ENT Notes (Chapters 1, 2, 3)

2. ______ is a managerial theory that believes individuals act to maximize their own benefit.

Agency theory

Which of the following statements about agency theory are correct?

Agents often maximize their own benefit, Owners always try to maximize the value of the business, managers are considered agents

1. What is the condition that allows the long-run average cost to continue downward as production increases?

Economies of scale

The underlying philosophy of the _____ test is that people are a result of all the experiences of their life

Enneagram

1. Which of the following are ways that entrepreneurial businesses can act as catalysts for societal change?

Entrepreneurial businesses have an understanding of the local community, entrepreneurial businesses are willing to pursue smaller markets ignored by large corporations

1. Thomas Stanley and William Danko, in their book The Millionaire Next Door, state that 75 percent of self-employed millionaires are _________________

Entrepreneurs

2. When a firm reaches its break-even point, the revenues are ____________

Equal to

3. Once a skill analysis has been completed, the next step is to:

Examine the marketplace for opportunities

Large businesses often have ____

Extensive written procedures

Which of the following are pairs of variables in the Myers-Briggs test?

Extroversion-introversion, judgement-perception, sensing-intuiting

1. True or false: Men are the largest single group of new business founders.

False

3. Which of the following sources of skills for a new business is often the most overlooked?

Family experiences

3. Why is discussing potential businesses with family members an attractive way to identify business opportunities?

Family member know your disposition, Family members can provide an honest perspective, Family members know your abilities

3. The steps in the process of generating ideas do not occur in a ______________ fashion but should occur in a ______________ manner

Linear; Interactive

2. Which is NOT on of the three types of specific risk?

Network. (the three are financial, strategic, and market retaliation)

1. According to the text, which of the following is an important driver of the economic success of a community

New business development

3. What are the typical categories used to analyze a business idea?

Nonfinancial resources, Risk, Competitors, Finance, Time

3. Which of the following contribute to personal skill sets?

Past work experience, Family history, Hobbies, Current work experience

2. Which of the following are typical triggers for starting a business?

Reaching a point financially where the risk-return level of a proposed new business is tolerable, being approached by friends or a family with a new business idea, being laid off from a job

3. Threats to profit margin, threats to operational financing, and threats to sales generation schemes are three threats to business success that entrepreneurs consider when they examine and characterize business _______________.

Risk

3. An individual's hobbies and past work contribute to the individual's personal _____ set

Skill

3. Which of the following statements are true regarding skills?

Skills are relatively idiosyncratic to the individual, derived from hobbies, derived from our history

2. Which of the following are advantages that small, new businesses have?

Small businesses can respond quickly to opportunities or threats as they arise, small businesses fill niches that large firms simply cannot afford to fill, Small businesses are owned and run by the same person

1. _____ include key suppliers, customers, and employees. These individuals are critical to the success of the business

Stakeholders

2. Entrepreneurs should work with family members for their advice, potential funding , reality check, and ________________ structure

Support

1. Which of the following are provided by the Economic Gardening program in the US?

Support classes, tax incentives, financing for the venture

3. What is the connection between the entrepreneur's skills, the understanding of an industry, and the ability to create a competitive advantage such that the sum of the parts of the new business is greater than the individual parts alone?

Synergy

1. Which of the following are reasons why entrepreneurial businesses are successful?

Tend to be more focused than large corporations, fewer layers of management, free to place energy into satisfying the needs of customers

1. Which of the following is a big advantage of starting one's own business?

The business owner can be the boss.

1. Why do individuals decide to start a new business?

The desire to be one's own boss

3. The first step in entrepreneurship is:

The desire to own and operate a business.

1. Which of the following are characteristics of entrepreneurial firms?

The number of employees will not be expected to grow beyond 100, The start-up is self-funded or closely funded, The operation is designed in the image of the founder

3. Which of the following are true regarding the process of generating ideas?

The process requires consideration, interaction, iteration

1. Which of the following is true of entrepreneurial firms?

The structure of management is designed to take advantage of the skills of the founder or the founders of a firm.

Which of the following are reasons why owners are a great asset to a new business?

Their personal investment, their dedication

2. Entrepreneurs prior experience plays a role in new business creation through _____

Their view of the world

1. Which of the following are capital backed firms?

They are formed with a harvest plan in place, they have a developed organizational structure, they either start or grow quickly to employ a relatively large number of employees.

