Entrepreneurship Exam 1 CH 1-5

A(n) ________ is a physical or digital repository for storing ideas. A) suggestion bank B) idea depository C) suggestion pool D) idea bank E) proposition pool

D) idea bank

According to the Global Entrepreneurship Monitor (GEM) 2007 study, the majority of people in high-income countries are drawn to entrepreneurship: A) to take advantage of an attractive opportunity B) due to lack of career prospects C) as a result of government incentives D) because an important role model was an entrepreneur E) to gain prestige

A) to take advantage of an attractive opportunity

There are two primary audiences for a business plan: investors and other external stakeholders and: A) officials with the SEC B) a firm's employees C) a firm's competitors D) a firm's customers E) public relations firms

B) a firm's employees

The ________ is a short overview of the entire business plan. A) summary statement B) executive summary C) managerial review D) founder's introduction E) abstract

B) executive summary

________ is the process of creating something new, which is central to the entrepreneurial process. A) Creative destruction B) Modernism C) Execution D) Creativity E) Innovation

E) Innovation

Which of the following is an example of an industry-level factor as opposed to a firm-level factor? A) a firm's assets B) a firm's culture C) the teamwork among a firm's employees D) a firm's products E) threat of substitutes

E) threat of substitutes

________ is the process of determining whether a business idea is viable. A) Feasibility analysis B) Opportunity recognition C) Viability analysis D) Achievability analysis E) Scenario analysis

A) Feasibility analysis

What section of the business plan deals with the day-to-day operations of a company? A) financial plan B) marketing plan C) operations plan D) industry analysis E) executive summary

C) operations plan

Most of Jacob's ideas come from interacting with coworkers, friends, his spouse, his parents, and other people that share the same beliefs that he does. Jacob is getting most of his ideas through: A) weak-tie relationships B) horizontal-tie relationships C) strong-tie relationships D) multiple-tie relationships E) vertical-tie relationships

C) strong-tie relationships

In regard to patent activity (issuance), which of the following statements is correct? A) Small businesses outperform their larger counterparts. B) Small businesses underperform their larger counterparts. C) Small businesses and large businesses are relatively equal. D) Small businesses are not active in patent activity. E) Large businesses are not active in patent activity.

A) Small businesses outperform their larger counterparts.

Which of the following is not a recommended guideline for writing a business plan? A) To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way. B) A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture. C) For most plans, 25 to 35 pages is sufficient. D) A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan. E) Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan.

A) To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.

An opportunity has four essential qualities: A) attractive, timely, durable, and anchored in a product, service, or business that creates or adds value for its buyer or end user B) practical, opportune, appropriate, and anchored in a product, service, or business that is efficient and effective C) realistic, striking, timely, and anchored in a product, service, or business that is timely D) attention-getting, attractive, timely, and anchored in a product, service, or business that creates or adds value for its buyer or end user E) attractive, durable, resilient, and opportune

A) attractive, timely, durable, and anchored in a product, service, or business that creates or adds value for its buyer or end user

The document that does the best job of introducing potential investors and other stakeholders with the business opportunity the firm is pursuing and how it plans to pursue it is the: A) business plan B) feasibility analysis C) opportunity analysis D) industry analysis E) marketing plan

A) business plan

Each quarter, Cindy Anderson, who owns a chain of card and gift shops, does a detailed analysis of her firm's competitors. This analysis is called: A) competitor analysis B) challenger analysis C) strategic analysis D) participant analysis E) industry analysis

A) competitor analysis

The Savvy Entrepreneurial Firm feature in Chapter 3 focuses on Bill Gross, and how a company he was leading, Knowledge Adventure, made a 180-degree turn on the positioning of a product. According to the feature, Gross and his team made the change as a result of: A) observing how customers acted when buying their product B) studying industry trends C) conducting Internet research D) administering a concept test and a buying intention's survey E) hiring consultants to provide them advice

A) observing how customers acted when buying their product

A computer-generated image of an invention that displays the invention as a 3D model that can be viewed from all sides and rotated 360 degrees is called a(n): A) virtual prototype B) concept visualization C) abstract prototype D) virtual design E) usability test

