Entrepreneurship and Small Business Practice Exam
Course Introduction
This course introduces students to the principles and practices of entrepreneurship and small business management. It explores the process of identifying business opportunities, developing a viable business concept, and launching a new venture. Topics include business planning, funding strategies, marketing, legal and regulatory considerations, and strategies for growth and sustainability. Through case studies, real-world examples, and hands-on projects, students gain practical skills in problem-solving, innovation, and decision-making necessary to succeed as entrepreneurs or small business managers.
Recommended Textbook
Entrepreneurship Successfully Launching New Ventures 3rd Edition by Bruce R. Barringer
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15 Chapters
1125 Verified Questions
1125 Flashcards
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Page 2
Chapter 1: Introduction to Entrepreneurship
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) Innovation is the process of creating something new, which is central to the entrepreneurial process.
A)True
B)False
Answer: True
Q2) Because entrepreneurs are very tenacious and they have a product/customer focus, the success rate associated with their efforts is naturally high.
A)True
B)False
Answer: False
Q3) Entrepreneurs are usually moderate, rather than high, risk-takers.
A)True
B)False
Answer: True
Q4) According to reliable statistics, 9 out of 10 businesses fail in their first few years of existence.
A)True
B)False Answer: False
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Chapter 2: Recognizing Opportunities and Generating Ideas
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75 Flashcards
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Sample Questions
Q1) An opportunity has four essential qualities: it is (1) rare, (2) attractive, (3) timely, and (4) resilient.
A)True
B)False Answer: False
Q2) Evaluation is the stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability.
A)True
B)False
Answer: True
Q3) An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business.
A)True
B)False Answer: True
Q4) An idea bank is a physical or digital repository for storing ideas.
A)True
B)False
Answer: True
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Chapter 3: Feasibility Analysis
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Sample Questions
Q1) Feasibility analysis is the process of determining if a business idea is viable.
A)True
B)False
Answer: True
Q2) The two components of product/service feasibility analysis are:
A) product/service desirability and product/service demand for similar products
B) product/service demand and total start-up cash needed
C) product/service desirability and management prowess
D) product/service desirability and product/service demand
E) product/service demand and target market attractiveness
Answer: D
Q3) A ________ market is a place within a larger market segment that represents a narrower group of customers with similar needs.
A) secondary
B) primary
C) target
D) parallel
E) minor
Answer: C
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Page 5
Chapter 4: Writing a Business Plan
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Sample Questions
Q1) Even though the executive summary appears at the beginning of the business plan, it should be written last.
A)True
B)False
Q2) According to the textbook, many investors and others who read business plans look first at the executive summary and then go directly to the ________ section of the business plan to make their preliminary assessment.
A) management team and company structure
B) product (or service) design and development plan
C) industry analysis
D) marketing plan
E) operations plan
Q3) According to the textbook, the ________ are the heart of the financial section of a business plan.
A) financial ratios
B) pro forma financial statements
C) budgets
D) sources and uses of funds statements
E) break-even analyses
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Page 6
Chapter 5: Industry and Competitor Analysis
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Sample Questions
Q1) Firms that pursue a ________ strategy compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market.
A) inclusive
B) universal
C) multidomestic
D) contemporary
E) worldwide
Q2) The five competitive forces model is a framework for understanding the structure of an industry.
A)True
B)False
Q3) According to the textbook, Nucor in steel, JetBlue in airlines, and Cirque du Soleil in circuses are examples of entrepreneurial firms who are exploiting opportunities in ________ industries.
A) fragmented
B) emerging
C) declining
D) global
E) mature
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Chapter 6: Developing an Effective Business Model
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Sample Questions
Q1) Which of the following is not a "primary" activity in the value chain?
A) inbound logistics
B) marketing and sales
C) service
D) technology development
E) outbound logistics
Q2) What is a strategic asset? Provide an example of a strategic asset that is utilized by an entrepreneurial firm.
Q3) Firms that have a ________ strategy strive to have the lowest costs in the industry, relative to competitors' costs, and typically attract customers on that basis. In contrast, firms using a ________ strategy compete on the basis of providing unique or different products and typically compete on the basis of quality, service, timeliness, or some other important dimension.
A) differentiation, cost leadership
B) cost emphasis, quality leadership
C) cost leadership, differentiation
D) price reduction, quality plus
E) cost differentiation, quality plus
Q4) Why is it important for a firm to have a well-thought-out business model?
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Chapter 7: Preparing the Proper Ethical and Legal Foundation
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Sample Questions
Q1) Partnerships are organized as either:
A) specific or general partnerships
B) narrow or broad partnerships
C) inward or outward partnerships
D) general or limited partnerships
E) partial or full partnerships
Q2) A founders' agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm.
A)True
B)False
Q3) What is meant by the term "piercing the corporate veil"? How can the corporate veil be pierced?
Q4) A disadvantage of a sole proprietorship is that it is subject to double taxation. A)True
B)False
Q5) The vast majority of corporations in the United States are public corporations. A)True
B)False
9
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Chapter 8: Assessing a New Venture's Financial Strength and Viability
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Sample Questions
Q1) ________ are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.
