MGMT 340 Midterm

What risks does the company take when expanding its product mix?

The company may incur unwieldy development expenses. The market may not accept the new product. Unsuccessful products can damage the brand. all of the above

Which of the following is the main component of a business model?

The cost model and the revenue model

A company will make a better growth decision by identifying the most lucrative PTA.

True

A highly priced product will usually be perceived as better quality by the customer.

True

A pivot requires that we keep one foot rooted in what we've learned so far, while making a fundamental change in strategy in order to seek even greater validated learning.

True

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner.

True

More than one engine of growth operate in a business at a time.

True

You will likely fail if you start a business in an area you have no experience in

True

Innovation accounting

a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruits.

How much does the Bayh-Dole Act contribute annually to the US economy?

300 million 950 million 12 billion 32 billion 40 billion

A proper organization is critical to making a business plan easy to read. Thus, it should include which of the following?

Appendicies SubSections exhibits Major Sections all of the above

Low-tech businesses, such as convience stores, are not typically considered a part of entrepreneurship because of their lack of innovation and intellectual property.

False

Most tools from General Managemnet are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.

False

With proper management struture innovation is a top-down, centralized, and predictable thing that can be managed.

False

In general, the most important source of capital for a new entrepreneurial venture is which of the following?

Informal Investors Venture Capitalists Banks Incubators

How does the US Government support entrepreneurship?

Registration of a new business is a relatively short process The level of regulations is generally low US taxes are lower than other nations All of the above None of the above

Which of the following entrepreneurs was one of the pioneers of the biotechnology industry?

Robert Noyce Author Blank George Gendron Robert Swanson

The 8 year survival rate for new businesses is

1% 12% 25% 50% 73%

Since the executive summary is the most important part of the finished plan, an entrepreneur should write that section first, in order to frame the rest of the plan.

False

Under the Foreign Direct Investment strategy, the startup retains control of the assets and facilities, which results in a cheap and easy means to go global.

False

Venture Capital is a source of growth funding exclusively for technology companies with the potential for rapid, scalable growth.

False

Whether a company is successful is largely a matter of luck

False

Yahoo! Inc.'s IPO set the all-time record, in terms of capital raised, for Silicon Valley companies.

False

having multiple layers of management is the best way to ensure that a startup is flexible and quick to reack to changes

False

Which of the following is not related to Dickson's eight primary means to expand globally?

Initial Public Offering

Which of the following is NOT a common category in the critical risks section?

Offering of financing

Commonly outsourced responsibilities include all of the folloowing except_______________________________

Payroll Accounting Legal Work Janitorial Services Customer Service

A startup is a human institution designed to create a new product or service under________________.

conditions of extreme uncertainty

Split- Test experiment

one in which different versions of a product are offered to customers at the same time. By observing the 2 different groups you can make inferences about the impact of the different variations.

It is a good idea for a startup to hire employees who are:

overqualified for their initial roles

Which of the following is an example of a perfect business?

There is no such thing as a perfect business

The more products you sell through your distribution channels, the greater your negotiating power.

True

A startup will likely fail if the entrepreneur ignores feedback from his or her customers.

True

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

True

It is important to explain why the team's compensation is appropriate.

True

It's a common misperception that a business plan is primarily used for raising capital.

True

It's possible for a company to have a positive cash flow and be unprofitable

True

Lowering COGS allows companies to reach their break even date earlier.

True

Maintaining trade secrets is one way to protect a company's competitive advantage.

True

Markets that truly do not have competition are the most profitable, though such markets are nearly impossible to find.

True

Playing the role of devil's advocate is important at the "optimize practicality" stage of concept development.

True

Which of the following subsections is traditionally NOT placed in the executive summary?

critical risks

The truth is every engine of growth _________________________.

eventually runs out of gas

Starting a company in a sphere of business that you really enjoy is not the best idea, in terms of the chance of success.

false

According to the chapter, what portion of all firms receives venture capital?

less than 0.1%

To truly understand your customers, you MUST ___

listen carefully and adapt

Delay

prevents many startups from getting the feedback they need.

