Multiple Choice Questions ( only till lecture 6 will come in Mid term.

However, here are questions till Lecture 8 as they may come in final). The answers are in PPT. Lecture 1 Foundations of Enterpreneurship and Lecture 2_Small Business

Which of the following is a major contribution of entrepreneurial firms? millions of new jobs created within the economy training for future employees of larger corporations increases in interest rates due to higher levels of corporate risk purchasing of larger, more established corporations' products ideas for larger corporations to capitalize upon

Which of the following is NOT a common personality characteristic of typical entrepreneurs? desire for responsibility and personal achievement flexibility fondness for high levels of risk a high level of personal energy a future orientation

What percentage of businesses fail or close within the 6 years following start-up? 35% 50% 64% 86% 95%

Which of the following is a commonly experienced drawback to being an entrepreneur? less autonomy in operating your own company inability to contribute to society potential profits from innovations reduced quality of life in start-up years attracting the interest of larger companies desiring to purchase your firm

What is it about service-based national economies that fuels entrepreneurship? the relatively low cost of developing new service-oriented businesses the governmental tax subsidies for starting service-oriented businesses the cooperation of manufacturing businesses with service-oriented businesses the geographic proximity of small, service-based national economies the intrinsic personal rewards of owning a service-based business

Which of the following is true regarding women-owned businesses? They have a faster growth rate than male-owned businesses. They typically require more start-up capital than male-owned businesses. There are more women-owned businesses than male-owned businesses. They have a higher survival rate than male-owned businesses. They typically operate in the retail and cosmetics manufacturing industries.

Small businesses create more _____ than large corporations. innovations per employee debt per employee business sales assets types of products

What is the primary cause of failure of most small businesses? family disagreements poor product quality poor management poor location poor customer service

Growth is ideal, but uncontrolled growth is undesirable. According to Peter Drucker, a small business can expect to outgrow its capital base each time sales increase _____. 20-25% 40-50% 100-200% 200-300% 1000% Lecture 3_Creativity and Innovation Which of the following is a major difference between creativity and innovation? Creativity means coming up with a new product; innovation means coming up with a new process. Creativity is a more mentally straining exercise; innovation just comes naturally. Creativity has to do with thinking new things, and innovation is more about doing or producing those new things.

Creativity is where the real money is made; innovations just usually stay in the lab. Creativity is the same thing as innovation, except creativity refers to ideas outside the business realm. Why are creativity and innovation so critical for entrepreneurs' survival? They allow small companies with limited resources to outwit their larger competitors. They keep entrepreneurs' minds off of their stressful initial business development period. They help entrepreneurs to replicate current products on the market. They can substitute for a shaky business model. They help the entrepreneur to secure SBA loans for start-up capital.

Entrepreneurs must harness the power of both lobes of their brains to perform successfully. They require the use of their left brain to _____, and the use of their right brain for _____. find new ways of doing things; translating these into business models tell them which idea is wrong; negate what the left brain says specialize in motor skills; think logically choose the best solution to a problem; generate several solutions to choose among assess the future; choose the right path

What may be one of the best ways to generate creativity and innovation within your own mind? Sit at your desk and think for several hours on how to solve a problem. Try to apply a practical solution: "How would a great scientist approach this?" Play with the problem; think of nonsensical ways to solve it. Write down all of the specific details of the problem;

the answer must lie in there somewhere. Ask those who have been working on the problem their entire lives for assistance in a solution. Which of the following is a creativity-boosting perspective on failure? Failure is a learning experience on the way to success. Failure is the reason why we should just stay working for larger corporations that can hide our incompetence. Failure is evidence of the entrepreneur's lack of knowledge or expertise. Failure means that the entrepreneur's idea was not well accepted by the marketplace. Failure is not the entrepreneurs' fault; those customers just didn't catch on to the product.

-----_____ is the best way to boost creativity among one's employees. Requiring creative idea generation as a prerequisite to employment Laying off those who aren't creative Putting together similar people on creative teams Hiring a creativity consultant Rewarding creative behavior

What is one of the best ways to generate creative thinking while you are on the job? Set a watch for two minutes and force yourself to generate a solution in that timeframe. Ask your colleagues in your department for help with your problem. Look at the solutions your company has generated in the past for answers. Get out of your surroundings and take a walk outside to clear your mind. Look through industry magazines for what your competitors

are doing.

