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Multiple Choice Questions ( only till lecture 6 will come in Mid term.However, here are questions till Lecture 8 as they may come infinal). The answers are in PPT.

Lecture 1 Foundations of Enterpreneurship and Lecture

2_Small Business

Which of the following is a major contribution of entrepreneurialfirms?

millions of new jobs created within the economy

training for future employees of larger corporations

increases in interest rates due to higher levels of corporate

risk

purchasing of larger, more established corporations' products

ideas for larger corporations to capitalize upon

Which of the following is NOT a common personality characteristicof typical entrepreneurs?

desire for responsibility and personal achievement

flexibility

fondness for high levels of risk

a high level of personal energy

a future orientation

What percentage of businesses fail or close within the 6 yearsfollowing start-up?

35%

50%

64%

86%

95%

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Which of the following is a commonly experienced drawback tobeing an entrepreneur?

less autonomy in operating your own company

inability to contribute to society

potential profits from innovations

reduced quality of life in start-up years

attracting the interest of larger companies desiring topurchase your firm

What is it about service-based national economies that fuelsentrepreneurship?

the relatively low cost of developing new service-orientedbusinesses

the governmental tax subsidies for startingservice-oriented businesses

the cooperation of manufacturing businesses withservice-oriented businesses

the geographic proximity of small, service-based nationaleconomies

the intrinsic personal rewards of owning a service-basedbusiness

Which of the following is true regarding women-owned businesses?

They have a faster growth rate than male-owned businesses.

They typically require more start-up capital than male-ownedbusinesses.

There are more women-owned businesses than male-ownedbusinesses.

They have a higher survival rate than male-ownedbusinesses.

They typically operate in the retail and cosmeticsmanufacturing industries.

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Small businesses create more _____ than large corporations.

innovations per employee

debt per employee

business sales

assets

types of products

What is the primary cause of failure of most small businesses?

family disagreements

poor product quality

poor management

poor location

poor customer service

Growth is ideal, but uncontrolled growth is undesirable. According toPeter Drucker, a small business can expect to outgrow its capital

base each time sales increase _____.

20-25%

40-50%

100-200%

200-300%

1000%

Lecture 3_Creativity and Innovation

Which of the following is a major difference between creativity andinnovation?

Creativity means coming up with a new product; innovationmeans coming up with a new process.

Creativity is a more mentally straining exercise; innovationjust comes naturally.

Creativity has to do with thinking new things, and

innovation is more about doing or producing those newthings.

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Creativity is where the real money is made; innovations justusually stay in the lab.

Creativity is the same thing as innovation, except creativityrefers to ideas outside the business realm.

Why are creativity and innovation so critical for entrepreneurs'survival?

They allow small companies with limited resources tooutwit their larger competitors.

They keep entrepreneurs' minds off of their stressful initialbusiness development period.

They help entrepreneurs to replicate current products on themarket.

They can substitute for a shaky business model.

They help the entrepreneur to secure SBA loans for start-upcapital.

Entrepreneurs must harness the power of both lobes of their brainsto perform successfully. They require the use of their left brain to

_____, and the use of their right brain for _____.

find new ways of doing things; translating these into businessmodels

tell them which idea is wrong; negate what the left brain says

specialize in motor skills; think logically

choose the best solution to a problem; generateseveral solutions to choose among

assess the future; choose the right path

What may be one of the best ways to generate creativity andinnovation within your own mind?

Sit at your desk and think for several hours on how to solve aproblem.

Try to apply a practical solution: "How would a great scientistapproach this?"

Play with the problem; think of nonsensical ways to solve it.

Write down all of the specific details of the problem;

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the answer must lie in there somewhere.

Ask those who have been working on the problem their entirelives for assistance in a solution.

Which of the following is a creativity-boosting perspective onfailure?

Failure is a learning experience on the way to success.

Failure is the reason why we should just stay working forlarger corporations that can hide our incompetence.

Failure is evidence of the entrepreneur's lack of knowledge orexpertise.

Failure means that the entrepreneur's idea was not well

accepted by the marketplace.Failure is not the entrepreneurs' fault; those customers just

didn't catch on to the product.

-----_____ is the best way to boost creativity among one's employees.

Requiring creative idea generation as a prerequisite toemployment

Laying off those who aren't creativePutting together similar people on creative teams

Hiring a creativity consultant

Rewarding creative behavior

What is one of the best ways to generate creative thinking while youare on the job?

