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Chapter 1: The Entrepreneurial Process True/False 1. Entrepreneurship is the process of planning, organizing, operating, and assuming the risk of a business venture. Ans: True Page: 4 2. The word entreprendre refers to the individuals who “undertook” th...

Chapter 1: The Entrepreneurial Process True/False 1. Entrepreneurship is the process of planning, organizing, operating, and assuming the risk of a business venture. Ans: True Page: 4 2. The word entreprendre refers to the individuals who “undertook” the risk of new enterprise. Ans: True Page: 5 3. Fortunately, entrepreneurs do not communicate with external “stakeholders” such as investors and bankers. Ans: False Page: 5 4. Aspiring entrepreneurs hope for the chance to be their own bosses and have made the leap from their current employment into the uncertainty of a start-up. Ans: False Page: 7 5. One negative aspect of entrepreneurs, according to research, is that they are not open to change and they hang on to old plans even when they are not working contributing to escalation of commitment. Ans: False Page: 8 6. Many companies fail because the founders do not confront their management limitations. Ans: True Page: 9 7. Fortunately, the skills needed to run a small company are not different from those required to run a larger firm. Ans: False Page: 10 8. If an entrepreneur has limited experience and limited internal resources, outside help is not necessary. Ans: False Page: 10 9. Looking at the historical trend, it is safe to say that most businesses start small and grow to be a large corporation. Ans: False Page: 17 10. The failure rate of new businesses is very high, about 80-90 percent within the first two years. Ans: False Page: 18 Short Answer / Fill in the Blank 11. _____________ have developed an enterprise that fits their individual circumstances and style of life, and their basic intention is to earn an income for themselves and their families. Ans: Lifestyle entrepreneurs Page: 7 12. _______________ often seem to be possessed by their ideas, committing their lives to changing the direction of their field. Ans: Social entrepreneurs Page: 7 13. The first decision that an entrepreneur should make is whether personal lifestyle and control are more important than ____________ and eventual wealth creation. Ans: growth Page: 8 14. The basic objective of Stage ________________ of the entrepreneurial process is to define the criteria that would make a business opportunity worthwhile. Ans: 1 Page: 13 15. Setting goals and objectives, starting to write the plan, determining pricing, and preparing a full business plan are part of Stage _______________ of the entrepreneurial process. Ans: 2 Page: 14 16. A full ____________ is a vital yet dynamic document for a company. Ans: business plan Page: 15 17. Stage 5 of the entrepreneurial process is called ____________________. Ans: Scaling and Harvesting the Venture Page: 16 18. A(n) _________________ is one that grows large enough to influence the environment and, thus, becomes a pacesetter. Ans: entrepreneurial firm Page: 17 19. Each year at least ____________ new businesses are started in the United States, and of these, a small proportion turn out to be the fast-growth companies that propel the economy forward. Ans: 700,000 Page: 17 20. The failure rate of new companies is ________ percent within the first two years. Ans: 24 Page: 18 Multiple Choice 21. Which of the following is not a characteristic of entrepreneurs: a. Self-starters b. Lethargic c. Optimists d. Perseverant Ans: B Page: 5 22. An entrepreneur is driven mainly by: a. The control of resources b. Changing technology c. The perception of opportunity d. Planning systems Ans: C Page: 6 23. Ray Smilor identified all of these entrepreneurs types except: a. Growth entrepreneurs b. Aspiring entrepreneurs c. Lifestyle entrepreneurs d. Technology entrepreneurs Ans: D Page: 7 24. The type of entrepreneur that have the desire and the ability to grow as fast and as large as possible is: a. Growth entrepreneurs b. Aspiring entrepreneurs c. Lifestyle entrepreneurs d. Technology entrepreneurs Ans: A Page: 7 25. Individuals with innovative solutions to society’s most social problems are classified as: a. Lifestyle entrepreneurs b. Aspiring entrepreneurs c. Growth entrepreneurs d. Social entrepreneurs Ans: D Page: 7 26. Technology entrepreneurs have ideas triggered by developments in: a. math and sociology b. science and history c. social studies and business d. science and engineering Ans: D Page: 7 27. Building ventures around new technology requires specialist knowledge in all of the following except: a. social science b. language arts c. economics d. markets Ans: B Page: 7 28. A spider-web provides an analogy to a small company because: a. It is continually under attack from outside. b. It has both radial and circumferential axes. c. It has multiple points for support on the outside. d. It is fragile. Ans: D Page: 10 29. To relieve stress you should: a. Work over the weekend if necessary b. Plan non-work personal time c. Work more intensely d. Work less Ans: B Page: 13 30. Which of the following is not a characteristic of relieving stress: a. Get advice on time-management techniques b. Try to live at least twenty minutes from work c. Do not delegate d. Build in some slack time Ans: C Page: 13 31. In what stage of the entrepreneurial process do you evaluate the competition? a. Stage 1 b. Stage 2 c. Stage 4 d. Stage 5 Ans: A Page: 14 32. In what stage of the entrepreneurial process would managing the finances take place? a. Stage 2 b. Stage 3 c. Stage 4 d. Stage 5 Ans: C Page: 14 33. Forming a strategic alliance and discussing options and alternatives are part of what stage of the entrepreneurial process?  