New Venture Creation
Textbook Exam Questions
Course Introduction
New Venture Creation is a dynamic course designed to guide students through the process of identifying, evaluating, and developing new business opportunities. Emphasizing entrepreneurial thinking and innovation, the course covers the key stages of launching a startup, including idea generation, market research, business model development, resource acquisition, and securing funding. Students will engage in hands-on activities such as crafting business plans, pitching proposals, and analyzing case studies, gaining practical experience and insights into the challenges and rewards of entrepreneurship. The course equips aspiring entrepreneurs with the tools and frameworks necessary to turn innovative ideas into successful new ventures in a competitive marketplace.
Recommended Textbook
New Venture Creation Entrepreneurship for the 21st Century 10th Edition by
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Stephen Spinelli
Chapter 1: The Global Entrepreneurial Revolution for a Flatter World
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Sample Questions
Q1) Entrepreneurship will result in equal incomes among the masses.
A)True
B)False
Answer: False
Q2) What is true of the majority of America's self-made entrepreneurs?
A) They accumulated their wealth through luck.
B) They are invisible to most Americans.
C) They fit the media stereotype.
D) They prefer social status to financial independence.
Answer: B
Q3) Entrepreneurship training works well in schools of business and engineering,but it has not proven to be useful in fields such as architecture,medicine,and life sciences.
A)True
B)False
Answer: False
Q4) _____ entrepreneurship means new venture creation. Answer: Classical
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Chapter 2: The Entrepreneurial Mind: Crafting a Personal
Entrepreneurial
Strategy
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Sample Questions
Q1) Successful entrepreneurs are driven by:
A) the quest for power for its own sake.
B) a personal need for authority expressed by control over others.
C) the quest for achievement and results.
D) a need to seek money as an end in itself.
Answer: C
Q2) Successful entrepreneurs possess a well-developed capacity to exert influence without formal power.
A)True
B)False
Answer: True
Q3) Successful entrepreneurs are not gamblers;they take ___.
Answer: calculated risks
Q4) Entrepreneurs are self-starters who are internally driven by a strong desire to compete and attain challenging goals.
A)True
B)False
Answer: True
Q5) The need to build a relationship with others is known as the need for ___.
Answer: affiliation
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Chapter 3: The Entrepreneurial Process
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Sample Questions
Q1) As depicted in the Timmons Model,the entrepreneurial process can be appreciated as a constant balancing act,requiring continual assessment,revised strategies and tactics,and a(n)_____ approach.
Answer: experimental
Q2) Write a brief note on the importance of timing in the entrepreneurial process.
Answer: Decisiveness in recognizing and seizing an opportunity can make all the difference.An entrepreneur should not wait for the perfect time to take advantage of an opportunity:There is no perfect time.Most new businesses run out of money before they can find enough customers and the right teams for their great ideas.
Q3) Entrepreneurs for whom issues of family roots and location take precedence and thereby wish to be with and work with their family may lead them to develop a ________ business.
Answer: lifestyle
Q4) In entrepreneurial companies,bootstrapping is a way of life that can create significant competitive advantages.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Clean Commerce and Sustainable Enterprise
Movements Are an Opportunity Sea Change
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Q1) How are businesses affected by the seismic shift toward clean commerce and sustainable enterprise movements?
Q2) At a macro level,green chemistry provides the means of shifting away from a petrochemical-based economy to a _____ economy.
Q3) Which industry is an early adopter of green chemistry principles in industrial processing?
A) The plastics industry
B) The textile industry
C) The pulp and paper industry
D) The pharmaceutical industry
Q4) The _____ standards provide sustainable building rating systems under the U.S.Green Building Council.
Q5) Some of the most fertile clean commerce opportunities lie in the areas of greatest tension.
A)True
B)False
Q6) Briefly discuss the concept of systems thinking.
Q7) Method keeps R&D inside,but the company outsources ____.
Q8) Define green chemistry,and explain how it relates to molecular thinking. Page 6
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Page 7
Chapter 5: Opportunity Recognition
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Sample Questions
Q1) The development of the value chain and channels of distribution has led to the opportunity creation in ____.
A) financial services
B) telecommunications
C) tax and SEC laws
D) superstores
Q2) Superior opportunities solve a significant problem,remove a serious pain-point,or meet a significant want or need for which someone is willing to pay a(n)____.
Q3) High value for a company can be created by the potential to be a market leader and to capture at least _____ percent share of the market.
A) 10
B) 20
C) 5
D) 15
Q4) In general,when do business plans become obsolete?
Q5) _____ is defined as the period of revenue growth in the life cycle of target industry when the slope of the revenue growth is increasing.
Q6) _____ law states that computer chips double productivity every 18 months.
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Chapter 6: Opportunities for Social Entrepreneurship
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Sample Questions
Q1) _____ is derived from entrepreneurial activities that seek to address problems related to people and problems related to the planet-regardless of profit orientation.
