Chapter 6

One of the essential characteristics that sets entrepreneurs apart from inventors, managers, and promoters is an effective combination of _____.

Innovativeness and business management skills

In a franchise agreement, the franchisor is the ____ and the franchisee is the ----.

Innovator; operator

Which of the following is NOT a factor that influences the success or failure of a new venture/business start-up?

Institutional corruption

A formal planning step that focuses on the entire venture and describes all the elements involved in starting it is called a(n) ____.

Business plan

The e-commerce business model in which a website is paid by companies that promote their goods or services on the website is the ____ model.

Advertising support

A group of people with business experience who can help guide an entrepreneur is called a(n) ____.

Advisory board

Among its various benefits, the value of a plan is that it helps the entrepreneur reduce ____ and maximize ____.

(1) risk (2) reward

Which of the following are purposes for creating a business plan? (Select all that apply)

- To guide planning and organizing - To determine the viability of an enterprise - To assist in obtaining financing

Which of the following are reasons that entrepreneurial businesses go public by using IPOs?

- To pursue otherwise unaffordable opportunities - To raise more capital - To improve credibility with customers - To reduce debt

Which of the following exacerbates the problem of entrepreneurs failing to use their resources wisely?

Venture capital funding

Which of the following are specific key planning factors, in addition to financial elements, that entrepreneurs must think through carefully? (Select all that apply)

- People - Competition - Context

A website, such as eBay, that brings buyers and sellers together and charges a commission is an example of the ____ model of e-commerce.

Intermediary

The e-commerce business model based on charging a commission for bringing buyers and sellers together is the ____ model.

Intermediary

New venture creators who work inside an existing company are called_____.

Intrapreneurs

Which of the following characterizes a small business?

It does not have many innovative practices

People's judgment of a company's desirability stemming from company goals and methods that are consistent with societal values is called ____.

Legitimacy

The ____ street effect occurs when an entrepreneurial opportunity is discovered unexpectedly while pursuing another opportunity.

Side

When entrepreneurs start their enterprises and then capitalize on an unexpected opportunity, it is called the ____ effect.

Side street

A lasting source of competitive advantage for an entrepreneur that involves building relationships and networking with people is _____ capital.

Social

Traditionally driven by the government and big defense contractors, the ____ market represents a potential future opportunity for entrepreneurs.

Space transport

When a newspaper company charges a monthly or annual fee to access its website content, the company is using the ____ model for e-commerce.

Subscription

A business plan is an opportunity for entrepreneurs to do which of the following? (Select all that apply)

- Convince others that the entrepreneur understands the process of starting a business - Determine ways to reduce risk and maximize rewards

When it comes to how a new business is viewed, people's judgment of which of the following characteristics of the company make up its legitimacy? (Select all that apply)

- Desirability - Acceptance - Appropriateness

Which of the following are factors that influence the success or failure of business start-ups? (Select all that apply)

- Economic environment - Management-related challenges

Which of the following are myths about entrepreneurship? (Select all that apply)

- Entrepreneurs are gamblers - Entrepreneurs are their own bosses who don't need to answer to anyone.

Which of the following could explain why entrepreneurs fail to use their resources wisely? (Select all that apply)

- Entrepreneurs fail to maintain control over their resources - Start-up capital is used on expensive locations

Which of the following are recommended practices for helping ensure the survival of a family-managed business? (Select all that apply)

- Have at least one key position be filled by a nonfamily member - Make sure that family members in the business work as hard as other employees - Someone outside the family and the business should help plan succession

What does the entrepreneurial strategy matrix do? (Select all that apply)

- Helps entrepreneurs decide if their ventures suit their objectives - Helps identify effective and ineffective strategies

Which of the following are favorable factors in increasing entrepreneurial activity? (Select all that apply)

- Improving performance of the stock market - Increases in the money supply - Real economic growth

Which of the following do start-ups contribute to the economy? (Select all that apply)

- Increased productivity - Wage growth

Which are ways a social enterprise might advance social well-being? (Choose every correct answer.)

-Encouraging responsible consumption -improving health-care access -revitalizing local neighborhoods

Entrepreneurs can find opportunities by entering domains bug companies avoid and introducing products that are ____.

Cheaper

In the model that conceptualizes entrepreneurial ventures, most small business ventures are categorized as ____.

