Ch1 – Understanding The Entrepreneurial – Verified Test Bank

Chapter 1: Understanding the Entrepreneurial Process

True/False

1. Entrepreneurship is the process of planning, organizing, operating, and assuming the risk of a business venture.
2. The word entreprendre refers to the individuals who “undertook” the risk of new enterprise.
3. Fortunately, entrepreneurs do not communicate with external “stakeholders” such as investors and bankers.
4. Aspiring entrepreneurs hope for the chance to be their own bosses and have made the leap from their current employment into the uncertainty of a start-up.
5. Technology entrepreneurs are individuals with innovative solutions to society’s most social problems.
6. Many companies fail because the founders do not confront their management limitations.
7. Fortunately, the skills needed to run a small company are not different from those required to run a larger firm.
8. If an entrepreneur has limited experience and limited internal resources, outside help is not necessary.
9. Looking at the historical trend, it is safe to say that most businesses start small and grow to be a large corporation.
10. The failure rate of new businesses is very high, about 80-90 percent within the first two years.
11. It is important for entrepreneurs to have mentors who always agree with them.
12. Oftentimes, entrepreneurs become so engrossed in their venture that they can neglect their family relationships and their own health.
13. It is important that entrepreneurs consider their lifestyles and personality characteristics, such as desire for control, before undertaking a venture.

Short Answer / Fill in the Blank

1. _____________ have developed an enterprise that fits their individual circumstances and style of life, and their basic intention is to earn an income for themselves and their families.
2. _______________ often seem to be possessed by their ideas, committing their lives to changing the direction of their field.
3. The first decision that an entrepreneur should make is whether personal lifestyle and control are more important than ____________ and eventual wealth creation.
4. The basic objective of Stage ________________ of the entrepreneurial process is to define the criteria that would make a business opportunity worthwhile.
5. Setting goals and objectives, starting to write the plan, determining pricing, and preparing a full business plan are part of Stage _______________ of the entrepreneurial process.
6. A full ____________ is a vital yet dynamic document for a company.
7. Stage 5 of the entrepreneurial process is called ____________________.
8. A(n) _________________ is one that grows large enough to influence the environment and, thus, becomes a pacesetter.
9. Each year at least ____________ new businesses are started in the United States, and of these, a small proportion turn out to be the fast-growth companies that propel the economy forward.
10. The failure rate of new companies is ________ percent within the first two years.

Multiple Choice

1. Which of the following is not a characteristic of entrepreneurs:
   1. Self-starters
   2. Lethargic
   3. Optimists
   4. Perseverant
2. An entrepreneur is driven mainly by:
   1. The control of resources
   2. Changing technology
   3. The perception of opportunity
   4. Planning systems
3. Ray Smilor identified all of these entrepreneurs types except:
   1. Growth entrepreneurs
   2. Aspiring entrepreneurs
   3. Lifestyle entrepreneurs
   4. Technology entrepreneurs
4. The type of entrepreneur that have the desire and the ability to grow as fast and as large as possible is:
   1. Growth entrepreneurs
   2. Aspiring entrepreneurs
   3. Lifestyle entrepreneurs
   4. Technology entrepreneurs
5. Individuals with innovative solutions to society’s most social problems are classified as:
   1. Lifestyle entrepreneurs
   2. Aspiring entrepreneurs
   3. Growth entrepreneurs
   4. Social entrepreneurs
6. Technology entrepreneurs have ideas triggered by developments in:
   1. math and sociology
   2. science and history
   3. social studies and business
   4. science and engineering
7. Building ventures around new technology requires specialist knowledge in all of the following except:
   1. social science
   2. language arts
   3. economics
   4. markets
8. A spider-web provides an analogy to a small company because:
   1. It is continually under attack from outside.
   2. It has both radial and circumferential axes.
   3. It has multiple points for support on the outside.
   4. It is fragile.
9. To relieve stress you should:
   1. Work over the weekend if necessary
   2. Plan non-work personal time
   3. Work more intensely
   4. Work less
10. Which of the following is not a characteristic of relieving stress:
    1. Get advice on time-management techniques
    2. Try to live at least twenty minutes from work
    3. Do not delegate
    4. Build in some slack time
11. In what stage of the entrepreneurial process do you evaluate the competition?
    1. Stage 1
    2. Stage 2
    3. Stage 4
    4. Stage 5
12. In what stage of the entrepreneurial process would managing the finances take place?
    1. Stage 2
    2. Stage 3
    3. Stage 4
    4. Stage 5
13. Forming a strategic alliance and discussing options and alternatives are part of what stage of the entrepreneurial process?
    1. Stage 2
    2. Stage 3
    3. Stage 4
    4. Stage 5
14. Which of the following is not a stage of the entrepreneurial process?
    1. Developing the plan and setting up the company
    2. Buying an existing company
    3. Scaling and harvesting the venture
    4. Conducting opportunity analysis
15. All of the following are early-stage funding sources except:
    1. family and friends
    2. banks
    3. government sources
    4. IPO
16. Stage 4 is:
    1. Scaling and Harvesting the Venture
    2. Determining the Resources Required and Implementing the Plan
    3. Developing the Plan and Setting up the Company
    4. Acquiring Financial Partners/Sources of Funding
17. The stages of entrepreneurship includes all of the following except:
    1. Conduct an opportunity analysis,
    2. Develop the plan and set up the company,
    3. Select an attorney
    4. Scale and harvest the venture.
18. What percent of all U.S. businesses employ twenty or fewer people?
    1. Approximately 98
    2. Approximately 87
    3. Approximately 65
    4. Approximately 50
19. The past ______ years have been years of tremendous growth for entrepreneurial companies and for the individuals who make them thrive.
    1. 50
    2. 2
    3. 15
    4. 7
20. How many new businesses are started in the United States each year? Approximately
    1. 700,000
    2. 1.5 million
    3. 450,000
    4. 100,000
21. Most businesses do this:
    1. Start big, stay big
    2. Start small, become big
    3. Start small, stay small
    4. Start big, become small
22. All of the following are reasons people become entrepreneurs except:
    1. working with others
    2. make your own decisions
    3. flexibility
    4. financial rewards
23. The failure rate of new companies is this percent in the first ten years:
    1. 40-50
    2. 80-90
    3. 70-80
    4. 75-85
24. Most business ventures that fail are:
    1. More than five years old.
    2. Less than ten years old.
    3. Less than one year old.
    4. More than ten years old.
25. Most companies fail because of:
    1. having too much money
    2. focusing on a bad idea
    3. confronting complex management decisions without experience
    4. not having enough employees

49. These selected stages of entrepreneurship in order are:

a. determining the resources required and implementing the plan; acquiring financial partners/sources of funding; scaling and harvesting the venture

b. acquiring financial partners/sources of funding; scaling and harvesting the venture; developing the plan and setting up the company

c. determining the resources required; acquiring financial partners/sources of funding; and conducting the opportunity analysis

d. acquiring financial partners/sources of funding; determining resources required and implementing the plan; scaling and harvesting the venture.

50. Entrepreneurship is sometimes discussed as the ability to deal with apparent conflicts and find a balance between differing conditions and personal attributes. An example of this type of conflict would be:

1. creativity and risk taking
2. urgency and patience
3. ambiguity and creativity
4. risk taking and ambiguity