2. Which of the following statements about Small Business Assistance Centers are correct?

They are funded by the Small Business Administration, they are often associated with SCORE offices, They provide a vide variety of support such as research aids.

3. A founder or founding team must have synergy, which is a combination of:

Understanding of an industry, Skill set, Competitive advantage

3. The business owner whose business is both a ____________ and a ______________ is difficult to beat.

Vocation; Avocation

3. Which of the following are probable questions potential business owners should ask themselves regarding hobbies?

What about the hobby is exciting? What specific skills were required of the hobby? What products/services were used in the hobbies?

3. Which of the following questions should NOT be explored to identify additional skill sources?

What are the worst accomplishments in life?

3. Which of the following are questions an entrepreneur should address regarding education?

What courses taken were particularly enjoyable? have you attended any unusual education programs? have you taken specialized training in any specific area?

3. Which of the following questions should be addressed by an entrepreneur when reflecting on family experience?

What is your family history with new business ventures? What skill sets exist within your nuclear family? Are there unique things that your family does that others are interested in?

3. Which of the following questions should be explored to identify additional skill sources?

What type of magazines and books do I read?, in what industry would I prefer to work, what skills were involved in the three greatest accomplishments of my life?

3. Which of the following questions should be considered by an entrepreneur when analyzing the nonfinancial resources category of a gap analysis for a new business?

What unique capabilities provide the entrepreneur a competitive advantage? What unique skills will be required to run the business?

People should start a new business that they _____

Will enjoy

1. What significant, historical event marked the beginning of the decline of entrepreneurial businesses in the united states?

World War II

3. True or false: if individuals are not detail oriented, then a business that is procedurally complex and involves managing a wide variety of tasks may be appropriate

false

3. true or false: one's skills from either educational training or experience does not have a critical impact on the direction of one's business

false

Entrepreneurs need to consider both the benefits and the drawbacks to hiring ____ members

family

2. Businesses in which ownership and employment are centered around a family are referred to as _____ _______

family businesses

3. ______ are uniquely positioned to provide a much-needed honest perspective on your efforts toward creating a new business

family members

2. Entrepreneurs need to ensure they have sufficient ____ resources prior to starting a business

financial

3. Which of the following are required in the initial analysis of a business opportunity?

financial investments, focus, time

3. The desire to own and operate a business is the _____ step in entrepreneurship

first

1. the success of entrepreneurial businesses occurs because they are simply more _____ than their larger corporate counterparts

focused

3. The founder of a business is directly involved in the:

funding of the business, running of the business, design of the business

3. Once a list of skills and abilities has been developed, the next step is to perform a ________ to examine the marketplace for an opportunity that exists between the demand for a product and the supply provided by firms in the market

gap analysis

1. Silicon Valley and Boston's 128 corridor are well known for

generating new employment with entrepreneurial ventures, providing a growing tax revenue base, providing a basis to the area's economic vitality

1. The _____ ceiling refers to the fact that women and minorities may be hired by large firms but they experience limits placed on their advancement within the firm

glass

1. Unlike the business plan of a venture backed business, the entrepreneurial business plan is developed as a

guide for the running of the business

1. A ______ plan is a plan to exit the business that allows the investors to take advantage of growth.

harvest

2. Individuals from outside an industry are able to establish a new business in a manner not previously considered because they ______

have bounded rationality

2. Personality tests can

help better understand one's traits and tendencies

2. The greater the debt an entrepreneur is willing to take on to start the business, the _____ his or her risk tolerance

higher

1. In what time period did the United States see a decline in large multinational firms and a rise of new opportunities for entrepreneurial businesses

late 1970s to early 1980s

2. People in an entrepreneur's network can help by providing ______ to a new business

legitimacy

2. Potential entrepreneurs must understand their level of tolerance to _____

risk

3. All new businesses have an inherent amount of ____ associated with starting and operation of the business

risk

1. The process of forming and managing a new entrepreneurial business in a clear, sequential manner that is rich in practical application and ground research is the ____

science

1. In their book entitled The Millionaire Next Door, Thomas Stanley and William Danko point out that almost two-thirds of US millionaires are

self employed

3. An individual's work experience builds _______ sets that can have direct applicability to the pursuit of a new business

skill

3. Without the needed _____, the founders would be faced with not holding any advantage over the competitors who have the necessary depth in the area

skill

3. In hobbies and activities, individuals develop ______ specific to the hobbies

skills

1. The world bank estimates that one of the strongest factors of any nation's GNP is the presence of entrepreneurial _____ enterprises

small and medium sized

2. Which of the following are resources that entrepreneurs rely on?

social networks, family, financial resources

2. By providing resources that new businesses cannot otherwise afford on their own, incubators help these businesses establish ______

some level of legitimacy

1. What are the critical elements that an entrepreneur must solve for success?

sustainable operating profit margin, develop an ability to generate consistent and growing sales, sufficient resources to get the business to a point where it is self funding