Entrepreneurs should focus on the key success factors that often lead a customer to buy one product over another, such as ___.

price, quality, and speed

Which of the following is true about all of the large, retail corporations in existence today?

roots in one geographic area

The irony if that it's often easier to raise money or acquire other resources when you have _______________.

0 revenue, 0 customers, 0 traction

What ratio best reflects the number of companies that begin with venture capital in hand

1 in 2 companies 1 in 20 companies 1 in 500 companies 1 in 2000 companies 1 in 10,000 companies

Typically, survival is the most pressing concern for a startup during the first:

1-2 years 2-3 years 4-5 years

Based on existing research, how long in the life of a startup do operating costs take to stabilize?

1-2 years 3-5 years 4-6 years 6-7 years 8 years

By 2009, what percentage of the world's population had become Internet users?

2 16 24 60 57

According to the GEM model, how many sets of activities create the basis for national economic growth?

2 3 4 5 6

According to the chapter, people of Hispanic descent will comprise 25% of the US population by what year?

2020 2030 2035 2040 2050

How many business incubators were in the US in 2003?

240 764 850 1113 2076

What was the increase in Benchmark Capital's investment of $5 million in eBay?

30 fold in 2 years 300 fold in 2 years 700 1500 4000

Which of the following is the primary means for FDI?

Acquire foreign assets Build new facilities expand current facilities oversees All of the above

Of the following differentiators, which most commonly determines the success of a company?

Better execution than the competition

The author agrees that a good plan, a solid strategy and thorough maket research works for startups.

False

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

False

The biggest risk any new venture faces is dilution of equity.

False

The cost-plus pricing technique is the most reliable one as it sets the price equal to the product's value.

False

The first two NASDAQ stocks to be included in the Dow Jones Industrial Average were Microsoft and Apple.

False

The former dean of the Nomura School of Advanced Management in Japan, Jiro Tokuyama, once said that the venture capital firms in Japan comprise one of the chief advantages for Japanese, technology start-ups.

False

The key to success in comedy improvisation is to always say, "Yes, but..."

False

The professionalization of the entrepreneurial process, which has developed over the last 20 years, has almost eliminated the need for young entrepreneurs to write business plans themselves.

False

The suthor explains "hard work and perserverance does lead to success.

False

There are formulas avaliable to decide exactly how complex you want to make your mvp.

False

There is a way to remove the human element- vision, intuition, judgement- from the practice of entrepreneurship.

False

To be successful, a company must possess a unique and novel idea

False

To target goods and services specifically to Hispanic populations in the US is to focus one's market too narrowly.

False

The essential lesson the be learned from small batch sizes is that by reducing batch sizes, organizations can get through the _______________________ more quickly than competitors.

Build-Measure- Learn Feedback Loop

When a venture capital firm invests in a company, they typically except what in return:

Cash Shares of the company Debt A personal guarantee intellectual property

When an organization is successful in their early efforts and ignore the principles behind their success, they have fallen into the ______________________.

Classic startup trap

The decision to pivot requires a _______________________

Clear Eyed and Objective Mindset

In the development plan, which issue should be the focus?

Devlopment strategy and timeline

Which of the trends below converged to spark the Internet revolution of the 1990's?

Digital Technology, Information Technology, Entrepreneurship

Which of the following is not one of the 10 D's of successful Entrepreneurs

Driven Details Dedicated Distribute Dream

Baby boomers" is the term used for Americans born in:

Early 1920's Early 1930's Mid 1940's and Early 1960's

The point is not to find the average customer nut to find _____________ the customers who feel the need for the product nost acutely.

Early adopters

Because the Japanese car market after the war was so small and capital was not avaliable they were unable to do mass production and take advantage of ________________

Economies of Scale

what is not cited by the chapter as a primary reason that entrepreneurs choost to go into business for themselves

Fame Innovation Financial success\ Independence Self-realization

When an organization starts making cuts that result in a slowdown of the ___________________, all they have accomplished is to help the startup go out of business more slowly.