a. Stage 2 b. Stage 3 c. Stage 4 d. Stage 5 Ans: D Page: 14 34. Which of the following is not a stage of the entrepreneurial process? a. Developing the plan and setting up the company b. Buying an existing company c. Scaling and harvesting the venture d. Conducting opportunity analysis Ans: B Page: 14 35. All of the following are early-stage funding sources except: a. family and friends b. banks c. government sources d. IPO Ans: D Page: 15 36. Stage 4 is: a. Scaling and Harvesting the Venture b. Determining the Resources Required and Implementing the Plan c. Developing the Plan and Setting up the Company d. Acquiring Financial Partners/Sources of Funding Ans: B Page: 16 37. Entrepreneurship includes all of the following except: a. small businesses b. family-owned businesses c. large businesses d. high-technology start-ups Ans: C Page: 17 38. What percent of all U.S. businesses employ twenty or fewer people? a. Approximately 98 b. Approximately 87 c. Approximately 65 d. Approximately 50 Ans: B Page: 17 39. The past ______ years have been years of tremendous growth for entrepreneurial companies and for the individuals who make them thrive. a. 50 b. 2 c. 15  d. 7 Ans: C Page: 17 40. How many new businesses are started in the United States each year?Approximately a. 700,000 b. 1.5 million c. 450,000 d. 100,000 Ans: A Page: 17 41. Most businesses do this: a. Start big, stay big b. Start small, become big c. Start small, stay small d. Start big, become small Ans: C Page: 17 42. All of the following are reasons people become entrepreneurs except: a. working with others b. make your own decisions c. flexibility d. financial rewards Ans: A Page: 18 43. The failure rate of new companies is this percent in the first ten years: a. 85-95 b. 80-90 c. 70-80 d. 75-85 Ans: B Page: 18 44. Most business ventures that fail are: a. More than five years old. b. Less than ten years old. c. Less than one year old. d. More than ten years old. Ans: B Page: 18 45. Most companies fail because of: a. having too much money b. focusing on a bad idea c. confronting complex management decisions without experience d. not having enough employees Ans: C Page: 18  Chapter 2: The Art of Innovation True/False 1. The frameworks in which a sustainable, high-profit company is constructed are called business models. Ans: True Page: 26 2. Unfortunately, North America has one of the lowest percentages of people with Internet access. Ans: False Page: 27 3. Geographical location no longer provides any significant advantage for access to major sources of capital. Ans: True Page: 29 4. A product life cycle is the time that a product is able to command a high profit margin in the market before it becomes obsolete or develops intense competition. Ans: True Page: 29 5. Product development times have increased from 200 days three years ago to an average of 225 days now. Ans: False Page: 29 6. Fortunately, it is becoming easier for a company to build around a single product idea without strong patent protection. Ans: False Page: 30 7. The first step for any entrepreneur is to generate an idea for a new business. Ans: True Page: 39 8. Asking the right questions and preparing the business plan are components of phase 3 in the five phases to success. Ans: True Page: 41 9. To eliminate receiving questionable data, you should train and monitor survey recorders and telephone interviews to ensure consistent results. Ans: True Page: 44 10. The final phase of the five step model of success is “Develop the Plan.” Ans: False Page: 46 Short Answer / Fill in the Blank 11. Successful ____________ is the use of new technological knowledge, and/or new market knowledge, employed within a business model that can deliver a new product and/or service to customers who will purchase at a price that will provide profits. Ans: innovation Page: 31 12. The ___________ is often used to illustrate the difference in which the performance achieved by new innovation is plotted against time. Ans: S-curve Page: 32 13. Usually, improvements can be made with ____________ innovations, pushing the original curve higher. Ans: incremental Page: 32 14. The term _______________ is often used to describe innovations that disrupt the status quo. Ans: disruptive innovation Page: 33 15. ___________ are sources of ideas. Ans: Patents Page: 39 16. Many new companies are built around a radical or ____________ technology. Ans: breakthrough Page: 40 17. A window of opportunity is a __________________ during which opportunities exist before something else happens to eliminate them. Ans: time horizon Page: 42 18. ________________ are the value of benefits lost when one decision or idea alternative is selected over another. Ans: Opportunity costs Page: 42 19. A(n) _______________ charts the current and future components of the business in about thirty to forty pages. Ans: business plan Page: 45 20. Sufficient ___________ is required to sustain the company for a specific length of time, possibly a one- or two-year period. Ans: capital Page: 46 Multiple Choice 21. More than ___________ new web pages are being added daily to the Internet. a. 18 million b. 500,000 c. 50 million d. 7 million Ans: D Page: 27 22. ___________ funds are a very small part of total growth capital. a. Technology b. Trade c. Venture capital d. International Ans: C Page: 29 23. A product life cycle is continually: a. increasing b. declining c. increasing in a step ladder pattern d. fluctuating Ans: B Page: 29 24. Incremental innovation means that: a. A start-up company grows slowly. b. Improvements are made on existing products and services. c. Innovation is only applied to the way that things are made. d. It is the safest strategy for a start-up to follow. Ans: B Page: 31 25. Radical innovation means that: a. Nothing from the past is retained. b. It applies only to products. c. It changes the rules of competition. d. It is too risky for a start-up to follow. Ans: C Page: 32 26. Which of the following is not on the list of some important innovations by U.S. small firms in the last century: a. GPA b. Airplane c. Zipper d. Heat sensor Ans: A Page: 34 27. All of the following are ways to build upon already existing material and still provide a profit-driven concept except: a. Market the product at a higher price. b. Add value to an existing product or service. c. Develop or redesign a new version of an existing product. d. Develop ideas as an extension or redesign an existing service. Ans: A Page: 39 28. There are more than ___________ patents issued in the United States. a. 31 million b. 17 million c. 8 million d. 60 million Ans: C Page: 39 29. Only about ________ percent of existing patents have actually been commercialized. a. 20 b. 10 c. 2 d. 32 Ans: B Page: 40 30. Of the five phases of success, which one is where the opportunity would be seized: a. Phase 1 b. Phase 2 c. Phase 3 d. Phase 4 Ans: A Page: 41 31. Which of the