A) Profitability statements
B) Financial statements
C) Owners' equity statements
D) Budgets
E) Statements of cash flows
Q2) A firm's profit margin, or return on sales, is computed by dividing net income by net sales.
A)True
B)False
Q3) The break-even point for a new restaurant or product is the point where the total revenue received equals total costs associated with the output of the restaurant of the sale of the product.
A)True
B)False
Q4) Describe each of the four primary financial objectives of firms.
Q5) Describe the difference between historical and pro form financial statements.
Q6) What is ratio analysis? Why is it important?
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Chapter 9: Building a New Venture Team
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Sample Questions
Q1) Savanna Combs opened a clothing boutique two years ago. Unfortunately, the boutique failed after 18 months. Savanna attributes the failure of her boutique to that fact that her employees couldn't adjust quickly enough to their new roles and because her boutique lacked a "track record" with outside buyers and sellers, which made it difficult to form partnerships and make sales. Savanna suffered from what research call the:
A) burden of novelty
B) millstone of innovation
C) liability of newness
D) liability of preparedness
E) burden of newness
Q2) Which of the following was not identified in the textbook as an attribute of an effective board member?
A) strong personal and professional networks
B) unknown in their field
C) investment and/or operating experience
D) ability and willingness to mentor the CEO and the top managers of the firm
E) pattern recognition skills
Q3) What is SCORE? What is its role in helping a firm fill out its new venture team?
Q4) What is a skills profile and what is it used for?
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Chapter 10: Getting Financing or Funding
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Sample Questions
Q1) Tim Graham's startup, which is in the electronics industry, was launched on January 1, 2009. However, prior to its formal launch, Tim spent many hours working on his business, particularly during the feasibility analysis stage. The time and effort that entrepreneurs put into their venture, that can't be easily measured from a financial point of view, is referred to as:
A) effort equity
B) intangible equity
C) sweat equity
D) worry equity
E) fret equity
Q2) For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firm's ability to provide funds for those needs on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?
A) lengthy product development cycles
B) costs associated with building a brand
C) cash flow challenges
D) capital investments
E) personnel costs
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Chapter 11: Unique Marketing Issues
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Sample Questions
Q1) A ________ is a place within a market segment that represents a narrower group of customers with similar interests.
A) position market
B) niche market
C) slot market
D) spot market
E) gap market
Q2) An important distinction should be made between a firm's core product and its actual product. While the core product may be a CD that contains an antivirus software program, the actual product may have a number of characteristics, include a quality level, features, design, a brand name, and packaging.
A)True
B)False
Q3) Markets can be segmented in a number of ways, including by product type, price point, distribution channel used, and customers served.
A)True
B)False
Q4) What is a brand? How does a new firm develop a brand?
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Page 13
Chapter 12: The Importance of Intellectual Property
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Sample Questions
Q1) ________ takes place when one party engages in the unauthorized use of another party's patent.
A) Patent breach
B) Patent encroachment
C) Patent violation
D) Patent infraction
E) Patent infringement
Q2) A trade secret is any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace.
A)True
B)False
Q3) Which of the following is not one of the four key forms of intellectual property protection?
A) trade secrets
B) copyrights
C) trademarks
D) innovations
E) patents
Q4) What is a trademark? Why are trademarks important?
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Chapter 13: Preparing for and Evaluating the Challenges of Growth
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Sample Questions
Q1) Growth usually decreases rather than increases the challenges involved with cash flow management.
A)True
B)False
Q2) Betty Harrington owns a floor covering firm. Recently, her market research is telling her that she is taking business away from the large home improvement stores in her trade area. One thing that Betty is worried about is that the large stores might fight back by lowering their prices, which hurt everyone except the consumer. The day-to-day challenge of firm growth that this example is referring to is:
A) quality control
B) price stability
C) capital constraints
D) cash flow management
E) benchmarking
Q3) Fixed costs are the costs a company incurs as it generates sales.
A)True
B)False
Q4) According to Chapter 13, business success doesn't always scale. What is meant by this statement?
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Chapter 14: Strategies for Firm Growth
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Sample Questions
Q1) In the context of strategic alliances, ________ typically match a company with a distribution system with a company that has a product to sell to increase sales of a product or service.
A) promotion alliances
B) marketing alliances
C) organizational alliances
D) directional alliances
E) technological alliances
Q2) Internal growth strategies involve efforts taken within the firm itself, such as new product development, other product-related strategies, and international expansion.
A)True
B)False
Q3) A spin-in occurs when a large company divests itself of one of its smaller divisions and the division becomes an independent company.
A)True
B)False
Q4) Describe what a joint venture is. Identify the two types of joint ventures.
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Chapter 15: Franchising
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Sample Questions
Q1) Which of the following is not a disadvantage of buying a franchise?
A) cost of the franchise
B) duration and nature of the commitment
C) restrictions on creativity
D) availability of financing
E) potential for failure
Q2) While franchise agreements vary, each agreement typically contains the franchise agreement and:
A) the legal agreement
B) the procurement agreement
C) the purchase agreement
D) the sell agreement
E) the conversion agreement
Q3) The royalty fees a franchisee pays are usually around 10 percent of gross income.
A)True
B)False
Q4) List and explain three of the common misconceptions about franchising.
Q5) How can a person tell if franchising is right for them?
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