Full Test Bank Next Steps Chapter.15

Chapter 15: Next Steps

= Correct answer

Multiple Choice/Fill in the Blank

1. How can entrepreneurs avoid the misguided perceptions of expectations for the business with other team members?

A. making sure you have patent protections

B. having a fully developed business plan

C. having an agreed upon founders’ agreement

D. organizing only as an LLP

Difficulty: Moderate

1. The ________ describes team member compensation, vesting plan, and exit strategy of team members.

A. articles of incorporation

B. founders’ agreement

C. LLC forming document

D. nondisclosure agreement

Difficulty: Easy

1. The code of conduct establishes ________.

A. the time frame for when you are able to go work for a competitor

B. how team members will be compensated and vesting timeline

C. the compensation package of employees and contractors

D. the guiding principles and details of what is acceptable and not acceptable

Difficulty: Easy

1. Why are documents such as the founders’ agreement and code of conduct important to the entrepreneur?

A. They are required by law and ensure that the entrepreneur will not get sued in the future by either customers or employees.

B. They are necessary to align the team with the entrepreneur’s vision and the desired behaviors to support the success of the venture.

C. These documents make the organization successful and are used to find the best employees that will support the business.

D. The documents are created after the venture is successful and during the growth stage in order to solicit more investors.

Difficulty: Moderate

1. Which of the following is a visual method to track assigned activities with a timeline?

A. activity decision tree

B. customer empathy map

C. Gantt chart

D. startup chart

Difficulty: Easy

1. Why should the entrepreneur revisit the business plan after launching?

A. It gives you an opportunity to reconsider whether changes to plans or milestones are necessary.

B. Once the business launches, you are required to submit an updated plan to the investor.

C. The secretary of state requires that the business plan be updated annually.

D. It will help you refocus and find the right employees to make your business successful.

Difficulty: Difficult

1. According to research, what are the two most significant biases that contribute to the failure to recognize the venture should be changed or ended?

A. failure avoidance and passion

B. optimism and passion

C. overconfidence and optimism

D. integrity and overconfidence

Difficulty: Moderate

1. Which of the following are items that trigger the consideration of the contingency plan in the venture?

A. cognitive dissonance triggers

B. fail-safe points

C. hindsight bias triggers

D. status quo points

Difficulty: Easy

1. Your goal for the first year of business is to capture 65 percent of the existing target market for your product. This is an example of ________.

A. fail-safe planning

B. hindsight bias

C. illusion of control

D. planning fallacy

Difficulty: Difficult

1. You fail to recognize that after the initial launch, customer interest has decreased for your product, but you continue on the same path since launch. You could be experiencing ________.

A. escalation of commitment

B. hindsight bias

C. illusion of control

D. planning fallacy

Difficulty: Difficult

1. A ________ has a center that defines the problem and then branches to identify possible reasons for the problem.

A. brainstorming map

B. customer empathy map

C. decision tree

D. mindmap

Difficulty: Easy

1. Why might the entrepreneur bring the team together after launching to have a brainstorming/mindmapping session?

A. to build teamwork and camaraderie in the entrepreneurial team

B. to get a better understanding of the problems in the venture and possible solutions

C. to update the business plan document for legal purposes

D. to discuss the alignment of your ethical beliefs and those of your employees

Difficulty: Moderate

1. Why should the angel investor be seen as a valuable resource beyond financial means for the entrepreneur?

A. The investor should act as a key member of management in the new venture based on the monetary contributions.

B. The angel investor will want to be involved in all of the day-to-day activities of the business.

C. The investor has industry knowledge, networks, and experience to help the venture be successful.

D. Angel investors often require that they have the final say in all decisions affecting the direction of the business.

Difficulty: Moderate

1. One advantage of a business incubator is ________.

A. cost savings because you are sharing space

B. being with other businesses just like your venture

C. having greater access to angel investors

D. being in a major city with a large population

Difficulty: Easy

1. “The weather is beautiful today” is an example of ________ information.