Feedback Loop

A majority of the businesses started each year will eventually go bankrupt

False

A penetration pricing strategy is one of the most simple and successful initial approaches for a new venture.

False

A strategy that attempts to capture the first-mover's advantage is usually the most inexpensive.

False

According to IDEO, the first step in the creation of a product is to make a set of assumptions.

False

An entrepreneur should try to broaden his or her customer base definition at the early stages of developing an idea.

False

Anyone who wishes to pursue an entrepreneutrial venture would be wise to take at least three of the widely distributed entrepreneur attribute tests beforehand

False

Approximately 66% of all businesses start in the owner's home, but fail to grow primarily because the entrepreneur hires too many full-time workers.

False

As mentioned in earlier chapters and reiterated in this chapter, "cost plus" pricing is the best strategy, because it wastes the least amount of time.

False

Asking leading questions is the best method of discovering the appeal of a potential product or concept.

False

Business planning, in a literal sense, begins when you start to look for external funds.

False

COGS is a cost measure that applies to companies that manufacture tangible products; COGS cannot be computed for firms that deal exclusively in a service-based revenue model

False

Customer and market trends change too rapidly to be of any predictive use for an entrepreneur.

False

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

False

Entrepreneurs should always seek to own the resources that they utilize while building a comapny./

False

Entrepreneurship reduces the overall health of an economy by destroying jobs in traditional industries

False

Examining how customers currently acquire similar products is a poor use of time for an entrepreneur launching an innovative, new product.

False

Exporting is one of the most expensive ways to enter new markets.

False

For a company that goes public, the founding entrepreneur typically owns a majority of the shares of the corporation

False

For fledgling entrepreneurs there are few free resources avaliable for input and guidance

False

Franchising speeds growth, but lowers a company's revenue overall.

False

General Motors became the first company to earn over one billion dollars in a single year on December 31, 1985.

False

Hiring a corporate lifer who is used to working in one functional area and has experience with comprehensive administrative support is always the right strategy for a startup firm.

False

When determining how to allocate scarce resources, an entrepreneur should

Focus on the company's key success factor Spread resources arount to gain experience Focus exclusively on marketing Focus on technology None of the above

When writing a business plan it is best to:

Follow a common outline which is better for spot reading

If you have a replicable business model, it is wise to use which of the following strategies to expand internationally:

Franchising

What is an example of a relatively inelastic product?

Gas Burgers Train Tickets Notebooks

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

Generate more Income COnserve resources Increase your brand image All of the above

What markets are characterized by "stealth" competition?

Growing Primitive Developed Emerging

Which of the following is not in the contents of marketing plan?

Growth Strategy

If you are building the wrong thing, optimizing the product or its marketing will yield significant results.

False

In 2005, North American incubators assisted more than 350,000 startup companies

False

Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.

False

Investors in small, growing startups typically expect to earn the same rate of return as they would if they invested in a public company that is listed on the New York Stock Excahange.

False

It is better to formulate the organizational culture after your company begins to grow, rather than at the company's inception.

False

It is important to lower your gross margins early in the venture's life

False

No one knows about your strengths better than you do.

False

Non-profit organizations do not need revenue to operate.

False

Raising venture capital is a critical step for most successful ventures

False

Technology licensing is a good opportunity to extend your brand image into new markets.

False

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

False

The Dow Jones Industrial Average is the average price of all the companies traded on the New York Stock Exchange.

False

The Global Entrepreneurship Monitor (GEM) is an organization created to gather information about the most successful start-ups for potential investors

False

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

Increase your brand name recognition

With all pivots, we have to get back to the basics and start the ___________________ over.

Innovation accounting cycle

What does moving a seed of an idea to a more concrete possibility require?

Input from others

Which of the following is not a venture stage specifically enumerated in the chapter?

Investigation Launch Growth Operations All are Stages

Which of the following is not mentioned in the chapter as a factor you need to weigh when planning geographic expansion?