Set a watch for two minutes and force yourself to generate asolution in that timeframe.

Ask your colleagues in your department for help with yourproblem.

Look at the solutions your company has generated in the pastfor answers.

Get out of your surroundings and take a walk outsideto clear your mind.

Look through industry magazines for what your competitors

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are doing.

Which of the following shows the proper order of select steps in thecreative process?

preparation, implementation, verification, illumination

preparation, verification, implementation, illumination

verification, preparation, implementation, illumination

preparation, illumination, verification, implementation

preparation, implementation, illumination, verification

What is a good recommendation for forming and conducting abrainstorming session?

keeping the size of the group to 5 to 8 members

distinguishing good ideas from bad ideas during the session

creating an all-day retreat for the session

restricting the guest list to only top management

allowing employees to prepare for the session ahead of time

To protect the name of a new engine that runs on water, theinventor would file for which type of intellectual property protection?

a patent

a trademark

a copyright

a trade secret

a service mark

Lecture 4 _ strategic Management

Which of the following are types of intellectual capital?

financial capital, land capital, and labor capital

human capital, creativity capital, and innovation capital

human resources capital, economic capital, and creativitycapital

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human capital, structural capital, and customer capital

Intelligence capital, innovation capital, and creativity capital

What is a competitive advantage?

a set of factors that gives a business a unique, superiorposition to make cheaper goods/services

a positive net profit margin

a resource that other competitors do not have

a group of customers who return often

a way to circumvent customers' changing demands

How can an entrepreneurial venture develop a sustainablecompetitive advantage?

by consistently offering lower prices on goods than its rivals

by developing core competencies that help it serve itscustomers better than its rivals

by offering more product selection than its rivals

by advertising in more media than its rivals

by having later business hours than its rivals

Which of the following is NOT a good recommendation forapproaching strategic management within a small business?

Stick to the established strategic plan, no matter whatchanges may occur in the environment.

Use a relatively short planning horizon - two years or less.

Create a process that is informal and not overly structured.

Refrain from creating too many objectives in the beginning.

Make strategic thinking an ongoing process.

Which of the following is the best descriptor of a mission statement?

an historical summary of the business's development

a statement that lists the business's objectives

a requirement for most quality awards

a description of the purpose of the business

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a description of the business's core competencies

What are the differences between goals and objectives?

Goals are where you want your company to arrive; objectivesare how you will get there.

Goals are for top management to use; objectives are forfront-line management to use.

Goals are more long-range than objectives.

Goals are broad in scope; objectives are specific andmeasurable.

Goals are not linked to monetary rewards; objectives arereinforced through monetary rewards.

Which is the best strategy to use in an environment wherein buyersare price sensitive and economies of scale exist?

cost leadership

focused differentiation

focus

differentiation

low-priced undercutting

When beginning the implementation phase of strategicmanagement, the plan should be divided into projects. Each projectshould be defined by ________.

the purpose of the project

the areas of the company to be involved

the project's contribution to the strategic plan

the resources needed to complete the project successfully

all of the above

Lecture 5_Business Ownership and Franchising

In general, what would cause a business owner to select one form ofownership over another?

image within the communitytax, liability, and growth concerns

industry membershippressure from the business owner's advisory board

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state governmental policy that dictates what forms are legal

What is a major advantage of a sole proprietorship?

A proprietorship can be started, for most entrepreneurs, in asingle day.

A proprietorship protects the owner, should a disgruntledcustomer attempt to sue for damages.

A proprietorship may be sold to someone else in theevent that an entrepreneur decides to go out of business.

A proprietorship is more attractive from potential investors'perspective.

A proprietorship is looked upon more favorably, credit-wise, bylending institutions.

Why do partnership agreements exist?

Partnership agreements detail the income requirements ofeach partner as an employee and are negotiated before thebusiness starts.

Partnership agreements exist to establish that both partners

have put the same amount of effort and capital into the newventure.

Partnership agreements show the willingness of each partnerto absorb the other partner's share of liabilities, should the otherpartner become financially insolvent.

Partnership agreements exist to lay out the structure for asuccessful organization and to serve as a guide if problems arisebetween the partners of the venture.

Partnership agreements are required by stategovernments as evidence that each partner willingly andknowingly entered the partnership.

What is one advantage of a partnership over a sole proprietorship?

A partnership is easier to establish than a sole proprietorship.

A partnership allows for more control overdecision-making than a proprietorship.

