Deck 2: Individual Leadership and Entrepreneurial Start-Ups

Question 1

Large firms can fill market niches that small companies cannot afford to fill.

Answer 1

False

Question 2

Bounded rationality offers an individual from outside an industry the unconstrained role of decision-making that was not previously considered.

Answer 2

True

Question 3

Organizational slack allows large organizations flexibility that is not available to smaller companies.

Answer 3

True

Question 4

The break-even point is the time when a new business starts to profit from incoming revenues.

Question 5

According to the agency theory, a manager at a large firm is more likely to exploit organizational resources for his or her own benefit than the owner of a small firm.

Question 6

There is one crucial person in a large organization: the chief executive officer.

Question 7

The most important person in an entrepreneurial business is the founder.

Question 8

One of the greatest assets of a small business is the owner.

Question 9

Future business owners need to understand how their own version of rationality affects their decision-making.

Question 10

The owner must be aware of his or her own tolerance of risk and establish a business that is consistent with that tolerance.

Question 11

In a small family business, the most important support group is the family.

Question 12

In a small business, an owner needs to consider how much debt he or she wants to accumulate in the business.The greater the debt, the lower the risk tolerance.

Question 13

Entrepreneurial orientation relies on an owner's prior work experience.

Question 14

The unlimited theory suggests that individuals act to maximize their own individual benefit.

Question 15

One advantage that a large firm has over a small firm is economies of scale.

Question 16

In the context of risk tolerance, most new business owners must set their risk tolerance based on the average level of risk in their specific market or industry.

Question 17

New entrepreneurial businesses tend to have slack financial resources that they can rely on, which gives them high flexibility in responding to emergencies.

Question 18

Potential entrepreneurs must determine the level of risk that they are able to tolerate.

Question 19

The excess resources that large companies tend to have to assist them are referred to as organizational redundancies.

Question 20

Unlike the owners of entrepreneurial ventures, the people who manage operations at large, established corporations do not typically have substantial ownership in the company.

Question 21

One of the negative aspects to being the owner of a family business has to do with firing a family member.

Question 22

A Myers-Briggs test analyzes four variables to indicate the different ways in which individuals deal with other people and their environment.

Question 23

Established businesses may be hesitant about buying from a start-up small business.

Question 24

The "glass ceiling" refers to the practical reality that many working women face which prevents them from advancing beyond certain levels of corporate hierarchies.

Question 25

Family members are in a unique position to keep an individual focused on pursuing the wrong approach to an issue.

Question 26

Small business owners who are driven by circumstance motivators tend to be more proactive and drive relentlessly toward their goals.

Question 27

The Myers-Briggs test is used for personality evaluations.

Question 28

An entrepreneur needs to set limits to how much time he or she spends on a business for it to be successful.

Question 29

A community could have an incubator, which is a facility that houses new businesses and provides many critical services for them.

Question 30

In the context of the triggers that encourage new business formations, circumstance motivators tend to result in more of a defensive positioning.

Question 31

Two triggers for staring a new business are talking to successful entrepreneurs and being laid off from your job.

Question 32

Entrepreneurs driven by circumstantial motivators are often more proactive than those with personal motivation for starting a business.

Question 33

Business incubators work best with small manufacturing-based firms.

Question 34

The Big Five test is composed of five factors in decision-making criteria.

Question 35

The philosophy of the Enneagram test is that a person is the result of all the experiences in his or her life.

Question 36

________ occur(s)in large companies that have excess resources such as equipment and employees.

A)Unlimited boundaries
B)Limited boundaries
C)Organizational slack
D)Organizational resources

Question 37

The reason a business is called a family business is that the owner's family plays a critical role in the success of the business.

Question 38

You should start a business doing something you have a passion for because you will spend more time starting and running the business than if you start a business that does not excite you.

Question 39

Identify a true statement about a large firm that has organizational slack.

A)The loss of an employee barely affects the abilities of its workforce.
B)Each employee is crucial to the survival of the firm.
C)The firm's knowledge is concentrated around a few key personnel.
D)The firm enjoys extreme financial flexibility and can survive huge annual losses if necessary.

Question 40

Having very little to lose financially by a failure could be a trigger for a new business.

Question 41

Anya is an entrepreneur.To understand her own strengths and weaknesses better, she takes a personality test.The test analyzes various factors, such as whether she focuses more on the outward world or her internal world and whether she gathers information through observation or intuition.Based on these variables, the test shows Anya how she tends to deal with other people and her environment.The test that Anya took is most likely the ________.

