ETR 210 Final Study Guide

The common sources of equity financing are commercial banks.

False

The corporation, like the proprietorship, avoids the "double taxation" disadvantage associated with the partnership form of ownership.

False

The extent and timing of funds needed to move through the venture process is not a critical issue and has little to do with the success or failure of a new venture.

False

The macro view of entrepreneurship can be broken down into three areas: the entrepreneurial trait, venture opportunity, and strategic formulation.

False

The sole proprietorship is the simplest, least expensive form of ownership to begin and the owner and the business are entirely separate

False

The term opportunity pressure describes an ethical lapse that occurs when competition is so intense that a company's survival is threatened and a manager begins to view what once was an unacceptable option as acceptable.

False

Anyone who violates an author's exclusive rights under a copyright is liable for infringement. However, because of this doctrine, it is sometimes difficult to establish infringement.

Fair use

"Monkey Marketing" is a strategy that relies on unconventional, low-cost, and creative techniques so that small companies can wring as much or more "bang" from their marketing bucks.

False

A business plan is developed through an intuitive process by which the entrepreneur records his/her plans for the business in the future.

False

A limited liability company does not offer the limited liability like a C corporation.

False

A nascent entrepreneur is an individual who has several years of experience operating as a business owner.

False

A novice entrepreneur is an individual who retains an original business and builds a collection of additional businesses through inheriting, establishing, or purchasing them.

False

A serial entrepreneur becomes a business owner by either inheriting a business or by being given a stake in a family owned business.

False

A trademark provides the owner with exclusive rights to hold, transfer, and license the production and sale of a product or process.

False

An entrepreneur is considered to have a high tolerance for ambiguity when the entrepreneur cannot deal with the various setbacks and changes that constantly confront them.

False

Because of the fair use doctrine, when designing a website or social media page for a new business, an entrepreneur can use any content, pictures, music, etc. found on the internet and not worry about violating anyone's copyright interest.

False

Under a cash system of accounting, revenue and expenses are recorded when received and paid, respectively, without regard for the period to which they apply.

True

Mike, Nora, and Own want to form a limited partnership. A limited partnership must have at least

one general partner and one limited partner

This element of a marketing communication plan focuses on sales presentation that is non-personal in nature is free,

publicity and public relations

Which of the following techniques are used in gathering primary data for marketing research

surveys

The most common source of debt funds used to start a small business is:

the entrepreneur's pool of personal savings

Dave is a general partner in Eagle Investments, a limited partnership, Dave pays personal income taxes on

His share of the firm's income

Which of the following is considered a benefit of entrepreneurship?

Impressive profits

Ann owns Beta Enterprises, a sole proprietorship. Ann's liability for the obligations of the business is

Unlimited

All of the following are important when implementing and maintaining ethical standards in a business except

basing hiring decision solely on professional qualifications

An entrepreneur uses this budget to for items they intend to use long term, generally more than 1 year

capital budget

A variable expense

changes in response to changes in activity for a given period of time

The first critical factor in the marketing-research process is

defining the research purpose and objectives

Bob Johnson's replication of the MTV format in creating programming for BET is an example of innovation through:

duplication

Break-even analysis is a technique commonly used to assess the

expected product profitability

Investors look for which of the following when reviewing the experience of the management team of a new venture?

experience, talent, and integrity

A fixed expense:

none of the above

Based on the average number of business ventures incorporated annually, how many new businesses are started each year in the United States?

600,000 per year

Which of the following statements about innovators are true?

Accomplished innovators are very practical people and create from the opportunities left by reality

In examining the community perspective, an entrepreneur should consider:

All of the above: demographics, economic base, population trends, overall business climate

Most university centers for entrepreneurship focus on which of the following:

All of the above: entrepreneurship education, outreach activities with entrepreneurs, entrepreneurship research

Which of the following is not one of the categories of financial ration

All of the above: liquidity, leverage, operating, profitability

Who are the "stakeholders" that a corporate manager should consider when making a management decision?

