Entrepreneurship and Innovation Concepts Quiz
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Questions and Answers

What describes the difference in performance achieved by new innovations plotted against time?

  • S-curve (correct)
  • Growth model
  • Trend line
  • Exponential curve

What type of innovation involves improvements made on existing products?

  • Radical innovation
  • Disruptive innovation
  • Revolutionary innovation
  • Incremental innovation (correct)

Which term is used to describe innovations that fundamentally alter the market or industry?

  • Incremental innovation
  • Radical innovation
  • Disruptive innovation (correct)
  • Sustaining innovation

What is referred to as the time period during which opportunities exist before they are eliminated?

<p>Time horizon (A)</p> Signup and view all the answers

What do opportunity costs refer to in the context of decision-making?

<p>Value of benefits lost from choosing one alternative over another (B)</p> Signup and view all the answers

What term describes sources of ideas used in the innovation process?

<p>Patents (A)</p> Signup and view all the answers

What is typically required to sustain a company over a defined period of time?

<p>Capital (C)</p> Signup and view all the answers

What is the characteristic of a product life cycle?

<p>It continually declines. (B)</p> Signup and view all the answers

What is the primary focus of entrepreneurs who prioritize personal lifestyle over growth?

<p>Work-life balance (B)</p> Signup and view all the answers

What is the main goal of Stage 1 in the entrepreneurial process?

<p>Defining opportunity criteria (A)</p> Signup and view all the answers

Which stage in the entrepreneurial process includes setting goals and writing the business plan?

<p>Stage 2 (C)</p> Signup and view all the answers

What is considered a vital document for a company that is also dynamic?

<p>Business plan (B)</p> Signup and view all the answers

What is the name given to Stage 5 of the entrepreneurial process?

<p>Scaling and Harvesting the Venture (C)</p> Signup and view all the answers

What differentiates an entrepreneurial firm from other businesses?

<p>Its capacity to influence the environment (C)</p> Signup and view all the answers

How many new businesses are typically started each year in the United States?

<p>700,000 (C)</p> Signup and view all the answers

What is the failure rate of new companies within the first two years?

<p>24 percent (A)</p> Signup and view all the answers

Which area of research is directly focused on the potential for patent or copyright protection?

<p>Proprietary (C)</p> Signup and view all the answers

What is a common pitfall when ensuring the quality of survey data?

<p>Avoiding telephone interviews (D)</p> Signup and view all the answers

Which recommendation does not contribute to cost-cutting in market research?

<p>Testing multiple products simultaneously (A)</p> Signup and view all the answers

Which component is considered the foundation of a business?

<p>Business plan (A)</p> Signup and view all the answers

What is classified as Phase 4 of the five phases of success?

<p>Determine the Resources Needed (D)</p> Signup and view all the answers

Which phase represents the final step in the five phases of success?

<p>Manage the Business (C)</p> Signup and view all the answers

Which criterion is least significant when assessing an opportunity?

<p>Availability of necessary resources (A)</p> Signup and view all the answers

Which condition would most likely raise doubts about an opportunity's viability?

<p>Gross margin on sales after three years is 25% (A)</p> Signup and view all the answers

Which type of marketing focuses on a small segment of a larger market often ignored by other companies?

<p>Niche marketing (D)</p> Signup and view all the answers

Which of the following is a necessary step to effectively practice one-to-one marketing?

<p>Calculate individual customer lifetime value (D)</p> Signup and view all the answers

What is the primary focus of psychographic segmentation in marketing?

<p>Cultural and social affiliations (C)</p> Signup and view all the answers

Which term describes the process of creating a unique position in the market for a startup's products?

<p>Positioning (B)</p> Signup and view all the answers

What is meant by contribution in the context of selling a service?

<p>Difference between selling price and variable costs (C)</p> Signup and view all the answers

Which factor does not typically underlie hidden profit potential in marketing?

<p>Targeting high-value customer segments (A)</p> Signup and view all the answers

Which type of marketing aims to motivate customers to recommend products to others?

<p>Viral marketing (D)</p> Signup and view all the answers

What is the role of trade shows in marketing?

<p>To generate leads and showcase products (B)</p> Signup and view all the answers

Which type of profit is derived from reducing the amount spent on purchases?

<p>Profit Derived from Decreased Purchases (B)</p> Signup and view all the answers

Demographic segmentation does not divide a market by which of the following?

<p>Geography (C)</p> Signup and view all the answers

Which of the following methods is not recognized as a way to segment a market?

<p>Viral Segmentation (D)</p> Signup and view all the answers

Which segmentation is particularly significant for businesses that focus on local markets?

<p>Geographic Segmentation (D)</p> Signup and view all the answers

Ethnic segmentation can be perceived as uncomfortable in areas with previously discriminatory practices for what reason?

<p>It can reignite historical tensions. (A)</p> Signup and view all the answers

In a combination segmentation, which two types of segmentation are typically merged?

