Test bank for Entrepreneurship, 1stCanadian Edition by Bygrave, Zacharakis, and Wise
Chapter 1: The Power of Entrepreneurship True/False Statements 1. In general, established businesses with less than 500 employees are considered SMEs or “small and medium-sized enterprises.” Answer: True Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
2. A majority of small business owners feel their companies have increased their overall standard of living. Answer: False Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
3. In 2014, the two sectors dominating the S&P/TSX 60 Index Fund were the energy and financial sectors. Answer: True Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
4. Venture Capital is a source of growth funding exclusively for technology companies with the potential for rapid, scalable growth. Answer: False Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
5. Historically, annual returns for venture capitalists have averaged 143% over the past several decades. Answer: False Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
6. The boom and bust cycle of the dot-com era is similar to other periods of commercial innovation Answer: True Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada 7. Yahoo! Inc.’s IPO set the all-time record, in terms of capital raised, for Silicon Valley companies. Answer: False Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
8. Entrepreneurship did not grow very much after the Great Depression, until it began increasing in the 1970’s. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
9. Baby boomers are not as concerned about job security as were their parents. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
10. The Fortune 500 employed 15 percent of the workforce in 2005. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
11. There was a burst of venture capital backed startups in the last half of the 1960s. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
12. It is estimated that angel investors invest between $500 million and $1-billion annually in Canada’s growth-oriented companies Answer: True
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
13. The Canadian Business Youth Foundation has invested in more than 10,000 young Canadian entrepreneurs.(False) Answer: Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
14. Virtual companies are so called because they outsource much of their work. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
15. In 2005, North American incubators assisted more than 350,000 startup companies Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
16. The professionalization of the entrepreneurial process, which has developed over the last 20 years, has almost eliminated the need for young entrepreneurs to write business plans themselves. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 17. Five percent of American adults report they “invested” in someone else’s venture in the last three years. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
18. Churning is a main component of a healthy economy. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
19. The Global Entrepreneurship Monitor (GEM) is an organization created to gather information about the most successful start-ups for potential investors Answer: False Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
20. Baby business managers are owners-managers who are actively trying to start a new business but who have not yet done so. Answer: False Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
21. The Total Entrepreneurial Activity (TEA) index tracks the percent of the adult population that is trying to start or has started an infant business because all other options for work are either absent or unsatisfactory. Answer: False Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
22. Japan is among the leading countries, in terms of entrepreneurial activity. Answer: False Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
23. Thirty year old people fall into the most entrepreneurially active age demographic. Answer: True Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
24. In general, the number of female entrepreneurs is 2/3rds the number of male entrepreneurs. Answer: True Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
25. A High-Expectation Nascent Entrepreneur is an individual who expects to employ at least 50 employees within four years’ time, through his or her new firm. Answer: False Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models? 26. Approximately 66% of all businesses start in the owner’s home, but fail to grow primarily because the entrepreneur hires too many full-time workers. Answer: False Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
27. The former dean of the Nomura School of Advanced Management in Japan, Jiro Tokuyama, once said that the venture capital firms in Japan comprise one of the chief advantages for Japanese, technology start-ups. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
28. General Motors became the first company to earn over one billion dollars in a single year on December 31, 1985. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 29. According to ACNielsen International Research, the most common reason for a person’s desire to start a business is to increase his or her income. Answer: True Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
30. Walmart and Home Depot, collectively, employ 1.8% of the US workforce. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
31. When surveyed, 46% of Canadian post-secondary students surveyed said they see themselves starting a business after graduation. Answer: True Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
32. The Toronto Stock Exchange (TSX) was created in 1908. Answer: False Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 33. The stricter a country’s employment security, the lower its early-stage HEA rate. Answer: True Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