Q2) In the early 1970s,the notion of wicked problems emerged out of the complexity of resolving issues related to ____.
A) price inflation
B) oil shortages
C) urban and governmental planning
D) declining gross domestic product (GDP)
Q3) Which of the following is a characteristic of wicked problems?
A) They have well-defined and stable problem statements.
B) They come with a limited set of alternative solutions.
C) Every problem is unique and novel.
D) The solution to these problems can be easily tried and abandoned.
Q4) The primary difference between traditional ventures and social purpose ventures is the primary market impact.
A)True
B)False
Q5) Using the Grameen Bank in Bangladesh as an example,explain how microloans work.
Q6) What is the result of social entrepreneurship?
Page 9
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Chapter 7: The Business Plan
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Sample Questions
Q1) Who develops a business plan?
Q2) Business plans are seldom obsolete and last throughout the lifecycle of a project. A)True
B)False
Q3) Briefly discuss the nature of venture capitalists that one has to keep in mind when raising venture capital.
Q4) The business plan is more of an end in itself than a work in progress.
A)True
B)False
Q5) Which of the following is the first step in writing an action plan?
A) Creating an overall schedule
B) Creating an action calendar
C) Segmenting information
D) Meeting the venture capitalists
Q6) Preparing and presenting a business plan to prospective investors is one of the best ways for a team to learn about the venture strategy.
A)True
B)False
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Chapter 8: The Entrepreneurial Leader and the Team
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Sample Questions
Q1) Which stage of the entrepreneurial transition faces the probable crisis of confusion over ambiguous roles and responsibilities?
A) The planning stage
B) The doing stage
C) The leading stage
D) The leading managers stage
Q2) The startup stage of venture growth is usually referred to as the nascent stage.
A)True
B)False
Q3) Briefly discuss the entrepreneurial culture in growing new ventures.
Q4) The nascent stage can be as short as a few months or can last years.
A)True
B)False
Q5) At which stage of the entrepreneurial transition do conflicts among founders most often arise?
A) The planning stage
B) The doing stage
C) The leading stage
D) The leading managers stage
Q6) From the high-growth stage of venture growth,a company moves to the _____ stage.
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Chapter 9: Ethical Decision Making and the Entrepreneur
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Q1) Why is it important to study and think about ethical situations in business settings?
Q2) Discuss why entrepreneurs who truly know themselves make the best ethical decisions.
Q3) Broken partnerships can often be traced to apparent differences in the personal ethics among the members of a management team.
A)True
B)False
Q4) The _____ construct classifies moral judgment into six stages of development.
Q5) What are the issues associated with the Aristotelian approach to ethics?
Q6) Whose approach to ethics states that the aim of each person should be to perfect his or her inherent human nature,and if successful,become a person of virtue?
A) J.Stewart Mill
B) Aristotle
C) Carnegie
D) Kant
Q7) Statutes do not always have the effect they were intended to have.
A)True
B)False
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Chapter 10: Resource Requirements
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Sample Questions
Q1) A board of advisors is an especially good alternative to a board of directors because they are authorized to make legal decisions.
A)True
B)False
Q2) What is the best referral system for locating consultants?
Q3) When hiring consultants for a firm,the best referral system is ____.
Q4) One price of resource ownership is an inherent ____.
Q5) How can new venture entrepreneurs without law degrees save money on legal work?
Q6) Effective entrepreneurs are more likely than others to undertake actions toward increasing their network density and ____.
Q7) Why are members of a board of advisors not exposed to personal liability like formal board directors?
Q8) Discuss the three important factors that an entrepreneur must consider when selecting accountants.
Q9) What are the two contradictory suggestions provided by Howard H.Stevenson and William H.Sahlman about using other people resources as an entrepreneur?
Page 13
Q10) If a new venture is organized as a corporation,it must have a board of directors elected by ____.
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Chapter 11: Franchising
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Sample Questions
Q1) At the center of the Franchise Relationship Model (FRM)is the:
A) customer.
B) market.
C) contract.
D) financial structure.
Q2) At the most fundamental level,margin analysis is the defining quality of the opportunity recognition process.
A)True
B)False
Q3) What are the three major profiles used to define the primary target audience?
Q4) A _____ profile segments potential customers based on social class,lifestyle,and personality traits.
Q5) The Timmons Model identifies the three components of opportunity as market demand,market size and structure,and ____.
Q6) In a franchise system,continuous knowledge gathering and transfer are important both before launch and on an ongoing basis.
A)True
B)False
Q7) Describe the Service Delivery System (SDS)component of a franchise offering.
Page 14
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Chapter 12: Entrepreneurial Finance
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Sample Questions
Q1) Increasing sales and healthy profitability ____.
A) lead to positive cash flow
B) lead to negative cash flow
C) lead to zero cash flow
D) have no effect on the cash flow
Q2) An entrepreneur's bargaining power with various sources of equity and debt capital is influenced by the cash flow of the venture.
A)True
B)False
Q3) The date a company runs out of money is called ____.