Low in innovation and high in risk

Nonfinancial resources that are important to the success of a new business are business legitimacy, networks, advisory boards, and the top ____ team.

Management

Rapid growth leads to increased hiring which then requires entrepreneurs to do what?

Raise prices

What role does the economic environment play in the success of entrepreneurial ventures?

the economic environment affects the success of entrepreneurial ventures by affecting the supply of capital and prospective opportunities.

Technological discoveries ---(1) Demographic changes --- (2) Government initiatives and rule changes --- (3) Lifestyle and taste changes --- (4)

(1) Start-ups in microcomputers and nanotechnology (2) Smartphones that are easier for older people to use (3) Stricter energy efficiency requirements (4) An increasing desire by consumers to protect the environment

Which of the following is a crucial nonfinancial resource?

A top management team

Entrepreneurs often hesitate to ____ work to others as their business grows.

Delegate

A great product, a viable market, and ____ are essential ingredients to entrepreneurial success.

Good timing

The two major liabilities of start-up companies are ____.

Newness and smallness

The entrepreneurial strategy matrix helps entrepreneurs think about their venture and whether it suits their ____.

Objectives

An analysis that includes a description of the good or service, and assessment of the entrepreneur, a specification of activities and resources needed to translate the idea into a viable business, and the sources of capital is called a(n) ____ analysis.

Opportunity

The first formal step in creating a business plan that includes a description of a good or a service and other assessments is a(n) ____.

Opportunity analysis

Which entrepreneurial trait involves an intimate knowledge of customers' needs and the desire to create value?

Opportunity obsession

What is the role does the economic environment play in the success of entrepreneurial ventures?

The economic environment affects the success of entrepreneurial ventures by affecting the supply of capital of capital and prospective opportunities

The difference between the transaction fee model and the intermediary model of e-commerce is that the transaction fee model charges a fee ____, whereas the intermediary model charges a fee ____.

for goods and services; to bring buyers and sellers together

An entrepreneurial alliance between an innovator who creates at least one successful store and wants to grow the business and a partner who managers a new store of the same type in a new location is called a(n) ____.

Franchise

An entrepreneurial venture seeks to have ____.

Growth and high profitability

Two people who go into business together are called ____.

Partners

Entrepreneurs often have to _____.

Perform more than one business function

In order for an entrepreneurial enterprise to survive the death of its founder, the company needs to have a(n) ____ in place early on.

Plan for succession

Entrepreneur facing growth are challenged by competition from bigger firms, funding issues, and _____.

Plans for international expansion

Entrepreneurs fail to use formal controls because they are busy and have _____.

Poor record keeping practices

Since World War II, small entrepreneurial business have created 95% of all____ in the United States.

Radical innovation

Which of the following are elements of social capital? (Select all that apply)

- Being part of a network of people - Having a good reputation

Which of the following are typical ways entrepreneurs exploit opportunities? (Select all that apply)

- By exploring domains that are avoided by large companies - By introducing goods or services that capture the market because they are simpler or more convenient

Business partners help each other in which ways? (Select all that apply)

- By spreading the workload - By sharing expertise - By accessing capital

What are high-potential future opportunities for entrepreneurship? (Select all that apply)

- Green energy - Artificial intelligence - Cryptocurrency

A new business that has growth and high profitability as primary objectives is called a(n) _____.

Entrepreneurial venture

One of the key planning factors that entrepreneurs must think through carefully in creating a business plan is risk and ____.

reward

Match an organization's entrepreneurial tendencies (on the left) with their descriptions (on the right).

1. Independent action matches -Grants people the freedom to exercise their creativity and champions promising ideas that they develop 2. Innovativeness -Supports new ideas and experimentation and shows a willingness to depart from existing practices 3. Risk taking -Is willing to commit significant resources to ventures into the unknown 4. Proactiveness -Acts in anticipation of future problems and opportunities 5. Competitive aggressiveness -Challenges competitors directly and intensely

Survival for small start-up companies may be difficult because of ____.

A specialized market and strong competition

When advertisers pay a website operator to access the demographic group that visits the site, they are using the ____ support e-commerce model.

Advertising

Sites such as Zazzle.com, which pay commissions to other sites to bring business to them, are using the ____ model for e-commerce.

