They must be gifted or highly intelligent.

Which of the following is an entity that helps new ventures to develop by providing services such as management training and office space? a. business incubator b. business accelerators c. entrepreneurial ecosystem d. franchise

a. business incubator

The four phases in the creative process in order are a. background or knowledge accumulation, incubation, idea experience, and evaluation and implementation. b. idea experience, background or knowledge accumulation, incubation, and evaluation and implementation. c. incubation, background or knowledge accumulation, idea experience, and evaluation and implementation. d. evaluation and implementation, idea experience, incubation, and background or knowledge accumulation.

a. background or knowledge accumulation, incubation, idea experience, and evaluation and implementation.

Which of the following statements is true? a. The right brain is more important in the creative process than the left brain. b. The left brain is more important in the creative process than the right brain. c. Both sides of the brain are important to the creative process. d. Motivation is the key to the creative process rather than the brain's functionality.

c. Both sides of the brain are important to the creative process.

Which of the following critical factors in the prestart-up and start-up phases considers whether the venture should be classified as lifestyle, small profitable or high-growth? a. uniqueness b. investment c. growth of sales d. product availability

c. growth of sales

The entrepreneurial motivations of individuals usually relate to which of the following factors? a. the environment b. the entrepreneur c. the venture d. all of these

d. all of these

The inventory should be examined for which of the following? a. salability b. correspondence between the physical count and the book count c. up-to-datedness d. all of these

d. all of these

Which of the following is not a key question a prospective buyer needs to ask in buying a business? a. Why is the owner selling? b. What is the owner's personal net worth? c. How many of the personnel will remain with the firm? d. What type of competition exists?

b. What is the owner's personal net worth?

A _____ is a system of distribution that enables a supplier to arrange for a dealer to handle a specific product or service under certain mutually agreed upon conditions. a. franchisee b. franchise c. franchisor d. franchiser

b. franchise

The type of venture that is expected to attract venture capital would most likely be a a. corporate venture. b. high-growth venture. c. lifestyle venture. d. smaller venture.

b. high-growth venture.

Poor financial understanding is characterized by which of the following? a. failure to anticipate technical difficulties b. inadequate understanding of costs and funding requirements c. failure to realize the life cycle of a product d. lack of product differentiation

b. inadequate understanding of costs and funding requirements

The terms upside gain and downside loss refer to the profits the business can make and the losses it can suffer. a. True b. False

a. True

In negotiating a deal to purchase an existing business, it is possible to request that the seller retain a minority interest in the firm. a. True b. False

a. True

The entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture. a. True b. False

a. True

The four basic types of innovation are invention, extension, duplication, and synthesis. a. True b. False

a. True

The four phases of the creative process are knowledge accumulation, incubation, idea experience, and evaluation. a. True b. False

a. True

The incubation process involves which of the following? a. working harder b. letting the subconscious work c. talking with friends d. changing jobs

b. letting the subconscious work

Inflated owner ego, employee-related concerns, control factors and interpersonal problems are factors involved in which of the following causes for venture failure? a. product/market problems b. managerial problems c. financial difficulties d. distribution problems

b. managerial problems