following is not a technology factor: a. Industry standards b. Niche market applications c. Infrastructure replacement d. Technology generation Ans: D Page: 41 32. Which of the following is not an economic factor? a. Better service b. Productivity gains c. Market changes d. Government and privacy issues Ans: C Page: 42 33. Of the five phases of success, which one is Phase 2? a. Develop the Plan b. Manage the Business c. Determine the Resources Needed d. Investigate the Need through Market Research Ans: D Page: 42 34. Of the five phases of success, Phase 3 is: a. Develop the Plan b. Manage the Business c. Determine the Resources Needed d. Investigate the Need through Market Research Ans: A Page: 45 35. Which of the following area of research help answer the question: “Can the product/service be patented or copyrighted?” a. Sales b. Proprietary c. Niche/competition d. Cost and manufacture Ans: B Page: 43 36. To eliminate receiving questionable data, all of these pitfalls must be avoided except: a. Train and monitor survey recorders. b. Make certain that the answers are accurate by maintaining an objectivemethod of questioning. c. Ensure that all of the participants are asked the same questions. d. Eliminate telephone interviews. Ans: D Page: 44 37. All of the following are cost-cutting recommendations except: a. Use search engines and web pages b. Use social media methods to access potential customers c. Test only one product at a time d. Use the telephone instead of mail survey Ans: C Page: 45 38. ______is(are) the backbone of the business. a. Employees b. Business plan c. Phases of Success d. Data Base Ans: B Page: 45 39. Of the five phases of success, which one is Phase 4? a. Determine the Resources Needed b. Develop the Plan c. Investigate the Need through Market Research d. Seize the Opportunity Ans: A Page: 46 40. Of the five phases of success, which one is Phase 5? a. Seize the Opportunity b. Develop the Plan c. Investigate the Need through Market Research d. Manage the Business Ans: D Page: 46 41. Which of the following criteria is least important when evaluating an opportunity? a. Size of the market b. Competitors c. Value provided to the targeted customers d. Having the resources in place to execute on the plan Ans: D Page: 47-48 42. Which of the following criteria would most lead you to question the viability of an opportunity? a. Gross margin on sales after three years is 25%. b. Total available domestic market is$80MM. c. The market is growing at 60% per annum. d. You only have two customers willing to buy your product currently. Ans: A Page: 47-48 43. The evaluation screening for patent protection includes all of the following except: a. If the fee for a patent search and application affordable b. Is the service, product, or idea unique to get a head start on the competition? c. Is the field changing so slowly that the innovation will be valuable for at least 5 years? d. Has an attorney discussed the options and recommended that a patent be pursued? Ans: C Page: 48  Chapter 3: Designing Business Models True/False 1. A business model provides a framework in which entrepreneurs can examine their business plans and explore alternative ways for their companies to function and grow profitably while building barriers to ward off competitors. Ans: True Page: 57 2. The Five Component Model has nine key topics to consider when exploring different business models. Ans: False Page: 58 3. Capturing data on customer requirements and using it to create unique services or products can be a powerful way of adding value and keeping out competitors. Ans: True Page: 61 4. A business model based on information sharing can provide low barriers against competitors because the costs involved in integrating incompatible data and computer systems can be prohibitive. Ans: False Page: 62 5. Unfortunately, licensing and franchising are not valuable components of a business model. Ans: False Page: 63 6. Interestingly, some companies base their business models entirely on licensing and have no intention of producing or selling any product. Ans: True Page: 64 7. An entrepreneur should not seek to be a franchisee or build a business as a franchisor without seeking competent legal advice. Ans: True Page: 65 8. The key advantage of outsourcing is that it enables you to invest your resources in more profitable activities. Ans: True Page: 69 9. Large companies are nearly always stretched for resources,however, use of outsourcing should not be part of their business models. Ans: False Page: 69 10. Outsourcing functions range from use of individual specialist consultants and focused service providers to full manufacturing facilities and large software program developers. Ans: True Page: 69 Short Answer / Fill in the Blank 11. A(n) ________ provides a framework in which entrepreneurs can examine their business plans and explore alternative ways for their companies to function and grow profitably while building barriers to ward off competitors. Ans: business model Page: 57 12. _____________ is the value created for the user of the product or service. Ans: Value proposition Page: 58 13. Suppliers, customers, and other stakeholders operate more and more in ______________. Ans: value networks Page: 58 14. If you can enter the market and build your customer base before anyone else, you achieve ____________ in which it becomes harder and harder for competitors to get into the market and convince your customers to switch. Ans: first-movers’ advantage Page: 61 15. Licensing ________ and refer to types of contracts between an issuing entity and a receiving entity. Ans: franchising Page: 63 16. A(n) _________ license provides just one licensee the rights stated in the agreement. Ans: exclusive Page: 64 17. ____________ are paid as a percentage of net sales of products or services. Ans: Running royalties Page: 64 18. ___________ may prevent a licensee from just sitting on the rights and not trying to generate sales. Ans: Minimums Page: 64 19. A(n) ____________ is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. Ans: franchise Page: 65 20. The _________ allows a franchisee to participate in building a business together with other franchisees, under the rules stipulated by the franchisor and under certain conditions spelled out in the agreement. Ans: franchise agreement Page: 