New Venture Creation
Textbook Exam Questions
Course Introduction
New Venture Creation explores the process of launching and developing new business ventures, guiding students from idea generation to business planning and execution. The course covers opportunity recognition, market assessment, business model development, resource identification, and strategies for acquiring financing. Through case studies, real-world examples, and hands-on projects, students learn how to analyze risks, develop viable business plans, and pitch their ideas to potential investors. This course equips aspiring entrepreneurs with essential knowledge and practical tools to transform innovative concepts into successful enterprises.
Recommended Textbook Entrepreneurship 11th Edition by Robert D Hisrich
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Page 2
Chapter 1: The Entrepreneurial Mind-Set
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Sample Questions
Q1) Comprehension questions are designed to stimulate entrepreneurs to think about their own understanding of the nature of the environment.
A)True
B)False
Answer: True
Q2) The McMullen-Shepherd Model explains how knowledge and motivation influence two stages of entrepreneurial action.
A)True
B)False
Answer: True
Q3) Role models are individuals who give psychological support to the entrepreneur especially during the start-up phase.
A)True
B)False
Answer: False
Q4) In a social network there are two major properties,density and centrality.
A)True
B)False
Answer: True
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Chapter 2: Corporate Entrepreneurship
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Sample Questions
Q1) Corporate ventures are totally independent units,hence the equity portion of the compensation is particularly difficult to handle.
A)True
B)False
Answer: False
Q2) Define and explain the dual process model of coping with negative emotions.
Answer: Student should define process as shifting between a loss orientation and a restoration orientation.The student should also explain the two alternate approaches to loss:
loss orientation An approach to negative emotions that involves working through,and processing,some aspect of the loss experience and,as a result of this process,breaking emotional bonds to the object lost.
restoration orientation An approach to negative emotions based on both avoidance and a proactiveness toward secondary sources of stress arising from a major loss. The entrepreneur can benefit from both orientations while minimizing the costs of maintaining either for too long.
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4
Chapter 3: Generating and Exploiting New Entries
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Sample Questions
Q1) By overestimating demand,the entrepreneur will suffer the costs of undercapacity.
A)True
B)False
Answer: False
Q2) When conducting research on a new entry:
A) the more information the entrepreneur has, the more difficult it is to focus on the consumer.
B) the entrepreneur must rely upon surveys more that market knowledge.
C) extensive research is expensive in terms of time and money.
D) lesser prior knowledge is advantageous since it minimizes the risk of entrepreneurial bias.
Answer: C
Q3) Entrepreneurs that delay entry have the advantage of more information about market demand.
A)True
B)False
Answer: True
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Chapter 4: Creativity and the Business Idea
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Sample Questions
Q1) In which stage of the product planning and development process would it be appropriate to give product samples to a panel of potential customers
A) Idea stage
B) Concept stage
C) Product development stage
D) Commercialization stage
Q2) The big-dream approach requires the entrepreneur to dream about the problem and its solution,thinking big.
A)True
B)False
Q3) Developing a new idea through a chain of word associations is known as the checklist method.
A)True
B)False
Q4) Results from product inventory analysis need minimal evaluation as they most likely reflect a new business opportunity.
A)True
B)False
Q5) List,in order,the stages of the product planning and development process.
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Chapter 5: Identifying and Analyzing Domestic and International Opportunities
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Sample Questions
Q1) Culture encompasses a wide variety of elements,including language,social structure,religion,political philosophy,economic philosophy,education,and manners and customs.
A)True
B)False
Q2) List the seven various aspects of culture.
Q3) Which among the following influences whether customers are able to use the good or service properly and whether they are able to understand the firm's advertising or other promotional messages
A) Political philosophy
B) Religion
C) Manners and customs
D) Education
Q4) Gartner provides information on technology markets.
A)True
B)False
Q5) Nonequity arrangements discussed by the text include licensing,management projects and exporting.
A)True
B)False
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Chapter 6: Protecting the Idea and Other Legal Issues for the Entrepreneur
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Sample Questions
Q1) Which of the following statements concerning patents is not true
A) A patent gives the owner a negative right, preventing anyone from making, using, or selling the defined invention.
B) A utility patent has a term of 20 years.
C) Plant patents are issues under the same provisions as utility patents.
D) Traditionally, utility patents were thought to be useless because it is easy to design around a patent.
Q2) To file for trademark protection only intent to use is necessary.
A)True
B)False
Q3) What type of insurance would cover fire or burglary damage
A) Property
B) Bonding
C) Life
D) Workers' Compensation
Q4) Copyrights can protect all of the following except:
A) music.
B) molded plastic parts.
C) sculptures.
D) models.
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Chapter 7: The Business Plan: Creating and Starting the Venture
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Sample Questions
Q1) All of the following are questions that should be considered in the environmental and industry analysis section of the business plan except:
A) What are total industry sales over the past five years?
B) Who are the nearest competitors?
C) What is my promotional strategy?
D) What is anticipated growth in this industry?
Q2) If the new venture is a manufacturing operation a(n)________ in the business plan is necessary.
A) ownership plan
B) quality control plan
C) production plan
D) partnership agreement
Q3) The executive summary section should:
A) be prepared before the total plan is written.
B) be about two to three pages in length.
C) highlight key financial milestones that have been achieved.
D) try to summarize every section of the plan.
Q4) Explain the purpose and content of the executive summary of the business plan.
Page 9
Q5) Identify the most common reasons why business plans fail.
Q6) List some of the advantages of using the Internet as a resource tool.
