Midterm Study Guide
According to a recent Gallop survey about ____ percent of kids in grades 5-12 say they plan to start their own business.
40%
The Barringer/ Ireland Business Model Canvas consists of _________ major category (ies) and ________ parts.
4; 12
In various studies, researchers have found that form _______ percent of the variation in firm profitability is directly attributable to the industry in which a firm competes.
8%-30%
What statement regarding survival rates of entrepreneurial firms in the United States is correct?
As high as 50 percent after four years
(T/F) A comparison analysis si a detailed evaluation of a firm's competitors
Fales- competitor analysis
(T/F) A feasibility analysis is an assessment of a potential product or service idea rather than a potential business
False
(T/F) According to the consensus of the research, some people are genetically predisposed to be entrepreneurs.
False
(T/F) Aging of the population, the increasing diversity of the workplace, and the continual migration of people from small towns and rural areas to cities are important economic trends.
False
(T/F) An idea is a favorable set of circumstances that creates a need for a new product, service, or business.
False
(T/F) Choosing a legal entity for a firm is a one time event. Once a form of legal entity has been chosen it cannot be changed.
False
(T/F) Entrepreneurs are motivated primarily by money
False
(T/F) Focus groups typically involve a group of people who are unfamiliar with a topic and are brought together to respond to questions.
False
(T/F) In the terminology of the Barringer/Ireland Business Model Template, a key asset is a specific factor or capability that supports a firm's business model and sets it apart from its rivals.
False
(T/F) Incubation is othe stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability.
False
(T/F) It is important to understand that there are several perfect business models.
False
(T/F) The limited liability corporation is a form of business organization that is rapidly losing popularity in the United States.
False
(T/F) The vast majority of corporations in the United States are public corporations
False
An emerging industry is one that is characterized by a large number of firms of approximately equal size.
False
Unfortunately, statistics show that there is very little interest in entrepreneurship among young people the United States.
False
(T/F) A firm's operating leverage is an analysis of its debt versus its equity.
False (Fixed versus Variable)
(T/F) A concept statement shoudl be two to three pages long.
False - one page
(T/F) Census Bureau data, analyst forecasts, and other pertinent information gleaned through library and internet research are examples of primary research.
False - secondary research
(T/F) A commercialization plan is written narrative that describes what a new business plans to accomplish how it plans to accomplish it
False- business plan
The information that is gathered by a firm to learn about its competitors is referred to as tactical intelligence
False- competitive analysis grid
Most businesses that plan to use a fictitious name, which is any name other than the business owner's name, need a ________ permit
Fictitious business name
________ depict realationships between items on a firm's financial statements.
Financial ratios
The template for completing a feastibility analysis included in Appendix 3.1 of the book is called the ________ analysis.
First screen
According to the textbook, the first rule in making an oral presentation is to _______.
Follow instructions
A ________ industry is an industry that is experiencing significcant international sales.
Global
What are 6 of the qualities and factors one should aim for when setting goals?
Specific Optimism Realism Both short term and long term
_______ is the overall health of the financial structure of the firm, particularly as it relates to the debt to equity ratio
Stability
_______ business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.
Standard
According to the textbook the only way to know if your product or service is what people want is by ______.
Talking to them
Which of the following statements is incorrect about business plans?
The business plan should be written while the feasibility analysis is being completed. *info should be gathered but not completed*
What are 4 things you would do to identify who your target market is and where they are?
Where do prospects go for education, shopping, and recreation? What media do they read or listen to? What's the use for my concept? What are other similar concepts used and sold?
In most industries, the major determinant of industry profitability is the level of competition among the firms alread competing in the industry
True
The first step in a competitor analysis is to determine who the competition is.
True
A computer-generated image of an invention that displays the invention as a 3D model that can be viewed from all sides and rotated 360 degrees is called a _______.
Virtual prototype
The two primary issues to consider in organizational feasibility analysis are ________.
management prowess and resource sufficiency
Which of the following is not a part of assessing the product/ service feasitibility of a business idea?
Analyzing industry attractiveness
What are the questions to ask when interviewing an accountant?
Are you a CPA? When and where did you receive a license to practice? What area do you specialize What professional organizations do you belong to? How active? What are your fees?
The three primary reasons that people become entrepreneurs and start their own firms are to ______.
Be their own boss, pursue their own ideas, and realize financial rewards
What are 4 things you can do to create a professional image?
Business Cards Office Space Logo and Signage Style
Which of the efollowing is not an example of a social force?
Changes in interest rates
Which of the following is true regarding common and preferred stock?
Common stock is issued more broadly than preferred stock.
A company's mission statement should be placed in the _______ section of its business plan.
Company description
What are 5 Dos and don'ts in choosing a business name?
DO Create a unique name that reflects the business, ask friends and family for input, be creative and create a new word, and consult an expert. DON'T Use the first name that comes to mind, and overly common name, something that is hard to say, an overly vague, or an already used name.
Which of the following is not one of the four steps of entreprenurial process?
Determining how to seize the spotlight
A disadvantage of C corporations is that they are subject to ______, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.
Double taxation
Which of the following is an example of how to encourage creativity at the organizational level?
Elevate creativity's importance throughout the organization
What are the major components of the business plan
Executive Summary Business Description Market Strategies Design and Development Plan Competitive Analysis
In the context of competitor analysis, _______ competitors offer close substitutes to the product sold by the firm completing the analysis.
