New Venture Creation Exam
Bank
Course Introduction
New Venture Creation explores the essential processes and skills required to launch and grow innovative business ventures. The course guides students through opportunity recognition, market research, business model development, resource acquisition, and the crafting of effective business plans. Emphasizing practical application, students analyze real-world case studies, engage in entrepreneurial simulations, and develop their own start-up ideas. Core topics include entrepreneurial mindset, opportunity validation, team formation, financing strategies, and navigating legal and regulatory landscapes. By the end of the course, students will possess the foundational knowledge and tools necessary to turn creative ideas into viable, sustainable new businesses.
Recommended Textbook
Entrepreneurship Theory Process and Practice 9th Edition by Donald F. Kuratko
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15 Chapters
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Chapter 1: Entrepreneurship: Evolutionary
Development-Revolutionary Impact
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Sample Questions
Q1) Michael Gerber, the author of The E-Myth, explains that the failure of most small businesses is due to:
A) owners being more technical rather than entrepreneurial
B) owners being more managerial rather than technical
C) owners being more entrepreneurial rather than managerial
D) owners being more entrepreneurial rather than technical
Answer: A
Q2) Prepared entrepreneurs who seize opportunities when they arise often appear to be lucky.
A)True
B)False
Answer: True
Q3) The macro view can be broken down into which three areas?
A) environmental, financial, and displacement
B) financial/capital, strategic, and opportunity
C) displacement, trait, and financial
D) entrepreneurial trait, opportunity, and strategic
Answer: B
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Chapter 2: The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics
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Q1) Entrepreneurs like to remain alert to competition, customers, and government regulations, but this continual scanning of the environment can lead to a negative sense of distrust.
A)True
B)False
Answer: True
Q2) Creativity was once regarded as an exclusively inherited trait.
A)True
B)False
Answer: True
Q3) According to the Model of Entrepreneurship Motivation, the entrepreneur's expectations are not compared with the actual or perceived outcomes of the firm.
A)True
B)False
Answer: False
Q4) There are many risks in entrepreneurship.
A)True
B)False
Answer: True
Page 4
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Chapter 3: The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship
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Sample Questions
Q1) In an innovative climate, failure is viewed as
A) the end of the world.
B) a learning experience.
C) O.K., inevitable, since the employee is probably not capable of further innovative thought.
D) a basis for firing.
Answer: B
Q2) The need for corporate entrepreneurship has risen in response to the rise of the global economy.
A)True
B)False
Answer: True
Q3) Firms do not need to alter management techniques to encourage corporate entrepreneurship since it tends to occur naturally.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Social Entrepreneurship and the Global
Environment for Entrepreneurship
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Q1) Why is global thinking important to today's entrepreneurs?
Q2) Which of the following statements about social entrepreneurship is not True?
A) Social entrepreneurship is limited to the world of not-for-profit corporations.
B) Social entrepreneurship is about having a heightened sense of accountability
C) Social entrepreneurship has, in recent years, been the subject of widespread media attention.
D) Social entrepreneurship adopts some of the same principles that have been effective in successful entrepreneurship.
Q3) Bottom-line measures of social performance include the unemployment rate and health-adjusted life expectancy.
A)True
B)False
Q4) Benefit corporations concern themselves with
A) purpose and transparency
B) accountability
C) accountability and transparency
D) purpose, accountability, and transparency
Q5) In the context of benefit corporations, what does transparency refer to?
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Chapter 5: Innovation: The Creative Pursuit of Ideas
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Sample Questions
Q1) Retirement centers for older people reflect which source of innovation?
A) industry changes
B) demographic changes
C) perception changes
D) unexpected occurrences
Q2) Overnight package delivery is illustrative of which source of innovation?
A) incongruities
B) unexpected occurrences
C) process needs
D) change in perception
Q3) Background or knowledge accumulation is the second phase of the creative process.
A)True
B)False
Q4) Structured and focused chaos is necessary for creativity to occur.
A)True
B)False
Q5) Most successful innovations are complex and focused.
A)True
B)False
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Chapter 6: Assessment of Entrepreneurial Opportunities
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Sample Questions
Q1) The entrepreneurial motivations of individuals usually relate to which of the following factors?
A) the environment
B) the entrepreneur
C) the venture
D) all of the above
Q2) What is a critical consideration when assessing customer availability?
A) amount of products sold
B) length of time needed to determine who the customers are and what their buying habits are
C) the exact profitability of the venture
D) all of the above
Q3) It is reported that _____ new firms have emerged in the United States every year since the mid-1990s.
A) 600,000
B) 100,000
C) 22,000
D) 230,000
Q4) What are three critical factors in a new venture assessment?
Q5) Explain three major reasons why new ventures fail.
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Chapter 7: Pathways to Entrepreneurial Ventures
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Sample Questions
Q1) The individual who buys the franchise is the
A) franchisee.
B) franchisor.
C) franchisette.
D) franchatter.
Q2) Perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, is that the franchisor will usually provide both training and guidance to the franchisee.
A)True
B)False
Q3) Starting a business by adapting something already on the market is called
A) a franchising approach
B) a buying approach
C) a new-new approach
D) a new-old approach
Q4) In purchasing an existing business the first question should be: "Why are you selling?"
A)True
B)False
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Chapter 8: Sources of Capital for Entrepreneurs
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Q1) Which of the following would be most commonly used for long-term financing?
A) insurance companies
B) trade credit
C) finance companies
D) leasing companies
Q2) The main objective of Regulation D is to
A) increase investment in private placement.
B) regulate new small-business investment.
C) make it easier and less expensive for small ventures to sell stock.
D) reduce debt financing by small enterprises.