All of the above: owners of shares of stock in the corporation, employees of the corporation, and the community in which the corporation operates.

Which of the following are ways to avoid the common pitfalls in creating a new business venture?

All of the above: prepare a business plan and know your business in depth, manage financial resources and understand financial statements, be unique and set your business apart from the competition.

Barriers to entry may include having lack to the following:

All of the above: proprietary technology, distribution channels, infrastructure

One researcher suggests that legal behavior represents one of four rationalizations managers use to justify questionable conduct:

All of the above: that the activity is really not illegal or immoral, that it is in the individual's or corporation's best interest, they will never be found out, and because it helps the company, the company will condone it

This type of ethical lapse occurs because of the company culture has been poisoned with an unethical overtone and unethical behavior is rewarded:

Bad Barrel

This segment of the business plan discusses the history, purpose, uniqueness, and mission of the proposed venture.

Business description section

Entrepreneurs themselves perceive the concept of risk in which of the following ways:

Calculated risk taking

Each and every person in a communist economic system has the potential and free choice to pursue a career as an entrepreneur.

False

In a limited partnership, the liability of each partner is limited to the amount of capital he or she has invested in the partnership.

False

In innovation through duplication, the entrepreneur simply copies someone else's business idea.

False

Innovation through perceptual changes is caused by continual shifts in the market due to changes in consumer attitudes, advancements in technology, and industry growth.

False

Large businesses are the most common form of business establishment.

False

Obtaining a business license is the same as forming a legal entity for a business.

False

Only 20% of all businesses employ fewer than 20 people.

False

Operating expenses are expenditures incurred after the decision has been made to establish a particular business operations begin.

False

Seldom do entrepreneurs get the idea for their new business through prior experiences while working for companies in the same industries.

False

Typically, an entrepreneur is not faced with many ethical decisions, especially during the early stages of their venture.

False

Under debt financing an entrepreneur must consciously decide to give up part of the ownership in the venture in return for the funding.

False

Whereas investors are generally more interested in security and payback; finance companies, as partial owners of the companies they lend to, are more concerned with the return of investment.

False

Works created and copyrighted after January 1, 1978, are protected for an unlimited duration.

False

This entrepreneurial risk is often experienced by entrepreneurs who are married, and especially those with children, expose their families to the risk of an incomplete family experience and the possibility of permanent emotional scares.

Family and social risk

A business plan:

Forces an entrepreneur to think a business idea through, considering both its positive and its negative aspects.

This characteristic of entrepreneurship is consistent with a high-achievement motivational drive, the desire to take personal responsibility, and self confidence.

Internal locus of control

For this kind of entrepreneur, making money is important but "enough" money is often more important than the more traditional capitalist pursuit of wealth.

Lifestyle

A good trait for an entrepreneur to have is a

Low need for status and power

When referring to "luck" and an entrepreneur, which of the following statements is an appropriate adage?

Luck happens when preparation meets opportunity.

Which of the following is a drawback of entrepreneurship:

Opportunity to risk losing your entire investment

An entrepreneur who retains an original business and builds a collection of additional businesses through inheriting, establishing, or purchasing them is called a(n):

Portfolio entrepreneur

The most common form of business ownership is the

Proprietorship

Entrepreneurs have been considered academic and social misfits because

Several highly successful entrepreneurs did not complete college

Carlos founded the Taco Factory 20 years ago as a family-oriented restaurant business. Over the years he grew the business, he incorporated and sold stock. Recently the stockholders voted to seek liquor licenses and sell beer and hard liquor in the restaurants. Carlos opposed this, citing the history of the restaurants family environment, but was voted down. Carlos experienced which drawback of the corporate form of ownership?

The Potential loss of control

Generally, anything that makes an individual company unique and has value to a competitor could be a trade secret.

True

According to this entrepreneurial school of thought, developing the right idea at the right time for the right people for the right market niche is the key to entrepreneurship success.