A partnership allows for limited liability among its general

partners.

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A partnership allows for investment by additional owners,some of whom may enjoy limited liability.

Focus group

In which of the following legal organization forms is ownership themost easily transferable?

the corporation

the general partnership

the limited liability partnership (LLP)

the structured partnership (SP)

the proprietorship

Which of the following is an accurate description of a franchisesystem?

A franchise system is one in which a parent companypurchases hundreds of smaller companies, often started byentrepreneurs.

A franchise system is a scheme in which an individual at thetop of a hierarchical structure makes an income from residualsof the commissions of those beneath him.

In a franchise system, a semi-independent owner paysfees and royalties to a parent company for the right tosell its products and/or services.

A franchise system is one in which the parent company buildsmany different locations of an original successful business.

A franchise system is one in which an original companydecides to open hundreds of international locations.

________ is the fastest growing segment of franchising and offers thefranchisee all of the elements of a fully developed businessoperation.

Pure franchising

Segment franchising

Trademark franchising

Multiple franchising

Product distribution franchising

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Why is the purchase of a franchise sometimes considered to be abetter option than starting a business independently, from scratch?

The upfront costs are lower for the rights to a franchisethan they are for a new independent business.

The franchiser will absorb the first few years' losses as a partof the services provided.

The franchisee often receives training, support, advice, andbrand recognition that an independent entrepreneur would notreceive.

The franchisee receives a portion of the profits of the parentcompany, whereas the independent entrepreneur would not.

The franchiser will come into the franchisee's company and

operate it until it becomes profitable, which would never be anoption for the independent entrepreneur.

Since franchises are so widespread, often nationally andinternationally interspersed, how is advertising handled between thefranchiser and franchisee?

The franchiser does all of the marketing for the franchisee, inreturn for royalties.

The franchisee pays the franchiser to arrange for all of theadvertising that is to be performed.

The franchiser puts national ads in the papers and on thetelevision, and anything else is up to the franchisee.

The franchisee pays a marketing fee to supportcompany-wide advertising, and is also often required tospend a predetermined amount on advertising in thelocal market to support her location.

There is no prevalent pattern for how advertising is conductedwithin a franchise system. It varies from franchise to franchise.

Where can an entrepreneur find the most accurate informationabout the total cost of opening a certain franchise?

in the local newspaper

in the Uniform Franchising Offering Circular

on the parent company's web site

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from other entrepreneurs that have opened the franchise

from the government offices of the state wherein the parentcompany has incorporated

If the franchisee fails to earn a profit over the course of the month,________.

the franchisee must still pay the requisite percent ofsales determined as royalties.

the franchisee pays a reduced percentage of overall sales tothe franchiser for royalties.

the franchisee is not responsible for paying any royalties to

the franchiser.the franchisee may sue the franchiser for false advertising in

its UFOC

the franchisee may decide not to continue with the business.

Which of the following is a behavior that can signal that a franchiseris trustworthy?

reassurance that there is no need to read the contract - hisword is as strong as oak

reassurance that there is no need to go to the expense ofhiring an attorney - her attorney will help you through theconfusing parts

promises that you will earn your required rate of return,without documentation of this outcome from other locations

very few lawsuits brought against the franchiser

presentation of a one-time only, sign-today discount onfranchise fees

After reviewing the documentation, what is one of the best ways to

evaluate a franchise opportunity?

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Patronize a franchise location to determine if you like theproduct.

Research and talk with several of the existingfranchisees about their experiences.

Search the Internet for information about the franchiseopportunity.

Stay away from past franchisees who might taint your opinionof the franchise.

Ask the franchiser to recommend several franchisees to speakwith about their experiences.

Lecture 6_Marketing

What are guerilla marketing strategies?Guerilla marketing strategies are those pursued by

entrepreneurs who dress in primate costumes and motioncustomers into their store.

Guerilla marketing strategies are unconventional,low-cost, creative marketing techniques pursued byentrepreneurs.

Guerilla marketing strategies are techniques that absorb all ormost of a company's marketing budget but that prove to be

extremely beneficial.

Guerilla marketing strategies are used by large organizationsto outpace the smaller, new entrant entrepreneur competition.

Guerilla marketing strategies are strategies that may or maynot attract the target market, but are thrown out to the entirepopulation to see who is attracted.