<p>Demographic and Geographic Segmentation (B)</p> Signup and view all the answers

Market segmentation based on demographics includes which of the following?

<p>Defining customers by income level (A)</p> Signup and view all the answers

Which aspect is NOT a factor in effective market segmentation?

<p>Group alignment with location (B)</p> Signup and view all the answers

Which step follows the drafting of the outline in the business plan writing process?

<p>Review the Outline (A)</p> Signup and view all the answers

What defines the document that management uses to implement the business plan?

<p>Action plan (B)</p> Signup and view all the answers

Which of the following is typically not included in the executive summary of a business plan?

<p>Temporary Position (D)</p> Signup and view all the answers

For what purpose should an entrepreneur ideally use a full business plan?

<p>To describe the business in detail (B)</p> Signup and view all the answers

Which audience is least likely to require access to a business plan?

<p>Potential customers (C)</p> Signup and view all the answers

What aspect of a business plan is least likely to be addressed regarding government influence?

<p>Government's role (D)</p> Signup and view all the answers

What is the recommended length for an executive summary in a business plan?

<p>One page (B)</p> Signup and view all the answers

Which question does not pertain to writing the overview of the company's operations?

<p>How much money will the business bring in? (B)</p> Signup and view all the answers

Flashcards

Stage 1 of the entrepreneurial process

The process of identifying and evaluating a potential business opportunity.

Stage 2 of the entrepreneurial process

The stage where entrepreneurs develop a detailed business plan, including market research, financial projections, and operational details.

Stage 3 of the entrepreneurial process

The stage where entrepreneurs gather resources, build their team, and launch their business.

Stage 4 of the entrepreneurial process

The stage where entrepreneurs establish their business and focus on generating profits.

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Stage 5 of the entrepreneurial process: Scaling and Harvesting the Venture

The stage where entrepreneurs look for ways to expand the business, potentially by acquiring other companies or expanding into new markets.

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A full business plan

A critical document for a company that outlines business goals, strategies, and financial projections.

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Entrepreneurial firm

A company that has grown large enough to influence its environment and become a leader in its industry.

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Failure rate of new companies

The percentage of new businesses that fail within the first two years.

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Proprietary Research

This research area determines if a product or service is eligible for patent or copyright protection.

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Market Research

This involves evaluating the size of the potential market and the competitors within that market.

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Determine the Resources Needed

This stage of the entrepreneurial process involves identifying and assessing the resources needed for your business.

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Seize the Opportunity

This phase focuses on taking action and actively pursuing opportunities.

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Manage the Business

This phase emphasizes the ongoing management of the business, including finances, operations, and growth strategies.

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Consistent Survey Questions

Ensuring that all participants receive the same survey questions is crucial for obtaining consistent and reliable data.

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Telephone vs. Postal Surveys

Using the telephone instead of mail surveys can potentially save costs.

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Business Plan

The business plan is a vital element for any enterprise as it outlines the company's strategies, objectives, and financial projections.

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S-curve

A visual representation that shows how the performance of a new innovation changes over time, often displaying an initial slow growth period followed by rapid acceleration and then eventual plateauing.

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Incremental Innovation

A type of innovation that makes gradual improvements to existing products or processes, enhancing their performance but not fundamentally altering them.

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Disruptive Innovation

A type of innovation that disrupts the existing market by introducing entirely new products, services, or business models; often challenging established players.

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Window of Opportunity

A period of time within which an opportunity exists, but it may disappear if not acted upon quickly. It's a time window where entrepreneurs need to take initiative and exploit the opportunity before it closes.

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Opportunity Costs

The potential benefits lost by choosing one option over another. It's the cost of not taking the other opportunity.

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Capital

The critical financial resources required to sustain a company's operations for a specified period. It's the money needed to cover expenses and ensure the business's viability.

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Venture Capital

A type of investment fund dedicated to providing capital to early-stage companies with high growth potential. It's a vital source of funding for startups.

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Niche market

A small market segment ignored by other businesses, potentially offering a unique opportunity for a startup.

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Strategic market segmentation

Marketing strategies specifically designed for each target market identified by the company.

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One-to-one marketing

Marketing approach focused on understanding individual customer profiles and tailoring offerings to their specific needs.

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Psychographic segmentation

A type of market segmentation that classifies customers based on their cultural background, values, and social groups.

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Positioning

The process of creating and maintaining a distinct and desirable position for a company or its products in the market.

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Contribution

The difference between the variable cost of selling one additional unit and the revenue generated from its sale.

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Direct salesforce

A team of salespeople directly employed by a company, compensated through salary, commission, or a combination of both.

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Trade shows

Events where businesses showcase and sell their products to a targeted audience within a specific industry.

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Demographic Segmentation

A type of market segmentation that categorizes customers based on their age, gender, income, and other demographic characteristics.

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Combination Segmentation

A segmentation method that combines demographic and geographic factors to target customers based on their location and demographic characteristics.

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Geographic Segmentation

A type of market segmentation that identifies customers based on their geographical location, such as city, region, or country.