A)Myers-Briggs test
B)Big Five test
C)HEXACO test
D)Enneagram test

Question 42

Which of the following is an advantage that small firms have over large businesses?

A)The ability to produce services and products quickly and cheaply
B)Significant financial resources slack
C)The ability to respond quickly to changes
D)Critical knowledge spread across the firms' human resources pool

Question 43

In general, the greater the debt a business owner is willing to take on, the ________ the risk tolerance.

A)lower
B)higher
C)less predictable
D)more predictable

Question 44

In the context of evaluating entrepreneurial orientation, which of the following personality tests has a bias that adults will not change their personality over time and instead hold on to the personality they develop during childhood?

A)The Big Five test
B)The Myers-Briggs test
C)The Enneagram test
D)The Rorschach test

Question 45

What does a potential entrepreneur need to consider when starting a new business?

A)Risk tolerance
B)Prior experience
C)Personality orientation
D)All of these

Question 46

Which of the following is NOT a personality dimension of the Big Five test?

A)Individualist
B)Extroversion
C)Agreeableness
D)Conscientiousness

Question 47

Why can a small business owner make decisions quicker than a big business?

A)Because the decision maker is both the owner and the manager of the business
B)Because the owner can delegate the decisions to committees
C)Because managers in big businesses have less knowledge than a small business owner
D)All of these

Question 48

________ is a rational decision-making process that is constrained by our experiences, history, and culture.

A)Logic rationality
B)Constrained rationality
C)Bounded rationality
D)Unbounded rationality

Question 49

________ states that individuals make decisions that maximize their own individual benefits.

A)Individual benefit theory
B)Organizational benefit theory
C)Self-fulfilling prophesy
D)Agency theory

Question 50

Which of the following personality tests is based on the philosophy of Carl Jung?

A)Insights
B)Enneagram
C)Big Five
D)Myers-Briggs

Question 51

The potential entrepreneur needs to consider ________ when starting a new business.

A)prior experience
B)education
C)rationality
D)capital

Question 52

In the context of entrepreneurial businesses, which of the following is an advantage that small businesses have over big businesses?

A)A diverse pool of workers
B)Ability to be financially flexible
C)Large-scale manufacturing
D)Ability to produce small niche products

Question 53

Zeus Cisterns is a large manufacturing firm with several employees.Many of the firm's employees are knowledgeable about the firm's various operations and requirements.Accordingly, the organization's functioning is barely affected when an experienced employee quits.Further, in an emergency, various employees can fulfill any critical role that needs to be handled immediately.Given these characteristics, Zeus Cisterns can be said to have ________.

A)bounded rationality
B)organizational slack
C)a strong resource network
D)a loyal worker-base

Question 54

Which popular personality test assumes there are five components or types of an individual's personality?

A)Insights
B)Enneagram
C)Big Five
D)Myers-Briggs

Question 55

Ray, a manager in Fir Tree Inc., a large and established firm, must travel to attend an annual conference.He books the most convenient flight tickets and a room in a luxurious hotel right next to the venue of the conference.Ray justifies these decisions by stating that these are time-saving measures.Ray's decisions can be best explained ________.

A)by the agency theory
B)as bounded rationality
C)through the Myers-Briggs test
D)as organizational slack

Question 56

In the context of entrepreneurial orientation, the presence of ________ often leads young people to be pioneers in an area, as they are not limited by the restrictions of the past.

A)family support
B)introversion
C)organizational slack
D)bounded rationality

Question 57

Which personality test indicates the different ways individuals deal with other people and their environments?

A)Insights
B)Enneagram
C)Big Five
D)Myers-Briggs

Question 58

In contrast to the role of leadership in a typical large organization, the founder of a new entrepreneurial business tends to play a very critical role because

A)outside experts generally work with entrepreneurial businesses.
B)the concentration of knowledge tends to be with her or him.
C)the founder tends to be the only worker at entrepreneurial businesses.
D)the employees of such new businesses tend to be unskilled or unmotivated.

Question 59

The break-even point is defined as

A)the time when a firm experiences steady losses during its initial stages of operation.
B)the level where a firm starts to profit from the revenue it makes from its products.
C)the time when a business must liquidate its holdings and declare bankruptcy.
D)the level where revenue coming into the firm is sufficient to cover expenses.

