Chapter 10:

Financial Plan:

1 The purpose of the pro forma sources and applications of funds is to show how net income and financing were used to increase assets or to pay off debt.

True

False

2 Breakeven is the volume of sales a venture needs to make profits.True

False

3 Salaries and wages for the company should reflect the number of personnel employed as well as their role in the organization.

True

False

4 Sales revenue for an Internet start-up is often more easier to project.True

False

5To satisfy outside investors, the financial plan will need two years of past financial data.

True

False

6 In the start-up stage where the venture is very small and limited in time and resources:a software program is not required.

the software selected can be very simple and easy to use.

a software program may cause delays and increase costs.

the software should be capable of performing a variety of tasks.

7 Which of the following would NOT be a current asset?

Certificates of deposit that mature in six months

Customer receivables

Cash

Property

8 Which of the following is an example of cash flow?

Payment on a loan

Sales

Depreciation

Use of a credit card

9 Which among the following is NOT a forecasting technique used to project sales?

Survey of buyer's intentions

Sales force opinions

Monthly disbursements

Time series

10 _____ Budgets are used to project cash flows for the cost of goods produced.

Capital

Operating

Production

Depreciation

Chapter: 9

The organizational Plan:

1 The leaders of the organization need not always consider themselves role models for their employees.

True

False

2 In an S corporation capital gains or losses from the corporation are treated as personal income or losses.

True

False

3 The most attractive type of business formation for raising capital is partnership.True

False

4 A sole proprietorship is dissolved in the event of the owner's death.True

False

5 The proprietor is not personally liable for any aspects of the business.True

False

6 The board of advisors:is subject to regulations stipulated in the Sarbanes-Oxley Act.

has no legal status.

is not advisable in a family-owned business.

is likely to meet more frequently.

7 In a(n) ______________________, only one class of stock is permitted.sole proprietorship

C corporation

S corporation

partnership

8 ________________ distribute profits to owners through dividends.Sole proprietorship

General partnerships

Limited partnerships

Corporations

9 In a ______________, bonds can be used to raise capital.corporation

limited partnership

general partnership

sole proprietorship

10

The least expensive form of ownership to start is a:

corporation.

limited liability company.

partnership.

sole proprietorship.

Chapter8

Marketing Plan:

1 If the entrepreneur closely monitors the progress of the existing plan, he or she need not be concerned about contingencies.

True

False

2 If the market for a new venture is highly concentrated, it is advisable to consider direct sales.True

False

3 During situation analysis, the entrepreneur should provide a review of past performance of the product and the company.

True

False

4 While a marketing plan may enable the entrepreneur to understand and recognize the critical issues, it may not help in the event of any change in the environment.

True

False

5 Gathering information from primary sources is the first step in market research.True

False

6 Monitoring ___________ during the implementation of the marketing plan allows the entrepreneur to establish controls on the process.

sales data

research data

consumer data

technical data

7 Advertising and promotion for the business-to-business market involve all of the following EXCEPT:

indirect sales

Trade magazine advertising.

direct sales.

trade shows.

8 What is a target market?A group of customers a venture reaches by accident.

All consumers who purchase the venture's product.

A specific group of potential customers toward which a venture aims its marketing plan.

A chain of discount stores.

9 Which of the following is NOT a characteristic of a marketing plan?It should provide a strategy.

It should be based on facts and valid assumptions.

It should be flexible.

It should be long and detailed.

10

Which of the following is NOT an example of collecting primary data?

Observation

Using the Internet

Interviewing

Focus groups

Chapter: 7

The business Plan

1 The venture's form of ownership should be included and described in the production plan section of the business plan.

True

False

2 Investors consider the section on description of the venture as important because they can determine the amount of investment needed without having to read through the entire plan.

True

False

3 Most entrepreneurs have difficulty with gathering operations information and do not often know where to begin.

True

False

4 Potential investors are not very insistent on specifications that need to be included in the business plan.

True

False

5 The business plan is an integration of functional plans such as marketing, finance, manufacturing, and human resources.

True

False

6 Typically business plan projections are made on a ____________.bi-monthly schedule

quarterly schedule

six-month schedule

12-month schedule

7 The names, addresses, and resumes of the directors and officers of the corporation forms part of the _______________ plan.

operations

organizational

production

marketing

8 A production plan usually includes:pricing.

evaluation of the weaknesses of the business.

names of suppliers of raw materials.

flow of orders for goods and/or services.

9 Raw materials, labor skills, space and location form a part of __________ information needs.marketing

financial

operations

planning

10

Which of the following is not among the three perspectives that should be considered in preparing a business plan?

marketing perspective

perspective of the entrepreneur

investor perspective

technical perspective

Chapter: 4

Creativity and the Business Idea:

1 In the concept stage, the refined idea is tested to determine consumer acceptance.True

False

2 Innovations such as: penicillin, the steam engine, the computer, the airplane, the automobile, the Internet, and nanotechnology are all classified as technological innovations.

True

False

3 In the collective notebook method, participants consider the problem and its possible solutions, recording ideas at least once, but preferably three times, a day.

True

False

4 Problem inventory analysis involves the identification of everything wrong with an idea, followed by a discussion of ways to overcome these problems.

