Test 4

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity. a. True b. False

b. False

An indicator of the planning pitfall of "failure to anticipate roadblocks" is a. recognition of future problems. b. making no admission of possible flaws in the plan. c. having a contingency or alternative plan. d. pursuing a good work force.

b. making no admission of possible flaws in the plan.

Which of the following statements may be the most important in new venture creation? a. the pro forma balance sheet b. the income statement c. the cash flow statement d. the profit statement

c. the cash flow statement

Small business owners are often guarded about their businesses, which leads to a. distrust of others when formulating a strategic plan. b. a myopic viewpoint. c. misunderstanding of the economic environment. d. lack of attention to the competition.

a. distrust of others when formulating a strategic plan.

What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to plan for a liquidity event as an exit strategy. b. It is important for the entrepreneur to know how to buy up troubled companies. c. It is important for the entrepreneur to indicate how the business will increase in value. d. It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.

a. It is important for the entrepreneur to plan for a liquidity event as an exit strategy.

Which of the following describes advantages of the business plan for financial sources? a. The plan identifies critical risks. b. The plan helps assess the entrepreneur's family. c. The plan identifies sources of capital. d. All of these.

a. The plan identifies critical risks.

A "SWOT" analysis refers to analyzing strengths, weaknesses, opportunities, and threats. a. True b. False

a. True

A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service). a. True b. False

a. True

A business plan must illustrate the current status of the venture but not the projected results. a. True b. False

a. True

An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it. a. True b. False

a. True

During the growth stage of a venture, entrepreneurs shift into a managerial style. a. True b. False

a. True

Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility. a. True b. False

a. True

In administrative cultures, there is a need for clearly defined authority and responsibility. a. True b. False

a. True

Which of the following is the correct order of the traditional life-cycle stages of an enterprise? a. start-up activities, new-venture development, growth, stabilization, and innovation or decline b. new-venture development, start-up activities, growth, stabilization, and innovation or decline c. Innovation, new-venture development, start-up activities, growth, stabilization, and decline d. growth, new-venture development, start-up activities, stabilization, and innovation or decline

b. new-venture development, start-up activities, growth, stabilization, and innovation or decline

In the strategy matrix model, innovation is defined as a. an invention. b. something new and different. c. copying and improving on competitor's products. d. using practical milestones.

b. something new and different.

A reason new venture managers lack knowledge in the strategic planning process is because a. they refuse to learn new things. b. they have minimal exposure to the planning process. c. they attempt to implement actions too quickly. d. they are overconfident.

b. they have minimal exposure to the planning process.

Which of the following questions should an entrepreneur ask when a business plan is turned down? a. "That means you do not know how to evaluate a good plan?" b. "Can you identify friends who would like this kind of deal?" c. "If you were in my position, how would you proceed?" d. None of these.

c. "If you were in my position, how would you proceed?"

Unique managerial concerns of growing ventures encompass all of the following except: a. the one-man-band syndrome b. community pressures c. time-management issues d. agency problems

d. agency problems

Which of the following would not be considered a key step in the strategic planning activities of a growing firm? a. examining the strengths, weaknesses, opportunities and threats b. Implementation of the plan using programs, budgets and procedures c. evaluation of the performance d. changing the short-term goals according to the political climate

d. changing the short-term goals according to the political climate

Which of the following would be considered fatal mistakes in strategic planning, according to researcher Michael E. Porter? a. pursuing a solid competitive position b. compromising strategy for profits c. venture's strategy is too rigid d. no real competitive advantage

d. no real competitive advantage

Analysis of a firm's external and internal environments provides the firm with the information to develop a. a degree of uncertainty. b. administrative experience. c. competitive strengths. d. strategic intent and strategic mission.

d. strategic intent and strategic mission.

Many research studies suggest that strategic planning influences a venture's survival. a. True b. False

a. True

Misunderstanding industry attractiveness can be a fatal flaw in strategic planning. a. True b. False

a. True

The "best" strategic plan will be influenced by the abilities of the entrepreneur, the complexity of the venture, and the nature of the industry. a. True b. False

a. True

The business plan is the entrepreneur's road map for a successful enterprise. a. True b. False

a. True

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim. a. True b. False

a. True

The entrepreneurial strategy matrix measures risk and innovation. a. True b. False

a. True

A business plan is a. a written document that details the proposed venture. b. an instance of entrepreneurial passion. c. the result of the new business. d. a blueprint of the product.

a. a written document that details the proposed venture.