Question 60

Which personality test believes that a person is the result of all experiences in his or her life?

A)Insights
B)Enneagram
C)Big Five
D)Myers-Briggs

Question 61

A person who wants to start a business needs a(n)________ risk tolerance.

Question 62

Sarah works as a supervisor in a large firm.Though she is very experienced at management and planning, she has not been promoted to the role of manager.However, she notices that other supervisors with less experience are often promoted to managerial positions, even if their work is not as good as hers.She also notices that all of them are men.In this scenario, Sarah being denied a promotion is an example of ________.

A)the glass ceiling
B)nepotism
C)organizational slack
D)bounded rationality

Question 63

Which of the following is NOT a personal motivator to start a business?

A)Being proactive
B)Feeling driven to achieve goals
C)Willing to make career-changing moves
D)Taking a defensive position

Question 64

Which of the following is an advantage that family businesses enjoy over nonfamily-owned businesses?

A)Family businesses have the ability to cheaply produce large numbers of a product, whereas nonfamily-owned businesses can only produce small volumes of a product.
B)Family businesses can afford to fill niches within markets that nonfamily-owned businesses cannot afford to fill.
C)Individuals in family businesses are often willing to work at times and in conditions that employees in nonfamily-owned businesses would not accept.
D)Family businesses are able to respond quickly to change around them, whereas nonfamily-owned businesses are often slow to react to changes.

Question 65

Incubators for small businesses include all of the following EXCEPT:

A)space.
B)financial loans.
C)legal expertise.
D)common receptionist.

Question 66

A prospective small business owner wants a career playing sports, which is what he enjoys doing most.He might be drawn to try an entrepreneurial venture in order to realize:

A)personal fulfillment.
B)substantial long-term profits.
C)freedom from the control of a managerial hierarchy.
D)a sense of self-esteem as a result of building his own business.

Question 67

Business incubators work best with which of the following type of firms?

A)Manufacturing
B)Retail
C)Service
D)Accounting

Question 68

The ________ is defined as the level where revenue coming into a firm is sufficient to cover expenses.

Question 69

In the context of entrepreneurship, which of the following is a typical trigger for starting a new business?

A)Being laid off from established employment
B)Getting recruitment offers from established places of work
C)Having a secure financial base
D)Migrating from one city to another

Question 70

In the context of supports for new businesses, why are established businesses often hesitant to buy from a start-up business?

A)Because the supply structures of established businesses are resistant to incorporating new supply sources
B)Because small businesses are typically family-run establishments, making them unreliable in the long run
C)Because it is more profitable for established businesses to fulfill any requirements through resources already present within their organizational structures
D)Because it is not clear if the new business will be able to fulfill an order or service a product in the future

Question 71

Which of the following is NOT a personal motivator to start a business?

A)Proactive positioning
B)Driven
C)Practical advice
D)Defensive positioning

Question 72

The ________ theory suggests that individuals act to maximize their own individual benefit.

Question 73

All of these are negatives for an owner in a family business EXCEPT:

A)firing a family member.
B)reprimanding a family member.
C)promoting a family member.
D)all of these.

Question 74

Some communities offer facilities that house new businesses and provide resources for them.These are called ________.

A)small business resource centers
B)temporary business agencies
C)holding facilities
D)incubators

Question 75

The Small Business Administration has set up which of these to advise individuals wanting to start a new business?

A)Service Corps of Retired Executives
B)Small Business Assistance Centers
C)Minority Enterprise Development Program
D)Community Incubator Program

Question 76

________ is a decision that is constrained by the background and history of the person.

Question 77

Sofor Designs is a successful firm that has been through many difficulties.When it first opened, the firm was financially unstable, but the employees agreed to work on partial salaries.The employees are also very loyal to the founder, and they always agree to work long hours during holiday seasons to maximize on increased customer traffic.Sofor Designs' characteristics are typical of ________.

A)family businesses
B)large established businesses
C)opportunistic start-ups
D)incubated start-ups

Question 78

Established businesses are often ________ to buy from a start-up small business.

A)quick
B)hesitant
C)sure
D)determined

Question 79

When should a new business owner ensure there are sufficient financial resources to operate the business?

A)Prior to the start
B)Opening day
C)First payroll
D)After six-month review

Question 80

________ is a supposition that assumes individuals act to maximize their own benefit.