Which of the following shows the proper order of select steps in the creative process? preparation, implementation, verification, illumination preparation, verification, implementation, illumination verification, preparation, implementation, illumination preparation, illumination, verification, implementation preparation, implementation, illumination, verification

What is a good recommendation for forming and conducting a brainstorming session? keeping the size of the group to 5 to 8 members distinguishing good ideas from bad ideas during the session creating an all-day retreat for the session restricting the guest list to only top management allowing employees to prepare for the session ahead of time To protect the name of a new engine that runs on water, the inventor would file for which type of intellectual property protection? a patent a trademark a copyright a trade secret a service mark Lecture 4 _ strategic Management

Which of the following are types of intellectual capital? financial capital, land capital, and labor capital human capital, creativity capital, and innovation capital human resources capital, economic capital, and creativity capital

human capital, structural capital, and customer capital Intelligence capital, innovation capital, and creativity capital

What is a competitive advantage? a set of factors that gives a business a unique, superior position to make cheaper goods/services a positive net profit margin a resource that other competitors do not have a group of customers who return often a way to circumvent customers' changing demands How can an entrepreneurial venture develop a sustainable competitive advantage? by consistently offering lower prices on goods than its rivals by developing core competencies that help it serve its customers better than its rivals by offering more product selection than its rivals by advertising in more media than its rivals by having later business hours than its rivals Which of the following is NOT a good recommendation for approaching strategic management within a small business? Stick to the established strategic plan, no matter what changes may occur in the environment. Use a relatively short planning horizon - two years or less. Create a process that is informal and not overly structured. Refrain from creating too many objectives in the beginning. Make strategic thinking an ongoing process. Which of the following is the best descriptor of a mission statement? an historical summary of the business's development a statement that lists the business's objectives a requirement for most quality awards a description of the purpose of the business

a description of the business's core competencies What are the differences between goals and objectives? Goals are where you want your company to arrive; objectives are how you will get there. Goals are for top management to use; objectives are for front-line management to use. Goals are more long-range than objectives. Goals are broad in scope; objectives are specific and measurable. Goals are not linked to monetary rewards; objectives are reinforced through monetary rewards.

Which is the best strategy to use in an environment wherein buyers are price sensitive and economies of scale exist? cost leadership focused differentiation focus differentiation low-priced undercutting When beginning the implementation phase of strategic management, the plan should be divided into projects. Each project should be defined by ________. the purpose of the project the areas of the company to be involved the project's contribution to the strategic plan the resources needed to complete the project successfully all of the above Lecture 5_Business Ownership and Franchising In general, what would cause a business owner to select one form of ownership over another? image within the community tax, liability, and growth concerns industry membership pressure from the business owner's advisory board

state governmental policy that dictates what forms are legal What is a major advantage of a sole proprietorship? A proprietorship can be started, for most entrepreneurs, in a single day. A proprietorship protects the owner, should a disgruntled customer attempt to sue for damages. A proprietorship may be sold to someone else in the event that an entrepreneur decides to go out of business. A proprietorship is more attractive from potential investors' perspective. A proprietorship is looked upon more favorably, credit-wise, by lending institutions.

Why do partnership agreements exist? Partnership agreements detail the income requirements of each partner as an employee and are negotiated before the business starts. Partnership agreements exist to establish that both partners have put the same amount of effort and capital into the new venture. Partnership agreements show the willingness of each partner to absorb the other partner's share of liabilities, should the other partner become financially insolvent. Partnership agreements exist to lay out the structure for a successful organization and to serve as a guide if problems arise between the partners of the venture. Partnership agreements are required by state governments as evidence that each partner willingly and knowingly entered the partnership. What is one advantage of a partnership over a sole proprietorship? A partnership is easier to establish than a sole proprietorship. A partnership allows for more control over decision-making than a proprietorship. A partnership allows for limited liability among its general partners.