34. According to a study, 70% of the employment growth in the U.S. comes from only 10% of all firms. Answer: False Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
Multiple Choice 35. What was the world’s largest corporation in 2012? a) Southwest Airlines b) General Motors c) Walmart d) Google e) Apple Answer: c Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
36. What percentage of new business ventures in Canada typically survive their first 5 years of operation? a) 100 b) 81 c) 65 d) 36 e) 25 Answer: d Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
37. What percentage of Canadian post-secondary students surveyed said they see themselves starting a business after graduation? a) 6% b) 46% c) 76% d) 36% e) 26% Answer: b Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
38. According to the survey cited in this chapter, which of the following was not one of the most important innovations since 1980? a) The Internet b) Cell phones c) Personal computers d) Digital imagery e) E-mail Answer: d Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
39. Which software application was the predecessor to the Lotus 1-2-3 spreadsheet? a) Microsoft Excel b) MasterFile c) Financial Works d) FileMaker e) VisiCalc Answer: e
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Learning Objective: Section Reference: 40. Which of the trends below converged to spark the Internet revolution of the 1990’s? a) Personal Computers, Cell Phones, and Laser Printing b) Digital Technology, Information Technology, and Entrepreneurship c) Personal Computers, Modems, and Floppy Disks d) Entrepreneurship, Venture Capital, and Computer Software e) Venture Capital, Biotechnology, and Telecommunications Answer: b Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 41. By 2011, what percentage of the world’s population had become Internet users? a) 2 b) 16 c) 33 d) 60 e) 57 Answer: c Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
42. Which of the following industries was the prime example of venture capital fueling the pace of commercial innovation? a) Semi-Conductors b) Mini-Computers c) Biotechnology d) Personal Computers e) All of the Above Answer: e Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
43. How much venture capital money (in billions) was invested in Ontario in 2013? a) $589 b) $676 c) $831 d) $245 e) $478
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: b Learning Objective: Section Reference:
44. Which province had the highest level of VC investment? a) Alberta b) British Columbia c) Nova Scotia d) Ontario e) Québec Answer: d Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada 45. What was the increase in Benchmark Capital’s investment of $5 million in eBay? a) 30-fold in two years b) 300-fold in two years c) 700-fold in two years d) 1500-fold in two years e) 4000-fold in two years Answer: d Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
46. The stock market collapse that led to the Great Depression occurred in what year? a) 1928 b) 1929 c) 1930 d) 1931 e) 1932 Answer: b
47. Who reasoned that capitalism would be inevitably destroyed by elites? a) Whyte b) Servan-Schreiber c) Schumpeter d) Lenin e) Marx
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: c Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
48. According to the GEM model, how many sets of activities create the basis for national economic growth? a) 2 b) 3 c) 4 d) 5 e) 6 Answer: a Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
49. Which term is used to describe business churning? a) Artificial evolution b) Evolving transition c) Making the butter d) Business expansion e) Creative destruction Answer: e Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 50. “Baby boomers” is the term used for Americans and Canadians born in: a) Early 1920’s b) 1920’s c) Early 1930’s d) Late 1930’s – 1940’s e) Mid 1940’s – early 1960’s Answer: e Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 51. What percent of the American workforce did Fortune 500 companies employ in 1960’s? a) 10 b) 15 c) 20
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
d) 25 e) 30 Answer: c Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 52. What percent of the executives downsized in the 1980’s and 1990’s started their own businesses? a) 10 b) 15 c) 20 d) 25 e) 30 Answer: c Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
53. How much new VC money in the United States was committed in 1975? a) $10 million b) $45 million c) $145 million d) $430 million e) $930 million Answer: a Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
54. What does SBIR stand for? a) Savings, Brokerage, and Investment Reserve b) Small Business Innovation Research c) Space Based Infra Red d) Speaker Boundary Interference Response e) Small Business Interest Rate Answer: b Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
55. The Canadian Business Youth Foundation (CYBF) has created how many Canadian jobs since it was established in 1996? a) 5,000 b) 12,000 c) 32,000 d) 18,000 e) 23,0000 Answer: e Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
56. What are the names of two Canadian federal government incentive programs offered to businesses conducting research and innovative projects? a) Scientific Research and Experimental Development b) Industrial Research Assistance Program c) Canadian Technology Research Incentive Program d) Bayh-Dole Program e) Technology and Innovation Canada Answer: a and b Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
57. How many startup incubators are in Canada? a) 240 b) 95 c) 550 d) 130 e) 17 Answer: d Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
58. What percent of American, four-year colleges have courses in entrepreneurship? a) 13 b) 43 c) 55 d) 60 e) 78 Answer: d Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models?