A) virtual prototype

To make sure that its customers are satisfied and to probe for new product ideas, Intuit routinely sends employees to the facilities of their customers. This technique for generating new business ideas is called: A) brainstorming B) day-in-the-life research C) focus group D) survey E) customer advisory board

B) day-in-the-life research

Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Paul send the investor? A) marketing plan B) executive summary C) elevator pitch D) company description E) operations plan

B) executive summary

Which of Porter's five forces is most directly influenced by the following factors: number and balance of competitors, degree of difference between products, growth rate of an industry, and level of fixed costs? A) threat of new entrants B) rivalry among existing firms C) threat of substitutes D) bargaining power of buyers E) bargaining power of suppliers

B) rivalry among existing firms

Sharon Simms is a very capable computer engineer. Recently, she noticed a problem that computer engineers have, and thought of a solution to the problem that might represent an opportunity for a new software product. Sharon's idea for a new software product is an example of a(n) ________ discovery. A) chance B) serendipitous C) traditional D) conventional E) opportune

B) serendipitous

Shelly Ford is starting a fashion boutique in an upscale mall near San Antonio. She wants to open her store during the time period in which a business like hers can realistically enter the new market. Shelly is trying to open her business while the ________ is open. A) safe harbor B) window of opportunity C) portal of entry D) doorway of opportunity E) safety zone

B) window of opportunity

Which of the following statements regarding business success (or failure) rates is correct? A) After four years, 15 percent of new businesses are still open. B) After four years, 25 percent of new businesses are still open. C) After four years, 50 percent of new businesses are still open. D) Two out of three businesses fail within the first four years. E) Nine out of ten businesses fail within the first four years.

C) After four years, 50 percent of new businesses are still open.

Which of the following statements is incorrect regarding the personal characteristics of entrepreneurs? A) Some people think that entrepreneurs have a "sixth sense" that allows them to see opportunities that others miss. B) The extent and depth of an individual's social network affects opportunity recognition. C) Several studies show that prior experience in an industry actually blinds an entrepreneur to the recognition of new opportunities in the same industry.

C) Several studies show that prior experience in an industry actually blinds an entrepreneur to the recognition of new opportunities in the same industry.

Once a firm decides to enter an industry and chooses a market in which to compete, it must gain an understanding of its competitive environment. This challenge can be undertaken by completing a(n): A) business analysis B) industry analysis C) competitor analysis D) strategic analysis

C) competitor analysis

Apple Inc. is a firm that is proactive, innovative and risk-taking. From this description, we can most accurately conclude that Apple has a high level of: A) enterprise focus B) innovative intensity C) entrepreneurial intensity D) creative intensity E) innovative concentration

C) entrepreneurial intensity

Which of the following is not an attribute of an attractive industry? A) is young rather than old B) is not crowded C) is late rather than early in its life cycle D) is important to the customer E) is fragmented rather than concentrated

C) is late rather than early in its life cycle

Firms that pursue a(n) ________ strategy compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market. A) inclusive B) universal C) multidomestic D) contemporary E) worldwide

C) multidomestic

Cameron Smith recently surveyed 200 of his classmates to get a sense of the demand for a new software product he is working on. Collecting data via a survey you administer yourself is referred to as: A) direct research B) derivative research C) primary research D) secondary research E) initial research

C) primary research

Some industries, like the athletic shoe industry, are dominated by a small number of firms with strong brands. These industries are difficult to break into without spending heavily on advertising. The barrier to entry that the firms in these types of industries have erected is referred to as: A) government and legal barriers B) capital requirements C) product differentiation D) cost advantages independent of size E) access to distribution channels

C) product differentiation

Which of the following is not an individual, group or institution that normally reads a company's business plan? A) board of directors B) potential alliance partners and major customers C) state and local government officials D) key recruits for jobs with the new firm E) rank-and-file employees

C) state and local government officials

A ________ market is a place within a larger market segment that represents a narrower group of customers with similar needs. A) secondary B) primary C) target D) parallel E) minor

C) target

________ feasibility is an assessment of the overall appeal of the product or service being proposed. A) Consumer B) Industry/market segment C) Industry/market D) Product/service

D) Product/service

Which of the following statements is incorrect regarding the economic impact of entrepreneurial firms in the United States? A) Small businesses outperform their larger counterparts in terms of patent activity. B) Small firms are providers of a significant share of the innovations that take place. C) According to a Kauffman Foundation survey, 92% of Americans say entrepreneurs are critically important to job creation. D) Small businesses employ just less than half of all private sector employees. E) Small businesses are the creators of most new jobs.