A partnership allows for investment by additional owners, some of whom may enjoy limited liability. Focus group In which of the following legal organization forms is ownership the most easily transferable? the corporation the general partnership the limited liability partnership (LLP) the structured partnership (SP) the proprietorship Which of the following is an accurate description of a franchise system? A franchise system is one in which a parent company purchases hundreds of smaller companies, often started by entrepreneurs. A franchise system is a scheme in which an individual at the top of a hierarchical structure makes an income from residuals of the commissions of those beneath him. In a franchise system, a semi-independent owner pays fees and royalties to a parent company for the right to sell its products and/or services. many A franchise system is one in which the parent company builds different locations of an original successful business.

A franchise system is one in which an original company decides to open hundreds of international locations.

________ is the fastest growing segment of franchising and offers the franchisee all of the elements of a fully developed business operation. Pure franchising Segment franchising Trademark franchising Multiple franchising Product distribution franchising

Why is the purchase of a franchise sometimes considered to be a better option than starting a business independently, from scratch? The upfront costs are lower for the rights to a franchise than they are for a new independent business. The franchiser will absorb the first few years' losses as a part of the services provided. The franchisee often receives training, support, advice, and brand recognition that an independent entrepreneur would not receive. The franchisee receives a portion of the profits of the parent company, whereas the independent entrepreneur would not. The franchiser will come into the franchisee's company and operate it until it becomes profitable, which would never be an option for the independent entrepreneur.

Since franchises are so widespread, often nationally and internationally interspersed, how is advertising handled between the franchiser and franchisee? The franchiser does all of the marketing for the franchisee, in return for royalties. The franchisee pays the franchiser to arrange for all of the advertising that is to be performed. The franchiser puts national ads in the papers and on the television, and anything else is up to the franchisee. The franchisee pays a marketing fee to support company-wide advertising, and is also often required to spend a predetermined amount on advertising in the local market to support her location. There is no prevalent pattern for how advertising is conducted within a franchise system. It varies from franchise to franchise.

Where can an entrepreneur find the most accurate information about the total cost of opening a certain franchise? in the local newspaper in the Uniform Franchising Offering Circular on the parent company's web site

from other entrepreneurs that have opened the franchise from the government offices of the state wherein the parent company has incorporated

If the franchisee fails to earn a profit over the course of the month, ________. the franchisee must still pay the requisite percent of sales determined as royalties. the franchisee pays a reduced percentage of overall sales to the franchiser for royalties. the franchisee is not responsible for paying any royalties to the franchiser. the franchisee may sue the franchiser for false advertising in its UFOC the franchisee may decide not to continue with the business.

Which of the following is a behavior that can signal that a franchiser is trustworthy? reassurance that there is no need to read the contract - his word is as strong as oak reassurance that there is no need to go to the expense of hiring an attorney - her attorney will help you through the confusing parts promises that you will earn your required rate of return, without documentation of this outcome from other locations very few lawsuits brought against the franchiser presentation of a one-time only, sign-today discount on franchise fees

After reviewing the documentation, what is one of the best ways to evaluate a franchise opportunity?

Patronize a franchise location to determine if you like the product. Research and talk with several of the existing franchisees about their experiences. Search the Internet for information about the franchise opportunity. of the Stay away from past franchisees who might taint your opinion franchise.

Ask the franchiser to recommend several franchisees to speak with about their experiences. Lecture 6_Marketing What are guerilla marketing strategies? Guerilla marketing strategies are those pursued by entrepreneurs who dress in primate costumes and motion customers into their store. Guerilla marketing strategies are unconventional, low-cost, creative marketing techniques pursued by entrepreneurs. Guerilla marketing strategies are techniques that absorb all or most of a company's marketing budget but that prove to be extremely beneficial. Guerilla marketing strategies are used by large organizations to outpace the smaller, new entrant entrepreneur competition. Guerilla marketing strategies are strategies that may or may not attract the target market, but are thrown out to the entire population to see who is attracted.