65-66 Multiple Choice 21. Which of the following factors are not important when designing a business model? a. Understanding customers’ values b. Having Venture Capital Investment c. Analyzing current and potential customers d. Clearly identifying the markets that you will enter. Ans: B Page: 58 22. Which of the following is the term for users to whom the product or service is useful and for what purpose? a. Cost structure b. Market segment c. Profit potential d. Value proposition Ans: B Page: 58 23. Formulating which of these allows the innovating firm to gain and hold advantage over rivals? a. Competitive strategy b. Value networks c. Market segment d. Value discounts Ans: A Page: 58 24. It is recommended that the Business Model Canvas be used in _________ sessions. a. Individual b. Team c. Small d. Large Ans: B Page: 58 25. Data lock-ins inhibiting a move to a competitor can be found in which of the following? a. E-mail services b. Banking c. Health care services d. All of these. Ans: D Page: 62 26. The authorsrecommend that a small company restrict the number of licenses it issues to how many competitors? a. Three or four b. Five or six c. Two or three d. One or two Ans: C Page: 64 27. Which of the following is the term used to describe the fee that may be paid to initiate the contract? a. Running royalties b. Minimums c. Up-front d. Advances Ans: C Page: 64 28. _________ may prevent a license from just sitting on the rights and not trying to generate sales. a. Running royalties b. Minimums c. Up-front fees d. Marketing Ans: B Page: 64 29. Which of the following is the term for a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business? a. License agreement b. Franchise c. Exclusive license d. Running royalty Ans: B Page: 65 30. Which is the best-known franchise organization? a. Wendy’s b. Arby’s c. Chick-Fil-A d. McDonald’s Ans: D Page: 65 31. The federal government has issued regulations that require franchisors to prepare what type of document? a. UFCO b. UFCC c. UFOC d. UFDC Ans: C Page: 65 32. A franchise agreement need not have the following conditions stated: a. Payments that must be made to the franchisor b. The location where the franchisee may operate c. Guidelines on using the franchisor’s brand d. The expiration date of the patent that is being franchised Ans: D Page: 66 33. For a franchise agreement, the typical length of agreement for initial period is around: a. 8 years b. 9 years c. 7 years d. 10 years Ans: C Page: 66 34. Limitations of franchise agreements include all of the following except: a. treatment of confidentiality b. general legal requirements c. non-compete stipulation d. legal advice Ans: D Page: 66 35. Every company is now contemplating ______ for some or even most of its functions. a. insourcing b. outsourcing c. running royalties d. upfront fees Ans: B Page: 68 36. What is the key advantage of outsourcing? a. It enables one to invest resources in more profitable activities. b. It is impossible to do it alone. c. It builds a virtual company. d. Resources are more valuable. Ans: A Page: 69 37. Outsourcing is attractive because: a. It allows a customer to learn about your internal processes. b. You should only retain routine processes within the company. c. Fixed costs can be reduced. d. It avoids having to train your employees in special skills. Ans: C Page: 69 38. Outsourcing implies loss of direct control and _______. a. supervision b. standards c. performance d. communication Ans: A Page: 70 39. Social networks are: a. Club members. b. Not-for-profit organizations. c. Missionaries. d. Online communities sharing common interests.  Ans: D Page: 70 40. We live in a global economy where changes occur ____________. a. slowly b. primarily within borders of economy c. rapidly d. with governmental intervention only Ans: C Page: 71 41. A large corporation can license rights to a small company’s _____________. a. intellectual property b. running royalties c. business profits d. networks Ans: A Page: 71  Chapter 4: Analyzing the Market, Customers, and Competition True/False 1. Entrepreneurs usually engage in marketing research for two reasons: (1) to identify the need and opportunity for the venture and (2) to understand marketing and customer issues that relate to the product or service. Ans: True Page: 79 2. Fortunately, market research is not a costly exercise for a startup company. Ans: False Page: 79 3. Google also offers free software tools to monitor web site effectiveness called Google Maps. Ans: False Page: 81 4. Marketing objectives are likely to be based on sales revenues and market share. Ans: True Page: 83 5. Given the rising cost of target marketing, generic marketing is the strategy used by most successful businesses today. Ans: False Page: 85 6. One-to-one marketing is rapidly becoming a competitive imperative. Ans: True Page: 85 7. Marketing plans often place a great deal of emphasis on acquisition but not on customer loyalty. Ans: True Page: 86 8. Once the marketing analysis and competition review are established, the entrepreneur should begin to develop the product research plan. Ans: False Page: 91 9. The advantage of using sales agents is that they usually sell other competitors’ products or services as part of a complete line. Ans: False Page: 94 10. After the trade show, the company should develop screening questions to identify solid sales leads. Ans: False Page: 95 Short Answer / Fill in the Blank 11. The ________ is the first step in determining what further information is required to build out a marketing plan, and is the basis for a method for collecting information, analyzing results, and communicating findings. Ans: embedded survey Page: 83 12. A(n) ________ is a small segment of a large market ignored by other companies. Ans: niche market Page: 84 13. Marketing tactics are developed for each target market, which is called ________. Ans: strategic market segmentation Page: 85 14. _________ marketing required learning the profile or details about individual customers to identify which are most valuable to the company. Ans: One-to-one marketing Page: 85 15. _______ segmentationdivides customers into cultural groups, value groups, social sets, or other interesting categories that might be useful for classifying customers. Ans: Psychographic Page: 88 16. ________ is the process of establishing