The venture opportunity.

A SWOT analysis is used to access an organization's strengths, weaknesses, opportunities, and threats.

True

A gazelle is defined as a business establishment with at least 20 percent sales growth every year, for over fives years, starting with a base of at least $100,000.

True

A limited liability company formed and chartered in Virginia is considered a foreign corporation when doing business in Maryland.

True

A major source of information about the entrepreneurial perspective is compendiums about entrepreneurs.

True

A new venture will not survive unless there is a market that exists for its products or services.

True

A restrictive covenant is a clause in a contract which prohibits an employee from competing with his ex-employer for a certain period or within a certain geographic area after the employee has left the business.

True

Although there is no single definition of an entrepreneur, there are common themes found in defining entrepreneurship.

True

An entrepreneur must be willing to risk their own personal funds in a business venture first, in order for other potential investors and lenders to provide capital for it.

True

Characteristics of successful entrepreneurs can be taught and learned by those who are willing to study them.

True

Depreciation is a financial term used to describe the lost usefulness; expired utility; the diminution of services yield from a fixed asset group that cannot or will not be restored by repairs or by replacement of parts.

True

Economic displacement is concerned with the economic variations of recession and depression- job loss and simple "bad times" can create the foundation for entrepreneurial pursuits.

True

Entrepreneurs can identify viable business opportunities by observing trends, solving problems, or finding gaps in the marketplace.

True

Entrepreneurs who do not prepare a business plan are less likely to get the money they need from a lender or investor.

True

Ethics represents a set of principles prescribing a behavioral code that explains what is good and right or bad and wrong; ethics may, in addition, outline moral duty and obligations.

True

Globalization of business has intertwined what once were distinct cultures; companies have discovered that there is no single standard of ethical behavior applying to all business decisions in the international arena.

True

If the partners fail to create an agreement, the UPA (Uniform Partnership Agreement) says that the partners share equally in the partnership's profits, even if their original capital contributions are unequal.

True

In most cases, lenders and investors look for key people, promising opportunity, business context and risk and rewards in a business plan.

True

Informal risk capitalist often referred to as "business angels" are those who have already made their money and available to help new ventures.

True

It is wise for an entrepreneur when selecting a business name to search the internet, state corporations commission, and the United States Patent and Trademark office to determine availability.

True

Marketing research involves the gathering of information about a particular market, followed by analysis of the information.

True

Nearly 80 percent of would-be entrepreneurs in the United States are between the ages of 18 and 34.

True

Pro forma statements are a firm's financial position over a future period (pro forma income statement) and on a future date (pro forma balance sheet)

True

Proper financial management requires more than gathering financial data and organizing it into financial statements; the entrepreneur must analyze those statements and use the information to make better business decisions

True

Several highly successful brands eventually failed because of poor quality, management, and locations.

True

Some of the reasons why many entrepreneurs fail to engage in marketing research are cost, complexity, irrelevancy, and lack of need in making strategic decisions.

True

Techniques for generating ideas may include having brainstorming sessions, hosting focus groups, conducting surveys, and establishing customer advisory boards.

True

The business plan presentation should be slow, methodical, and detailed to show the depth of understanding and preparation the entrepreneur has gone to prepare it.

True

The ecology pertains to such issues as pollution and waste disposal, recycling of usable materials, protection of wildlife preserve areas, workplace safety and hazards, and the general quality of life.

True

The entrepreneurial ego may be manifested if the entrepreneur has an overriding desire for success and an overbearing need for control.

True

The four main areas of environmental assessment include the societal environment, the specific industry environment, the community perspective, and the venture organization.

True

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

True

The small business manager should employ the different advertising media than competitors to increase the likelihood of advertising success.

True

The utilitarian principle evaluates ethical behavior based on choosing the option that offers the greatest good for the greatest number of people.

True

To draw customers to a new venture, an entrepreneur should provide performance or services that are superior to competitive offerings.