Affiliate

The e-commerce business model in which an organization drives business to its own site by paying commission to other sites is known as the ____ model.

Affiliate

A group of people who are willing to provide business insights and professional connections are known as ____.

An advisory board

People who become successful entrepreneurs usually have which characteristics?

They understand and have skills in management, business, and networking.

When Amazon.com and online travel agents charge a fee for goods or services, they are using the ____ fee model of e-commerce

Transaction

The e-commerce business model in which a company charges for goods or services is the ____ model.

Transaction fee

True or False: The idea that an entrepreneur gets rich quickly and enjoys a lot of leisure time while someone else does the work is a myth about entrepreneurship

True

Business incubators are often associated with a(n) ____.

University

Intrapreneurs are individuals who create new ventures____.

Within an existing organization using their company's resources

A(n) _____ generally has fewer than 500 employees and expects moderate sales and profits.

small business

The e-commerce business model based on charging a monthly or annual fee for access to a website is the ____ model.

subscription

Which of the following statements about successful entrepreneurs and innovators are true? (Select all that apply)

- Inventors may be highly creative - Entrepreneurs need to have good business management skills - Inventors often lack good business management skills

Which of the following describe typical features of a business incubator? (Select all that apply)

- It is associated with a university - It offers shared costs - It is located in an industrial park

What are challenges associated with rapid entrepreneurial growth? (Select all that apply)

- Limits to founders' capacities - Increasing expenses - Competing with bigger firms

In what ways does entrepreneurship differ from management? (Select all that apply)

- Managers are often slower to act and tend to avoid risk while entrepreneurs are quicker to act and actively manage risk. - Entrepreneurs often rent or use assets on a temporary basis while managers usually prefer to own assets - Entrepreneurs use networks of contacts while managers have more clearly defined authority and responsibility

Which of the following are characteristics of an entrepreneurial personality? (Select all that apply)

- Motivation to excel - Leadership - Commitment and determination

In general, successful entrepreneurs have good knowledge and skills in which of the following? (Select all that apply)

- Networking - Business - Management

Which of the following are reasons that survival may be difficult for a small start-up company? (Select all that apply)

- No track record - Lack of customers - Difficulty finding lenders

Which of the following present opportunities for new business ideas? (Select all that apply)

- Technological discoveries - Lifestyle and taste changes - Natural disasters

Which of the following are factors that typically motivate entrepreneurs as they start a business? (Select all that apply)

- The sense of satisfaction the business generates - The challenges of the business - The potential for profit

Which of the following are reasons entrepreneurs fail to use formal controls? (Select all that apply)

- Their time is consumed with running the business - They have an aversion to record keeping

Independence, profit potential, and a better quality of life are reasons individuals become ____.

Entrepreneurs

Which group is more likely to rent assets on a temporary basis than own them?

Entrepreneurs

Which of the following statements about the early stages of an entrepreneurial venture is true?

Entrepreneurs are unable to specialize

The situation in which an individual initiates and builds an organization pursuing a lucrative opportunity is called _____.

Entrepreneurship

Using market-based methods to leverage resources in order to stimulate social change is a form of social ______.

Entrepreneurship

When an enterprising individual pursues a lucrative opportunity, initiating and building an organization rather than being only a passive part of one, it is called _____.

Entrepreneurship

Which of the following statements about the failure of new start-ups is true?

Estimates of failure rates indicate that more start-ups fail than succeed

True or False: The only essential step for building support for a project idea within a company is to get the support of higher-level officials.

False

True or False: As a business grows, entrepreneurs often quickly delegate work they had been doing previously.

False - they hesitate to delegate

Which of the following statements about IPOs is true?

IPOs are federally registered

When contemplating a business, an entrepreneur must start with a good ____.

Idea

A(n) _____ is when a company wants to raise capital through federally registered and underwritten sales or shares in the company.

Initial public offering

The first-time sale of federally registered and underwritten shares of company sock to the public is called a(n) ____.

Initial public offering

An important model for characterizing new ventures categorizes them by their levels of ____.

Innovation and risk

Which formal control system do entrepreneurs commonly fail to utilize?

Record Keeping - b. Entrepreneurs, in part because they are very busy, often fail to use formal control systems. One common entrepreneurial malady is an aversion to record keeping. Pricing decisions are based on intuition without adequate reference to costs.