3. List the steps that are important to the development of a quality business idea. Start from the first step

1. list and evaluate one's personal skill sets 2. Analyze the market and look for a gap or need that is not being met effectively 3. compare one's ability to fill the identified gaps with an opportunity available

1. When was the initial development of the large industrial base of the United States?

1880s

1. A venture capital backed business plan typically runs from ______ pages long

25 to 45

1. The european union considers any business with fewer than _____ employees to be a small busines

50

1. The US government considers any business with fewer than _____ employees to be a small business

500

1. The repayment rate on microloans is typically _______

99%

3. Along with the business idea, what else should be included in the first column of the gap analysis chart?

A brief explanation of the business idea

3. The nature of the effort required for an entrepreneur to carry out an effective due diligence analysis necessitates _____

A focus on a single business idea

3. Which of the following statements are true regarding education as it relates to skill?

An opportunity that uses your education is another source of a business, Knowledge gained from formal education provides a skill set, Technology skills acquired through education can be particularly valuable.

3. What is the suggested starting point for generating business idea

Analyzing the skill set of the potential founders

3. Which of the following is NOT an example of family experiences that build knowledge and can grow into a new business opportunity?

Attending SBA courses with your sibling

3. Which of the following businesses could be most likely pursued by individuals who do NOT prefer to work with people?

Bookkeeping, Order fulfillment, Internet-based businesses

1. Which of the following need to be evaluated in order to provide potential investors with the critical information required when developing a business plan for a new entrepreneurial business?

Cash flow, management team, competitive advantage

1. Which of the following are true regarding the closure of military bases in the United States?

Cities with base closings experienced higher income growth, cities with base closings experienced increases in new businesses, cities with base closings offered tax breaks and programs to support new business development

3. Which category on the gap analysis chart would examine companies doing the same thing as the new potential business?

Competitors

3. Which of the following are examples of family experiences that build knowledge and can grow into a new business opportunity?

Cooking with family members, tracing the family history, maintaining the family property, working on the home

2. Identify the websites that help a company reach out to a wide community online to get funding and often get advice in the process of raising those funds

Crowdfunder, kickstarter

3. The founders of a business need to be intimately involved in the:

Design of the business, Funding of the business, Running of the business

1. Along with being properly financed and developing sustainable profit margins, in order to be successful, entrepreneurs must:

Develop an effective sales generation model

1. What program is growing across the United States to help start new entrepreneurial business in an area?

Economic Gardening

2. Which of the following statements about family members are true?

Family members best know one's abilities and shortcomings, family members are likely to serve as a reality check and support structure, family members are likely to be willing to contribute time and money to the new business

2. New business owners need to be sure that the level of risk is consistent with their ___________, ________________, and _________________

Family situation, Background, Values

2. Which of the following groups might be included in an entrepreneur's key support network?

Former employers, Friends from school

1. Which periodical is published annually and documents the 500 largest corporations by sales in the US?

Fortune

3. Which of the following is NOT a common source of entrepreneurial skills?

Genetics

1. Which of the following are reasons for the recent growth in the number women starting new businesses?

Greater control over work-life balance, Frustration with the glass ceiling

1. According to the World Bank, the presence of entrepreneurial small- and medium-sized enterprises is one of the strongest factors in the growth of any nation's __________________

Gross national product

3. Which of the following would be classified as threats to operational financing?

High development costs, An entrepreneurial team with a low asset base, High inventory needs, Rapid expansion costs

2. Students need to consider their own resources and abilities early when they think about starting an entrepreneurial business because of the ______

Importance of an owner to a new business

3. Which of the following are questions an entrepreneur should answer regarding work experience?

In what businesses have you worked? What skills were critical to the jobs you performed? What aspects of the job were most enjoyable? In what areas would you be considered an expert?

