Question 1

Which of the following is not one of the questions a person should ask when making a decision whether to start or buy a new business?

Accepted Answer

The question about keeping the creation of the new business a secret from a current employer does not align with the fundamental considerations of starting or buying a new business, which typically involve logistical, financial, and strategic planning aspects.

Question 2

Entrepreneurs often make a conscious determination of the level of resources they are willing to commit to a venture. This is known as __________.

Accepted Answer

The principle of affordable loss refers to the concept where entrepreneurs decide in advance how much they are willing to lose on a venture, emphasizing a risk management strategy that focuses on minimizing potential losses rather than maximizing potential gains.

Question 3

Entrepreneurs have a tendency to __________ their income and __________ their costs.

Accepted Answer

Entrepreneurs often overestimate their income due to optimism about their business prospects and underestimate their costs due to overlooking or not fully understanding all the expenses involved in running a business.

Question 4

A new venture should identify anticipated costs of opening the business, and project, month by month, the expenses that reasonably can be expected for the first one to three years. This is usually done in the ___________.

Accepted Answer

This is typically done in the new-venture plan, which outlines the business model, anticipated costs, and projected expenses to give investors and stakeholders an overview of the company's financial planning and potential.

Question 5

Entrepreneurs can seek funding from which of the following sources?

Accepted Answer

Entrepreneurs can seek funding from a variety of sources including venture capital firms, financial institutions, and business angels. Each of these sources offers different advantages and terms, making them all viable options for funding depending on the specific needs and stage of the business.

Question 6

A __________ is a private individual who invests directly in firms and receives an equity stake in return.

Accepted Answer

Business angels are private individuals who invest their own money in potentially high-growth companies at an early stage, often in exchange for an equity stake. Unlike venture capitalists, who typically invest institutional money in more mature businesses, business angels use their personal funds.

Question 7

Kipper Overstreet is a venture capitalist. When he provides funds to a company, Overstreet can expect to __________.

Accepted Answer

The answer of Kipper Overstreet is a venture capitalist. When...

Question 8

Clint Kubiak is opening a new business and is currently calculating the expenses that can be expected for each month during the next two years. Kubiak is developing the __________.

Accepted Answer

The answer of Clint Kubiak is opening a new business...

Question 9

A popular global start-up strategy that now accounts for 31% of foreign sales by American companies is __________.

Accepted Answer

The answer of A popular global start-up strategy that now...

Question 10

Several considerations are involved in choosing between domestic and global start-ups. Which of the following is not a consideration?

Accepted Answer

The considerations for choosing between domestic and global start-ups typically focus on resource availability, market requirements, and sales potential rather than short-term profit maximization.

Question 11

In going global, the importance of the __________ competency is not to be underestimated.

Accepted Answer

Multicultural competency is crucial in a global context as it involves understanding, respecting, and effectively interacting with people from diverse cultures, which is essential for success in international business environments.

Question 12

Henry Estate Winery has successfully exported wine to all of the following countries except:

Accepted Answer

Henry Estate Winery, based in the United States, has successfully exported its wines to various international markets. However, Australia, being a significant wine producer itself, is not listed among the countries to which Henry Estate Winery has exported. This makes Australia the correct answer as the country to which Henry Estate Winery has not exported its wines, considering the competitive nature of the wine market in Australia and the abundance of local wine production.

Question 13

Karen Langley worked in a family business that was characterized by back-stabbing and accusations of stealing that ultimately caused a __________.

Accepted Answer

The answer of Karen Langley worked in a family business...

Question 14

The top recommendation for increasing the likelihood of a successful family business is to __________.

Accepted Answer

The answer of The top recommendation for increasing the likelihood...

Question 15

Hiring criteria policies established by a family business for employing other family members should be most concerned with the __________ of the person.

Accepted Answer

Competence is crucial in hiring policies for a family business to ensure that family members are qualified for their roles, maintaining professionalism and operational efficiency.

Question 16

A board of directors is particularly useful for the family business in its ability to __________.

Accepted Answer

A board of directors can provide unbiased advice, which is valuable for family businesses that may struggle with internal biases and conflicts.

Question 17

As a family business owner, an outside board of directors can help you do all of the following except __________.

Accepted Answer

Outside boards of directors can help with evaluating relationships with bankers, strategic planning, and making recommendations on large investments, but selecting the best possible job applicants is typically a function of the management team and HR, not the board of directors.

Question 18

Decisions in a family business must strike a balance between two categories of criteria. These two categories are referred to as __________ criteria and __________ criteria.

Accepted Answer

Economic criteria focus on the financial aspects and performance of the business, while family obligation criteria consider the values, relationships, and emotional ties within the family that owns and operates the business.

Question 19

The development of a legal agreement to govern a family business should address all of the following issues except __________.

Accepted Answer

The development of a legal agreement for a family business typically focuses on overarching governance and future planning issues such as contingencies for disposing of the business, policies for financial distributions, and succession planning. Specific job descriptions of family members are usually operational details that are not typically addressed in a legal agreement but rather in internal operational documents or human resources policies.

Question 20

The development, promotion, and implementation of innovative initiatives in established firms for the purpose of generating growth and, thus, profits under risky or uncertain conditions is referred to as ________________.

Accepted Answer

Corporate entrepreneurship refers to the process within an established company where teams or individuals pursue innovation, new business opportunities, or product development to generate growth and profits, often under conditions of uncertainty or risk.

Quiz 6: Fostering Entrepreneurship