Indirect
Which of the following issues should be considered in industry/ target market feasibility analysis?
Industry attractiveness
What is secondary research?
Information from other organizations such as the government agencies, trade associations, and your local chamber of commerce.
What is primary research?
Information that comes directly from the source- for market research this would be information from potential customers.
An entity created by two or more firms pooling a portion of their resources to creagte a separate, jointly-owened organization is called a _______.
Joint venture
What are 3 alternatives to full time employees?
Leased Temporary Part-time Interns
Which of the following statements is incorrect regarding sole proprietorships?
Liquidity of the investment is high
Generally, industries are more attractive when the threat of substitutes is ______.
Low
What are 4 "part time pointers" to consider in helping to make your part time business a success?
Make the most of every minute Take advantage of time zone differences and technology Don't overstep your boundaries Be obvious
Which of the following is typically not included in the founders' agreement for a firm?
Marketing plan
A business' _______ describes why it exists and what its business model is supposed to accomplish.
Mission statement
Which of the following represents the correct order of the five stages of the creative process?
Preparation, incubation, insight, evaluation, elaboration
Talking to industry experts, obtaining feedback from prospective customers, and administering surveys are examples of _____ research.
Primary
Which of the following was not identified in the textbook as a nontraditional barrier to entry?
Product differentiation
A company's _______ scope defines the products and markets on which it will concentrate.
Product/ market
What are 4 "other issues you should focus on" in determining whether to buy a business?
Sales Activity Operating Environment Net Income Excessive Inventory
Which of the following statements is incorrect regarding the personal characteristics of entrepreneurs?
Several studies show that prior experience in an industry actually blinds an entrepreneur to the recognition of new opportunities in the same industry.
What are 4 things you cannot ask on a job application?
Sex, race, creed, color, religion, or nationality Disabilities Marital Status Date and type of military discharge
What are the 4 basic forms of business?
Sole Proprietorship Partnership Corporation LLC
Which of the following statements is incorrect regarding entrepreneurial activity and age range?
The majority of business founders have no prior work experience.
According to the textbook, how do well-managed firms respond to the five forces that determine industry profitability.
They try to position their firms in a way that avoids or diminishes the forces
Which of the following is not a recommend guideline for writing a business plan?
To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.
(T/F) A company's channels describe how it delivers its product or service to its customers
True
(T/F) A company's target market is a place within a larger market segment that represents a narrower group of customers with similar interests.
True
(T/F) A competitor analysis, which is a detailed analysis of a firm's competitors, should be included in the market analysis section of its business plan.
True
(T/F) A new venture team is the group of founders, key employees, and advisers that either manage or help manage a new business in its startup yearsa
True
(T/F) A noncompete agreement prevents an individual from competing against a former employer for a specific period of time.
True
(T/F) A sources and uses of funds statement is a document that lays out specifically how much money a firm needs, where the money will come from, and what the money will be used for.
True
(T/F) A subchapter S corporation combines the advantages of a partnership and a C corporation
True
(T/F) Disruptive business models are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.
True
(T/F) Economic factors, social factors, technological advances, and political action and regulatory changes are the most important trends to follow in trying to identify opportunities.
True
(T/F) Entrepreneurs are usually moderate, rather than high, risk-takers.
True
(T/F) Established firms with an entrepreneurial empahsis are proactive, innovative, and risk-taking.
True
(T/F) In the financing/funding section of the Barringer/Ireland Business Model Template, there are three categories of costs to consider: capital costs, one-time expenses, and provisions for ramp-up expenses.
True
(T/F) Opportunity recognition may be an innate skill or cognnnitive process
True
(T/F) Organizational feasibility analysis is conducted to determine wether a proposed business venture has sufficient management expertise, organizational competence, and resources to successfully launch its business.
True
(T/F) The executive summary is a lengthy overview of the entire business plan.
True
(T/F) The five competitive forces model is a framework for understanding the stucture of an industry
True
(T/F) The four main characteristics of successful entrepreneurs are: passion for the business, execution intelligence, product/ customer focus, and tenacity despite failure.
True
(T/F) The most important issues to consider in financial feasibility analysis are total startup cash needed, financial performance of similar businesses, and overall financial attractiveness of the proposed venuture
True
(T/F) The single most important thing the founders of an entrepreneurial venture can do to avoid ethical misconduct is to establish a strong ethical culture for their firms.
True
(T/F) To make the best impression a business plan should follow a conventional structure.
True
What are 6 key questions you would want answered when evaluating whether to buy a business?
Why is the owner selling? Does the business have debts? does amount of business vary seasonally? Is this a fad business? How many employees, what positions? Will change in ownership result in change in personnel?
A code of _______ is a formal statement of an organizations values on certain ethical and social issues.
conduct
The term "window of opportunity" as discussed in Chapter 2 is a metaphor that describes the time period in which a firm can ______.
realistcally enter a new market
A firm's _____ describes the ways in which it makes its money
revenue stream
The three types of business plans are _______.
summary business plan, full business plan, operational business plan
A network entrepreneur is an individual who identifies his or her business idea ________.
through social contacts
A financial statement is a _________
written report that quantitatively describes a firm's financial statements.