Which of the following fatal mistakes entrepreneurs continually fall prey to in their attempt to implement a strategy concerns pursuing a position of dominance in a fast-growing industry? a. pursuing an unattainable competitive position b. misunderstanding industry attractiveness c. compromising strategy for growth d. failure to explicitly communicate the venture's strategy to employees

a. pursuing an unattainable competitive position

The comprehensive business plan should be the result of a. reflections on the direction of the venture. b. continuous operations of the venture. c. investor's promises of capital. d. the entrepreneur's best guesses.

a. reflections on the direction of the venture.

A "SWOT" analysis refers to a. strength, weaknesses, opportunities, threats. b. small, weak, ordinary, tact. c. sound warnings of takeovers. d. none of these.

a. strength, weaknesses, opportunities, threats.

The financial segment includes a. the pro forma balance sheet. b. the profit statement. c. the cost statement. d. the R & D statement.

a. the pro forma balance sheet.

Which of the following statements is not part of the "five-minute reading" by venture capitalists? a. Determine the characteristics of the venture and industry. b. Determine the strengths and weaknesses of the entrepreneur. c. Determine the financial structure of the plan. d. Read the latest balance sheet.

b. Determine the strengths and weaknesses of the entrepreneur.

Lack of expertise has never been considered a reason for the lack of strategic planning in new ventures. a. True b. False

b. False

Participation by subordinates in a strategic plan is never appropriate. a. True b. False

b. False

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources. a. True b. False

b. False

The pro forma balance sheet is used in the critical risk segment of the business plan. a. True b. False

b. False

There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source. a. True b. False

b. False (Entrepreneur, financial source, investor)

Which one of the following is not a benefit of a business plan to the entrepreneur? a. Provides a communication tool for outside financial sources. b. Allows the entrepreneur to view the venture critically and objectively. c. Provides a comprehensive product-launch timetable. d. Quantifies objectives, providing benchmarks for comparing forecasts with actual results.

c. Provides a comprehensive product-launch timetable.

What is the one-person-band syndrome? a. an invention b. following a competitor's lead c. failure to delegate d. effective time management

c. failure to delegate

A reason for lack of strategic planning has been found to be a. lack of preference. b. time sharing. c. lack of expertise. d. lack of dominance.

c. lack of expertise.

Which of the following business plan pitfalls possible solution is to set up a timetable of specific steps to be accomplished during a specific period? a. no market niche or segment b. lack of demonstrated experience c. no realistic goals d. no commitment or dedication

c. no realistic goals

Which of the following is a critical factor to be considered in the management segment? a. suppliers b. location of the plant c. organizational structure d. product design

c. organizational structure

The entrepreneurial strategy matrix measures: a. risk and security. b. commitment and time. c. risk and innovation. d. opportunity and time

c. risk and innovation.

Formation of long-range plans for effective management in light of a venture's strengths and weaknesses is referred to as a. dimensional planning. b. tactical planning. c. strategic planning. d. operational planning.

c. strategic planning.

An important guideline in putting the plan together is a. to over diversify. b. to not highlight critical risks. c. to identify the target market. d. to impress with excessive detail.

c. to identify the target market.

New-venture development is a result of both market conditions and the entrepreneur's efforts. a. True b. False

b. False (consists of activities associated with the initial formulation of the venture)

Which of the following statements would not be an appropriate guideline for successful business plan development? a. Avoid exaggeration. b. Orient the plan to the present. c. Highlight critical risks. d. Do not over diversify.

b. Orient the plan to the present.

Competitive analysis, advertising plan, and pricing policy are all part of the a. research, design, and development segment. b. marketing segment. c. milestone schedule segment. d. financial plan segment.

b. marketing segment.

Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need a. less formal planning because of constant changes. b. to formalize planning because there is a great deal of complexity. c. to establish a pattern of subordinate participation. d. to evaluate company strengths and weaknesses.

b. to formalize planning because there is a great deal of complexity.