ENT Exam 1 Study Guide
Identifying substitutes
Keith has set up a new burger joint in his locality. He is planning on introducing craft beers and milkshakes to the existing menu. Thus, the customers who visit his joint will have a range of options to choose from. This scenario exemplifies ________.
Women
The largest group of new business owners is ________.
Myers-Briggs test
Anya is an entrepreneur. To understand her own strengths and weaknesses better, she takes a personality test. The test analyzes various factors, such as whether she focuses more on the outward world or her internal world and whether she gathers information through observation or intuition. Based on these variables, the test shows Anya how she tends to deal with other people and her environment. The test that Anya took is most likely the ________.
Elastic Demand
As the prices of luxury items increase, the demand usually declines as these goods are not essential and their purchase can be delayed. This would be called ______________.
Informal
Brainstorming works well in ________ groups.
Service
Business incubators work best with which of the following type of firms?
Fragmented
In ________ markets, no one competitor has a substantial share of the market and the means of competition vary widely within the same market space.
False
In an external environment analysis, the first step is to research your customers. T/F
The concentration of knowledge tends to be with her or him
In contrast to the role of leadership in a typical large organization, the founder of a new entrepreneurial business tends to play a very critical role because:
Advantage
Competitive ____________ is the edge that a firm has over competing businesses.
Share
Competitors will often ________ their knowledge if your business is not a potential direct competitor.
D) All of these: Population of the area Household income Average number of customers per hour
In developing a competitive map, an owner should review:
Higher
In general, the greater the debt a business owner is willing to take on, the __________ the risk tolerance.
Size
In the context of a harvest plan, which of the following is the deciding metric in a potential public offering of a business?
D) All of these: The government The library The Internet
Information from the North American Industry Classification System (NAICS) can be found from:
Benchmarking
Initech is a computer manufacturing company. Janice, a senior manager at Initech, is given the task of developing the company's after-sales services. Janice researches information about companies that have been pioneers in this domain. She learns that Massive Dynamic, a car manufacturing company, has the best after-sales service in the country. She gets in touch with senior managers in Massive Dynamic and learns about their in-house operational processes that enable them to be leaders in the industry. She introduces new policies in her company with the knowledge gained from Massive Dynamic to improve their after-sales service. This scenario exemplifies ________________.
Larry should conduct research to know his exact competitors
Larry has set up a new burger joint in his hometown. He has obtained information about who will most likely be customers at his joint. Because his joint is located near a college, he knows that a majority of his customers are going to be students. In the context of the critical steps involved in conducting an external analysis, which of the following should be Larry's next step?
Brainstorming
Mark brings his friends together to generate ideas on his new business. Mark identifies his skills and then asks his friends to generate a list of business ideas he might start. This is called ________.
Mark should research the industry
Mark is setting up his new business. He has defined the industry in which he competes and defined his customers. In the context of conducting an external analysis, which of the following should be Mark's next step?
Examine potential customers
Mary has established a reasonable geographic radius for her flower shop. As a result, she should be able to:
Women
Micro-loans have been in existence for years; they are most commonly made directly to ___________ for self-development.
Threat to profit margin
Miriam starts a new boutique that specializes in fashionable clothing made from environmentally friendly materials. She prices her products competitively to attract customers. However, she discovers the revenue earned from each piece of clothing the boutique sells barely makes back its labor and material costs. In this scenario, the threat to business success experienced by Miriam's boutique is:
Define a narrow group of customers
Once a business is broadly defined, the next step is to:
Small business owners have greater ability to attract financing from venture capital firms.
Owning a small business provides a means to meet varied demands that individuals face in society.Which of the following is NOT a need mentioned in the text's discussion of how society benefits from small business ownership?
Financial history
Potential owners should examine all of these specific areas before choosing a business idea EXCEPT:
Unlike entrepreneurial businesses, large organizations will regularly ignore business opportunities if they fail to believe the results will generate high profits.
Which of the following is a difference between large organizations and entrepreneurial businesses?
Accuracy and diligence
What are the two things that a new business owner should keep in mind when defining a customer base?
D) All of these: Risk tolerance Prior experience Personality orientation
What does a potential entrepreneur need to consider when starting a new business?
20%
What is the percentage of self-employed people in the workforce?
66.7%
What percentage of U.S.millionaires are self-employed?
Economies of Scale
What term is used to describe Walmart's ability to purchase more advertising space at a lower cost per ad?
The courses they took that were particularly enjoyable
Which of the following experiences can entrepreneurs evaluate when generating business ideas based on their education?