Is your brand name well known

After thr startup has made all the micro changes and product optimizations it can move its baseline toward the ideal, the company reaches a decision point. At this point they __________ or _______________.

Pivot or Perserve

Successful startups usually focus on _____, engine(s) of growth, specializing in everything that is required to make it work.

One

What is the name of the process that is the equivalent of brainstorming, but with a focus on writing rather than verbal communication?

Paper writing Brain writing Brain storming

Which of the following most typifies a "cocktail entrepreneur?"

Popular Productive Fails to take action Decisive

The lean starup methodology reconceives a startup's efforts as experiments that ___________ its strategy to see which part are brilliant and which are crazy.

Test

According to the survey cited in this chapter, which of the following was not one of the most important innovations since 1980?

The Internet Cell phones Personal Computers Digital Email Imagery

A serial entrepreneur is one who starts multiple companies one after the other

True

According to ACNielsen International Research, the most common reason for a person's desire to start a business is to increase his or her income.

True

An 'A' entrepreneur with a 'B' idea is better than a 'B' entrepreneur with an 'A' idea."

True

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner

True

Baby boomers are not as concerned about job security as were their parents.

True

Both positive and negative trends will help shape the businesses.

True

Certain stages of the "initial market test" can be cheap or even free.

True

Detailed financial investigation of comparable companies, because the results can lead to deceptive conclusions.

True

Developments in technology have spurred companies to expand to other countries increasingly early in their business

True

Entrepreneurial companies should consider outsourcing responsibilities and function that are not critical to the company's success.

True

Entrepreneurs benefit from developing and following a coherent geographic expansion strategy

True

Entrepreneurship did not grow very much after the Great Depression, until it began increasing in the 1970's.

True

Entrepreneurship is a process that can be learned

True

Five percent of American adults report they "invested" in someone else's venture in the last three years.

True

Going global increases risk and requires capital.

True

If you do not fully understand your revenue drivers, you cannot achieve the highest success.

True

In aggregate, baby boomers create powerful trends for US businesses.

True

In general, the number of female entrepreneurs is 2/3rds the number of male entrepreneurs.

True

It is appropriate to discuss the geographic location of production facilities and how this enhances your firm's competitive advantage.

True

Market analysis looks at current trends in the market; anticipating future trends is reserved for later steps in the business planning process.

True

Mergers and acquisitions are likely to increase a company's survival rate when used as a means for growth.

True

Most of the time customers don't know what they want in advance.

True

New Startup organizations should be committed to making mistakes.

True

One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.

True

Only the most skilled entrepreneurs should attempt to build a business around social and cultural facts

True

Secrecy about one's idea is more likely to hurt the development of the business than help it

True

Small batches normally allow new versions of products to be released to customers on a monthly, quaterly, or yearly cycle.

True

Startup organizations must attempt to tune the engine from the baseline toward the ideal

True

Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.

True

The S-curve is a forecasting tool designed to measure the power of competition.

True

The Scope of Operations section should discuss partnerships with vendors, suppliers, and partners.

True

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan

True

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

True

The business plan must establish that there is an opportunity worth exploiting and must detail how to take advantage of it.

True

The challenge of entrepreurs is to find ways to achieve the same amount of validated learning at lower cost or in a shorter time.

True

The chapter takes the view that the self-examination required to develop a tight, well written business plan is more important than the plan itself.

True

The innovation accounting framework makes it clear when the company is stuck and needs to change direction.

True

The market enters a fast growth phase when customer awareness and demand exceed supply.

True

The two types of startup capital are debt and equity

True

The vast majority of entrepreurs start their companies with their own personal savings.

True

There was a burst of venture capital backed startups in the last half of the 1960s.

True

Virtual companies are so called because they outsource much of their work.

True

What is the most successful US airline?

United Airlines Continential Airlines Southwest Airlines Delta

Which of the following is the key to creating visual catch-points in a business plan?

Use clearly marked headers and sub headersz

Startups have to focus on the big experiments that lead to _________________________.

Validated Learning

The _______________ hypothesis test whether a product or service really delivers value to customers once they are using it.