59. How much do informal investors contribute to startup businesses annually? a) $12 billion b) $50 billion c) $67 billion d) $86 billion e) $100 billion Answer: e Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 60. At the turn of the 20th century, about 50% of US workers worked in either the agricultural or the domestic service spheres. Approximately 100 years later that percentage had decreased to which of the following figures? a) 4% b) 10% c) 16% d) 22% e) 35% Answer: a Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
61. Which of the following entrepreneurs was one of the pioneers of the biotechnology industry? a) Robert Noyce b) Arthur Blank c) Tim Nerners-Lee d) George Gendron e) Robert Swanson Answer: e Learning Objective: Section Reference:
62. Jim Balsillie, a Canadian entrepreneur, was the cofounder of what company? a) Microsoft Corp. b) Blackberry Inc. c) West Jet d) Netscape e) Lululemon Athletica
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: b Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
63. In general, the most important source of capital for a new entrepreneurial venture is which of the following? a) Informal investors b) Venture Capital c) Banks d) Profits from the venture e) Incubators Answer: a Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
64. What is the second largest Canadian airline? a) Air Canada b) Delta c) Continental d) West Jet e) Pan-Am Answer: d Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
65. The highest average TEA rates are found in? a) Middle East & North Africa b) European Union c) United States d) Asia Pacific/South Asia e) sub-Saharan Africa and Latin America/Caribbean Answer: e Learning Objective: 1.4 Compare the Anglo-Saxon economic system and the social model Section Reference: Twenty-First-Century Economies: AngloSaxon or Social Models? 66. High-growth entrepreneurs, also known as “gazelles,” receive heightened attention from policymakers because: a) their firms have an average annual growth rate of 20%. b) they contribute a small number of jobs created by new firms.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise c) their firms account for approximately 10% of the world’s GDP. d) their firms contribute a disproportionate share of all new jobs created by new firms. e) they are mostly located in the European Union and the Middle East & North Africa. Answer: d Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
67. All of the following have Anglo-Saxon economic systems and high HEA rates except: a) Germany b) Canada c) Ireland d) Australia e) United States Answer: a Learning Objective: Section Reference: 68. Edited by Ian Portsmouth, what is Canada’s most read publication for entrepreneurs and small businesses? a) Growth Magazine b) Businessweek c) The Gazette d) Profit Magazine e) Canada Today Answer: d Learning Objective: Section Reference:
69. Small businesses represents what percentage of total R&D expenditure in Canada? a) 3% b) 11% c) 31% d) 66% e) 91% Answer: e Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Open ended 70. Why are small businesses an important consideration for Canadian policy makers? • • •
There are approximately 1.1 million employer owned Canadian businesses, of which approximately 98% are small businesses. They employ approximately 5 million individuals in Canada, or 48% of the total labour force in the private sector. At any one time, approximately 15% of Canadians in the labour force deem themselves “a nascent entrepreneur”
Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada 71. Explain, in your own words, Schumpeter’s view of entrepreneurship’s role in an economy and society. • • •
Schumpeter argued that the innovation and technological change of a nation come from entrepreneurs. He believed that entrepreneurs are the ones who facilitate the functionality of an economy. He claimed that by destroying old businesses and creating new ones, entrepreneurs keep the economy healthy.
Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada 72. Describe the World Economic Forum’s (WEF) 3 phases of economic development. • •
•
The factor-driven phase is dominated by subsistence agriculture and extraction businesses, with a heavy reliance on (unskilled) labor and natural resources. The focus of development efforts tends toward building a sufficient foundation of basic requirements. The efficiency-driven phase: an economy has become more competitive with further development accompanied by industrialization and an increased reliance on economies of scale, with capital-intensive large organizations more dominant. Generally accompanied by improved (and improving) basic requirements, and attention is then directed toward developing the efficiency enhancers. In the innovation-driven phase, businesses are more knowledge-intensive, and the service sector expands.
Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise 73. What was the most critical step in Federal Express’ rapid growth? • •
In the mid-1970s, Federal Express had taken a leading role in lobbying for air cargo deregulation that finally passed in 1977. These changes allowed Federal Express to use larger aircraft and spurred the company's rapid growth. Today FedEx has the world's largest all-cargo air fleet, including McDonnellDouglass MD-11s and Airbus A-300s and A-310s.
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
74. What are the three primary reasons Industry Canada outlined for why Canadians, in recent years, are becoming more entrepreneurial? • • •
Recent economic downturns, though, have been accompanied by downsizing and people want to regain control over their pay cheques by starting their own business. People — especially younger people — increasingly prefer an independent lifestyle. Entrepreneurs have become influential. Canadian entrepreneurs are celebrated in their communities.
Learning Objective: 1.1 Describe entrepreneurship and small business in Canada Section Reference: Entrepreneurship and Small Business in Canada
75. Why is the Internet one of the most revolutionary developments in the history of commercial innovation? • • •
The internet provided businesses with millions of flexible space in which to conduct commerce. Small businesses gained a platform that allowed them to compete with multi-billion corporations. The internet spurred the proliferation of information. Any entrepreneur now has access to virtually any information he or she needs.