Is designed to reflect the mission of the founder
Which of the following is NOT a characteristic of a high-growth venture?
Other people's needs and wants are not as important as the small business owner's
Which of the following is NOT a factor in a small business's success?
Defensive positioning
Which of the following is NOT a personal motivator to start a business?
Taking a defensive position
Which of the following is NOT a personal motivator to start a business?
Individualist
Which of the following is NOT a personality dimension of the Big Five test?
Inventory resources
Which of the following is NOT included in the second column of labeled categories in a gap analysis?
The businesses are well-funded by angel investment.
Which of the following is a defining characteristic of venture capital start-ups?
Unusual or unique competitive factor
___________ describes those areas of a business that are unique or unusual as compared to standard practices of the industry.
Bounded rationality
___________ is a rational decision-making process that is constrained by our experiences, history, and culture.
Normal or ordinary competitive factor
___________ is an area of business that uses standards that are necessary for the business.
Benchmarking
___________ is studying and learning from a company outside of your industry that has a particular skill that is potentially critical to the company's operation.
Benchmarking
____________ is working with and learning from a company outside of your industry that has a skill critical to the firm's operation.
Fragmented
____________ markets are areas in which no one competitor has a substantial share of the market.
Determine which industry the new business will compete
The first part of an external analysis is:
False
The first step in developing a quality business idea is to analyze the market. T/F
Stakeholders
What term is used to describe individuals or other organizations that impact the success of a business?
By observing what potential customers do to satisfy their current needs or wants
In the context of business risks, how can an entrepreneur identify competitors to a new potential business?
Draw a set of competitive maps.
In the context of conducting an external analysis, which of the following steps should an entrepreneur take next after identifying and researching competitors within an industry?
Gap analysis
What term is used to describe the process of systematically examining the difference between what is expected and what occurs?
Ability to produce small niche products
In the context of entrepreneurial businesses, which of the following is an advantage that small businesses have over big businesses?
Exit barrier
When an entrepreneur cannot leave his or her business because of the amount of money that was invested. This is called an________.
Bounded rationality
In the context of entrepreneurial orientation, the presence of ___________ often leads young people to be pioneers in an area, as they are not limited by the restrictions of the past.
The success of such loans has been substantial, with great strides being made in many desperately poor nations.
In the context of entrepreneurship around the world, identify a true statement about micro-loans.
Being laid off from established employment
In the context of entrepreneurship, which of the following is a typical trigger for starting a new business?
The Enneagram test
In the context of evaluating entrepreneurial orientation, which of the following personality tests has a bias that adults will not change their personality over time and instead hold on to the personality they develop during childhood?
Develop an understanding of his or her competitive advantage
In the context of external analysis, once an entrepreneur has examined and developed insights about substitutes, elasticity of demand, ease of entry and exit, benchmarking, and industry trends, he or she should ________.
A family gathers after dinner to discuss the various small industries they can set up on their family land
In the context of generating new business ideas, which of the following is an example of brainstorming?
100 percent
When completing a conceptual map, an entrepreneur needs to visit ________ of the potential competitors.
Gap Analysis
When conducting a _____________, a potential business owner examines the demand by customers and the supply provided by competing firms in the marketplace.
Business ideas
When conducting a gap analysis, the first column should include the ________.
Define a specified radius around the business
When defining potential customers, an owner must:
Prior to the start
When should a new business owner ensure there are sufficient financial resources to operate the business?
Operating at a cost level
When small businesses compete with large firms, a main disadvantage is:
Telecommunication center
Which kind of business is NOT likely to be eligible for a micro-loan program?
They quickly came to dominate new sectors of the economy
In the context of the initial developments of the industrial base in the United States, which of the following statements is true about robber barons?
75
In their book The Millionaire Next Door, Dr.Thomas Stanley and William Danko state that ________ percent of self-employed millionaires are entrepreneurs.
Financial loans
Incubators for small businesses include all of the following EXCEPT:
planning; analyzing
The benefits of ________ and ________ are the insights to provide the owner that performs the activities with a greater chance of success.
Substitute
A ___________ exists if the service or product performs a similar function.
Substitute
A ___________ is a product that performs a similar function, or it achieves the same result.
Competative Map
A ____________ is an analytical tool used to provide information to organize information about direct competitors on all points of competition.
Exit barrier
A _____________ keeps an entrepreneur from leaving the business.
The level where revenue coming into the firm is sufficient to cover expenses.
The break-even point is defined as:
Resource-based analysis
A business owner will gain an increased understanding of the unusual or unique competitive factors and capabilities of a business through ____________ .