Value

The lesson of the minimum viable product is that any additional work beyond what was required to strat learning is _______________________, no matter how important it might have seemed at the time.

Waste

The critical first question for any lean transformation os ________________

Which activities create value and which are a waste.

An important technique in brainstorming is to say:

Yes and Yes but Nice

A common problem entrepreneurs can fall victim to is ____________ endlessly refining their plans

analysis paralysis

Startups that tend to focus on multiple markets are the most successful

False

Strategic partners are required by law to be offered seats on your Board of Directors.

False

Approximately what share of all new products are failures?

40 80 90

In entrepreneurship, luck is where __________________ and opportunity meet

Preparation

What percent of the workforce did Fortune 500 companies employ in 1960's?

10 15 20 25 30

What percentage of new business ventures typically survive their first 5 years of operation?

100 81 65 40

How much do informal investors contribute to startup businesses annually?

12 billion 50 billion 67 billion 86 billion 100 billion

What percentage of venture backed companies survive the five year mark

12% 20% 50% 67% 80%

What percent of American, four-year colleges have courses in entrepreneurship?

13 43 55 60 78

Generally speaking, what is the lowest level of total revenue in which a market becomes attractive for new entrants?

15 million 20 million 25 million 30 million 35 million

The stock market collapse that led to the Great Depression occurred in what year?

1928 1929 1930 1931 1932

At the turn of the 20th century, about 50% of US workers worked in either the agricultural or the domestic service spheres. Approximately 100 years later that percentage had decreased to which of the following figures?

4% 10% 16% 22% 30%

Investors typically expect an annual rate of return in the range of __________ from a growing startup.

40-60% 20-40% 60-80%

In 2008, Microsoft earned an operational cash flow of approximately what amount per second

450 930 1200 2900 12,200

Research suggests that a gross margin of what percent is a good benchmark for distinguishing more attractive opportunities from less attractive ones?

5% 15 40 70

What is the approximate number of baby boomers in the US?

55-60 M 60-65 M 65-70 70-75 75-80

What percent of GDP did venture capital backed companies generated in 2008?

7 21 28 31 50

To replace $70,000 of forgone salary and benefits, an entrepreneur will need the new venture to generate approximately how much in annual revenue?

70,000 200,000 400,000 600,000 800,0000

Vanity metrics

Allows the entrepreneur to form false conclusions and live their own private reality.

How many beta-tests of the product should the company do before releasing it to the market?

As many as neccessary

Considering competitor actions and reactions, which of the following would be dangerous for entrepreneurs?

Assume competition will never change

What are the two methods of forecasting future revenues, as stated in the chapter?

Comparable method and build up method

Suppose and advertisement cost $100 and cause 50 new customers to sigh up for the service. This ad has a ____________________________ of $2.00.

Cost Per Acquisition (CPA)

A company's sales channels can include all of the following except:

Cost reduction

Which of the following is part of the first-mover myth?

Creating a market is inexpensive and creating a new market is easier than entering an existing one

The lean startup model often works because _____________________

Cusomers don't know what they want.

Which of the following is the most important part of the business plan?

Executive Summary

Which of the following is the cheapest and easiest way to enter new markets?

Exporting

A High-Expectation Nascent Entrepreneuris an individual who expects to employ at least 50 employees within four years' time, through his or her new firm.

False

A head start is usually large enough to matter, and time spent in stealth mode- away from customers- is likely to provide a head start.

False

which of the following would be the best expanation for the lack of minority owned businesses in the united states

Lack of entrepreurial role models Small market potential for minority owned businesses Legal roadblocks Satisfaction with job

An understanding of your STA helps you to:

Make better growth decisions

Which term is used to describe business churning?

Making the butter Artificial evolution creative destruction business expansion

Which of the following influence a company's revenue?

Markers and Headers

How can entrepreneurs minimize risk?

Market research beta testing focus groups All of the above

Who reasoned that capitalism would be inevitably destroyed by elites?

Marx Whyte Lynen Schumpeter

Many of the big names in retail revolutionized and unified fragmented markets. Which of the following should NOT be on such a list?

