Deck 6: Assessment of Entrepreneurial Opportunities

Question 1

There is a great abundance of reliable data concerning the start-up, performance, and failure of new ventures.

Answer 1

False

Question 2

Only a small percentage of new ventures succeed.

Answer 2

True

Question 3

Most entrepreneurs hire lawyers to brief them on the legal issues surrounding a new venture.

Answer 3

False

Question 4

In a lifestyle venture, independence, autonomy, and control are the primary driving forces.

Question 5

Pricing becomes less of a concern when customers become aware of a product's unique characteristics that are superior to the competition.

Question 6

Since the mid-1990s, the number of new start-up ventures has been approximately 1500 per day.

Question 7

Most entrepreneurs are well schooled in the technology associated with their ventures.

Question 8

Surprisingly, growth of sales is generally not considered a critical factor in assessing new ventures.

Question 9

Most entrepreneurs are objective when they evaluate their new idea.

Question 10

The growth pattern of sales is critical for an entrepreneur to make correct forecasts.

Question 11

There are five specific phases that a new venture goes through.

Question 12

Obtaining external financing is considered one of the major types of problems for a new venture during its first year.

Question 13

The entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture.

Question 14

The decision of an entrepreneur to ignore the market is a safe one if he or she is sure that the idea will be a success.

Question 15

"Intensity of competition" changes the dominance of problem areas.

Question 16

Proper understanding of the market will help an entrepreneur avoid failure with a new venture.

Question 17

Two important factors classified as managerial that could be a cause for failure include human resource problems and the concept of the team approach.

Question 18

Many entrepreneurs do not understand the marketing life cycle of a new product.

Question 19

Timing has little to do with the success or failure of a new venture.

Question 20

With a nonroutine venture, the initial innovation will maintain the company's competitive advantage without new technology.

Question 21

A feasibility criteria approach focuses strictly on the financial feasibility of a new venture.

Question 22

Timing is especially critical in which area?

A) the new venture profitability method
B) marketing
C) accounting
D) the economy

Question 23

Name the pitfall described by the statement, "Engineers and technically trained people are particularly prone to falling in love with an idea for a product or service."

A) inadequate understanding of technical requirements
B) lack of venture uniqueness
C) no real insight into the market
D) lack of objective evaluation

Question 24

A product does not have to be patented in order to be introduced into the marketplace.

Question 25

The entrepreneurial motivations of individuals usually relate to which of the following factors?

A) the environment
B) the entrepreneur
C) the venture
D) all of the above

Question 26

Overall market understanding rather than a time-consuming focus on market niches is sufficient for an evaluation.

Question 27

Which of the following is critical to a product's success?

A) timing
B) marketing approach
C) objectivity
D) all of the above

Question 28

Researchers have described a "fully developed new firm" with a number of characteristics, including:

A) full-time commitment
B) formal financial support
C) minimal hiring
D) a and b both apply

Question 29

Many entrepreneurs lack

A) knowledge of their product.
B) venture uniqueness.
C) drive.
D) the willingness to put in long hours.

Question 30

Many entrepreneurs lack _____ for their new venture.

A) innovation
B) intelligence
C) objectivity
D) both a and b

Question 31

Poor financial understanding is characterized by which of the following?

A) failure to anticipate technical difficulties
B) inadequate understanding of costs and funding requirements
C) failure to realize the life cycle of a product
D) lack of product differentiation

Question 32

A common pitfall in selecting a new venture is

A) poor financial understanding.
B) proper objective evaluation.
C) real insight into the market.
D) none of the above.

Question 33

When a customer sees a product that is superior to its competitors, ______ becomes less important.

A) size
B) color
C) quantity
D) price

Question 34

It is reported that _____ new firms have emerged in the United States every year since the mid-1990s.

A) 600,000
B) 100,000
C) 22,000
D) 230,000

Question 35

The maverick entrepreneur who avoids reaching out and finding help is a myth of the past.

Question 36

A new venture should be

A) cheap.
B) unique.
C) easy to copy.
D) inferior to its competitors.

Question 37

The evaluation process must be done by a research firm.

Question 38

Feasibility analyses include technical, market, financial, organizational, and competitive analyses.

Question 39

A new venture must go through _____ phases.

A) five
B) two
C) three
D) seven

Question 40

Solid analysis and evaluation of the feasibility of the product/service idea are critical tasks in starting a new business.

Question 41

Three specific phases that a new venture goes through are

A) prestart-up, start-up, poststart-up.
B) start-up, poststart-up, evaluation.
C) beginning start-up, start-up, ending start-up.
D) prestart-up, start-up, evaluation.

Question 42

Venture classifications include which of the following types of venture?

A) hobby ventures
B) smaller copycat ventures
C) high-growth ventures
D) survival ventures

Question 43

In recent studies of new venture problems, dominant problems at start-up were related to:

A) regulatory environment
B) sales/marketing
C) production/operations
D) none of the above

Question 44

Sales growth is a critical factor in the

A) prestart-up phase.
B) poststart-up phase.
C) start-up phase.
D) evaluations phase.

Question 45

During the prestart-up phase of a new venture, which of the following are among the crucial five factors for success?

A) uniqueness of venture and price
B) expected growth and price
C) uniqueness of venture and expected growth
D) price and timing

Question 46

Financial considerations play a major role in

A) lifestyle ventures.
B) smaller profitable ventures.
C) high-growth ventures.
D) corporate debentures.

Question 47

The amount of capital required to start a new venture _____.