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Reviewing the Outline

The process of reviewing and refining the initial structure of a business plan.

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Ethnic Segmentation

This type of segmentation is often considered uncomfortable due to the possibility of reinforcing negative stereotypes associated with ethnic groups.

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Drafting the Plan

The step where you transform the plan outline into a detailed written document, including all necessary sections.

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Executive Summary

A concise overview of your business, outlining its core concept, financial features, and key success factors.

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Market Segmentation by Demographics: Income Level

A method for classifying customers based on their income level to understand their purchasing power and spending habits.

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Market Segmentation by Geography: Location

A method for identifying customers based on their geographic location, such as the city or region they reside in.

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Action Plan

A document used by the business management team to implement the plan, outlining specific actions and timelines.

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Effective Segmentation: Customer Needs and Ability to Pay

Identifying potential customer groups with differing needs and evaluating their willingness and ability to pay for a product or service is crucial for effective market segmentation.

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Title Page for a Business Plan

The title page of a business plan should contain the company's contact information.

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Executive Summary Length

An executive summary should be concise and informative, ideally within a 2-3 page range.

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Company Overview

This section of the business plan addresses the company's mission, industry, products, services, and target market.

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Study Notes

Entrepreneurial Process

  • Entrepreneurship is the process of planning, organizing, operating, and assuming the risk of a business venture.
  • The word "entreprendre" refers to individuals who undertake the risk of new enterprises.
  • Entrepreneurs often communicate with external stakeholders, such as investors and bankers.
  • Aspiring entrepreneurs often hope to be their own bosses and transition from employment to starting a business, but this is not always the case.
  • Entrepreneurs are often not open to change and may hold onto old plans even if they are unsuccessful, potentially leading to escalation of commitment.
  • Many companies fail due to management limitations by their founders.
  • Small business skills are not necessarily transferable to running a large firm.
  • Entrepreneurs with limited experience and resources should consider outside help.
  • Most businesses start small and grow to be large corporations (historically).
  • The failure rate of new businesses is high (around 80-90%) within the first two years.

Business Models

  • A business model is a framework that allows entrepreneurs to examine their business plans and explore alternative ways for their companies to function and grow profitably, minimizing competition.

  • The Five Component Model has key topics to consider when exploring different business models.

  • It's crucial to capture data on customer requirements and use data to develop unique services or products to compete effectively.

  • A business model based on information sharing offers low barriers to competitors due to the cost of integrating incompatible data or computer systems.

  • Licensing and franchising are key components of a successful business model.

  • Some companies' business models focus entirely on licensing without producing or selling physical products.

  • Outsourcing is key to enabling companies to focus their resources on higher-value activities.

Analyzing Markets, Customers, and Competition

  • Entrepreneurs use marketing research to identify needs and to better understand marketing and customer issues related to the product or service.
  • Market research for startups is often costly.
  • Free software tools like Google Maps are available to help track website effectiveness.
  • Successful businesses frequently utilize broader market segment approaches (rather than targeted ones).
  • One-to-one marketing is becoming crucial to effectively compete.
  • Marketing plans often emphasize acquisition but not customer loyalty.
  • Once the marketing, analysis, and review of competition are detailed, then a product research plan can be developed.
  • Using sales agents allows entrepreneurs to sell competitors' products as part of a line, but potentially relinquishes some control over sales activities.
  • Screening questions are vital after trade shows for finding qualified sales leads.

Writing the Winning Business Plan

  • A business plan tests a business idea’s viability and guides the entrepreneur.
  • A business plan is a document to show investors and potential partners the direction the company seeks.
  • A business plan is not meant to be a detailed timeline (45 to 60 pages), but rather a way to understand the overall business idea and direction.
  • A business plan's main purpose is to secure funding, not human capital.
  • A well-written plan can control entrepreneurial life.
  • Market research is crucial, not the central focus of the plan.
  • The marketing and sales section explains how the business will implement its marketing plan for high performance. The talents and skills of the management team should be detailed.
  • The financial plan is adaptable and not fixed in format.

Early-Stage Funding

  • Start-up funding in today's world is frequently possible.
  • Credit cards, outsourcing, and securing angel funding and other forms of investor money are common avenues.
  • The best angel investors can offer valuable contacts, experience, and potentially long-term financing.

Setting up the Company

  • The sole owner typically has the right to make decisions.
  • Sole proprietorships are fast and easy to establish.
  • There's often no pre-determined "best" option for a business structure to follow.
  • Sole proprietorships often have unlimited personal liability, but this is different for corporations.
  • Corporations have their equity divided across shared stock.
  • The board of directors is not selected by the CEO.
  • A limited liability company is not a tax benefit (not equivalent to a partnership).

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Description

Test your knowledge on key concepts of entrepreneurship and innovation. This quiz covers essential terms, processes, and characteristics crucial for understanding how innovations affect market dynamics and decision-making in business. Perfect for students and professionals looking to assess their understanding of entrepreneurial principles.

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