and maintaining a distinctive place in the market for the start-up and/or its products offerings. Ans: Positioning Page: 90 17. __________ is the difference between variable cost of selling an extra unit of service and the money received from the buyer of that service. Ans: Contribution Page: 92 18. The ________ is a group of salespeople who work directly for the company and are paid straight salary, salary plus bonus, or straight commission. Ans: direct salesforce Page: 94 19. _________ are good places to exhibit and sell products. Ans: Trade shows Page: 95 20. ________ is a term used to describe mechanisms by which customers are triggered and motivated to recommend a product or service to other potential customers. Ans: Viral marketing Page: 95 Multiple Choice 22. Which type of marketing is a small segment of a large market ignored by other companies? a. Niche marketing b. Mass marketing c. Value marketing d. Just-in-time marketing Ans: A Page: 84 23. All of the following are key steps to becoming a one-to-one marketer except: a. Link customers’ identities to their transactions b. Calculate individual customer lifetime value c. Mass market to customers using generic approach to satisfy all d. Practice just-in-time marketing Ans: C Page: 85 24. All of the following are factors that often underlie hidden profit potential except: a. Profit from Price Premium b. Profit from Reduced Operating Costs c. Profit Derived from Decreased Purchases d. Profit from Referrals to Other Customers Ans: C Page: 86 25. Demographic segmentation divides a market by all of the following except: a. age b. income c. gender d. geography Ans: D Page: 87 26. All of the following are ways that a market can be segmented except: a. Viralsegmentation b. Geographic segmentation c. Business demographics d. Psychographic segmentation Ans: A Page: 88-89 27. _______segmentation is very important for retail businesses, restaurants, and services addressing their local surroundings only. a. Geographic segmentation b. Business demographics c. Ethnic segmentation d. Viral segmentation Ans: A Page: 87-88 28. Which type of segmentation is somewhat uncomfortable for people living in a county with a history of ethnic-based discrimination? a. Combination segmentation b. Ethnic segmentation c. Psychographic segmentation d. Demographic segmentation Ans: B Page: 88 29. In a combination segmentation, which two types of segmentation are combined? a. Ethnic and Psychographic segmentation b. Demographic and Psychographic segmentation c. Demographic and Geographic segmentation d. Geographic and Viral segmentation Ans: C Page: 88 30. Market Segmentation by Demographics includes: a. Defining targeted customers by income level. b. Defining targeted customers by value groups. c. Defining targeted customers by business level. d. Defining targeted customers by location. Ans: A Page: 87 31. Market Segmentation by Geography includes: a. Defining targeted customers by where they were born. b. Defining targeted customers by where they went to school. c. Defining targeted customers by the value group they belong to. d. Defining targeted customers by where they live. Ans: D Page: 87 32. All of the following are questions for effective segmentation except: a. Do potential customer groups have different needs? b. Are customers both willing and able to pay? c. Can the segment be influenced to respond favorably? d. Is the segment small enough to be profitable? Ans: D Page: 88 33. _______ is the process of establishing and maintaining a distinctive place inthe market for the start-up and/or its product offerings. a. Positioning b. Viral marketing c. Combination segmentation d. Mass marketing Ans: A Page: 90 34. What is the key to the process of controlling costs and showing a profit? a. Pricing b. Market analysis c. Supply and demand d. Sales strategy Ans: A Page: 91 35. Demonstrating _________ is part of pricing a new strategy. a. rationale b. costs c. value d. contribution Ans: C Page: 92 36. Which type of cost is the economic cost associated with service for an additional customer? a. Fixed b. Variable c. Semivariable d. Contribution Ans: B Page: 92 37. Which type of cost represents expenses that rise or fall in stepwise fashion as the business volume increases or decreases? a. Fixed b. Variable c. Semivariable d. Contribution Ans: C Page: 92 38. Which type of cost is the difference between variable cost of selling an extra unit or service and the money received from the buyer of that service? a. Fixed b. Variable c. Semivariable d. Contribution Ans: D Page: 92 39. What type of pricing objective aims to maximize the surplus of income over expenditures? a. Revenue oriented b. Operations oriented c. Patronage oriented d. Contribution oriented Ans: A Page: 93 40. What type of pricing objective aims to attract customers, even at a loss, typical of grand- opening sales? a. Revenue oriented b. Operations oriented c. Patronage oriented d. Viral oriented Ans: C Page: 93 41. Which of the following works as a subcontractor to sell products or services? a. Direct salesforce b. Sales Agents c. Trade shows d. Entrepreneurs Ans: B Page: 94 42. All of the following are disadvantages of using sales agents except: a. The entrepreneur has little control over the sales agents. b. Sales agents usually sell other products or services as part of a complete line. c. Sales costs are not incurred until the product is sold. d. Sales agents tend to push the easier-to-sell products or services. Ans: C Page: 94 43. Which of the following is not an advantage of trade shows? a. The competition cannot be quickly assessed. b. The company can initiate a business relationship by inviting the customer to afollow-up meeting. c. It is an excellent opportunity to interact with many people in the industry whom the entrepreneur might not have otherwise met. d. The company can demonstrate the products and answer any questions from prospective customers about the product or service. Ans: A Page: 95 44. To determine the best type of advertising, entrepreneurs should consider all of the following except: a. Variables of targeted audience b. Type of product c. Cost d. Entrepreneurial personality Ans: D Page: 95 45. The best advocate for a company’s products or services is the: a. New customer b. Existing customer c. Entrepreneur d. Sales Representative Ans: B Page: 95 46. Which type of marketing describes mechanisms by which customers are triggered and motivated to recommend a product or service to other potential customers? a. Viral marketing b. Niche marketing c. One-to-one marketing d. Value marketing Ans: A Page: 95  Chapter 5: Writing the Winning Business Plan True/False 1. The main purpose of writing a business plan is to test the viability of the business idea and set a path for the entrepreneur to follow. Ans: True Page: 109 2. A business plan allows for bank loans and investors to gain insight into the business idea and determine the financial requirements. Ans: True Page: 110 3. A business plan is a 45 to 60 page written document that describes where a business is heading and how it hopes to achieve its goals and objectives. Ans: False Page: 110 4. The single most important reason for preparing a business plan is to secure needed human resources. Ans: False Page: 111 5. A business plan is a first attempt at controlling entrepreneurial life. Ans: False Page: 111 6. Writing a business plan guarantees that problems do not come up. Ans: False Page: 111 7. Research finds that it will take at least three hundred hours of dedicated effort to produce a good plan. Ans: False Page: 114 8. The marketing and sales strategy section of the business plan describes how the business will implement the marketing plan to achieve expected sales performance. Ans: True Page: 116 9. To protect the human resource talent and competitive positioning, the management team’s talents and skills should not be detailed in the management team section of the business plan. Ans: False Page: 118 10. Fortunately, the financial plan is the most flexible part of a business plan in terms of format. Ans: False Page: 119 Short Answer / Fill in the Blank 11. A(n) ________ serves as a blueprint for building a company. Ans: business plan Ans: 110 12. An entrepreneur should use a(n) ________ business plan when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers. Ans: full Page: 113 13. A(n) _________ is a two-to-five page document that contains the most important information about the business and its direction. Ans: executive summary plan Page: 113 14. _______ pricing is when the business sells the products or services based on demand or whatever the market will bear. Ans: Demand Page: 117 15. ________ are individuals who buy products, often overseas, directly from the distributor and sell them to retailers or end users. Ans: Brokers Page: 117 16. The term _______ is used to describe when products and services are sold through a web site or through Internet partner alliances. Ans: Web E-commerce Page: 117 17. ________ most often reflects at least quarterly performance for the first year. Ans: Projected income statements Page: 119 18. The _______ should reflect the company’s financial position at its inception. Ans: current balance sheet Page: 119 19. The funds required and uses section of the business plan should describe how much _______ is required to finance the business, where these funds will be spent, and when they will be needed. Ans: money Page: 120 20. A business plan may fail because the _______ is unclear, not concise, and not specifically targeted to the intended audience. Ans: executive summary Page: 120 Multiple Choice 21. The business plan’s primary purpose is to: a. develop new applications. b. guide the entrepreneur. c. avoid competition. d. provide a historical perspective of the venture. Ans: B Page: 109 22. Which of the following is not one of the ways that the business plan will determine if the business has a chance of becoming successful? a. Decrease the likelihood of the venture’s success. b. Test the feasibility of the business concept. c. Attract bank loans and investors. d. Improve your business planning process to become more manageable and effective. Ans: A Page: 109 23. How long is a typical business plan? a. 45-50 pages b. 25-40 pages c. 60-80 pages d. 20-22 pages Ans: B Page: 110 24. Which of the following is not one of the three essential reasons to prepare a business plan? a. Entrepreneurs reap benefits from the planning activity itself. b. The plan provides a basis for measuring actual performance against expected performance. c. The plan acts as a vehicle for communicating to others what it is that the businessis trying to accomplish. d. The plan is to attract competitors’ action. Ans: D Page: 110 25. Which of the following is the first step in the process to write the business plan? a. Draft the Outline b. Review the Outline c. Draft the Plan d. Identify the Objectives Ans: D Page: 111 26. Which of the following is the third step in the process to write the business plan? a. Draft the Outline b. Review the Outline c. Draft the Plan d. Identify the Objectives Ans: B Page: 112 27. Detailed support for any assumptions and assertions made in the business plan should be available in what stage of writing the business plan? a. Draft the Outline b. Review the Outline c. Draft the Plan d. Identify the Objectives Ans: B Page: 112 28. Which of the following is the fourth step in the process to write the business plan? a. Draft the Outline b. Review the Outline c. Draft the Plan d. Have the Plan Reviewed and Updated Ans: C Page: 112 29. Which of the following is not part of the executive summary? a. Business Concept b. Financial Features c. Success Factors d. Temporary Position  Ans: D Page: 113 30. An entrepreneur should use a(n)_____ when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers. a. executive summary plan b. full business plan c. action plan d. target plan Ans: B Page: 113 31. A document the management team uses to implement the plan is called the: a. Executive summary plan b. Full business plan c. Action plan d. Target plan Ans: C Page: 113 32. The business plan should be read by: a. The key employees of the venture. b. Banks. c. Potential customers. d. A and B only. Ans: D Page: 113 33. Which of the following is NOT addressed in the business plan? a. Target customer b. Competition c. Market constraints d. Government’s role Ans: D Page: 114 34. The purpose of the title page is: a. to provide contact information about the company. b. Indicate the length of the plan. c. Questionable, especially to investors. d. Both A and B. Ans: A Page: 114 35. How long should the executive summary be? a. Onepage b. Four to six pages c. Two to three pages d. 8-10 pages Ans: C Page: 115 36. Writing the overview of the company, industry, products, and services addresses all of the following questions except: a. What is the business? b. How much money will the business bring in? c. What customers will it serve?  