Which of the following is agreed upon by most marketing experts as the biggest marketing mistake that small businesses make? carving out too narrow of a target niche spending too much on media advertising failing to come up with a memorable jingle for their advertising spending too much on marketing during the first year failing to clearly define the target market to be served

Why is market research so important for an entrepreneur? It allows the entrepreneur's family to understand that he or she has put preparation into the business before starting it. It tests the entrepreneur's ability to stick to his idea, regardless of information that tells the entrepreneur not to move forward. It helps the entrepreneur to determine whether a market exists for her service. It gives the entrepreneur a head start on developing relationships later in the business's development. It gives the entrepreneur information on how much it will cost to start the business.

How can individualized marketing help a small company? Affordable technology can assist an entrepreneur in gathering individuals' information to develop a tailored marketing program for them. The entrepreneur can use an individual's information to call them and invite them to come to the store. The small company can gather individuals' information and then sell it off to larger businesses for a second stream of revenue. Individualized marketing can allow for a variable price structure according to what each customer is willing to pay. Individualized marketing can allow for the entrepreneur to act like a different business for each individual customer that comes along.

Which of the following would be a rigorous method of collecting primary data for market research? looking at census data direct mail list purging reviewing industry consultant reports distributing customer surveys and questionnaires

reading articles on customers in your industry

What types of marketing tactics work well for smaller businesses? competing based upon price dressing in crazy outfits and standing in traffic spending large amounts on television advertising focusing on the individualized needs of their customers piggybacking on the ads run by larger, related organizations What is a unique selling point (USP)? a short phrase that expresses what the business can do uniquely for its customers a postal service organization that delivers packages a public statement that reveals that the company is for sale a price point that is agreed upon by customers and sellers a phrase that describes how the business will sell its products What is one competitive edge that small businesses can excel at, because of their size? lower pricing strategies higher advertising spending innovation supplier relationships market research gathering What is the marketing mix? the right mix of advertising and pricing to attract your target market the major elements of a marketing strategy - product, place, price, and promotion the mixture of advertising and public relations efforts that best suits your target market the set of decisions that must be made before deciding upon

which target

market to address

the way that your customer sees themselves in the mixture of your entire marketplace

Lecture 7_Promotion and Pricing The correct price of a company's product or service is ________. a measure of the entrepreneur's costs and sales taxes on a good or service less important to the customer than reductions in fixed or variable cost levels a measure of what the customer must give up to obtain a good or service similar across all target customers the result of a simple mathematical equation

Why may demand remain low when a product is priced low? because lower prices often convey to a customer that a product is of lower value and lower quality because customers enjoy using more of their disposable income to buy a similar good because customers get a tax break from buying the higher priced good because stores will not carry the lower priced goods because competitors will use the low price to lure customers away Which of the following is NOT a point of reference that consumers often use when evaluating the fairness of a price? the price they would charge if they were the entrepreneur the price they have paid in the past for a product or service the prices competitors charge for the same or similar products or services the costs a company incurs to provide the product or service the value they receive from the product

A market penetration pricing strategy is most appropriate to use when ________. the company can clearly differentiate its products from competitors' offerings the entrepreneur is trying to convey his product's clear superiority to competitors it is difficult to differentiate your new product from other similar offerings in the marketplace the product is revolutionary and there is little competition the consumer is willing to pay a premium for extra attention to detail How can price lining help to generate sales? Price lining helps to add an extra profit margin cushion from the higher price level. Price lining allows customers to immediately find the right product and spend less time shopping. Price lining allows the customer to know what your competitors are charging for a similar product. Price lining allows the entrepreneur to capture many target markets with different needs and income levels. Price lining appeals to customers because the odd-priced product seems much cheaper to them than a product priced at the higher even dollar level.

Why is a flexible markup preferred to a standard markup for products and services? because flexible markup allows for price increases in times of increased manufacturing costs because the demand for products and services responds differently to price markup, depending on the product type because standard markup can easily be discovered by wary customers because flexible markup allows the entrepreneur to negotiate pricing with customers because standard markup does not take into account the

overhead that

the firm incurs

What is the difference between absorption costing and variable costing? Absorption costing does not include fixed costs in the costing of each manufactured item. Absorption costing allows the entrepreneur to envision the effects of increases in supply costs. Variable costing allows the entrepreneur to determine how costs would increase if product levels decline. Absorption costing allows the entrepreneur to determine the direct effects of increases or decreases in volume on the cost of the product. In a variable costing structure, the fixed or overhead costs of the period are not included in the costs of finished items.