Q3) Which of the following is not a question commonly asked by banks of entrepreneurs?
A) What do you plan to do with the money?
B) How much do you need?
C) What interest rate did you have in mind?
D) How will you repay the loan?
Q4) What are the major types and uses of debt financing?
Q5) Social lending sites are different from so-called microlending sites.
A)True
B)False
10
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Chapter 9: Legal Challenges of Entrepreneurial Ventures
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Sample Questions
Q1) Identify the three major sections of the Bankruptcy Act.
Q2) Specific forms of partnership include which of the following?
A) limited partnerships
B) limited partnerships and limited liability partnerships
C) limited partnerships and S partnerships
D) S partnerships and limited liability companies
Q3) That part of a patent application which identifies the features that are protected are known as the
A) particular.
B) claim.
C) identification.
D) essence.
Q4) That part of a patent application which identifies the features that are protected are known as the
A) specification.
B) illustration.
C) claim.
D) concept.
Q5) What are the rules for avoiding pitfalls in selecting trademarks?
Q6) Define a patent and describe its limitations.
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Chapter 10: Marketing Challenges for Entrepreneurial Ventures
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Sample Questions
Q1) Marketing information that has already been compiled is known as secondary data.
A)True
B)False
Q2) Which of the following is a demographic variable?
A) weight
B) hair color
C) attitude
D) income
Q3) A firm's pricing structure dictates almost no knowledge to customers.
A)True
B)False
Q4) Inhibitors to marketing research include all of the following except:
A) cost
B) irrelevancy
C) complexity
D) distribution
Q5) Geographic flexibility is greater for telephone interviews than for in-person interviews.
A)True
B)False
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Chapter 11: Financial Preparation for Entrepreneurial Ventures
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Sample Questions
Q1) The pro forma income statement is prepared before the pro forma balance sheet.
A)True
B)False
Q2) The first step in creating an operating budget is to prepare the sales forecast.
A)True
B)False
Q3) Which of the following statements is not True about financial assumptions?
A) They explain how the numbers are derived.
B) They should be clear and precise.
C) They are the most integral part of the financial segment.
D) They do not necessarily correlate with information from other parts of the business.
Q4) A key concept in developing an expense budget is that of
A) fixed costs.
B) labor costs.
C) taxes.
D) rent.
Q5) Name and describe the final phase of the budget process.
Page 13
Q6) List the elements of a capital budget and define its main objective.
Q7) What is included in an operating budget and how is this helpful?
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Chapter 12: Developing an Effective Business Plan
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Sample Questions
Q1) To an entrepreneur, one of the benefits of a business plan is A) the development of operating strategies for outside evaluators.
B) benchmarks for comparing forecasts with actual results.
C) both a and b
D) neither a nor b.
Q2) The day of the presentation, the entrepreneur should arrive early to A) serve snacks to attendees.
B) arrange to have breakfast and coffee catered in.
C) read the paper to relieve nervousness.
D) set up, test any equipment, and organize notes and visual aids.
Q3) The comprehensive business plan should be the result of A) reflections on the direction of the venture.
B) continuous operations of the venture.
C) investor's promises of capital.
D) the entrepreneur's best guesses.
Q4) A business plan __________ potential financial backers.
A) indicates the exact sum to be borrowed from B) establishes a first impression of the company and its principals on C) provides an accurate sales forecast for D) purposefully underestimates financial need for
Page 14
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Chapter 13: Strategic Entrepreneurial Growth
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Sample Questions
Q1) The reason many small business managers lack expertise is that they are
A) optimists.
B) specialists.
C) subordinates.
D) generalists.
Q2) Misunderstanding industry attractiveness can be a fatal flaw in strategic planning.
A)True
B)False
Q3) The past is the best predictor of the future, according to which mind-set?
A) the entrepreneurial mind-set
B) the managerial mind-set
C) the cognitive mind-set
D) the risk-averse mind-set
Q4) New ventures are important to the economy in terms of
A) innovation.
B) employment.
C) both a and b
D) continuing the American way of life.
Q5) Does strategic planning pay off?
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Chapter 14: Valuation of Entrepreneurial Ventures
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Sample Questions
Q1) A drawback to the price/earnings ratio method is that
A) the stock of a private company is publicly traded.
B) the stated net income of a private company may not truly reflect its actual earning power.
C) it is relatively easy to find a truly comparable publicly held company, even in the same industry.
D) it distorts profits earned.
Q2) Explain the purpose of a letter of intent.
Q3) When considering employees, the entrepreneur should be concerned about
A) total number of single employees.
B) total number of female employees.
C) total number of employees by function.
D) employee productivity.
Q4) Which of the following are considered methods for valuation of a venture?
A) return on investment
B) stock market method
C) multiple of earnings
D) a and c are correct
Q5) List some of the questions to ask before making a potential purchase and explain why each is important.
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Chapter 15: Harvesting the Entrepreneurial Venture
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Sample Questions
Q1) Which of the following statements about communication between the seller and buyer of a business is recommended?
A) End communication at least ten days prior to signing a buy agreement.
B) Communicate with sellers only through proxies.
C) Continue communication through the transition to new ownership.
D) End communication at the time the buy agreement is signed.
Q2) Barriers to successful succession planning, discussed in the text, include which of the following?
A) nobody wanting to own the firm.
B) lack of a final will.
C) dilemma of choice.
D) lack of profits.
Q3) Succession pressure inside the firm exists
A) when the founder wants to give up authority.
B) when family members want to keep and manage the business.
C) nonfamily employees don't want the business.
D) competition-is hurting the business.
Q4) Once the decision is made to harvest the business, the way forward is easy.
A)True
B)False
Page 17
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