D) Small businesses employ just less than half of all private sector employees.

Operating leverage is highest in companies that have: A) a service rather than a manufacturing emphasis B) virtually no fixed costs C) equal variable costs and fixed costs D) a high proportion of variable costs relative to their fixed costs E) a high proportion of fixed costs relative to their variable costs

D) a high proportion of variable costs relative to their fixed costs

Frank Patterson started a firm in 2011 that creates and manufactures accessories for Apple iPhones. He started with four accessories, and after several months added three new accessories that have been very successful. The fact that Frank recognized the opportunity for the three new accessories only after he started his firm and become immersed in the iPhone accessory industry is an example of the ________ at work. A) opportunity tenet B) opportunity rule C) chance rule D) access principle E) corridor principle

D) access principle

The three primary reasons that people become entrepreneurs and start their own firms are to: A) gain prestige, realize financial rewards, and eliminate risk in their lives B) do what they were "born" to do, be their own boss, and gain prestige C) take big risks, be their own boss, and do what they were "born" to do D) be their own boss, pursue their own ideas, and realize financial rewards E) take advantage of government subsidies, pursue their own ideas, and realize financial rewards

D) be their own boss, pursue their own ideas, and realize financial rewards

The ability to notice things without engaging in deliberate search is referred to as: A) cognitive alertness B) cognitive awareness C) managerial alertness D) entrepreneurial alertness E) individual awareness

D) entrepreneurial alertness

If a startup pioneers an industry or a new concept within an industry, the name recognition the startup establishes may create a formidable nontraditional barrier to entry referred to as a(n): A) unique business model B) aggressive supremacy C) competitive superiority D) first-mover advantage E) aggressive tactical advantage

D) first-mover advantage

Katherine Chapman recently launched a firm in the clothing industry, targeting teens ages 13-17. One thing Katherine thinks she has accomplished is producing products that have universal appeal, so she will not vary her approach from country to country. Katherine is pursuing a ________ strategy. A) universal B) multidomestic C) contemporary D) global E) home

D) global

A prototype is: A) a form of opportunity recognition B) a tool for evaluating the industry a new firm plans to enter C) a financial model D) the first physical depiction of a new product E) a tool for evaluating the organizational prowess of a new firm

D) the first physical depiction of a new product

Alex has a number of casual acquaintances that he interacts with infrequently. The relationships that Alex has with these people are referred to as: A) strong-tie relationships B) moderate-tie relationships C) lateral-tie relationships D) weak-tie relationships E) multiple-tie relationships

D) weak-tie relationships

Which of the following statements about target markets is incorrect? A) There is a distinct difference between a firm's industry and its target market. B) The challenge in identifying an attractive target market is to find a market that's large enough for the proposed business but is yet small enough to avoid attracting larger competitors. C) By focusing on a target market, a firm can usually avoid head-to-head competition with industry leaders and can focus on serving a specialized market very well. D) A target market is a place within a larger market segment that represents a narrower group of customers with similar needs. E) It's generally easier to find good information about a target market than an industry as a whole.

E) It's generally easier to find good information about a target market than an industry as a whole.

Corry Pierce is investigating the feasibility of a new type of electronic game targeting middle school and high school-age boys. Which of the following is an example of "gumshoe research" that Corry could conduct to get a sense of the likely demand for his game? A) Download electronic games industry reports from the Internet. B) Administer a buying intentions survey. C) Administer a concept test. D) Look at the Web sites of a number of companies that sell electronic games. E) Spend several days in electronic games arcades and stores to observe the types of games that attract the interest of middle school age and high school age boys.

