Gupta Test Bank Docx Chapter 2 Starting A New Business

Chapter 2- Starting a New Business

True/False

1. According to the text, economists tend to see necessity entrepreneurship as more desirable than opportunity entrepreneurship

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Necessity entrepreneurship refers to people starting a business because they have a promising idea

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Opportunity entrepreneurship is usually higher when the economy is weaker

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Business incubators are private organizations that offer startups shared space and mentoring

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Y Combinator (YC) is a privately-owned business incubator

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. More than 80% of ventures that begin in business incubators fail within five years

Response: See 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Part-time start-ups are the main source of income for the entrepreneur

Response: See 2.2

Level: Easy

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. Most new ventures start on a part-time basis

Response: See 2.2

Level: Easy

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. The cost of entering into part-time entrepreneurship is higher than in full-time business

Response: See 2.2

Level: Easy

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. Poisoning the well refers to leaving a negative impression--intentionally or unintentionally--among the customers or suppliers of the existing employer

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. Brainstorming is a group creativity technique to generate ideas on particular issues

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. SCAMPER is a tool that can be used to help identify new business ideas

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. It is easier to succeed if an idea generates market need where none currently exists

than if it solves an existing problem

Response: See 2.3

Level: Medium

Learning Objective: Explain how ideas turn into startup opportunities

1. Value statement is an important step in turning any idea into a viable business opportunity

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. Every idea is a good business opportunity

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. Most new businesses are imitative

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. Bootstrapping involves making the new business look bigger, more substantial, and more capable than it really is

Response: See 2.4

Level: Easy

Learning Objective: Describe the universal start-up model

1. According to the text, a big obstacle to starting a new business is inertia

Response: See 2.4

Level: Easy

Learning Objective: Describe the universal start-up model

1. Bootstrapping emphasizes on increasing the business expense to the maximum

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. According to the BRIE model, boundary is the only required element for a new startup to exist

Response: See 2.4

Level: Easy

Learning Objective: Describe the universal start-up model

1. In U.S., the startup rate has been decreasing for decades

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States

1. Interest in starting a new business is high among the millennial generation

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States

1. America has the highest start-up rate in the world

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States

1. The employer enterprise birth rate is also called the startup rate

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States

1. The employer enterprise birth rate is the product of the number of new businesses with paid employees created in a year and the number of active companies

Response: See 2.5

Level: Medium

Learning Objective: Analyze the State of Start-up in the United States

Multiple Choice Questions

1. According to the Global Entrepreneurship Monitor (GEM), the two major reasons for starting a business are:
2. Push and pull
3. Pull and fixed
4. Push and fixed
5. None of the above

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. Who founded Tweezerman?
2. Jason Grill
3. Dal LaMagna
4. Drew Houston
5. Dennis Crowley

Response: See section 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. Which of the following BEST represents a push factor for Kristie to start a new business?
2. Kristie is jobless and she does not know what to do next
3. Kristie has a promising idea
4. Kristie always wanted to be her own boss
5. Kristie is passionate about starting her own business

Response: See section 2.1

Level: Easy

Learning Objective: Identify motives for starting a new business

1. The total rate of entrepreneurial activity in any society is the
2. Difference of necessity and opportunity entrepreneurship
3. Product of necessity and opportunity entrepreneurship
4. Division of necessity and opportunity entrepreneurship
5. Sum of necessity and opportunity entrepreneurship

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. The Global Entrepreneurship Monitor (GEM) project found that necessity entrepreneurs make up about ____percent of the total entrepreneurial activity in the U.S.
2. 10
3. 50
4. 21
5. 100

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. According to the SBA, about _____of new businesses (with employees) survive two years or more
2. One-fourth
3. One-third
4. One-fifth
5. One-half

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. Which of the following is the advantage of starting a business from scratch?
2. It is easier to make people aware of the new business than the established one
3. No carryover baggage of someone else’s mistakes
4. It is easy to foresee its requirements
5. It is easy to get authentic suppliers