3. Why are hobbies a good skill source?

Individuals are passionate about their hobbies, hobbies require the development of specific skills

3. Which of the following is a principal cause of new business failure?

Insufficient resources at founding

2. An entrepreneurial business A large, established organization

Is owned and run by the same person The individuals who manage do not typically have substantial ownership in the company

1. Which of the following is true regarding the great depression of the 1930's?

It encouraged industrial concentration

How does support from companies in a network help a new firm?

It helps the new firm in obtaining credit, it helps to indicate to others the staying power of the new firm

3. Which of the following are the characteristics of a gap analysis methodology for a new venture using a chart?

It is a reasonably quick analysis, It requires minimal research

3. Which of the following is a characteristic of a gap analysis methodology for a new venture?

It is intended to be completed by the entrepreneur or entrepreneurial team

Which of the following statements about the Big Five test are true?

It was developed by two independent research teams, the researchers surveyed thousands of individuals, the five factors emerged from the researchers analysis of the data

2. Which of the following statements regarding entrepreneurial businesses are correct?

They are generally dependent on a single person or few individuals, they have limited flexibility in responding to emergency issues such as the need to hire replacements if the company loses key individuals

1. Which of the following statements is true of venture capital start-ups?

They are often formed as high-tech ventures consisting of unique characteristics

1. Which of the following are characteristics of venture capital-backed firms?

They have a developed organizational structure, They either start or grow quickly to employ a relatively large number of employees, They are formed with a harvest plan in place

2. Which of the following are correct regarding the characteristics of large businesses?

They have greater excess resources, no one person is critical to the businesses survival, knowledge is widely dispersed throughout the business

2. Which of the following statements about incubators are correct?

They provide common receptionists to new businesses, they provide office machines and basic furniture to new businesses, they provide many critical services to new businesses.

2. Which of the following statements about women entrepreneurs are true?

They start up businesses at a rate of 50 percent more than men, they often run into a glass ceiling, they are one of the fastest growing segments of entrepreneurs

2. Identify the features of circumstance motivators

They tend to result in more of a defensive positioning, they result from environmental changes

1. Which of the following are true regarding robber barons?

They took advantage of economies of scale, they dominated the industrial sectors, they were responsible for some of the great abuses in business

3. Entrepreneurs can examine business risk by considering three threats to business success. Those three threats are:

Threats to profit margins, threats to sales generation schemes, threats to operational financing

1. Which of the following are goals of the business plan for a new entrepreneurial business?

To provide self-evaluation, to be a guide to managing the business, to provide investors the necessary information.

2. Starting a business is often the result of an event or condition within an individual's environment called a ______________

Trigger

1. True or false: Starting a new business may allow individuals to meet demands in their lives in a way that large corporations are unwilling to do.

True

Online communities such as blogs and chat rooms can provide ______ to people starting business

advice

1. The united states small business administration was organized to:

aid, counsel, and protect the interests of small businesses, provide assistance at all levels of management for entrepreneurial businesses, provide information at all levels of organizational development for entrepreneurial business

3. The finance category on the gap analysis chart examines the:

amount of money required to start and operate a business, amount of family resources that could be committed

3. Which of the following would be classified as threats to operational financing?

an entrepreneurial team with low asset base, rapid expansion costs, high inventory needs, high development costs

3. A gap ______ is the relatively simple process of systematically examining the difference between what is expected and what occurs

analysis

3. the process of generating ideas will result in a lift of three to five business ideas that:

appear to be an opportunity, match the founders skills

1. practice, example, and skill of the founder is the _____ part of entrepreneurial business development

art

3. The process involved in the gap analysis is more _____ than _____

art; science

3. If you prefer to work extensively with people, in which of the following businesses should you probably NOT pursue a business opportunity

bookkeeping, billing

________ ________ is the rational decision making that is considered by the background and history of the person making the decision

bounded rationality

3. ______ is the creative process in which a group of individuals are brought together and asked to generate ideas related to a specific topic, with little effort given to evaluating the potential of the ideas

brainstorming

2. ______-_______ point is when a business has reached a level where the revenue coming into a firm is sufficient enough to cover its expenses

break-even

1. Which of the following are important elements of a one-page pitch for your business?

business model, customer problem, product offering

1. True or false: Unlike entrepreneurial businesses, large organizations will regularly pursue smaller markets even if they do not believe the results will generate profits