Which of the following best represents the pricing equation for a break-even pricing strategy? Selling Price = Contribution Margin * Quantity Produced Selling Price = Customer's Preferred Price - Desired Profit per Item Selling Price = Variable Cost per Item + Fixed Costs Selling Price = ((Variable costs X Quantity Produced) + Total Fixed Costs))/Quantity Produced Selling Price = Variable Costs + Quantity Produced

Lecture 8_Cash and Profit What is a company's cash flow cycle? The amount of cash that the company goes through in an average month. The amount of time between the start of the business and the point at which it can support its needs through sales generated. The period between the receipt of cash from a customer and

the outflow of that cash to support the development of another unit. The time between the payment for merchandise and materials from suppliers and the receipt of payment from customers. The period between the receipt of cash and its deposit into the bank.

What is the fallacy made by the entrepreneur who decides to generate more cash through increasing sales levels? The entrepreneur fails to consider that it takes cash to generate more sales, something he does not have. be The entrepreneur fails to understand that more sales will not profitable.

The entrepreneur fails to take into account the interest rate on the loan she will have to take out to cover the sales increase. The entrepreneur fails to take into consideration the backlash from customers upon realizing that they are having to cover his cash deficit. The entrepreneur fails to take into account the price drop he will have to use to generate the increase in sales. Why is a cash budget sometimes more useful to an entrepreneur than an accrual-based budget? A cash budget allows the entrepreneur to determine how many items need to be sold to remain profitable. A cash budget shows chronologically when inflows and outflows of cash can be expected. A cash budget allows the entrepreneur to determine how the company will generate new sales. A cash budget does not take into account the employees' salaries, which can be removed through layoffs. The cash budget helps entrepreneurs determine when it would be a good idea to bring on additional product lines. What is the primary cause of cash flow problems cited by entrepreneurs? generating those first sales having to pay employee salaries collecting accounts receivable promptly

excruciatingly high utility bills suppliers' hesitancy to extend credit to new buyers The three primary areas of cash flow problems are ________. employees, new products, and advertising current assets, sales, and net income unemployment insurance, workers' compensation, and severance pay utility bills, sales tax, and income tax withholding accounts receivable, accounts payable, and inventory

________ is the first line of defense against bad debt losses. Hiring a collection agency Screening customers carefully before granting them credit Advertising your firm's willingness to extend credit Setting a limit for the amount of credit you will extend to a new customer Calling a customer's bank What is the general approach that an entrepreneur should have toward his accounts payable? The entrepreneur should try to pay all accounts by the dates indicated on the invoices. The entrepreneur should strive to pay accounts payable before even receiving an invoice. The entrepreneur should lengthen the time he takes to pay accounts payable as long as possible without damaging his company's credit rating. The entrepreneur should try to leave at least two or three creditors unpaid each month to lengthen the time in accounts payable. The entrepreneur should pay off remaining balances with creditors, even if those creditors have issued interest-free credit.

Why is carrying too much inventory a strain on the business? because inventory may make the back office area messy because inventory ties up cash and generates zero return because inventory takes up valuable space because inventory is taxed again at the end of the year if not sold because excess inventory can cause the business to believe that it is selling goods that it really is not Trading goods and services for other goods and services rather than cash is called _____. rummaging pilfering scraping masting bartering

How might leasing improve an entrepreneur's cash position? the The lessor gives the entrepreneur cash back on each payment entrepreneur makes on the piece of equipment.

Leasing allows entrepreneurs to gain access to needed equipment without the large down payments that would normally be required to finance the purchase of the same equipment. Leasing allows the entrepreneur to go for several months at a time without making a payment on the equipment the entrepreneur is using. Leasing allows entrepreneurs to pay only when they first begin turning a profit. the Leasing allows entrepreneurs a chance to profitably sublease equipment.