d. Where is it located, and where will it do business? Ans: B Page: 115 37. Which marketing section should define how the business will use its marketing tools? a. Market Opportunity b. Competition c. Marketing Strategy d. Sales Forecasts Ans: C Page: 115 38. Which marketing section presents financial projections in the financial section of a business plan? a. Sales Forecasts b. Market Research c. Support Material d. Competition Ans: A Page: 116 39. Which type of pricing includes all costs, both fixed and variable, and a profit percentage is added on? a. Demand Pricing b. Competitive Pricing c. Markup Pricing d. Cost-Plus Pricing Ans: D Page: 117 40. Which type of pricing is where the company enters a market where there is an established price and where it is difficult to differentiate one product from another? a. Value Pricing b. Competitive Pricing c. Markup Pricing d. Cost-Plus Pricing Ans: B Page: 117 41. In the operations section of the business plan, all of the following are included except: a. Maintenance and Support b. Manufacturing c. Marketing d. Product/Service Development Ans: C Page: 118 42. Which section of the business plan should formulate a credible, comprehensive set of projections reflecting the business’s anticipated financial performance? a. Financial plan b. Operations section c. Marketing analysis section d. Marketing and sales strategy section Ans: A Page: 119 43. All of the following information should be presented in the financial plan except: a. Project income statements b. Projected cash flow statements c. Competitor’s balance sheet d. Other financial projections Ans: C Page: 119 44. Which section of the business plan describes how much money is required to finance the business, where these funds will be spent, and when they will be needed? a. Operations section b. Marketing analysis section c. Funds required and uses d. Management plan Ans: C Page: 120 45. All of the following are typical exhibits except: a. Market potential b. Process flow c. Detailed financials d. Working capital Ans: D Page: 120  Chapter 6: Setting up the Company True/False 1. Unfortunately, with the way the laws are written, the sole owner does not have the right to make all the decisions for the business. Ans: False Page: 133 2. One of the most attractive features of sole proprietorships is how fast and simple it is to begin operations. Ans: True Page: 134 3. In choosing a form of ownership, entrepreneurs must remember that there is no single“best” form. Ans: True Page: 134 4. The greatest advantage of a sole proprietorship is unlimited personal liability. Ans: False Page: 135 5. When a corporation is founded, it does not have to accept the regulations and restrictions of the state in which it is incorporated and of each state in which it does business. Ans: False Page: 136 6. When a corporation is established, its equity is divided among a number of shares of stock that are issued to the investors in proportion to their investment in the corporation. Ans: True Page: 136 7. The board is selected by the CEO and she or he has the power to remove board members. Ans: False Page: 136 8. The ownership of a corporation lies in the stockholders and is evidenced by stock certificates issued to the shareholder. Ans: True Page: 139 9. The total number of issued shares outstanding in a company is most often shown in theannual report. Ans: True Page: 140 10. A disadvantage of a limited liability company is that the owners do not assume liabilitiesfor debt. Ans: False Page: 146 Short Answer / Fill in the Blank 11. A(n) ________ is a form of business in which a single owner does business himselfor herself and requires only a business license to open. Ans: sole proprietorship Page: 133 12. The __________ is the most common form of business ownership. Ans: C-corporation Page: 136 13. _________ value is an archaic concept that is still applied to stocks. Ans: Par Page: 139 14. Annual _________ are usually based on the number of shares of authorized stock and on whether the stock has a par value. Ans: taxes Page: 139 15. ____________ are the stock that a company sells to investors to generate capital. Ans: Issued shares Page: 140 16. The _____________ is a corporation that elects under federal and state tax laws to be taxed like a partnership. Ans: S-corporation Page: 142 17. A(n) _________ is usually defined as an association of two or more people carrying on as co-owners of a business for profit. Ans: partnership Page: 144 18. A(n) ________ partnership must have at least one general partner so at least one personor entity’s personal assets must be at stake. Ans: limited Page: 144 19. A(n) ________ is a blend of some of the best characteristics of corporations, partnerships, and sole proprietorships. Ans: limited liability company Page: 146 20. A limited liability company is formed by filing a(n) _______________ form with a secretary of state and signing an LLO Operating Agreement. Ans: Article of Organization Page: 146 Multiple Choice 21. All of the following are advantages of a sole proprietorship except: a. Profit Incentive b. Easy to Discontinue c. Total Decision-Making Authority d. Unlimited Personal Liability Ans: D Page: 134-135 22. All of the following are disadvantages of sole proprietorship except: a. Limited Skills b. Limited Access to Capital c. No Special Legal Restrictions d. Lack of Continuity for the Business Ans: C Page: 135-136 23. Which of the following is the greatest disadvantage of sole proprietorship? a. Limited Skills b. Unlimited Personal Liability c. Limited Access to Capital d. Lack of Continuity for the Business Ans: B Page: 135 24. A _______ is a separate legal entity apart from its owners and may engage in business, issue contracts, sue and be sued, and pay taxes. a. Stockholder b. Corporation c. Sole proprietorship d. Partnership Ans: B Page: 136 25. A “C” corporation need not have: a. Stakeholders b. A board of directors c. External investors d. Officers Ans: C Page: 136 26. Who has the ultimate power and control of every