Question 1

Which of the following is the most important resource for a start-up activity?
A)social recognition
B)land
C)personnel
D)money

Accepted Answer

Resources are an essential component of a successful entrepreneurial launch. For start-ups, the most important resource is usually money because a new firm typically has to expend substantial sums just to start the business. However, financial resources are not the only kind of resource a new venture needs. Human capital and social capital are also important.

Question 2

The U.S. Small Business Administration supports small business through all of the following except
A)government contracting.
B)investing venture capital.
C)underwriting loans.
D)training and counseling.

Accepted Answer

In the United States, the federal government provides support for entrepreneurial firms in two key arenas, financing and government contracting. The Small Business Administration (SBA) has several loan guarantee programs designed to support the growth and development of entrepreneurial firms. The government itself does not typically lend money but underwrites loans made by banks to small businesses. The SBA also offers training, counseling, and support services through its local offices and Small Business Development Centers.

Question 3

According to a study by the Kaufmann Foundation, which of the following is the largest source of funding for businesses that have been operating at least five years?
A)public financing
B)venture capital
C)loans
D)angel financing

Accepted Answer

According to the Kauffman Foundation study, after five years of operation, the largest source of funding is from loans taken out by the business.

Question 4

Opportunities can be found through a structured search process. The example of Ancient Ales with their innovative line of craft beers demonstrates which of the following types of structured search?
A)Identify frustrations with current products or processes.
B)Talk to people who know including suppliers, customers, frontline employees.
C)Borrow ideas from other markets.
D)Find historical ideas and re-purpose them.

Accepted Answer

Sometimes, the best ideas are not actually new ideas. Opportunities in industries can often be discovered by looking to the past to find good ideas that have slipped out of practice but might now be valued by the market again. For example, Sam Calagione, founder of Ancient Ales, developed an innovative line of craft beers by using ancient brewing techniques and ingredients that differ from modern brews.

Question 5

When launching a new venture, finding a way to begin doing business must ___________ generate cash flow, build credibility, attract good employees, and overcome the liability of newness.
A)slowly
B)quickly
C)steadily
D)painlessly

Accepted Answer

One of the most challenging aspects of launching a new venture is finding a way to begin doing business that quickly generates cash flow, builds credibility, attracts good employees, and overcomes the liability of newness. The idea of an entry strategy or entry wedge describes several approaches that firms may take to get a foothold in a market.

Question 6

The first personal computer revolutionized computing and how business is conducted. It was using a(n) ______________ entry strategy.
A)imitative
B)pioneering
C)adaptive
D)creative

Accepted Answer

New entrants with a radical new product or highly innovative service may change the way business is conducted in an industry. This kind of breakthrough of creating new ways to solve old problems or meeting customer needs in a unique new way is referred to as a pioneering new entry. If the product or service is unique enough, a pioneering new entrant may actually have little direct competition. The first personal computer was a pioneering product; there had never been anything quite like it, and it revolutionized computing.

Question 7

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as _____________ new entry.
A)adaptive
B)imitative
C)proactive
D)pioneering

Accepted Answer

Imitators look for opportunities to capitalize on proven market successes. An imitative new entry strategy is used by entrepreneurs who see products or business concepts that have been successful in one market niche or physical locale and introduce the same basic product or service in another segment of the market.

Question 8

Which of the following terms is used to refer to opportunities that are practical and physically possible?
A)durable
B)valuable
C)sustainable
D)achievable

Accepted Answer

For an opportunity to be viable, it needs to have four qualities, one of which is it must be achievable. This means the opportunity must be practical and physically possible.

Question 9

Which of the following statements about venture capital is not true?
A)Entrepreneurs raise venture capital by selling shares of ownership in their business.
B)Venture capital groups can often provide helpful management advice.
C)Venture capital is used to finance rapid growth or large capital expenditures.
D)Venture capital is a form of public equity financing.

Accepted Answer

Start-ups that involve large capital investments or extensive development costs may seek venture capital, a form of private equity financing through which entrepreneurs raise money by selling shares in the new venture. Venture capitalists nearly always have high performance expectations from the companies they invest in, but they also provide important managerial advice and links to key contacts in an industry.

Question 10

The new entry strategy that a firm chooses is dependent upon the ______________ and the ______________ of the new business concept.
A)riskiness; cost
B)riskiness; potential sales
C)riskiness; innovativeness
D)idea; innovativeness

Accepted Answer

In some respects, any type of entry into a market for the first time may be considered entrepreneurial. But the entry strategy will vary depending on how risky and innovative the new business concept is.

Question 11

The majority of entrepreneurial start-ups are financed through monies from
A)bank financing.
B)SBA loans.
C)personal savings and the contributions of family and friends.
D)venture-capital financing.

