Entrepreneurship Exam 2

The inventory should be examined for which of the following?

All of the above.

Which of the following statements is true

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

Franchisees have the option of using the logo and symbols of the franchisor.

False

Most entrepreneurs are objective when they evaluate their new idea

False

Most entrepreneurs are well schooled in the technology associated with their ventures.

False

Overall market understanding rather than a time-consuming focus on market niches is sufficient for an evaluation

False

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

False

The Federal Trade Commission does not provide information on franchise success.

False

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

False

A key question to ask when buying an on-going small business is which of the following

How many personnel are going to remain?

Which of the following statements is true?

Innovation is the specific function of entrepreneurship.

Which is not a key question to ask when buying a business?

Is the building heated with gas or electricity?

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.

True

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

True

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

True

The cognitive ability of entrepreneurs to acquire and transform information has yet to be studied

True

The four basic types of innovation are invention, extension, duplication, and synthesis

True

The left hemisphere of the brain is responsible for logical and analytical skills

True

The prospective investor should get as much information as possible on the franchisor.

True

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

True

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

True

Which of the following is not a key question a prospective buyer needs to ask in buying a business

What is the owner's personal net worth?

An agreement not to compete is also known as

a legal restraint of trade.

An additional consideration to keep in mind when negotiating to purchase an existing business includes requesting that the seller retain __________ in the firm

a minority interest

An advantage to buying an on-going business is

all of the above

The entrepreneurial motivations of individuals usually relate to which of the following factors

all of the above

Which of the following is critical to a product's success

all of the above

The advantages of franchising include

all of the above.

When should a potential franchisee receive the FDD (Franchise Disclosure Document)?

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

Which of the following mental habits inhibit creativity and innovation

either/or thinking, stereotyping

An approach developed as a criteria selection list from which entrepreneurs can gain insights into the viability of their venture is the

feasibility criteria approach.

The individual who buys the franchise is the

franchisee

Market feasibility analysis relies on

general economic trends and competitor data

The type of venture that is expected to attract venture capital would most likely be a

high-growth venture.

Venture classifications include which of the following types of venture

high-growth ventures

The phase of the creative process when the idea or solution the individual is seeking is discovered is the

idea experience.

Overnight package delivery is illustrative of which source of innovation

incongruities

What are the four types of innovation

invention, extension, synthesis, duplication

Name the pitfall described by the statement, "Engineers and technically trained people are particularly prone to falling in love with an idea for a product or service."

lack of objective evaluation

Logical and analytical skills are developed in the

left hemisphere of the brain.

The incubation process involves which of the following

letting the subconscious work

A common pitfall in selecting a new venture is

poor financial understanding

Which of the following is not one of the phases in the creative process

preliminary investigation

Which of the following as a factor contributing to new-venture failure?

product/market problems.

Rapid technological advances in many industries cause a concern for in new venture development

rapid product obsolescence

The combination of existing concepts and factors into a new formulation would define which of the following terms

synthesis

Using the failure prediction model discussed in the chapter, the risk of failure can be reduced by:

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

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

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.

True

Synthesis is the combining of existing concepts into a new formulation

True

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

True

The entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture.

True

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

True

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

True

Which of the following is a major reason for the failure of a new venture

inadequate market knowledge

Poor financial understanding is characterized by which of the following

inadequate understanding of costs and funding requirements

When one designs a unique good or service, the individual is said to have used a(n) ____approach to starting the business

new-new

Many entrepreneurs lack _____ for their new venture

objectivity

The person who sells the franchise is usually required to do all of the following except:

pay a fee.

Three specific phases that a new venture goes through are

prestart-up, start-up, poststart-up

Which of the following are sources of innovation

unexpected occurrences and incongruities

Who must negotiate a final deal to purchase a business?

The potential buyer

Which of the following statements is true

The right brain helps people understand analogies and imagine things.

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

True

Feasibility analyses include technical, market, financial, organizational, and competitive analyses

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

True

Incongruities are gaps or differences between expectations and reality

True

Innovation is the process by which entrepreneurs convert opportunities into marketable ideas.

True

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

True

The four phases in the creative process in order are

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

Which of the following is a characteristic of creative people

bright but not necessarily brilliant

Looking for different or unorthodox relationships among elements and people is one way to develop creativity. How might a person develop this capacity

by perceiving in a relational mode

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

False

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

franchise

Which of the following is an intangible asset

goodwill