True

False

5 In brainstorming, quality of ideas is desired – the fewer the individuals coming up with good ideas, the greater the likelihood of the emergence of useful ideas.

True

False

6 __________ is software that accepts product orders and automatically calculates and totals customers' orders based on the product availability information.

Customer feedback software

Secure server

Shopping cart

Credit card payment

7 In which stage is consumer reaction to the physical product/service determined?Concept Stage

Idea Stage

Product Development Stage

Test Market Stage

8 Which creative problem solving technique develops a new idea by looking at the positives and negatives?

Reverse Brainstorming

Free association

Attribute listing

Big-Dream approach

9 All of the following except _____ is desirable when brainstorming is in process.idea combination and improvement

criticism

generating a large quantity of ideas

"freewheeling"

10

Which of following creative problem solving method starts with a problem statement that is neither too broad nor too narrow?

Brain writing

Brainstorming

Gordon Method

Reverse Brainstorming

Chapter: 3

Entrepreneurial Strategy: Generating and Exploiting New Entries

1 Financial backing is the basis of the entrepreneurial resource.True

False

2 Newness of a new entry is sometimes a disadvantage.True

False

3 First movers face more competitive rivalry.True

False

4 An example of a window of opportunity closing is when another entrepreneur has entered the industry and erected substantial barriers to entry and to imitation.

True

False

5 A narrow-scope strategy always provides protection against competition.True

False

6 Changes needed to adapt to environmental changes:are easier in established organizations because of inertia.

can be avoided by late entry.

are more difficult because of the entrepreneur's tendency to escalate commitment.

don't affect smaller organizations.

7 Determining first-mover advantage depends on all of the following except:the stability of the environment surrounding the entry.

the ability of the company to maintain a legal monopoly in the market.the ability of the entrepreneur to erect barriers to entry and imitation in order to extend the firm's lead time.the ability of the entrepreneur to educate customers.

8 An entrepreneur who pursues a new entry opportunity only to find out that he or she had overestimated his or her ability to create customer demand is:

in error of commission.

in technological error.

in error of omission.

in competition rivalry.

9 Which of the following statements is true?Knowledge is a valuable entrepreneurial resource that is typically learned in a classroom.Experience is idiosyncratic—unique to the life of the individual.

Knowledge based on experience is likely to be learned in a classroom.

Financial potential is the basis for a new entry.

10

Which of the following is not part of entrepreneurial strategy?

Generation of a new entry opportunity.

Expansion of an existing opportunity.

A feedback loop.

Exploitation of a new entry opportunity.

Chapter: 2Entrepreneurial Intentions and Corporate Entrepreneurship:

1

Most entrepreneurs indicate that they have mentors.True

False

2 An entrepreneur is rarely able to start a new business without some form of formal education.

True

False

3 With regard to minority entrepreneurship, in terms of ownership, one study found the lowest participation rate for American Indians.

True

False

4 In an encouraging climate for corporate entrepreneurship, rewards should be based on the attainment of established performance goals.

True

False

5 An organization that wants to become more entrepreneurial must learn to obtain as many resources as possible in order to be more productive.

True

False

6 _____ leads to increased initiative and persistence and thus improved performance.High self-efficacy

Perceived desirability

High feasibility

A strong moral-support system

7 Entrepreneurial endeavors consist of all of the following key elements except:new business venturing

increasing productivity

Innovativeness

Pro activeness

8 Motivation to launch a new venture can arise from all of the following except:lack of prior experience.

boredom.

a lack of challenge.

Frustration.

9 Within the moral-support network, most entrepreneurs indicate that their _____ are their biggest supporters.

mentors

friends

parents

spouses

10

All these are characteristics of an entrepreneurial environment except:

there are short term horizons.

new ideas are encouraged.

the organization operates on frontiers of technology.

it uses a multidiscipline teamwork approach.

Chapter: 1

Entrepreneurship and the Entrepreneurial Mind-Set:

1 While effectuating, entrepreneurs think through a problem in a way that starts with a desired outcome and focuses on the means to generate that outcome.

True

False

2 A distribution channel member would typically prefer doing business with single-product, rather than multiproduct firms.

True

False

3 Opportunity assessment plan is more commonly known as business plan.True

False

4

The product development phase begins at the iterative synthesis point.True

False

5 Learning from business failure involves feedback information and entrepreneurial knowledge.

True

False

6 Why is the evaluation of an opportunity the most critical element of the entrepreneurial process?

It helps the entrepreneur in developing a good business plan.

It enables the entrepreneur to judge the market and the competition.

It allows the entrepreneur to compare the prospective returns and the resources needed

It helps develop the opportunity assessment plan

7 Which is the most common cause of business failure?Insufficient capital

Unstable market

Insufficient experience

Poor entrepreneurship

8 Which grief recovery process is based on both avoidance and pro activeness?Restoration-orientation

Proactive counseling

Loss-orientation

Dual process for grief

9 Which term refers to the process of being proactive towards secondary sources of stress instead of being concerned with loss itself?

Grief recovery process

Loss-orientation

Dual process

Restoration-orientation

10

What takes place during the product-evolution process?

Innovation is developed and commercialized through entrepreneurial activity.

The product/service is evaluated and any scope of further development is charted.

The business branches into separate units of development and marketing.

The product/service is evaluated to identify its global marketability.