E) Spend several days in electronic games arcades and stores to observe the types of games that attract the interest of middle school age and high school age boys.

________ are characterized by frequent interactions that form between coworkers, friends, and spouses. A) Balanced relationships B) Weak-tie relationships C) Lateral-tie relationships D) Moderate-tie relationships E) Strong-tie relationships

E) Strong-tie relationships

Which of the following statement is incorrect about business plans? A) Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture. B) For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm. C) A business plan is typically 25 to 35 pages long. D) A large percentage of entrepreneurs do not write business plans for their new ventures. E) The business plan should be written while the feasibility analysis is being completed

E) The business plan should be written while the feasibility analysis is being completed

An example of a valuable library resources is IBISWorld, which is a(n): A) business publication B) academic journal C) Census Bureau publication D) trade journal E) database of industry-related information

E) database of industry-related information

A(n) ________ is a favorable set of circumstances that creates a need for a new product, service, or business. A) idea B) scheme C) design D) proposal E) opportunity

E) opportunity

Sarah Thorton is the founder of a company named Extreme Sports Apparel. The company makes apparel products for extreme sports enthusiasts such as rock climbers, triathletes, parasailors, and BMX bikers. Sarah wants her company to pursue a high level of corporate entrepreneurship. To achieve that goal, Sarah's firm should be: A) innovative, risk averse, and take a "wait and see" posture B) taking a "wait and see" posture, innovative, and risk taking C) proactive, not innovative, and risk taking D) taking a "wait and see" posture, not innovative, and risk averse E) proactive, innovative, and risk taking

E) proactive, innovative, and risk taking

Suppose you are a Small Business Development Center counselor and you're looking at the personality profiles of five potential entrepreneurs. Based on the profiles, which individual has the most desirable mix of personal characteristics to become a successful entrepreneur? A) Candidate A: visionary, energetic, moderate risk taker B) Candidate B: seeks recognition, self-starter, creative C) Candidate C: visionary, high risk taker, energetic D) Candidate D: high risk taker, achievement-motivated, networker E) Candidate E: tolerant for ambiguity, seeks recognition, motivated primarily by money

A) Candidate A: visionary, energetic, moderate risk taker

Which of the following is not one of the five common myths about entrepreneurs? A) Entrepreneurs are tenacious. B) Entrepreneurs are moderate risk takers. C) Entrepreneurs should be young and energetic. D) Entrepreneurs love the spotlight. E) Entrepreneurs are born not made.

A) Entrepreneurs are tenacious.

Which of the following statements is incorrect regarding the marketing plan section of a business plan? A) The marketing plan focuses on how the business will market and sell its product or service. B) The two most important items to include in a marketing plan are (1) overall marketing strategy and (2) the nuts and bolts of marketing a firm's product in terms of product, price, promotion, and place. C) The best way to describe a company's marketing plan is to begin by talking about its competitors. D) A firm's marketing strategy refers to its overall approach for marketing its products and services. E) A firm's overall approach to marketing typically boils down to how it positions itself in its market and how it differentiates itself from its competitors.

C) The best way to describe a company's marketing plan is to begin by talking about its competitors.

Which of the following statements is incorrect regarding the executive summary of a business plan? A) It is a short overview of the entire business plan. B) In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing. C) It is arguably the most important section of the business plan. D) It should not exceed two single-spaced pages. E) The executive summary is the first thing that should be written in preparing a business plan.

E) The executive summary is the first thing that should be written in preparing a business plan.

There are two primary audiences for a business plan: A) a firm's employees and officials with the SEC B) a firm's customers and its competitors C) investors and other external stakeholders and public relations firms D) officials with the SEC and public relations firms E) a firm's employees and investors and other external stakeholders

E) a firm's employees and investors and other external stakeholders

Shelly James recently launched a firm in the fruit drink industry, and has already exported her fruit drinks to 9 different countries. One thing that Shelly's firm is doing is that it is varying the tastes of the fruit drinks it sells on a country by country basis to meet the demands of the local markets. Shelly's firm is pursuing a ________ strategy. A) global B) home C) universal D) contemporary E) multidomestic

E) multidomestic