D) All of these: Location Product selection Activity of the firm
A competitive advantage in a business could be ________.
A sports card collector becomes a dealer who specializes in the trade of rare and valuable trading cards.
In the context of generating new ideas, which of the following is an example of a personal hobby developed into a business venture?
Because it is not clear if the new business will be able to fulfill an order or service a product in the future
In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business?
A creative process whereby a group of individuals are brought together and asked to generate numerous ideas, with little or no effort made to evaluate the potential for each idea
In the context of identifying new business opportunities, which of the following is the definition of brainstorming?
What constitutes a risk is determined by an entrepreneur by observing his or her own tolerances
In the context of risks to new businesses, identify a true statement about risk tolerance.
Conducts a brainstorming session
An entrepreneur identifies a gap in the market for camping goods. He recognizes ropes with high stress tolerances would be popular with campers. He gathers a group of his friends, who go camping regularly, and asks them to generate ideas for the best application of ropes with high stress tolerances in camping. In this scenario, the entrepreneur:
Industry
An________ is defined as companies within a specified geographic radius that will be in direct competition for the same customers and sales as that of the new business.
Planning to exit a small business
A harvest plan for a small business means the owner is:
A sequential formula
A small business owner must possess all of the following EXCEPT:
Charles Wilson
During Eisenhower's presidency, who stated, "What is good for General Motors is good for the nation"?
Japanese
During the 1970s and 1980s, the ________ occupied the dominant economic position in the world.
D) All of these: Aids in keeping a strategic distance between itself and its competitors Helps in focusing on the core customers Provides a way to control expenses
According to the book, a clear understanding of the business's customers is important because it:
Part art and part science.
According to the book, the development and implementation of a new business is:
D)All of these: Industry trends Case of entry/exit Elasticity of demand
According to the book, which of the following is an example of an economic issue that a new business should consider?
Reading government documents
All of the following are ways to identify gaps or business opportunities EXCEPT:
Consistent
All of these are criteria to be an unusual or unique service-product EXCEPT ________. A) valuable B) consistent C) durable D) rare
D)all of these: Special contacts with suppliers or customers groups Physical location of the business Experience
All of these are examples of non-financial resources EXCEPT:
Franchising.
All of these are harvest plan strategies EXCEPT: A) Selling the business to another firm B) Selling it to a group of investors C) Participating in an IPO (public offering of stock) D) Franchising
D) All of these: Firing a family member Reprimanding a family member Promoting a family member
All of these are negatives for an owner in a family business EXCEPT:
Deficit gaps
All of these are threats to business success EXCEPT:
Hesitant
Established businesses are often ________ to buy from a start-up small business.
Performing a due diligence analysis
As a result of conducting a gap analysis, a potential entrepreneur proved there was a need for the business. This is known as:
Women
________ are now the largest single group of new business founders.
List their personal skill sets
Before establishing a new business, the first thing founders should do is:
Over 100 employees
Characteristics of a small business start-up include all EXCEPT which one of the following?
Play just as important a part in our economy
Compared to large corporations, entrepreneurial businesses:
Higher
A person who wants to start a business needs a(n)________ risk tolerance.
2
A potential business owner needs to convey his or her business idea to a prospective investor or lender in ________ minutes.
Personal fulfillment
A prospective small business owner wants a career playing sports, which is what he enjoys doing most.He might be drawn to try an entrepreneurial venture in order to realize:
Ceiling
A substitute can assist in forming a __________ on the price that can be charged for product or service.
Competitive map
A tool to better understand competitors and their capabilities is:
Opportunity analysis
A type of analysis that examines opportunities in the marketplace compared to the individual's ability to address those gaps is called:
Industry
A(n)________ consists of direct competitors selling similar products or services within a specified geographic radius.
Incubator
A(n)________ is a facility that houses new businesses and provides many critical services for them.
Competitive map
A(n)________ is an analytical tool to organize information about direct competitors on all points of competition.
Constrained
Entrepreneurial business resources are more ________ than venture capital-backed businesses.
No clear dominant competitors
Fragmented markets have:
Defining the industry in which he is competing
Gerald is planning on setting up a burger joint in his hometown. He finds out the NAICS code for his business. From this information, he is able to understand his immediate area contains virtually no competitors and has potential to do very well. In the context of the critical steps involved in conducting an external analysis, Gerald is ___________.
Developing an understanding of the competitive advantage
Harold is the owner of a beer cafe in his locality. His beer cafe is not the only one in the area. In order to improve business, Harold decides to make a few changes to his cafe. He installs state-of-the-art music system, a karaoke machine, and a snooker table in his cafe. Customers flock to his cafe every evening because it is the only cafe in the locality with these facilities. Which of the critical steps involved in conducting an external analysis has helped Harold improve his business?
