Question 1

________ are a way for a business to raise capital through federally registered and underwritten sales of shares in the company.

Accepted Answer

Initial public stock offerings refer to the process of a company offering shares of its stock to the public for the first time. This is done through a federally registered and underwritten sale, meaning that the offering is regulated by the Securities and Exchange Commission and managed by an underwriting firm. This process can raise significant capital for the business, as investors purchase shares in the company with the expectation of earning a return on their investment.

Question 2

Renaldo is creating a business plan. His first formal step should be to

Accepted Answer

The first formal step in creating a business plan should be to conduct an opportunity analysis, which involves evaluating the potential market for the product or service, analyzing competition, and identifying potential challenges and risks. This will provide the necessary information to guide the development of a successful business plan. Secure financing, writing a business plan, hiring the right people, and getting support from others can come later in the process once the opportunity analysis has been completed.

Question 3

Kit's new business rocketed upwards in its first year, but its progress stagnated thereafter. His mentor noted that Kit was having a hard time "letting go"-giving his two best employees responsibility to take on assignments that they were obviously ready to handle. In fact, Kit was needlessly and constantly "looking over their shoulder" to check their work. As evidenced by these reasons, Kit's entrepreneurial venture was being threatened by his failure to

Accepted Answer

Kit's failure to delegate his work and give responsibility to his employees is hindering the progress of his business. Delegation is an essential skill for entrepreneurs to ensure proper utilization of resources, timely delivery of projects and overall growth of the business.

Question 4

Keiko prepares a document that outlines her plan to open a new essential oils company, including descriptions of the product, the market, her strategies, and the future direction she envisions for the company. This document is a(n)

Accepted Answer

The document that Keiko is preparing is a business plan, which outlines her proposed company's products, market, strategies, and future direction.

Question 5

People's judgment of a company's acceptance, appropriateness, and desirability, generally stemming from company goals and methods that are consistent with societal values, is known as

Accepted Answer

The definition provided closely matches the concept of legitimacy, which refers to the perceived adherence to social norms and values by a company. Social capital refers to the network of relationships that a company has built, while venture capital refers to investment in a company. Reliability and consistency are also important, but do not fully capture the concept described in the question.

Question 6

Ryan has a wide network of relationships, and most of his acquaintances have a positive opinion of his intelligence and integrity. This is an example of

Accepted Answer

This is an example of social capital, which refers to the resources that an individual has access to through their social networks and relationships. Ryan's positive reputation among his acquaintances can benefit him in various ways, such as providing job opportunities or access to information and resources.

Question 7

________ provides a lasting source of competitive advantage.

Accepted Answer

Social capital, which refers to the networks, norms, and trust that exist between individuals and organizations, provides a lasting source of competitive advantage because it is not easily replicable by competitors. These social relationships can enhance communication, cooperation, and knowledge sharing, leading to increased efficiency, innovation, and customer satisfaction. In contrast, venture capital, bootlegging, horse trading, and emotional intelligence may contribute to success in certain situations, but they are not as universally applicable or sustainable as social capital.

Question 8

________ is a competitive advantage that exists in your relationships with other people and the image other people have of you.

Accepted Answer

Social capital is a competitive advantage that exists in one's relationships with other people and the image they have of you. It refers to the network of social relationships that one possesses, including both personal and professional connections. Building strong social capital can lead to opportunities for collaboration, knowledge sharing, and access to resources that can give one a competitive advantage in business.

Question 9

Sam's new business is failing. In desperation, he asks his most experienced investor, Esteban, for advice. Esteban says, "Sam, I'm glad you asked. As a(n)________ investor, I've seen other businesses struggle, and I believe that I can help your business recover. In fact, I'll probably be willing to make further investments if I can have some say-so in what steps you take to recover."

Accepted Answer

The term "sophisticated investor" typically refers to someone who has experience and knowledge in investing, and can provide more than just financial support to a business. Esteban's statement suggests that he falls under this category, as he has seen other struggling businesses and can offer advice on how to recover. Additionally, his willingness to make further investments in exchange for some control over the recovery process indicates that he has a vested interest in the success of the business, which is a common trait of sophisticated investors.

Question 10

Global Crafts has made the decision to "go public" through an initial public stock offering (IPO). Global Crafts' executive management undertook this process to

Accepted Answer

Going public through an initial public stock offering (IPO) is a way for a company to raise capital by selling shares to the public. This process can help to reduce debt, improve the balance sheet, and enhance net worth, as stated in option C. Option A, which includes reducing capital, is not a typical goal of an IPO. Option B, which includes dissolving net worth, is not a desired outcome for a company. Options D and E do not accurately describe the goals of an IPO.

