Entrepreneurship chapter 9

Which of the following statements is incorrect regarding boards of directors?A) If a new venture organizes as a corporation, it is not legally required to have a board of directors, but it is strongly recommended. B) A board is typically made up of both inside and outside directors. C) The board is responsible for declaring dividends. D) Most boards meet formally three or four times a year. E) The boards for publicly-traded companies are required by law to have audit and compensation committees.

A) If a new venture organizes as a corporation, it is not legally required to have a board of directors, but it is strongly recommended.

According to the textbook, which of the following statements is inaccurate regarding the size and composition of the founding team of a firm? A) There is no relationship between a founding team's size and its effectiveness. B) A founding team larger than four people is typically too large to be practical. C) The members of a homogeneous founding team are similar in terms of their abilities and experiences. D) The members of a heterogeneous founding team are diverse in terms of their abilities and experiences. E) A founding team can be too big, causing communication problems and increasing potential for conflict.

A) There is no relationship between a founding team's size and its effectiveness.

James Williams is the Chief Operating Officer of a startup in the health food industry. He is also a member of his firm's board of directors. In board of directors terminology, James is a(n) ________ director. A) inside B) outside C) expert D) junior E) senior

A) inside

in the context of boards of directors, a(n) ________ director is someone who is not employed by the firm. A) outside B) inside C) external D) impartial E) peripheral

A) outside

According to the textbook, although a board of directors has formal governance responsibilities, its most useful role is to ________. A) provide guidance and support to the firm's managers B) submit papers on behalf of the firm to the SECC) represent the firm in public relations activities D) conduct the firm's annual meeting E) provide funding to the firm

A) provide guidance and support to the firm's managers

Jason Andersen just finished writing a business plan for a new type of office supply store. One thing Jason included in the "Management Team & Company Structure" section of his business plan is a chart that depicts the most important skills that are needed for his business and where skills gaps exist. Jason included a(n)________ in his business plan. A) skills profile B) talent report C) abilities profile D) expertise report E) talent summary

A) skills profile

According to the textbook, studies show that more than one individual starts ________ percent of all new firms. A) 20 to 25 B) 50 to 70 C) 5 to 15 D) 30 to 40 E) 75 to 90

B) 50 to 70

Which of the following was not identified in the textbook as an element of a new venture team? A) Board of advisors B) Suppliers and vendors C) Key employees D) Lenders and investors E) Management team

B) Suppliers and vendors

Which of the following statements is incorrect regarding founding teams? A) The members of heterogeneous teams are diverse in terms of their abilities and experiences. B) Teams that are working together for the first time have an advantage over teams that have worked together before. C) The psychological support that cofounders of a new business can offer one another is an important element of a firm's success. D) The members of homogeneous teams are very similar in terms of their abilities and experiences. E) Studies show that more than one individual starts 50 to 70 percent of all new teams.

B) Teams that are working together for the first time have an advantage over teams that have worked together before.

Which of the following was not identified in the textbook as an attribute of an effective board member? A) Strong personal and professional networks B) Unknown in their field C) Investment and/or operating experience D) Ability and willingness to mentor the CEO and the top managers of the firm E) Pattern recognition skills

B) Unknown in their field

A board of directors' three formal responsibilities are to ________. A) periodically update the firm's business plan, declare dividends, and write the firm's marketing plan B) appoint the officers of the firm, declare dividends, and oversee the affairs of the corporation C) write the firm's strategic plan, declare dividends, and conduct the annual meeting D) appoint the officers of the firm, conduct the annual meeting, and submit the firm's annual report to the Securities & Exchange Commission E) provide funding to the firm, write the firm's strategic plan, and submit the firm's annual report to the Securities & Exchange Commission

B) appoint the officers of the firm, declare dividends, and oversee the affairs of the corporation

The members of heterogeneous teams are ________. A) diverse in terms of their abilities and experiences B) diverse in terms of their abilities, but very similar in terms of their experiences C) similar in terms of their abilities and experiences D) diverse in terms of their experiences, but very similar in terms of their abilities E) sometimes diverse in terms of their abilities and experiences and sometimes similar along the same dimensions

B) diverse in terms of their abilities, but very similar in terms of their experiences

A board of directors is typically made up of both ________ and ________ directors. A) junior; senior B) inside; outside C) experienced; inexperienced D) novice; expert E) paid; unpaid

B) inside; outside

The fact that companies often falter because the people who start the firms can't adjust quickly enough to their new roles and because the firm lacks a "track record" with outside buyers and sellers, is referred to as the ________. A) liability of preparedness B) liability of newness C) burden of novelty D) burden of freshness E) millstone of innovation

B) liability of newness

Which of the following statements is not true regarding the attributes of the founder(s) of a firm? A) Evidence suggests that important entrepreneurial skills are enhanced through higher education. B) Founders with prior entrepreneurial experience are more likely to avoid costly mistakes. C) Founders with experience in the same industry as their new ventures will typically have "blinders" on and are typically not as effective as founders new to the industry. D) Founders with broad social and professional networks have an advantage. E) New ventures that are started by a team rather than an individual have an advantage

C) Founders with experience in the same industry as their new ventures will typically have "blinders" on and are typically not as effective as founders new to the industry.