Which of the following is agreed upon by most marketing experts asthe biggest marketing mistake that small businesses make?

carving out too narrow of a target niche

spending too much on media advertising

failing to come up with a memorable jingle for theiradvertising

spending too much on marketing during the first year

failing to clearly define the target market to be served

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Why is market research so important for an entrepreneur?

It allows the entrepreneur's family to understand that he orshe has put preparation into the business before starting it.

It tests the entrepreneur's ability to stick to his idea,regardless of information that tells the entrepreneur not tomove forward.

It helps the entrepreneur to determine whether amarket exists for her service.

It gives the entrepreneur a head start on developingrelationships later in the business's development.

It gives the entrepreneur information on how much it will costto start the business.

How can individualized marketing help a small company?

Affordable technology can assist an entrepreneur in gatheringindividuals' information to develop a tailored marketing

program for them.

The entrepreneur can use an individual's information to call

them and invite them to come to the store.

The small company can gather individuals' information andthen sell it off to larger businesses for a second stream ofrevenue.

Individualized marketing can allow for a variable pricestructure according to what each customer is willing topay.

Individualized marketing can allow for the entrepreneur to actlike a different business for each individual customer thatcomes along.

Which of the following would be a rigorous method of collectingprimary data for market research?

looking at census data

direct mail list purging

reviewing industry consultant reports

distributing customer surveys and questionnaires

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reading articles on customers in your industry

What types of marketing tactics work well for smaller businesses?

competing based upon price

dressing in crazy outfits and standing in traffic

spending large amounts on television advertising

focusing on the individualized needs of their customers

piggybacking on the ads run by larger, related organizations

What is a unique selling point (USP)?

a short phrase that expresses what the business cando uniquely for its customers

a postal service organization that delivers packages

a public statement that reveals that the company is for sale

a price point that is agreed upon by customers and sellers

a phrase that describes how the business will sell its products

What is one competitive edge that small businesses can excel at,because of their size?

lower pricing strategies

higher advertising spending

innovation

supplier relationships

market research gathering

What is the marketing mix?

the right mix of advertising and pricing to attract your targetmarket

the major elements of a marketing strategy - product,place, price, and promotion

the mixture of advertising and public relations efforts thatbest suits your target market

the set of decisions that must be made before deciding upon

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which target market to address

the way that your customer sees themselves in the mixture ofyour entire marketplace

Lecture 7_Promotion and Pricing

The correct price of a company's product or service is ________.

a measure of the entrepreneur's costs and sales taxes on agood or service

less important to the customer than reductions in fixed orvariable cost levels

a measure of what the customer must give up to obtaina good or service

similar across all target customers

the result of a simple mathematical equation

Why may demand remain low when a product is priced low?

because lower prices often convey to a customer that aproduct is of lower value and lower quality

because customers enjoy using more of their disposableincome to buy a similar good

because customers get a tax break from buying the higherpriced good

because stores will not carry the lower priced goods

because competitors will use the low price to lure customersaway

Which of the following is NOT a point of reference that consumersoften use when evaluating the fairness of a price?

the price they would charge if they were the entrepreneur

the price they have paid in the past for a product or service

the prices competitors charge for the same or similar productsor services

the costs a company incurs to provide the product or

servicethe value they receive from the product

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A market penetration pricing strategy is most appropriate to usewhen ________.

the company can clearly differentiate its products fromcompetitors' offerings

the entrepreneur is trying to convey his product's clearsuperiority to competitors

it is difficult to differentiate your new product fromother similar offerings in the marketplace

the product is revolutionary and there is little competition

the consumer is willing to pay a premium for extra attention

to detailHow can price lining help to generate sales?

Price lining helps to add an extra profit margin cushion fromthe higher price level.

Price lining allows customers to immediately find the rightproduct and spend less time shopping.

Price lining allows the customer to know what yourcompetitors are charging for a similar product.

Price lining allows the entrepreneur to capture manytarget markets with different needs and income levels.

Price lining appeals to customers because the odd-pricedproduct seems much cheaper to them than a product priced atthe higher even dollar level.

Why is a flexible markup preferred to a standard markup forproducts and services?

because flexible markup allows for price increases in times ofincreased manufacturing costs

because the demand for products and services respondsdifferently to price markup, depending on the product type

because standard markup can easily be discovered by warycustomers

because flexible markup allows the entrepreneur to negotiatepricing with customers

because standard markup does not take into account the

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overhead that the firm incurs

What is the difference between absorption costing and variablecosting?

Absorption costing does not include fixed costs in the costingof each manufactured item.