Question 11

Anil is the owner of Brick and Mortar, a construction company in a growing city. Anil has been in the construction business his whole life and takes pleasure in the day-to-day operations of the business. Brick and Mortar has quickly become popular, largely because Anil almost always comes in at a lower bid for the work than his competitors. Anil has hired trustworthy employees to whom he can grant ever-growing responsibilities, and he has built a state-of-the-art cafeteria and gym for them to enjoy. He is meticulous and thorough with his filing system and has designated his vice president, a long-time colleague, as his successor in the event of his death. Based on this scenario, what management issue is Anil most likely to experience as a result of his actions?

Accepted Answer

Anil's strategy of consistently underbidding his competitors, combined with the significant investments in employee amenities like a state-of-the-art cafeteria and gym, could strain his financial resources, potentially leaving him short of cash.

Question 12

If a business's goals and methods are consistent with societal values, it is considered

Accepted Answer

A business that aligns its goals and methods with societal values is considered legitimate. Legitimacy is the perception that a business operates within the bounds of accepted societal norms and values. It is important for businesses to maintain legitimacy in order to maintain trust and support from stakeholders.

Question 13

A(n)________ is a formal planning step that focuses on an entire venture and describes all the elements involved in starting it.

Accepted Answer

A business plan is a formal planning step that outlines all the key elements that are involved in starting and managing a successful business venture. It includes various factors like marketing strategy, target market analysis, financial projections, and operational logistics.

Question 14

Which of the following nonfinancial resources is crucial to the success of a new business?

Accepted Answer

Top management teams are crucial to the success of a new business because they provide the leadership, decision-making, and strategic direction necessary for the business to thrive.

Question 15

Which of the following is a reason why companies go public?

Accepted Answer

Companies go public to raise more capital by issuing stocks to the public. This allows them to access more funds than they would be able to through private investments.

Option A is incorrect because becoming a franchisee involves a company entering into a contractual agreement with another business to use its name, products and processes, and is unrelated to going public.

Option B is also incorrect because going public does not necessarily give a company more control. In fact, it often means giving up some control to shareholders, who have a say in company decisions.

Option C is incorrect because going public does not help a company evade government taxation. Publicly traded companies are subject to the same tax laws as privately held companies.

Option E is also incorrect because going public does not reduce payment of dividends. Dividend payouts are determined by a company's board of directors and are not directly influenced by it being publicly traded.

Question 16

A(n)________ includes a description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, a specification of activities and resources needed to translate the idea into a viable business, and your source(s)of capital.

Accepted Answer

A comprehensive analysis of a business idea will require an assessment of the opportunity that the idea presents, including an assessment of the entrepreneur who will be responsible for turning the idea into a viable business. This analysis will specify the activities and resources needed to make the idea a reality and will identify potential sources of capital that might be available to support the venture. While a SWOT analysis, situational assessment, PERT chart, and organization chart might be useful tools for a comprehensive analysis of a business idea, only an opportunity analysis will address all of the elements listed in the question.

Question 17

Gil has asked Leon to be a primary investor in his entrepreneurial start-up. Leon first wants to carefully study Gil's business plan, in particular these key factors:

Accepted Answer

The key factors that Leon wants to study include the people involved in the business (which refers to Gil and his team), the opportunity, the competition, the context (referring to the market and industry factors that may impact the business), and the risk/reward ratio. The clients are important too but fall under the opportunity factor. The other options (C, D, and E) either have incorrect factors or do not cover all the necessary areas for Leon to make an informed decision.

Question 18

A disadvantage of going public is the

Accepted Answer

The answer of A disadvantage of going public is the
...

Question 19

Which of the following is the fundamental reason for creating an opportunity analysis?

Accepted Answer

The fundamental reason for creating an opportunity analysis is to analyze whether or not to act on a potential business opportunity. It involves evaluating the feasibility and potential profitability of a new venture before committing resources and time. The other options listed (obtaining financing, negotiating agreements with suppliers, exciting potential customers, and working out the details of marketing, finance, and manufacturing) may be outcomes of a successful opportunity analysis, but they are not the primary reason for conducting one.

Question 20

Which of the following key planning elements should provide a competitive advantage that can be defended?

Accepted Answer

Opportunities are external factors that a company can exploit to gain a competitive advantage, and if leveraged effectively, they can be defended against competitors.

Quiz 7: Entrepreneurship