Q4) Short-term debt is incurred for what time frame?
A) Less than six months
B) One year or less
C) One to five years
D) Depends on the deal structure
Q5) Short-term debt is incurred for _____ months or less.
Q6) List the factors that can affect the availability of various financing options and their suitability and cost.
Q7) What are the three core principles of entrepreneurial finance?
Page 15
Q8) What are the three central issues in entrepreneurial finance?
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Chapter 13: Obtaining Venture and Growth Capital
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Q1) The greatest source of seed and startup capital comes from organized venture capital groups.
A)True
B)False
Q2) What are the three central issues that should be considered when beginning to think about obtaining investment capital?
Q3) Angels or wealthy individuals are often sought because the evaluations they provide of potential investments are more thorough than formal investors.
A)True
B)False
Q4) Discuss how timing is a critical aspect of raising risk capital.
Q5) A private placement should not be offered after a company has already gone public.
A)True
B)False
Q6) With mezzanine financing,the principle amount may be converted into equity.
A)True
B)False
Q7) ESOP stands for ____.
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Chapter 14: The Deal: Valuation, Structure, and Negotiation
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Sample Questions
Q1) The goals of users and suppliers of capital are often contradictory.
A)True
B)False
Q2) Entrepreneurs should rely on expert legal and accounting advice to protect them during the deal-making process.
A)True
B)False
Q3) Strategic circumference is never an intentional outcome.
A)True
B)False
Q4) By _____ their capital contributions,venture capitalists maintain the right to abandon a project whose prospects look dim.
Q5) Explain how strategic circumference relates to fund raising.
Q6) What rate of return (ROR)will a venture capital investor seek from a first stage investment?
A) 30 percent annual ROR
B) 30-40 percent annual ROR
C) 40-60 percent annual ROR
D) 60-80 percent annual ROR
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Chapter 15: Obtaining Debt Capital
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Sample Questions
Q1) Which of the following businesses frequently lend money to companies that do not have positive cash flow?
A) Commercial banks
B) Commercial finance companies
C) Leasing companies
D) Factors
Q2) A factor assumes the credit risk,does credit investigations and collections,and advances funds.
A)True
B)False
Q3) To build credibility with bankers,entrepreneurs should borrow before they need to and then repay the loan.
A)True
B)False
Q4) Identify the two most likely sources of debt financing for a startup company.
Q5) For an established and financially sound company,interest rates are frequently quoted using a(n)_____ with an added premium.
Q6) Factoring is accomplished on a _____ value of the receivables pledged.
Q7) What are the three distinguishing features of term loans?
Page 18
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Chapter 16: Leading Rapid Growth, Crises, and Recovery
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Q1) What are the three most commonly found areas for potential cuts and improvements in a troubled company?
Q2) List the six basic dimensions of organizational climate.
Q3) The best route to quick cash is _____.
Q4) Describe how effective group communication is facilitated in successful entrepreneurial firms.
Q5) In highly successful ventures,leadership is based on _____ rather than on authority.
Q6) What is the major protection for organizations against trouble caused by external forces?
A) Long-term strategies
B) Cash budgets and projections
C) Experienced advisors and directors
D) Mergers and acquisitions
Q7) In rapid growth situations where cash burn rates are racing ahead of collections,what measures need to be in place to avoid chaos and possible collapse?
Q8) _____ refers to the problem of starting a firm around an idea without strategically analyzing the firm's opportunities.
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Chapter 17: The Family As Entrepreneur
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Q1) Discuss why a financial mind-set is more effective than an operational mind-set.
Q2) The family _____ category occurs when an existing family company or group starts new businesses.
Q3) When entrepreneurial processes are institutionalized through governance structures and policies,this promotes growth and change activities. A)True B)False
Q4) The job of families who desire to be enterprising is to determine how to generate and exploit their _____ familiness and to minimize or shed their _____ familiness.
Q5) The _____ assumes that enterprising organizations are taking bold,innovative,market-leading actions to seek a competitive advantage and generate new streams of value.
Q6) What is transgenerational entrepreneurship?
Q7) The idiosyncratic bundle of resources and capabilities that can give an enterprising family an advantage in the entrepreneurial process is referred to as its _____.
Q8) What are the six dimensions for family enterprising?
Q9) List five attributes of relationship capital.
Page 20
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Chapter 18: The Harvest and Beyond
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Q1) Which harvest option can force a leadership team to focus on short-term profits and performance results?
A) Management buyout (MBO)
B) Employee Stock Ownership Plan (ESOP)
C) Initial Public Offering (IPO)
D) Strategic Alliance
Q2) What are the three anchors of entrepreneurial process that loom above the rest?
Q3) Managing a business that is oriented to harvest is less stressful than managing a business that is not.
A)True
B)False
Q4) A public offering increases public awareness of the company and contributes to the marketability of the products.
A)True
B)False
Q5) If begun early in the venture-building process,shaping a harvest strategy is a straightforward task.
A)True
B)False
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