Question 1

Opportunity recognition is the process of identifying,selecting,and developing entrepreneurial opportunities.

Accepted Answer

To determine which ideas are strong enough to become new ventures, entrepreneurs must go through a process of identifying, selecting, and developing potential opportunities. This is the process of opportunity recognition.

Question 2

An entry wedge,according to the text,is a type of entrepreneurial strategy firms can use to enter into business.

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 3

Because of the Small Business Administration and government regulations,small businesses are rarely allowed to bid on government contracts.

Accepted Answer

A key area of support for small business is in government contracting. Programs sponsored by the SBA and other government agencies ensure that small businesses have the opportunity to bid on contracts to provide goods and services to the government.

Question 4

Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes.

Accepted Answer

An imitative new entry strategy is used by entrepreneurs when they look for opportunities to capitalize on proven market successes. 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, creating new ways to solve old problems or meeting customer needs in a unique new way, is referred to as a pioneering new entry.

Question 5

Adaptive new entry involves offering a radical new product or highly innovative service.

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, creating new ways to solve old problems or meeting customer needs in a unique new way, is referred to as a pioneering new entry. An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation.

Question 6

Opportunity recognition involves two phases of activity: discovery and execution.

Accepted Answer

Opportunity recognition refers to more than just the Eureka feeling that people sometimes experience at the moment they identify a new idea. Although such insights are often very important, the opportunity recognition process involves two phases of activity (discovery and evaluation) that lead to viable new venture opportunities.

Question 7

Spandex,founded in 2000,created footless pantyhose and other undergarments for women.This is an example of an imitative new entry strategy.

Accepted Answer

An adaptive new entry approach does not involve reinventing the wheel nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation. Spandex is an example of a young company that successfully modified or adapted existing products to create new value.

Question 8

The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends.

Accepted Answer

The funding available to young and small firms tends to be quite limited. In fact, the majority of new firms are low-budget start-ups launched with personal savings and the contributions of family and friends.

Question 9

Venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture.

Accepted Answer

Bankers, venture capitalists, and angel investors agree that the most important asset an entrepreneurial firm can have is strong and skilled management.

Question 10

The majority of entrepreneurial firms are started with financing from venture capitalists and banks.

Accepted Answer

The funding available to young and small firms tends to be quite limited. In fact, the majority of new firms are low-budget start-ups launched with personal savings and the contributions of family and friends.

Question 11

As investors,venture capitalists rarely provide any help or services to entrepreneurial firms other than financing.

Accepted Answer

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 12

To obtain venture capital financing,business founders often have to give up some ownership and control of their business.

Accepted Answer

Venture capital is a form of private equity financing through which entrepreneurs raise money by selling shares in the new venture.

Question 13

Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

Accepted Answer

Although bank financing, public financing, and venture capital are important sources of small business finance, these types of financial support are typically available only after a company has started to conduct business and generate sales. Once a venture has established itself as a going concern, other sources of financing become readily available. Banks, for example, are more likely to provide later-stage financing to companies with a track record of sales or other cash-generating activity. Start-ups that involve large capital investments or extensive development costs or those on the brink of rapid growth often seek venture capital.

Question 14

Angel investors are private individuals who provide equity investments for seed capital during the later stages of a new venture.

Accepted Answer

Although bank financing, public financing, and venture capital are important sources of small business finance, these types of financial support are typically available only after a company has started to conduct business and generate sales. Even 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

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture,often based on prior knowledge.

Accepted Answer

The discovery phase refers to the process of becoming aware of a new business concept. Many entrepreneurs report that their idea for a new venture occurred to them in an instant in which they had some insight or epiphany, often based on their prior knowledge, and that gave them an idea for a new business.

Question 16

Entrepreneurship refers to new value creation and can include activities in major corporations.

Accepted Answer

Even though entrepreneurial activity is usually associated with start-up companies, new value can be created in many different contexts including: start-up ventures, major corporations, family-owned businesses, non-profit organizations, and established institutions.

Question 17

The term,angel investors,refers to private individuals who provide seed capital to young ventures.

Accepted Answer

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

Question 18

Venture capital is a form of public equity financing used to help young firms grow rapidly.

Accepted Answer

Venture capital is a form of private equity financing through which entrepreneurs raise money by selling shares in the new venture.

Question 19

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations with the greatest opportunities most likely to be in existing markets,rather than in new markets.

Accepted Answer

Considering these choices, an entrepreneur or entrepreneurial team might wonder which new entry strategy is best. The choice depends on many competitive, financial, and marketplace considerations and may stem from being willing to enter new markets rather than seeking growth only in existing markets.

Question 20

Small businesses create the majority of new jobs in the U.S.economy.

Accepted Answer

Small businesses, those defined as having 500 employees or fewer, create about 65 percent of all new jobs in the United States and also generate 13 times as many new patents per employee as larger firms.

Quiz 8: Entrepreneurial Strategy and Competitive Dynamics

Opportunity recognition is the process of identifying,selecting,and developing entrepreneurial opportunities.

An entry wedge,according to the text,is a type of entrepreneurial strategy firms can use to enter into business.

Because of the Small Business Administration and government regulations,small businesses are rarely allowed to bid on government contracts.

Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes.

Adaptive new entry involves offering a radical new product or highly innovative service.

Opportunity recognition involves two phases of activity: discovery and execution.

Spandex,founded in 2000,created footless pantyhose and other undergarments for women.This is an example of an imitative new entry strategy.

The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends.

Venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture.

The majority of entrepreneurial firms are started with financing from venture capitalists and banks.

As investors,venture capitalists rarely provide any help or services to entrepreneurial firms other than financing.

To obtain venture capital financing,business founders often have to give up some ownership and control of their business.

Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established a track record.

Angel investors are private individuals who provide equity investments for seed capital during the later stages of a new venture.

The evaluation phase of opportunity recognition occurs when an entrepreneur has an insight about a new business venture,often based on prior knowledge.

Entrepreneurship refers to new value creation and can include activities in major corporations.

The term,angel investors,refers to private individuals who provide seed capital to young ventures.

Venture capital is a form of public equity financing used to help young firms grow rapidly.

Choosing which new entry strategy is best depends on competitive financial and marketplace considerations with the greatest opportunities most likely to be in existing markets,rather than in new markets.

Small businesses create the majority of new jobs in the U.S.economy.