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution 76. Why was the Netscape’s IPO so popular and successful? • •
Netscape Navigator was an instant hit with users, gaining 75 percent of the browser market within four months of its introduction. Marc Andreessen, the creator of Netscape, was well known among investors by the time he decided to take his company public.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise •
Venture capitalists saw huge potential in Netscape and believed that the company could become a legitimate rival to Microsoft.
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
77. How did the advent of the PC churn up the entire computer industry? • •
It wiped out the typewriter industry. Changed the way office work is organized – secretaries had to learn computer skills
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
78. Which factors led to American entrepreneurial revolution? • • •
In the 1960s a generation of Americans who had no first-hand memory of the Great Depression and did not believe an economy should be built on corporations only came of age. In the 1970s, Washington, after bailing out Penn Central, Lockheed, and Chrysler, started to pay more attention to small businesses Congress took steps in 1978 to stimulate the venture capital industry, which, in turn, led to more investments in start-ups
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution Section Reference: Causes of the Entrepreneurial Revolution
79. How has the government incentivized the commercial development of intellectual property in Canada? The Canadian federal government offers two incentive programs to businesses conducting research and innovative projects: the Scientific Research and Experimental Development (SR&ED) and the Industrial Research Assistance Program (IRAP).
80. Who, in your opinion, would benefit from the creative destruction process and why? • • •
Economy – stays healthy and primed for growth. The customer – new ventures create better products. The companies themselves – the threat of creative destruction leads companies to constantly improve their operating and production processes and leads to faster learning curves.
Learning Objective: 1.2 Outline the causes of the entrepreneurial revolution
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Section Reference: Causes of the Entrepreneurial Revolution
81. Describe the three main measures of entrepreneurial activity. • •
•
TEA (total entrepreneurial activity) is the percentage of the adult population that is either nascent entrepreneurs or baby businesses owner-managers or both. It measures the overall entrepreneurial activity of a nation. TEA (opportunity) is the percentage of the adult population that is trying to start or has started a baby business to exploit a perceived opportunity. They are classified as improvement-driven opportunity motivated if they additionally seek to improve their income or independence through entrepreneurship. TEA (necessity) is the percentage of the adult population that is trying to start or has started a baby business because all other options for work are either absent or unsatisfactory.
Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
82. Explain what the Global Entrepreneurship Monitor (GEM) is. • • •
It was conceived in 1997 to study the economic impact and the determinants of nationallevel entrepreneurial activity. It is the largest coordinated research effort ever undertaken to study population-level entrepreneurial activity. GEM has become the world’s most influential and authoritative source of empirical data and expertise on the entrepreneurial potential of nations.
Learning Objective: 1.3 Describe what the Global Entrepreneurship Monitor (GEM) is and outline the principal findings from GEM Section Reference: Global Entrepreneurship Monitor (GEM)
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Chapter 2: The Entrepreneurial Process True/False Statements 1. One definition of an entrepreneur is someone who shifts economic resources out of an area of higher productivity into an area of lower productivity. Answer: False Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
2. Entrepreneurship is a process that can be learned. Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
3. Entrepreneurs possess highly specialized behavioral attributes that are distinct from those of non-entrepreneurs. Answer: False Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
4. Entrepreneurs have a higher internal locus of control than non-entrepreneurs. Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
5. Canada has twice the percentage of people self-employed compared to the United States. Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
6. Access to entrepreneurial role models can be a significant factor in determining whether or not someone will become an entrepreneur.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
7. The majority of the businesses started each year will eventually go bankrupt. Answer: False Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
8. Raising venture capital is a critical step for most successful ventures. Answer: False Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
9. Whether a company is successful is largely a matter of luck. Answer: False Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
10. To be successful, a company must possess a unique and novel idea. Answer: False Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
11. Financial literacy and management is not an important factor contributing to new venture success. Answer: False Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources 12. Secrecy about one’s idea is more likely to hurt the development of the business than help it. Answer: True
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
13. Only the most skilled entrepreneurs should attempt to build a business around social or cultural fads. Answer: True Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
14. Entrepreneurial companies should consider outsourcing responsibilities and functions that are not critical to the company’s success. Answer: True Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources
15. Marginal cost is a term that refers to expenses that are difficult to justify in an entrepreneurial environment. Answer: False Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources
16. Entrepreneurs should always seek to own the resources that they utilize while building a company. Answer: False Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources
17. The two types of startup capital are debt and equity. Answer: True Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
18. The vast majority of entrepreneurs start their companies with their own personal savings.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: True Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources
19. Pivoting refers to startups making the required course corrections during the development process to dramatically improve their odds for success. Answer: True Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
20 A majority of companies require at least $100,000 to begin operations. Answer: False Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
21. The cost to finance a startup ranges between $25,000 and $30,000 depending on the size of the startup. Answer: True Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
22. It is possible for a company to have a positive cash flow and be unprofitable. Answer: True Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
23. Startups that tend to focus on multiple markets are the most successful. Answer: False Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
24. Having multiple layers of management is the best way to ensure that a startup is flexible and quick to react to changes.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: False Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
25. If companies A and B are in the same industry, and A has $200,000 in sales per employee while B has $325,000 in sales per employee, then B is the more productive company. Answer: True Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
26. A serial entrepreneur is someone who starts multiple companies, one right after the other. Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
27. Generally speaking, entrepreneurs have a stronger need to be in control of their own fate. Answer: True Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
28. Entrepreneurship reduces the overall health of an economy by destroying jobs in traditional industries. Answer: False Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
29. For fledgling entrepreneurs, there are few free resources available for input and guidance. Answer: False Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
30. For a company that goes public, the founding entrepreneur typically owns a majority of the shares of the corporation.