A) can vary considerably depending upon the industry
B) is generally the same for all start-ups
C) is never available
D) will always be small

Question 48

Product/market problems include which of the following?

A) venture capital relationship problems
B) unclear business definition
C) concept of a team approach
D) assuming debt too early

Question 49

Lack of finished product availability can affect

A) the company's image.
B) the success of any venture.
C) both a and b
D) costs.

Question 50

The type of venture that is expected to attract venture capital would most likely be a

A) corporate venture.
B) high-growth venture.
C) lifestyle venture.
D) smaller venture.

Question 51

Hiring and promotions on the basis of nepotism rather than qualification fall under the managerial problem of

A) human resource problem.
B) the concept of a team approach.
C) unclear business definition.
D) poor management.

Question 52

A common human resource problem is

A) poor relationships with parent companies and venture capitalists.
B) incompetent support professionals.
C) inflated owner ego.
D) incompetent workforce.

Question 53

Using the failure prediction model discussed in the chapter, the risk of failure can be reduced by:

A) using less debt as initial financing and generating revenue in the initial stages.
B) using more debt as initial financing and generating less revenue in the initial stages.
C) using more revenue to enhance more debt in the initial stage.
D) all of the above.

Question 54

Which of the following is a major reason for the failure of a new venture?

A) inadequate market knowledge
B) good product performance
C) opening in the wrong location
D) good product/poor marketing

Question 55

One of the external problems new ventures face is

A) vandalism
B) poor labor force
C) government regulations
D) market knowledge

Question 56

Rapid technological advances in many industries cause a concern for in new venture development.

A) faulty product performance
B) rapid product obsolescence
C) inadequate awareness of competitive pressures
D) undercapitalization

Question 57

What is a critical consideration when assessing customer availability?

A) amount of products sold
B) length of time needed to determine who the customers are and what their buying habits are
C) the exact profitability of the venture
D) all of the above

Question 58

In recent studies of new venture problems, dominant problems during the growth stage were related to

A) sales/marketing
B) organization design
C) regulatory environment
D) none of the above

Question 59

Independence and autonomy are the major driving forces behind which of the following types of ventures?

A) small unprofitable ventures
B) corporate ventures
C) lifestyle ventures
D) high-growth ventures

Question 60

Which of the following as a factor contributing to new-venture failure?

A) product/market problems.
B) family issues.
C) personality clashes.
D) good management/poor product.

Question 61

Market feasibility analysis relies on

A) organizational competence
B) the entrepreneur's vision
C) venture capital
D) general economic trends and competitor data

Question 62

List and describe three pitfalls in selecting a new venture.

Question 63

General sources for a market feasibility analysis include

A) reliability studies.
B) statistical analyses.
C) pricing data.
D) supplier data.

Question 64

An approach developed as a criteria selection list from which entrepreneurs can gain insights into the viability of their venture is the

A) feasibility criteria approach.
B) time-essence of a venture approach.
C) marketability feasibility approach.
D) comprehensive feasibility approach.

Question 65

In shaping the ultimate success or failure of a new venture, which of the following statements is applicable?

A) A single strategic variable is usually responsible.
B) A single strategic variable is seldom responsible.
C) A single strategic variable that frequently changes is responsible.
D) A single strategic variable that influences the entire outcome is responsible.

Question 66

Which evaluation method enables an entrepreneur to judge the potential of the business?

A) the entrepreneurial analysis method
B) the venture analysis method
C) the profile analysis
D) the net out-of-pocket cost method

Question 67

Which formula defines the quick ratio?

A) financial assets/current debt
B) current debt/net sales
C) net sales/current debt
D) net profit/net sales

Question 68

The results of a profile analysis enable the entrepreneur to judge

A) himself or herself.
B) the competition.
C) the potential of the business.
D) venture capital opportunities.

Question 69

What are three critical factors in a new venture assessment?

Question 70

Functional design of the product and attractiveness in appearance are an aspect of

A) technical feasibility.
B) financial feasibility.
C) marketability.
D) organizational competence.

Question 71

A solid analysis is

A) a critical task in starting a new business.
B) of no importance.
C) no way to discover flaws in a new-venture idea.
D) both a and c

Question 72

Explain three major reasons why new ventures fail.

Question 73

The comprehensive feasibility approach is closely related to

A) the preparation of a thorough financial plan
B) initial customers
C) calendar times
D) good product design

Question 74

Product design, reliability, and safety are all examples of

A) technical feasibility
B) market feasibility
C) assessment of the entrepreneurial profile
D) a good product

Question 75

In determining the potential market, one should look _____ into the future.

A) one year
B) three to five years
C) ten years
D) three months

Question 76

Which of the following are key questions to ask when screening an idea?

A) Is it proprietary?
B) Can it easily make money?
C) What are its points of discussion?
D) All of the above are correct.

Question 77

When premature entry into the marketplace causes the failure of a new venture, it can be termed

A) poor timing.
B) undercapitalization.
C) a design problem.
D) a distribution problem.

Question 78

A checklist approach allows the entrepreneur to identify major strengths and weaknesses in factors of a new venture.

A) the financial
B) the marketing
C) the organizational
D) all of the above

Question 79

Failure of a new venture can be avoided

A) by being a high-risk taker.
B) through a careful profile analysis.
C) through both a and c
D) through none of the above.

Question 80

Which of the following are questions an entrepreneur can ask to gain insight into the viability of a venture?

A) Is it proprietary?
B) Are the initial production costs realistic?
C) Is the potential market large?
D) All of the above are correct.