A. factual

B. nominal

C. qualitative

D. quantitative

Difficulty: Moderate

1. The ________ uses broad questions sent out to participants in a questionnaire.

A. Delphi method

B. nominal group

C. qualitative method

D. quantitative group

Difficulty: Easy

1. Which of the following would be considered a risk of becoming a mentor?

A. seeing the business become successful and not getting credit

B. incurring the usually high cost of being a mentor

C. providing advice that later becomes detrimental

D. having difficulty finding someone to mentor

Difficulty: Moderate

1. Why can journaling be beneficial?

A. It can lead to insights and patterns of behavior that help us grow.

B. It can chronicle the history of the organization for legal purposes.

C. It provides documentation of your thought processes for employees.

D. It can take the place of the articles of incorporation.

Difficulty: Moderate

1. Why has lack of reflection been identified as a factor that hinders success?

A. Reflective thoughts that are not included in the business plan can lead to venture failure.

B. Increased awareness of thoughts and feelings can lead to recognizing strengths.

C. Lack of reflection means that you are not very passionate about the business.

D. Business leaders can spend too much time reflecting and not enough time acting.

Difficulty: Difficult

1. Which of the following is an overinflated belief in yourself?

A. escalation of commitment

B. fail-safe point

C. hubris

D. overconfidence

Difficulty: Easy

True/False

1. True or false? Reflection and journaling are useful tools for growth.

Difficulty: Easy

1. True or false? The entrepreneur should stick to the original details in the business plan.

Difficulty: Moderate

1. True or false? In contrast to a traditional venture, a lifestyle business provides income that replaces other types of employment.

Difficulty: Easy

1. True or false? You should not consider the entrepreneurial team members’ expectations when launching.

Difficulty: Easy

1. True or false? Contingency plans are not included in the founders’ agreement.

Difficulty: Easy

1. True or false? You and your former partner are in legal battles because they wanted out of the business. This could be avoided if a nondisclosure agreement was included in the forming documents.

Difficulty: Moderate

1. True or false? A noncompete clause prevents someone from working for a competing organization generally for one year.

Difficulty: Easy

1. True or false? Company culture supports the values and behaviors that you want to advance throughout the organization.

Difficulty: Moderate

1. True or false? All codes of conduct are the same and include punishable actions.

Difficulty: Easy

1. True or false? You should only have one Gantt chart for the organization.

Difficulty: Moderate

1. True or false? Highly successful ventures will eventually earn a good deal of money.

Difficulty: Difficult

1. True or false? Escalation of commitment negates the recognition of the need to pivot.

Difficulty: Difficult

1. True or false? The belief that you can affect the outcome of decisions is called hubris.

Difficulty: Easy

1. True or false? Once the business launches, you may find that the venture goes in a different direction that the original plan.

Difficulty: Easy

1. True or false? Original team members for the venture generally stay for the life of the business.

Difficulty: Moderate

1. True or false? Research indicates that a majority of reported misconduct involved managers.

Difficulty: Difficult

1. True or false? In brainstorming, ideas should first be vetted for ease of implementation.

Difficulty: Moderate

1. True or false? Adding visuals encourages people’s brains to think creatively.

Difficulty: Easy

1. True or false? All business incubators provide the same set of services.

Difficulty: Difficult

1. True or false? Using an idea that has been rejected by someone you are mentoring can provide a viable business venture for you.

Difficulty: Difficult

Short Answer

1. Discuss the components that should be included in the founders’ agreement. Write a sample founders’ agreement.

This agreement is between the following individuals with respect to the business venture Company XYZ. The founders are A. Bitar, C. Wang, and T. Murphy.