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
Answer: False Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
31. Anyone who wishes to pursue an entrepreneurial venture would be wise to take at least three of the widely distributed entrepreneur-attribute tests beforehand. Answer: False Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
32. The most famous geographic region for high-tech entrepreneurship is in California and often referred to as, “Silicon Valley.” Answer: True Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
33. Low-tech businesses, such as convenience stores, are not typically considered part of entrepreneurship because of their lack of innovation and intellectual property. Answer: False Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
34. The most costly expense that seed-stage biotechnology companies face in their early years is the initial expenditure on manufacturing equipment. Answer: False Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential 35. The majority of entrepreneurs’ business ideas come from area outside of their present line of employment or experience. Answer: False Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
36. One difference between having an idea vs. an opportunity is the ability to list potential customers by name. Answer: True Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business 37. Two ingredients that determine an entrepreneur’s return on investment are (1) the amount invested and (2) the annual amount earned on that investment. Answer: True Learning Objective: 2.4 Evaluate the profit potential of a new business. Section Reference: Profit Potential
Multiple Choice 38. Which of the following could be a “trigger” for the entrepreneurial process? a) Being fired by an employer b) Deep frustration with one’s career c) A conversation with a friend or peer d) An unexpected financial windfall e) All of the above Answer: e Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
39. What percentage of Canadians are self-employed? a) 5% b) 10% c) 15% d) 20% e) 25% Answer: d Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
40. Where do most entrepreneurs get the idea for their businesses? a) Through brainstorming
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
b) From mentors c) From exposure to an industry d) By reading entrepreneurship books e) From venture capitalists Answer: c Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
41. Which of the following is not cited by the chapter as a primary reason that entrepreneurs choose to go into business for themselves? a) Fame b) Innovation c) Financial success d) Independence e) Self-realization Answer: a Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
42. Which of the following is not a critical component of the talent triangle of a successful management team except for: a) Business acumen b) Financial investment c) Domain knowledge d) Operational Experience Answer: b Learning Objective: 2.1 Identify the critical factors for starting a new venture. Section Reference: Critical Factors for Starting a New Enterprise
43. Which of the following contacts can be critical to the startup phase of a new business? a) Potential customers b) Lawyers c) Bankers d) Accountants e) All of the above Answer: e Learning Objective: 2.3 Identify the resources needed for a new business. Section Reference: Determining Resource Needs and Acquiring Resources
Test bank for Entrepreneurship, Canadian Edition by Bygrave, Zacharakis, and Wise
44. What percentage of new startup firms in Canada survive the five year mark? a) 1% b) 12% c) 25% d) 36% e) 73% Answer: d Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
45. Which of the following is not a critical favor attributed to lack of success of a new venture in Canada? a) Market entry in unfavorable conditions b) Overemphasis on market trends c) Lack of financial literacy d) Lack of financial management e) Inadequate business acumen. Answer: b Learning Objective: 2.2 Evaluate the opportunity for a new business. Section Reference: Evaluating Opportunities for New Businesses
46. Which of the following is not a critical component for a successful new business? a) The opportunity b) The management team c) The age of the lead entrepreneur d) The resources available e) None of the above Answer: c Learning Objective: 2.5 Identify the factors for a successful new business. Section Reference: Ingredients for a Successful New Business
47. A successful new business needs to provide a solution that is how much better than what is currently available? a) Equally as good b) Slightly better c) Twice as good d) 10 times better e) Not a factor in determining success