Absorption costing allows the entrepreneur to envision theeffects of increases in supply costs.

Variable costing allows the entrepreneur to determine howcosts would increase if product levels decline.

Absorption costing allows the entrepreneur to determine the

direct effects of increases or decreases in volume on the costof the product.

In a variable costing structure, the fixed or overhead costs ofthe period are not included in the costs of finished items.

Which of the following best represents the pricing equation for abreak-even pricing strategy?

Selling Price = Contribution Margin * Quantity Produced

Selling Price = Customer's Preferred Price - Desired Profit perItem

Selling Price = Variable Cost per Item + Fixed Costs

Selling Price = ((Variable costs X Quantity Produced) +Total Fixed Costs))/Quantity Produced

Selling Price = Variable Costs + Quantity Produced

Lecture 8_Cash and Profit

What is a company's cash flow cycle?

The amount of cash that the company goes through in anaverage month.

The amount of time between the start of the business and thepoint at which it can support its needs through sales generated.

The period between the receipt of cash from a customer and

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the outflow of that cash to support the development of another unit.

The time between the payment for merchandise and materialsfrom suppliers and the receipt of payment from customers.

The period between the receipt of cash and its deposit into thebank.

What is the fallacy made by the entrepreneur who decides togenerate more cash through increasing sales levels?

The entrepreneur fails to consider that it takes cash togenerate more sales, something he does not have.

The entrepreneur fails to understand that more sales will not

be profitable.The entrepreneur fails to take into account the interest rate on

the loan she will have to take out to cover the sales increase.

The entrepreneur fails to take into consideration the backlashfrom customers upon realizing that they are having to cover hiscash deficit.

The entrepreneur fails to take into account the price drop hewill have to use to generate the increase in sales.

Why is a cash budget sometimes more useful to an entrepreneurthan an accrual-based budget?

A cash budget allows the entrepreneur to determine howmany items need to be sold to remain profitable.

A cash budget shows chronologically when inflows andoutflows of cash can be expected.

A cash budget allows the entrepreneur to determine how thecompany will generate new sales.

A cash budget does not take into account the employees'salaries, which can be removed through layoffs.

The cash budget helps entrepreneurs determine when itwould be a good idea to bring on additional product lines.

What is the primary cause of cash flow problems cited byentrepreneurs?

generating those first sales

having to pay employee salaries

collecting accounts receivable promptly

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excruciatingly high utility bills

suppliers' hesitancy to extend credit to new buyers

The three primary areas of cash flow problems are ________.

employees, new products, and advertising

current assets, sales, and net income

unemployment insurance, workers' compensation, andseverance pay

utility bills, sales tax, and income tax withholding

accounts receivable, accounts payable, and inventory

________ is the first line of defense against bad debt losses.

Hiring a collection agency

Screening customers carefully before granting them credit

Advertising your firm's willingness to extend credit

Setting a limit for the amount of credit you will extend to anew customer

Calling a customer's bank

What is the general approach that an entrepreneur should havetoward his accounts payable?

The entrepreneur should try to pay all accounts by the datesindicated on the invoices.

The entrepreneur should strive to pay accounts payablebefore even receiving an invoice.

The entrepreneur should lengthen the time he takes to payaccounts payable as long as possible without damaging hiscompany's credit rating.

The entrepreneur should try to leave at least two or threecreditors unpaid each month to lengthen the time in accountspayable.

The entrepreneur should pay off remaining balances withcreditors, even if those creditors have issued interest-free credit.

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Why is carrying too much inventory a strain on the business?

because inventory may make the back office area messy

because inventory ties up cash and generates zero return

because inventory takes up valuable space

because inventory is taxed again at the end of the year if notsold

because excess inventory can cause the business to believethat it is selling goods that it really is not

Trading goods and services for other goods and services rather thancash is called _____.

rummaging

pilfering

scraping

masting

bartering

How might leasing improve an entrepreneur's cash position?

The lessor gives the entrepreneur cash back on each paymentthe entrepreneur makes on the piece of equipment.

Leasing allows entrepreneurs to gain access to neededequipment without the large down payments that would normallybe required to finance the purchase of the same equipment.

Leasing allows the entrepreneur to go for several months at atime without making a payment on the equipment theentrepreneur is using.

Leasing allows entrepreneurs to pay only when they firstbegin turning a profit.

Leasing allows entrepreneurs a chance to profitably subleasethe equipment.

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