True

Trends signal shifts in the current paradigm (or thinking) of the major population. Observing trends closely will grant an entrepreneur the ability to recognize a potential opportunity.

True

Unlike a limited partnership, which prohibits limited partners from participating in the day-to-day management of the business, and LLC does not restrict its member's ability to become involved in managing the company.

True

When a "bad barrel" ethical lapse occurs, the company culture has been poisoned with an unethical overtone and unethical behavior is rewarded.

True

When examining a community's economic base, it is wise to examine any community dependence on one large firm or industry or how a community may be impacted by seasonal or cyclical fluctuations.

True

When preparing the business plan, the entrepreneur should not assume that the investor understand the business the entrepreneur is starting.

True

When selecting a location for a new business venture, it is important to examine population trends in order to identify expanding communities as opposed to long-term declining or static populations.

True

Under this strategic formulation school of thought, this approach to entrepreneurship refers to the skills or special talents of one or more individuals around whom the venture is built.

Unique people

Which of the following is not true about the protection of intellectual property under a patent:

a patent last for the life of the inventor plus 70 years

A market is

a group of consumers who have purchasing power and unsatisfied needs

A common pitfall in selecting a new venture is

a lack of venture uniqueness

A common legal concern that new ventures face is

all of the above: making the workplace safe for employees, providing reliable and safe products and services, and necessity of patents, trademarks, and copyrights to protect one's inventions and products

These ______ are wealthy individuals, often entrepreneurs themselves, who invest in business start-ups in exchange for equity stakes in the companies

business angels

Which of the following is not true about the protection of intellectual property under a trade secret theory:

must register trade secret with federal agency

The new trend to build housing communities for people age 55 and over best reflects which source of innovation

demographic changes

This source of innovation is caused by changes in population, age, education, occupation, geographic location and similar factors?

demographic changes

Name the pitfall described by the statement, "Failure to anticipate the technical difficulties related to developing or producing a product can sink a new venture."

inadequate understanding of technical requirements

Ted Turner, founder of CNN, insistence on forming a 24-hour news network after he was told, "That won't work! No one wants to watch news all day!" is an example of what source of innovation:

incongruities

The four methods of innovation include which of the following?

invention, extension, synthesis, duplication

In reality, advertising:

is an investment in the future; without steady advertising the customer base will dry up

A form of partnership that includes at least one general partner who is liable for all its liabilities and at least one partner who is liable for the capital invested in the partnership is

limited partnership

A discussion of the location, facilities, zoning, access, transportation, etc should be included in the:

operations section of the business plan

Poor financial understanding for an entrepreneur would be characterized by which of the following?

overly optimistic estimate of funds

The current desire for locally grown, organic, and whole grain foods has lead to the creation of grocery stores such as whole foods and to the reemergence of local farmer's markets is an example of which of the following sources of innovation?

perceptual changes

The marketing plan should include certain key objectives, such as:

pinpointing the specific target markets a small business will serve and methods to capture them

The micro view is divided into which three theories

the venture opportunity, entrepreneurial trait, strategic formulation

Drs. Kayla and Lyle are partners in a medical clinic, which is organized as a limited liability partnership. A court holds Lyle liable in a malpractice suit. Kay is liable

to the extent of her capital contribution

Lebron James is in the process of launching a sports bar and restaurant. His biggest supplier, Cavalier Cuts, agrees to sell him the inventory he needs to stock his restaurant on a delayed payment schedule. Lebron is using what type of financing.

trade credit

Which of the following are sources of innovation?

unexpected occurrences and incongruities

A disadvantage of using friends and relatives as investors is:

unrealistic expectations or misunderstood risks may destroy friend family relationships.

There are three basic requirements for a patent to be granted. The subject of the patent application must be:

useful, novel in relation to prior arts in the field, and not obvious to a person of ordinary skill in the field

_____ are private, for-profit organizations that purchase equity positions in young businesses they believe have high-profit potential, producing annual returns of 300-500 percent over five to seven years.

venture capital firms