Chapter 7
C)
Market niches are most likely to: A) offer potential for large, high-profile companies B) be characterized by the presence of monopolistic large companies C) offer potential for small, specialized companies D) be characterized by the presence of several competitors
angel investors
Individuals who invest in start-up companies with high growth potential in exchange for a share of ownership
Small Business Development Centers (SBDCs)
Local offices-affiliated with the Small Business Administration- that provide comprehensive management assistance to current and prospective small business owners
B)
Lucia works as a programmer in a software firm. She has recently received a promotion and an annual bonus. She believes that this is a result of random luck as she had not given her best. Lucia has ________. A) entrepreneurial self-reliance B) an external locus of control C) learned optimism D) a low tolerance of failure
C)
Lynn has started a new company called VivaCom and is in need of additional capital to establish the company in the market. Many reputable banks have turned down her request for funding. Her neighbor, Sam suggests that she approach a private firm called Wise Investments Inc. which offers loans to small businesses. He informs her that Wise Investments will require her to repay the loan in months rather than years. He warns her that though availing funds through this firm can be less time-consuming and easier, Lynn should keep in mind that it charges very high interest rates. Wise Investments Inc. is an example of a(n) __________. A) angel investor B) small business development center C) alternative lender D) small business administration
external locus of control
A deep-seated sense that forces other than the individual are responsible for what happens in his or her life
internal locus of control
A deep-seated sense that the individual is personally responsible for what happens in his or her life
business plan
A formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives
market niche
A small segment of a market with fewer competitors than the market as a whole. Market niches tend to be quite attractive to small firms
A)
An advantage that small business have is that: A) they have lower overhead costs B) they face minimal federal regulations C) they have lower health insurance costs D) they face lower risks of failure
Small Business Administration (SBA)
An agency of the federal government designed to maintain and strengthen the nations economy by aiding, counseling, assisting and protecting the interests of small businesses
SCORE (Service Corps of Retired Executives)
An organization- affiliated with the Small Business Administration- that provides free, comprehensive business counseling for small business owners from qualified volunteers
D)
Audrey has recently launched a start-up called Bailey Inc. Steven, her wealthy friend, believes that her company has a high growth potential. He invests in Bailey Inc. in exchange for a share of ownership. In this scenario, Steven is a(n) ______. A) corporate philanthropist B) alternative lender C) venture capitalist D) angel investor
D)
Carmen has an internal locus of control. She is most likely to ______. A) believe that the actions of others play a major role in her fate B) have no confidence in her own abilities C) believe that everything happens because of luck and coincidence D) attribute success and failure to her own actions
venture capital firms
Companies that invest in start-up businesses with high growth potential in exchange for a share of ownership
B)
CorpLab and Natural Inc. are two start-up companies in need of funds. TechLink, an already established company, believes that CorpLab and Natural Inc. have a high growth potential. Therefore, it agrees to invest in the two start-ups in exchange for a share of ownership. TechLink is a _________. A) trade union B) venture capital firm C) credit union D) nonprofit organization
D)
Debra has envisioned a pub in the heart of the city. She decides to have a music band right next to the bar playing her favorite rock ballads. She also has creative ideas for the items on the menu. She already has the funds needed to start the pub. Which of the following suggestions is most likely to help Debra realize her dream? A) Debra should know that starting a small business will mean very high overhead costs B) Debra should buy a pub that is already established as there are better chances of implementing her own ideas C) Debra should buy a franchise of a well-known pub as she will have more opportunities for creativity D) Debra should start from scratch as she can implement her own concepts, designs, and structures
B)
Ida has recently finished her high school exams. When the results are announced, she finds out that she is one of the students with the least scores. Ida believes that the bad results are because of her lack of concentration in class. She has a(n) ________. A) culture of silence B) internal locus of control C) low tolerance of failure D) external locus of control
B)
In low-income countries, a high percentage of entrepreneurs start their own business because: A) the impact of federal regulations is less B) they have no other economic options C) the required start-up money is less D) a low national income causes the business to have less financial risks
C)
In the context of the US economy, small businesses: A) have an insignificant impact on the state of the economy B) do not create a significant percentage of new jobs C) are often the first to contract when times are tough D) contribute to a very small percentage of the gross domestic product
entrepeneur
People who risk their time, money, and other resources to start and manage a business
A)
People with an external locus of control: A) feel buffeted by forces like random luck B) are extremely self-reliant C) feel that they have complete control over their lives D) are more likely to take responsibility for their own failure
D)
Small businesses are more likely to develop innovations because they: A) employ the best scientists and innovators in the country B) have easy access to research funds C) have an established bureaucracy that promotes invention D) came into existence because of a new idea