Microsoft Walmart Home Depot

Which software application was the predecessor to the Lotus 1-2-3 spreadsheet?

Microsoft Excel Masterfile Financial Works FileMaker VisiCalc

One of the most pressing challenges for entrepreneurs is to maintain adequate levels of cash. Which of the following is the best way to ensure that a lack of cash does not bankrupt your startup?

Monitor your burn rate

Which of the following is not a part of IDEO's product design steps?

Multiple stimuli Gather Stimuli Create Stimuli

In which stage is it important to play devil's advocate?

Multiple stimuli Gather stimuli Create stimuli Optimize practicality

What is the only action that the "gather stimuli" stage requires of the entrepreneur?

Observe

What does moving a seed of an idea to a more concrete possibility require?

Practical thinking Market research Input from others a business plan Maturity

Marc Andreessen coined the term ________________ to describe the moment when a startup finally finds a widespread set of customers that resonate with its product.

Product/Market fit

The biggest advantage of working in small batches is that ___________________________________.

Quality problems can be identified much sooner

According to the chapter, into what type of opportunity should a business idea translate?

Realistic Attractive Unique

On what category of customers should a startup business focus most of its attention?

STA PTA TTA

Which of the following industries was the prime example of venture capital fueling the pace of commercial innovation?

Semi Conductors Mini- computers Biotechnology Personal Computers All of the Above

What does SBIR stand for?

Small Business Innovation Research.

The one envelop at a time approach is called "single piece flow" in lean manufacturing. It works because of the surprising power of ______________

Small batches

Startups vision

Startups have a true north, a destination in mind : creating a thriving and world changing business.

True

Strategic partners are required by law to be offered seats on your Board of Directors.

Ways past customers drive sustaintable growth:

Through funded advertising, word of mouth, as a side effect of product design, through repeat purchase or use.

Startup's job

To devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan & rigorously measure where it is right now, confronting the hard truths that assesment reveals.

Which of the following is not a goal of business planning?

To inform competitors of your intentions

The term "free cash flow" refers to _______________________________________.

cash that is generated in excess of funds required to sustain operations and purchase assets

Mainstream customers have __________ requirements and are much more demanding.

different

If you are thinking about venturing into a market and cannot find any competitors, what should you do as an entrepreneur?

expand your definition of the market

Cocktail party entrepreneurs can provide you with invaluable advice about how to run a venture

false

What is the revenue strategy of both Walmart and Amazon?

low margins,high volumes

An example of entrepreneurial frugality is

purchasing used office equipment and machinery

Before raising capital, the company should identify which of the following?

stategy customers cost categories competitive advantage all of the above

The author adopted the view that their job was to find ___________ between their vision and what customers would accept.

synthesis

The Lean Startup works only if we able to build an organization as adaptable and fast as ____________________________.

the challenges it faces

Which of the following is not a critical component for a successful new business

the opportunity the management team the age of the lead entrepreneur the resources avaliable none of the above

Validated learning

the process of demonstrating empirically that a team has discovered valuable traits about a startup's present and future business prospects.

Just do it attitude

this approach leases to chaos more often than it does success.

The Lean Startup model offers a way to test an organization's hypotheses _________

thoroughly, rigorously, and immediately

Where do most entrepreneurs get the idea for their business

through brainstorming from mentors from exposure to an industry by reading entrepreneurship books from venture capitalists

If business planning predicts that your gross margins will be 5%, you would be best advised to:

to redesign or abandon your concept

A company will make a better growth decision by identifying the most lucrative PTA.

true

The first domain name on the Web was assigned in 1986.

false

A simple, flat organization chart is often useful to visualize what roles you have filled and what gaps remain.

True

Entrepreneurship requires a _____________ to harness an entrepreneurial opportunity.

managerial discipline

On average each person who signs up will bring, on an average ______ than one other person with them.

more

The graphical depiction that highlights the diffusion of product acceptance over time is:

s-Curve c- Curve U-Curve V- Curve