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Page 10
Chapter 8: The Marketing Plan
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Q1) Which stage of marketing research is considered to be the most difficult for an entrepreneur due to lack of knowledge or experience in marketing
A) Analyzing and interpreting the results
B) Gathering data from primary sources
C) Gathering data from secondary sources
D) Defining the purpose or objectives
Q2) Which of the following is a pitfall of social media
A) Setting short-term and long-terms goals to help assess the effectiveness of the plan
B) Spending time each day to review and update material
C) Promoting your product in every post
D) Cultivating customer relationships
Q3) Management needs to look at the marketing plan as a guide for implementing marketing decision making and not as a generalized,superficial document.
A)True
B)False
Q4) Describe the steps in the marketing plan flowchart.
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Chapter 9: The Organizational Plan
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Sample Questions
Q1) In an LLP,the transfer of interest of one limited partner is typically not allowed.
A)True
B)False
Q2) Identify the nine areas an entrepreneur should consider in choosing a legal form of organization.
Q3) A company has a formal structure and an informal structure which evolves over time.This informal structure is a company's:
A) culture.
B) business plan.
C) legal business form.
D) board of advisors.
Q4) The difference between a board of directors and a board of advisors is that:
A) the board of advisors meets less frequently.
B) the board of directors lacks voting authority.
C) the board of directors is subject to less pressure of litigation.
D) the board of advisors are compensated.
Q5) In a limited liability company,every member has limited liability.
A)True
B)False
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Chapter 10: The Financial Plan
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Q1) Selling expense is an expense that can be expected to remain stable over time.
A)True
B)False
Q2) Identify the basic formula of a balance sheet and give an example of an item that might fall under each major component of the formula.
A.Assets = liabilities + owners equity
B.Assets - two categories
Q3) Capital budgets project expenditures on:
A) new equipment.
B) future production costs.
C) advertising.
D) costs of goods sold.
Q4) Cash flow is the same thing as profit.
A)True
B)False
Q5) Large positive cash flows usually occur in the first months of a new venture.
A)True
B)False
Q6) Define capital budgeting.
Q7) Explain negative cash flow.How can a profitable firm have negative cash flow
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Chapter 11: Sources of Capital
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Sample Questions
Q1) Funds obtained from ________ are the least expensive in terms of cost and control.
A) the entrepreneur's personal resources
B) friends and family
C) commercial banks
D) private placement
Q2) The SBA 7(a)loan program has a maximum loan amount of $5 million.
A)True
B)False
Q3) If the amount of money provided by family members or friends is small and in the form of equity financing,they do not have an ownership position in the venture.
A)True
B)False
Q4) External investors generally require the entrepreneur to commit a large percentage of his or her personal assets.
A)True
B)False
Q5) Explain and define the four types of asset backed loans.
Q6) Identify and explain the three types of loans used for cash flow financing.
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Chapter 12: Informal Risk Capital, Venture Capital, and Going Public
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Q1) With the enactment of the Sarbanes-Oxley Act in 2002:
A) the expense and administrative responsibilities of being a public company are significantly lower.
B) corporate governance and disclosure requirements of public companies is subject to greater regulation.
C) the liability risks of officers and directors less stringent.
D) the recruitment of qualified independent directors is simpler.
Q2) The private equity market provides capital for privately held ventures.
A)True
B)False
Q3) The informal investment market contains the smallest pool of risk capital in the United States.
A)True
B)False
Q4) The shorter the time before a company goes public,given that profits and sales growth occur,the less percentage of equity the entrepreneur will have to give up per dollar invested.
A)True
B)False
15
Chapter 13: Strategies for Growth and Managing the Implication of Growth
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Q1) To implement participative management the entrepreneur should have open communication with employees.
A)True
B)False
Q2) Product development strategies use customers' experiences to develop new products for existing customers.
A)True
B)False
Q3) The most often used method of transporting goods is:
A) air transport.
B) truck and rail transport.
C) barge transport.
D) tanker transport.
Q4) The ________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers.
A) value chain
B) inventory
C) electronic data interchange
D) market accounting system
Page 16
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Chapter 14: Accessing Resources for Growth From External
Sources
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Q1) In the ________ task,the mutual benefits from the relationship are explored,making the "size of the pie" larger.
A) distributive
B) assessment
C) integrative
D) reservation
Q2) For the franchisor,the capital required to expand a venture quickly is more than it would be without franchising.
A)True
B)False
Q3) Most ventures that are up for sale have good to very successful profit records.
A)True
B)False
Q4) One advantage of franchising is that the entrepreneur usually enters into a business that has an accepted name and product.
A)True
B)False
Q5) What are the four major factors in joint venture success
Q6) Discuss the main disadvantages of an acquisition.
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Chapter 15: Succession Planning and Strategies for
Harvesting and Ending the
Venture
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Q1) It is best for the entrepreneur to have any litigation in existence transferred to the bankruptcy court.
A)True
B)False
Q2) When business failure looks probable,the entrepreneur should seek outside advice.
A)True
B)False
Q3) Explain the advantages and disadvantages of an ESOP.
Q4) Management buyouts usually involve a ________ of the venture for some predetermined price.
A) hostile takeover
B) foreclosure sale
C) cash sale
D) direct sale
Q5) An ESOP:
A) is a device to transfer the business to a small group of key loyal employees.
B) eliminates the need to perform a complete valuation of the venture.
C) motivates employees because they realize they are working for themselves.
D) removes the need for a continuous performance appraisal.
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