A)
Small businesses: A) have higher health insurance costs than large businesses B) tend to have higher overhead costs than large businesses C) are exempted from federal regulations D) tend to avoid niche markets
A)
Tracey has recently opened a company called Handy Baskets, which offers its customers a diverse selection of hand-woven baskets. As it is a small businesses. Which of the following opinions should Tracey believe to be correct? A) Julian tells her that Handy Baskets, being a small business, will have low overhead costs as she can hire only a few managers and specialized employees B) Sylvester tells her not to worry about regulatory burdens as small businesses face minimal federal regulations C) Belinda tells her that Handy Baskets, being a small business, will have lower health insurance costs making it easier to offer coverage to its employees D) Marsha tells her that starting a new business involves very little risk and that her company will thrive even if she doesn't put in much effort
alternative lenders
Typically private firms that charge very high interest rates, structure loans to be repaid in months rather than years, and often collect payments daily or weekly to reduce risk. They also tend to make decisions quickly and are more willing to overlook lower credit scores
B)
Which of the following acts as a source of funding for small businesses? A) Nonprofit organizations B) Venture capital firms C) Small Business Development Centers D) Service Corps of Retired Executives
D)
Which of the following firms, supported by Small Business Administration (SBA), provides free, comprehensive counseling for small businesses from qualified volunteers? A) A venture capital firm B) An angel investor C) A Small Business Development Center D) The Serve Corps of Retired Executives
C)
Which of the following is a disadvantage of buying a franchise? A) The franchisee receives no assistance in terms of management expertise and consulting B) The franchisee faces the task of building a customer base C) The franchisee is tied to the requirements of an agreement and has little scope for creativity D) The franchisee is faced with the challenge of building a brand image
D)
Which of the following is a disadvantage of buying an established business? A) The entrepreneur will need to invest a lot of time, money, and sheer sweat equity to build a customer base B) The relationships of the entrepreneur with customers, suppliers, and other stakeholders are not stabilized C) The entrepreneur can face challenges while securing permits to hiring employees D) The entrepreneur may inherit old mistakes that can range from poor employee relations to pending lawsuits
D)
Which of the following is a primary reason for necessity entrepreneurs to launch their own business? A) Starting a business provides them independence from managers B) They have the ability to control their own schedule C) Starting a business offers them endless opportunities for learning D) They believe it is their only economic option
C)
Which of the following is an advantage of buying an established business? A) The entrepreneur will not have to deal with the mistakes made by the previous owner B) The entrepreneur gets to pursue his or her own business concepts C) The entrepreneur faces fewer challenges when it comes to getting financing D) The entrepreneur gets to develop creative organizational structures and procedures
D)
Which of the following statements is true of commercial loans A) They are free of internet B) They are easy to get C) They provide 100% of the required start-up money D) They require a lot of paperwork and often a fairly long waiting period
C)
Which of the following statements is true of entrepreneurship? A) It offers little independence and less scope for learning compared to conventional employment B) It provides less scope for achieving financial success than conventional employment C) It offers individuals more flexibility to control their own schedules than conventional employment D) It involves fewer risks compared to conventional employment
C)
Which of the following statements is true of funding options for small businesses? A) Venture capital firms are federal agencies that provide microloans to small businesses B) Getting commercial loans form banks is the quickest way to get funds for small businesses C) The SBA partially guarantee loans from local commercial lenders to help small businesses D) Angel investors provide interest-free loans to help small businesses
B)
Which of the following statements is true of the impact of federal regulations on entrepreneurship? A) Regulations and entrepreneurship are not independent B) Extensive regulations can impede entrepreneurship C) Entrepreneurs owning small businesses are in favor of strict regulations D) Lack of regulations can stop entrepreneurship from thriving
B)
_______ are companies that invest in start-up businesses with high growth potential in exchange for a share of ownership A) Trade unions B) Venture capital firms C) Credit unions D) Nonprofit organizations
C)
_______ are individuals who put money in start-up companies with high growth potential in exchange for a share of ownership A) Formal investors B) Venture capitals C) Angel investors D) Alternative lenders
B)
_______ is an agency of the federal government designed to maintain and strengthen the nations economy by aiding, counseling, assisting, and protecting the interests of small businesses A) Economic Development Corporation B) Small Business Administration C) Fair Trade Federation D) Small Business Funding Bank
B)
_______ refers to a deep-seated sense that forces other than the individual are responsible for what happens in his or her life A) Entrepreneurial self-reliance B) External locus of control C) Learned optimism D) Tolerance of failure
B)
_______ refers to a deep-seated sense that the individual is personally responsible for what happens in his or her life A) Culture of silence B) Internal locus of control C) Learned helplessness D) Tolerance of uncertainty