Accepted Answer

The majority of new firms are low-budget start-ups launched with personal savings and the contributions of family and friends.

Question 12

Which of the following is not a primary source of financing for entrepreneurial start-ups?
A)investments by family and friends
B)public equity
C)private investors
D)personal savings

Accepted Answer

The majority of new firms are low-budget start-ups launched with personal savings and the contributions of family and friends. Angel investors, private individuals who provide equity investments for seed capital during the early stages of a new venture, favor companies that already have a winning business model and dominance in a market niche.

Question 13

Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentioned by the text?
A)clarifying job responsibilities
B)dedication and drive
C)commitment to excellence
D)vision

Accepted Answer

Entrepreneurs put themselves to the test and get their satisfaction from acting independently, overcoming obstacles, and thriving financially. To do so, they must embody three characteristics of leadership which are vision, dedication and drive, and commitment to excellence.

Question 14

Private individuals who provide seed capital to young ventures are known as
A)gazelles.
B)angels.
C)cash cows.
D)rising stars.

Accepted Answer

Angel investors, private individuals who provide equity investments for seed capital during the early stages of a new venture, favor companies that already have a winning business model and dominance in a market niche.

Question 15

Vision is an important element of entrepreneurial leadership because
A)a vision statement is part of the documentation used to obtain venture financing.
B)the entrepreneur has to envision realities that do not yet exist.
C)organizations cannot function without a detailed and operational vision.
D)banking institutions require it.

Accepted Answer

Vision may be the most important asset of an entrepreneur. Entrepreneurs envision realities that do not yet exist. Without a vision, most entrepreneurs would never even get their venture off the ground.

Question 16

______________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and to expand into new markets.
A)Strategic alliances
B)Funding
C)Banking
D)Research and development

Accepted Answer

Strategic alliances provide a key avenue for growth by entrepreneurial firms. By partnering with other companies, young or small firms can expand or give the appearance of entering numerous markets and/or handling a range of operations.

Question 17

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by
A)established corporations.
B)lone wolf entrepreneurs.
C)bootstraps.
D)individual investors.

Accepted Answer

Managers need to have a strong base of experience, extensive domain knowledge, and an ability to make rapid decisions and change direction as needed. In the case of start-ups, more is better. New ventures that are started by teams of three, four, or five entrepreneurs are more likely to succeed in the long run than are ventures launched by lone wolf entrepreneurs.

Question 18

Which of the following is NOT one of the characteristics of an entrepreneurial opportunity?
A)affordable
B)attractive
C)achievable
D)value creating

Accepted Answer

For an opportunity to be viable, it needs to have four qualities: attractive, achievable, durable, and value creating.

Question 19

According to the textbook, which of the following is NOT a common new entry strategy?
A)imitative new entry
B)adaptive new entry
C)pioneering new entry
D)proactive new entry

Accepted Answer

For a new venture, the entry strategy will vary depending on how risky and innovative the new business concept is. New entry strategies typically fall into one of three categories: pioneering new entry, imitative new entry, or adaptive new entry.

Question 20

When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be
A)value creating.
B)durable.
C)achievable.
D)affordable.

Accepted Answer

For an opportunity to be viable, it needs to have four qualities, one of which is it must be durable. This means the opportunity must be attractive long enough for the development and deployment to be successful; that is, the window of opportunity must be open long enough for it to be worthwhile.

Quiz 8: Entrepreneurial Strategy and Competitive Dynamics

Which of the following is the most important resource for a start-up activity?

The U.S. Small Business Administration supports small business through all of the following except

According to a study by the Kaufmann Foundation, which of the following is the largest source of funding for businesses that have been operating at least five years?

Opportunities can be found through a structured search process. The example of Ancient Ales with their innovative line of craft beers demonstrates which of the following types of structured search?

When launching a new venture, finding a way to begin doing business must ___________ generate cash flow, build credibility, attract good employees, and overcome the liability of newness.

The first personal computer revolutionized computing and how business is conducted. It was using a(n) ______________ entry strategy.

Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as _____________ new entry.

Which of the following terms is used to refer to opportunities that are practical and physically possible?

Which of the following statements about venture capital is not true?

The new entry strategy that a firm chooses is dependent upon the and the of the new business concept.

The majority of entrepreneurial start-ups are financed through monies from

Which of the following is not a primary source of financing for entrepreneurial start-ups?

Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentioned by the text?

Private individuals who provide seed capital to young ventures are known as

Vision is an important element of entrepreneurial leadership because

______________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and to expand into new markets.

According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by

Which of the following is NOT one of the characteristics of an entrepreneurial opportunity?

According to the textbook, which of the following is NOT a common new entry strategy?

When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be