Operational Financing
High development costs, rapid expansion plans, and high inventory needs are all threats to ________.
Limits
Hiring a consultant is expensive, but it also ________ the insights that could be obtained.
Conducting a "gap analysis"
How does a potential business owner decide that a new business opportunity exists?
They tend to be oriented toward the personal goals of the founder.
Identify a defining characteristic of entrepreneurial firms.
They tend to develop operations in multiple locations very shortly after the initial investment.
Identify a defining characteristic of venture capital start-ups.
The loss of an employee barely affects the abilities of its workforce.
Identify a true statement about a large firm that has organizational slack.
The number of employees in such businesses is unexpected to grow to more than 50 to 100.
Identify a true statement about entrepreneurial firms.
It provides potential entrepreneurs with data related to industry categorization.
Identify a true statement about the North American Industry Classification System (NAICS).
The 1880s saw the initial development of the nation's large industrial base.
Identify a true statement about the history of entrepreneurial businesses in the United States.
The founder of a new business needs to be intimately involved in its designing, funding, and running.
Identify a true statement about the potential founder of a new business.
After analysis, the opportunity identified might be very different from the business idea initially conceived.
Identify a true statement about the process of generating business ideas.
As a business idea evolves, an entrepreneur must be willing to develop a new set of skills to make it successful
Identify a true statement about the process of generating new business ideas.
By the agency theory
Ray, a manager in Fir Tree Inc., a large and established firm, must travel to attend an annual conference.He books the most convenient flight tickets and a room in a luxurious hotel right next to the venue of the conference. Ray justifies these decisions by stating that these are time-saving measures. Ray's decisions can be best explained ________.
The glass ceiling
Sarah works as a supervisor in a large firm. Though she is very experienced at management and planning, she has not been promoted to the role of manager. However, she notices that other supervisors with less experience are often promoted to managerial positions, even if their work is not as good as hers. She also notices that all of them are men. In this scenario, Sarah being denied a promotion is an example of ________.
They have the ability to generate profits in markets ignored by large corporations.
Small businesses act as a catalyst for social change because:
They often expand easily in mature industries
Small companies have flourished for all the following reasons EXCEPT:
Family businesses
Sofor Designs is a successful firm that has been through many difficulties. When it first opened, the firm was financially unstable, but the employees agreed to work on partial salaries. The employees are also very loyal to the founder, and they always agree to work long hours during holiday seasons to maximize on increased customer traffic. Sofor Designs' characteristics are typical of ________.
Incubators
Some communities offer facilities that house new businesses and provide resources for them. These are called ________.
D) All of these: Books and magazines An individual's background Hobbies
Successful new business ideas can come from:
Small Business Assistance Centers
The Small Business Administration has set up which of these to advise individuals wanting to start a new business?
The Small Business Act of July 30, 1953.
The Small Business Administration was organized as a part of:
Firms with fewer than 99 employees represent the majority of all firms in the United States
The U.S.Census tracks employment by number of employees (among many other statistics)and the latest census reports indicate that ________.
Small and medium-sized enterprises
The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is _____________.
Break-even point
The ________ is defined as the level where revenue coming into a firm is sufficient to cover expenses.
Agency
The ________ theory suggests that individuals act to maximize their own individual benefit.
Sales Generation Schemes
The ability of a competitor to meet or exceed the quality of your product or service is an example of a threat to ________.
Profit Margin
The ability to attract customers to your business instead of your competitors is an example of a threat to ________.
Tends to limit the intensity of competition in the industry.
The ability to exit a business relatively easily:
art; science
The development and implementation of a new business is part ________ and part ________.
D) All of these: Design Funding Operating
The founders of a small business need to be involved in which of the following tasks when starting the new business?
D) All of these: An effective sales generation model Sustainable operating profit margins Being properly financed
What are the critical elements that an entrepreneur must solve for success?
Prior experience
The potential entrepreneur needs to consider ________ when starting a new business.
Gap Analysis
The process of determining if you have the resources necessary to take advantage of a business opportunity is called ________.
interactive; linear
The process of generating ideas should occur in an __________ environment and not in a __________ environment.
More focused than their large corporate counterparts
The success of entrepreneurial businesses occurs partially because they are ________.
"resource based analysis"
The term ________ is defined as a theoretical approach and practical methodology that examines the functioning of a business in terms of whether a product or service simultaneously meets the criteria of being rare, durable, non-substitutable, and valuable.