• Each founder will receive one-third of the retained earnings each month.
• Vesting is after a period of one year.
• A. Bitar will handle marketing, C. Wang will handle day-to-day operations, and T. Murphy will handle all financial matters.
• Decisions will be made by consensus. If no agreement can be reached between the founders, an outside mediator will be employed.
• If a founder would like to leave the venture, the other two parties will buy out their interest in the business.
• The exiting member will sign a nondisclosure and noncompete agreement.
• If the venture is dissolved, all founders will be equally responsible for debts and assets will be divided equally.

Answers for the sample agreement will vary but should include all the components.

Difficulty: Moderate

1. Define company culture and the company code of conduct. Discuss how they are related. Describe the company culture and code of conduct for a company that you have worked for.

I work for a retail company. The culture is one of accountability and is very fast paced. We are expected to be on time and to process customer transactions quickly. However, it is also very fun. We have competitions for sales amongst the employees, and we have celebrations when we meet the targets for the month. These could include a pizza party or free donuts each morning.

The code of conduct is fairly straightforward. Treat people with respect, all customers are important, and we work as a team. We represent the company when we are on and off shift. That means that we are expected to do the right thing and to be honest.

Student answers will vary but should include a description of the company’s culture and code of conduct.

Difficulty: Difficult

1. How can a Gantt chart help with the operational side of the business venture launch? Find a sample Gantt chart online and fill it out for a class project you are working on.

Student answers will vary. My team has to conduct a research project and collect survey data. The analysis will be presented at the college annual research symposium. There are three people on the team. Below is the Gantt chart and graph using Microsoft Word and Excel.

Difficulty: Moderate

1. Discuss some of the launch considerations in the early stage that the entrepreneur should consider.

Difficulty: Easy

1. What are the common cognitive biases that entrepreneurs face? Which bias do you think you are most susceptible to experiencing?

Student’s responses to their personal bias will vary but should include an evaluation of their personality and how that affects their bias.

Difficulty: Easy

1. What are some decisions that must be made in order to overcome some common challenges in new venture startups? Discuss an example of a company that started in one direction and ended up transforming into something very different.

An example of a company that shifted gears is Taco Bell. Taco Bell actually started as a hot dog stand. Even though they are still in the fast food business, they shifted to focus on a completely different food. The business model changed when the owner noticed the long lines at a local Mexican restaurant.

Difficulty: Difficult

1. What is the Delphi method and the nominal group technique? How are they used?

Difficulty: Easy

1. Would you consider becoming a mentor? Why or why not?

I would not be comfortable being a mentor. It would be nice to help someone else and share my experiences. However, it sounds like being a mentor can take a lot of time. That would be time away from my business or my family. In addition, there are many risks with being a mentor. One in particular would cause me to hesitate. What if I gave the wrong advice and ultimately their business failed because of me? Would I be legally liable for that? If they were my friend, I would feel very guilty. It is great to help other people, but I think being a full-fledged mentor has too many downsides.

Difficulty: Moderate

1. What are fail-safe points? Give a couple of examples of fail-safe points for an organic pet food operation.

Difficulty: Easy

1. Do you see value in journaling as outlined in the text? Why or why not? Try journaling about one day in your life this past week.

Answers for journaling about their day can vary. The answer should include some underlying thoughts and emotions, not simply what they did throughout the day. A sample answer is as follows:

I chose to journal on a Thursday, the day before I had a midterm exam in one of my harder classes. The day began as normal with me getting up around 8:00. I realized I was anxious about the exam because I got right up without hitting the snooze button. I knew that I had limited time to study throughout the day because I also had to work. So, I needed to make sure I could really focus during my study time. I also decided to skip lunch so that I could study with a couple of classmates. In hindsight, that was not a good idea. I ended up with a headache because I had very little to eat throughout the day. This meant that my study time in the evening was not as effective because my head hurt. I ended up going to bed early so that I could get rid of the headache and get up early to study for the test the next day. I am not sure yet that this will work out for me. I generally like to get extra sleep before a big test.

Difficulty: Moderate

This file is copyright 2020, Rice University. All Rights Reserved.