In the context of boards of directors, a(n) ________ director is a person who is also an officer of the firm. A) outside B) junior C) inside D) expert E) senior

C) inside

A(n) ________ is a person who works for a business as an apprentice or trainee for the purpose of obtaining actual experience. A) freelancer B) consultant C) intern D) virtual assistant E) novice

C) intern

According to the textbook, prior entrepreneurial experience ________. A) is one of the poorest predictors of future entrepreneurial performance B) is one of the most consistent predictors of future entrepreneurial performance for entrepreneurs under 50 years of age, but not for entrepreneurs over 50 years of age C) is one of the most consistent predictors of future entrepreneurial performance D) is one of the most consistent predictors of future entrepreneurial performance in service firms,but not in manufacturing firms E) has no relationship to future entrepreneurial performance

C) is one of the most consistent predictors of future entrepreneurial performance

Savanna Combs opened a clothing boutique two years ago. Unfortunately, the boutique failed after 18 months. Savanna attributes the failure of her boutique to the facts that her employees couldn't adjust quickly enough to their new roles and that her boutique lacked a "track record" with outside buyers and sellers, which made it difficult to form partnerships and make sales. Savanna suffered from what research calls the ________. A) burden of novelty B) millstone of innovation C) liability of newness D) liability of preparedness E) burden of newness

C) liability of newness

A skills profile is a chart that depicts the ________. A) preferable skills and abilities of the members of a firm's board of advisors B) preferable skills and abilities of the members of a firm's board of directors C) most important skills that are needed in a business startup and where skills gaps exist D) skills and abilities that will be needed for a firm to maintain an aggressive growth strategy E) skills of a company's customers and how those skills impact the products and services a company provides

C) most important skills that are needed in a business startup and where skills gaps exist

A ________ is the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm. A) new venture panel B) startup team C) new venture team D) new project team E) startup cadre

C) new venture team

Kathy Denver is preparing to launch a home security firm. The team of people that will launchKathy's firm are as follows: Kathy (CEO), Trevor (VP-Finance), Shelia (VP-Sales), a four-person Board of Directors, a five-person Board of Advisors, and Kathy's primary investor, who will assume an advisory role. The group of people that will launch Kathy's firm is called its ________. A) startup squad B) new venture panel C) new venture team D) startup cadre E) startup troop

C) new venture team

The members of homogeneous teams are ________ in terms of their ________. A) diverse; abilities and experiences B) diverse; abilities, but very similar in terms of their experiences C) similar; abilities and experiences D) diverse; experiences, but very similar in terms of their abilities E) sometimes diverse; abilities and experiences and sometimes similar along the same dimensions

C) similar; abilities and experiences

Which of the following qualities was not identified in the textbook as a preferred attribute of the founder(s) of a firm? A) Prior entrepreneurial experience B) Firm started by a team C) Relevant industry experience D) Prior experience working in a government or university position E) Higher education

D) Prior experience working in a government or university position

Calvin Tucker is in the process of launching an educational services firm. He plans to incorporate the firm. Because the firm will be incorporated, Calvin is legally required to have a ________. A) board of investors B) board of advisors C) customer advisory board D) board of directors E) panel of advisors and peers

D) board of directors

A board of directors' three formal responsibilities are to appoint the officers of the firm, oversee the affairs of the corporation, and ________. A) conduct the annual meeting B) provide funding for the firm C) submit the firm's annual report to the stockholders D) declare dividends E) write the firm's strategic plan

D) declare dividends

A(n) ________ is a chart that depicts the most important skills that are needed in a new venture and where skills gaps exist. A) expertise report B) talent profile C) abilities summary D) skills profile E) talent summary

D) skills profile

Which of the following statements is untrue regarding founding teams? A) The members of heterogeneous teams are diverse in terms of their abilities and experiences. B) The members of homogenous teams are very similar in terms of their abilities and experiences. C) Teams that have worked together before have an edge. D) Studies show that more than one individual starts 50 to 70 percent of all new firms. E) It is generally believed that new ventures started by an individual have an advantage over new ventures started by a team.

E) It is generally believed that new ventures started by an individual have an advantage over new ventures started by a team.

A(n) ________ is a person who is in business for themselves, works on their own time with their own tools and equipment, and performs services for a number of different clients. A) employee B) virtual assistant C) intern D) trainee E) freelancer

E) freelancer

Adam Miller is a general partner in a venture capital firm that just funded Gold Coast Software, a software firm in Santa Barbara, California. Gold Coast Software is incorporated, and Adam has taken a seat on the firm's board of directors. In board of directors terminology, Keith isa(n) ________ director. A) subordinate B) senior C) distant D) inside E) outside

E) outside

A board of directors' three formal responsibilities are to appoint the officers of the firm, declare dividends, and ________. A) write the firm's strategic plan B) conduct the annual meeting C) provide funding for the firm D) represent the firm in public relations activities E) oversee the affairs of the corporation

E) oversee the affairs of the corporation

Homogeneous teams are diverse in terms of their abilities and experiences

False

It is generally believed that new ventures started by an individual have an advantage over those started by a team.

False

Prior entrepreneurial experience is a poor predictor of future entrepreneurial performance.

False

A new venture team is the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm

True

A skills profile is a chart that depicts the most important skills that are needed and where skills gaps exist

True

A virtual assistant is a freelancer who provides administrative, technical, or creative assistance to clients remotely from a home office.

True

Although a board of directors has formal governance responsibilities, its most useful role is to provide guidance and support to the firm's managers.

True

Founding teams that have worked together before, as opposed to teams that are working together for the first time, have an edge

True

Prior entrepreneurial experience, relevant industry experience, and networking are attributes that strengthen the chances of a founder's success.

True

Studies show that more than one individual starts 50 to 70 percent of all new firms.

True