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. Which of the following is a formal source of help for startups?
2. Family
3. Friends
4. Business incubators
5. Relatives

Response: See section 2.1

Level: Medium

Learning Objective: Identify motives for starting a new business

1. Which of the following is NOT a reason for starting a part-time business?
2. To gain business experience
3. Lack of resources
4. Limited window of opportunity for a new product
5. Conflict-of-interest

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. Working on your own business part-time after a regular job is called _________
2. Moonlighting
3. Cherishing
4. Cannibalizing
5. None of the above

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. Which of the following is a risk associated with moonlighting?
2. Conflict of interest
3. Poisoning the well
4. Cannibalizing
5. All of the above answer choices are correct

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. _________involves taking business away from the current employer when running a part-time business
2. Cannibalizing
3. Moonlighting
4. Conflict-of-interest
5. Poising the well

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. ________is known as the Netflix of eyewear
2. ManPacks
3. Warby Parker
4. Sneakerheads
5. Frank style plan

Response: See 2.2

Level: Medium

Learning Objective: Distinguish between part-time and full-time entrepreneurship

1. SCAMPER stands for
2. Supplier, customer, applied, marketing, performance, entrepreneurship, retail
3. Substitute, combine, adapt, modify, put to other uses, eliminate, reverse
4. Supplier, customer, adapt, marketing, performance, eliminate, reuse
5. Supplier, customer, adapt, magnify, performance, eliminate, reuse

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. Which of the following one should NOT consider to find out if an idea is actually a business opportunity
2. Value statement
3. Customer problem identification
4. Customer willingness to buy
5. Cannibalizing

Response: See 2.3

Level: Medium

Learning Objective: Explain how ideas turn into startup opportunities

1. Opportunity discovery focuses on individual’s _________, while opportunity creation relies on_______
2. Alertness; imagination
3. Alertness, integrity
4. Imagination; integrity
5. Imagination; alertness

Response: See 2.3

Level: Medium

Learning Objective: Explain how ideas turn into startup opportunities

1. ________refers to the extent to which one venture--or its offering--is similar to another
2. Degree of overlapping
3. Degree of similarity
4. Degree of imitation
5. Degree of innovation

Response: See 2.3

Level: Easy

Learning Objective: Explain how ideas turn into startup opportunities

1. The BRIE model stands for
2. Boundary, resources, intention, and exchange
3. Boundary, resources, imitation, and eagerness
4. Boundary, reuse, innovation, and exchange
5. Boundary, reuse, imitation, and exchange

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. In the BRIE model, the boundary condition refers to :
2. Human, social, and financial resources that make up the business
3. Creating a place for a business
4. Buying products in exchange for money
5. The desire and willingness to act and to start a business

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. Which of the following is a challenge that plagues a large majority of startups?
2. Legitimate aggrandizing
3. Bootstrapping
4. Good credit policy
5. Undercapitalization

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. ________refers to getting by with less, or arranging to borrow, rent, or trade for the resource
2. Cannibalizing
3. Aggrandizing
4. Bootstrapping
5. Moonlighting

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. Bootstrapping helps deal with the:
2. Moonlighting
3. Cannibalizing
4. Poising the well
5. Undercapitalization

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. Having a nice website that makes the business look professional is a(n) _____activity
2. Cannibalizing
3. Aggrandizing
4. Bootstrapping
5. None of the above

Response: See 2.4

Level: Medium

Learning Objective: Describe the universal start-up model

1. Which of the following is less likely to show interest in starting a new business?
2. Millennials
3. Generation X
4. Baby boomers
5. None of the above

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States

1. The startup rate for small businesses in the U.S. has steadily gone ______ over time
2. Down
3. Up
4. Consistent
5. None of the above

Response: See 2.5

Level: Easy

Learning Objective: Analyze the State of Start-up in the United States