false

2. Personality test should help you better understand yourself and your strengths and should not be used as a guide for your _______

career

3. What is included in the second column of the chart used in the gap analysis?

categories of analysis

3. The typical categories analyzed in a gap analysis include finance, time, risk, nonfinancial resources, and _____

competitors

1. The process of ________ a new business is unique and has developed into a popular area of study at colleges around the globe

developing, running, initiating

1. Recent trends indicate that larger corporations have been _____ while entrepreneurial businesses have been _____ rapidly

downsizing; growing

1. Economies of scale is the condition that allows the long run average cost to continue _____ as production ______

downward; increases

1. Large firms can obtain ______ _____ ________ in some industries because of their ability to operate on a larger scale than can a small firm

economies of scale

1. The fact that Walmart can buy its advertising much cheaper on a per-unit basis than a small retailer is an example of _____

economies of scale

1. A difference between entrepreneurial business and venture capital backed firms is that

entrepreneurial businesses resources are more constrained than those of venture capital backed businesses

1. True or false: every business in the fortune 500 started out as a large corporation

false

2. To utilize family resources, entrepreneurs should ______

make a list of members that they have regular contact with, list the capabilities those individuals possess that might be helpful

3. _______ is key in successfully starting a new business venture

making quick adjustments using lean startup and evolution

1. _____ are often for only a few dollars each and are made directly to entrepreneurs to encourage self-development in developing nations

microloans

2. The founders and the leadership they provide play _______ of a critical role in the businesses success than senior leadership in the typical large organization

more

3. Which of the following statements make interviewing key successful entrepreneurs an attractive way to identify opportunities or gaps?

most successful entrepreneurs have great ideas, most successful entrepreneurs are too busy with their own business to pursue new ventures, entrepreneurs have a keen eye for what businesses are needed in an area

3. The initial analysis is a process of:

moving from three to five ideas to a single idea

2. Women of color account for _________ of businesses headed by women

one-third

2. The big five test comprises which of the following factors?

open-mindedness, emotional stability, extroversion

3. Which type of gap analysis examines the opportunities in the marketplace side-by-side with the individual's ability to address those gaps?

opportunity analysis

3. An ______ that uses your education is a potential source of a business

oppportunity

2. An excess of resources in an organization that allows for redundancy and the quick deployment of personnel is referred to as

organizational slack

3. Perhaps as important as the entrepreneur's skills in a particular area is the need for the entrepreneur to have ____ for starting a business in that domain

passion

3. Once a list of skills, abilities, and interests have been developed, the next step is to:

perform a gap analysis

2. _____ motivations come from the individuals themselves

personal

2. The triggers for starting a business come from either ______ or negative stimuli that occur in the individual's life

positive

3. Which of the following support the rationale for starting a business idea generation process by analyzing the skill sets of potential founders

pursuing opportunities without the requisite skill set wastes time, pursuing opportunities without the requisite skill set wastes money, there are literally millions of opportunities

3. Research suggests that successful new business ideas are NOT determined by your:

race, gender, parents, religion

2. Entrepreneurs need to have a _______ vision of what resources are necessary in order to be successful

realistic

3. An individual's professional background and hobbies are excellent resources new business ideas because:

the individual knows these domains very well, the individual can easily see the shortcomings in the current business offerings, the individual can see the current needs that are not being met

3. Each type of business started will require different _____ frames

time

2. When starting a business, one must understand the relationship between ______ and the unexpected return

time commitment

3. Examining _____ around the region, nation, or world that may not have reached a particular location is one way of identifying business opportunities or gaps

trends

2. True or false: it is likely for an entrepreneur to spend more time starting and running the business than doing anything else in life

true

2. True or false: new businesses have greater flexibility in responding to changes that take place in their external environment

true

2. true or false: an entrepreneur's risk tolerance, prior experience, and personality orientation shape their analysis of a business idea's potential

true

3. True or false: family experiences are often an overlooked source of skills for a new venture

true

True or false: the high level of commitment is a key reason why family businesses are able to survive and prosper

true

2. An entrepreneur's support and resources are typically _____ to the individual and the location

unique

1. The first category of start up businesses are those formed as high-growth, often high tech, ventures and are referred to as

venture capital backed firms

3. the business owner whose business is both a ______ and an ______ is difficult to beat

vocation, avocation