"glass ceiling"
The term ________ refers to the fact that women, like minorities, may be hired by large firms but experience limits placed on their advancement.
Operational financing
Threats to ________ are threats to the new business in financing its growth, including high development cost.
Sales generation schemes
Threats to ________ are threats to the success of a business regarding its opportunity to sell to too many customers and to obtain repeat business.
Profit margin
Threats to ________ are threats to the success of a new business related to its ability to establish and maintain a high-margin product or service.
Small businesses have proven to be more resilient than big businesses and have actually helped to improve the economy.
Throughout U.S. history, from the 1800s to today, how would you characterize the role and impact of small businesses?
Small
Until the mid-1880s, almost all U.S. businesses were ________.
Individuals in family businesses are often willing to work at times and in conditions that employees in non family-owned businesses would not accept
Which of the following is an advantage that family businesses enjoy over non family-owned businesses?
The ability to respond quickly to changes
Which of the following is an advantage that small firms have over large businesses?
D) All of these: Access from road Size of the facility Nearby attraction for customers
Which of the following is an example of the list of items that an entrepreneur should include while visiting and making comparisons to his-her potential competitors?
It will distort the entrepreneur's advertising efforts
Which of the following is likely to occur if entrepreneurs fail to define a radius from which they believe their business will draw a majority of its customers?
Myers-Briggs
Which of the following personality tests is based on the philosophy of Carl Jung?
Diamond
Which of the following products is likely to have an elastic demand?
Cancer medicine
Which of the following products is likely to have an inelastic demand?
Competitive advantage
Which of the following provides the new business with the opportunity to make more money than the competition?
Understanding the competitive advantage
Which of the following should be an entrepreneur's last step in external analysis?
They are funded by angel investors who invest more than $2 million and expect extraordinary returns.
Which of the following statements is true about venture capital start-ups?
Harvest plan
Which of the following terms describes a plan to exit a small business?
Entrepreneurial business as a percentage of the U.S.economic output began to decline
Which of the following was the outcome of the Great Depression of the 1930s?
The desire to be one's own boss
Which one of the following is a huge advantage for small business owners to start a business?
D) All of these: Apple Hewlett-Packard Facebook
Which one of these large companies started out as a small business?
Myers-Briggs
Which personality test indicates the different ways individuals deal with other people and their environments?
Big Five
Which popular personality test assumes there are five components or types of an individual's personality?
Carefully analyze the market and look for a gap
While developing a quality business idea, what should potential business founders ideally do after evaluating their personal skill sets?
Because the decision maker is both the owner and the manager of the business
Why can a small business owner make decisions quicker than a big business?
Better ideas for small businesses
Women entrepreneurs are starting small businesses for all but one of the following reasons:
Be replaced by a smaller number of big businesses
Years ago, economists mistakenly predicted that small businesses would:
D)All of these: Each business plan should have its own voice, feel, and presentation. A good plan is best developed by the individual contemplating the business, not by a paid consultant. Potential investors are often family members, which makes it critical that the entrepreneur seeks to ensure the chances of success by doing thorough planning and thinking.
You should not use a cookie-cutter business plan program because:
Organizational slack
Zeus Cisterns is a large manufacturing firm with several employees. Many of the firm's employees are knowledgeable about the firm's various operations and requirements. Accordingly, the organization's functioning is barely affected when an experienced employee quits. Further, in an emergency, various employees can fulfill any critical role that needs to be handled immediately. Given these characteristics, Zeus Cisterns can be said to have ________.
Hobbies
________ are examples of avocational pursuits that an individual can use to inspire new business ideas.
Stakeholders
________ are individuals or other organizations that impact the success of a business.
Micro-loans
________ are often worth only a few dollars and they are given to entrepreneurs, especially women.
Brainstorming
________ is a creative process where a group of individuals are brought together and asked to generate ideas.
Bounded rationality
________ is a decision that is constrained by the background and history of the person.
Fortune 500
________ is a list published annually by Fortune magazine of the largest corporations in the United States.
Agency Theory
________ is a supposition that assumes individuals act to maximize their own benefit.
Synergy
________ is defined as the connection between an entrepreneur's skills, 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.
Competitive advantage
________ is the edge a business has over competing businesses.
Economies of scale
________ lead to a condition where a single firm making 100 percent of the product is the most efficient.
Organizational slack
________ occurs in large companies that have excess resources such as equipment and employees.
Agency theory
________ states that individuals make decisions that maximize their own individual benefits.
The U.S. Small Business Administration
___________ aids, counsels, assists, and protects the interests of small business concerns.