corporation? a. Officers b. Board of directors c. Stockholders d. Sole proprietors Ans: C Page: 136 27. Who establishes the general policies of the company, and to a greater or lesser extent depending on the particular corporation, can become involved in various details of the operating procedures? a. Employees b. Board of directors c. Stockholders d. Government Ans: B Page: 136-137 28. The functions of each officer are defined by: a. Board of directors b. Stockholders c. Officers themselves d. Government Ans: A Page: 137 29. Who is in charge of day-to-day operations under the directives of the board of directors? a. Stockholders b. The President c. An Attorney d. Employees Ans: B Page: 137 30. If you are not a resident of Delaware, you must have an agent in the state who is empowered to accept service in the event the corporation is sued. What is the next step after selecting a local agent? a. Select the corporate name b. Prepare the Certificate of Incorporation c. Hire employees d. Get a building Ans: A Page: 137 31. Which type of stock is the most common/usual? a. Preferred Stock b. Par Value c. No-Par-Value Stock d. Private Stock Ans: C Page: 139 32. All of the following are advantages of a C-corporation except: a. Limited Liability of the Stockholders b. Ability to Attract Capital c. Skills, Expertise, Knowledge d. Directors held Accountable Ans: D Page: 140-141 33. All of the following are disadvantage of a C-corporation except: a. Double Taxation b. Cost and Time Involved in the Incorporation Process c. Transferable Ownership d. High Administration Compliance Costs Ans: C Page: 141-142 34. To become an S-corporation, all of the following must occur except: a. Only two classes of stock are allowed. b. Shareholders cannot be nonresident aliens. c. The company must be a domestic company. d. Only individuals and certain trusts may own stock. Ans: A Page: 142 35. What is the maximum number of shareholders there can be in an S-corporation? a. 200 b. 150 c. 100 d. 80 Ans: C Page: 142 36. All of the following are disadvantages of S-corporations except: a. Investors cannot receive preferred shares. b. Qualification requirements necessitate administrative and cost burdens. c. Not eligible for qualified employee stock options. d. Owners pay all taxes. Ans: D Page: 143 37. What type of partnership has unlimited liability? a. Limited b. General c. Complementary d. Personal Ans: B Page: 144 38. All of the following are advantages of a partnership except: a. Division of Profits b. Larger Pool of Capital c. Capital Accumulation d. Easy to Establish Ans: C Page: 144 39. All of the following are disadvantages of a partnership except: a. Potential for Personality and Authority Conflicts b. Unlimited Liability c. Restrictions of Elimination for the General Partnership d. Division of Profits Ans: D Page: 145 40. All of the following are advantages of a limited liability company except: a. They may offer different classes of membership. b. There are no restrictions on the number and types of owners. c. Owners do not assume liabilities for debt. d. Transferring ownership is restricted. Ans: D Page: 146 41. In the business start-up checklist, when do you do a name search in location to determine if the name is available on Clerks Commission web site? a. First 30 days b. After one year c. Between 3-6 months after opening d. At the end of the year 3 Ans: A Page: 147 42. In the first 30 days of your new company you should: a. Register your internet domain name. b. Obtain an Employee ID Number from the IRS. c. File your first tax return. d. Join the local entrepreneurs’ network. Ans: B Page: 148 43. When should you contact suppliers? a. First 30 days b. Sixty days c. Between 3-6 months after opening d. At the end of the year Ans: B Page: 149 44. When should you establish a relationship with a bank in order to acquire a line of creditin the near term? a. First 30 days b. Sixty days c. Between 30-60 days d. At the end of the year Ans: D Page: 149 45. Which of the following insurance coverage’s are highly desired as soon as you start youcompany? a. Key man insurance b. Directors and Officers insurance c. Workers Compensation insurance d. Malpractice insurance Ans: C Page: 150-151  Chapter 7: Special Topic: Social Entrepreneurship True/False 1. ​It is generally believed that the term social entrepreneur was first coined by William Drayton in 1972. ​Ans: True ​ ​ ​ ​ ​Page: 158 2. ​Traditional business entrepreneurs typically choose a nonprofit form to operate their ventures, but social entrepreneurs unfortunately do not choose the nonprofit form. ​Ans: False ​ ​ ​ ​ ​Page: 160 3. ​A significant pro for a social entrepreneur of using the nonprofit form is that the owners can never take the value out of the venture for themselves. ​Ans: False ​ ​ ​ ​ ​Page: 160 4. ​Fortunately, profiting from curing social ill is not acceptable by law. ​Ans: False ​ ​ ​ ​ ​ age: 160 P 5. ​Social ventures tend to have greater stakeholder issues and challenges than traditional entrepreneurial ventures. ​Ans: True ​ ​ ​ ​ ​Page: 161 6. ​With growth come increased stresses on the ability of the venture to communicate internally. ​Ans: True ​ ​ ​ ​ ​ age: 162 P 7. ​ eople who believe in the social mission of the venture tend to be willing to pay a higher price P for products and services. ​Ans: True ​ ​ ​ ​ ​Page: 163 8. ​An outline business plan is usually the first attempt at strategic planning. ​Ans: True ​ ​ ​ ​ ​ age: 174 P 9. ​If you tend to become a global force, then you will have to have managers in your team who have experience in managing small organizations. ​Ans: False ​ ​ ​ ​ ​Page: 176 10. ​Social ventures are usually a short-tem mission. ​ ns: False A ​ ​ ​ ​ ​ age: 176 P Short Answer / Fill in the Blank https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 1 of 6  11. A(n) _______ profit status is what most people think of when they think of a nonprofit. Ans: charitable ​ ​ ​ ​Page: 160 12. The second class of models are called __________, in which a legal structure is created to enable both a social and a business mission to exist in a mutually supportive relationship. Ans: hybrid ​ ​ ​ ​ ​Page: 163 13. The ___________ model usually requires the identification of a number of similar small businesses that individually cannot grow or even be sustainable. Ans: co-operative ​ ​ ​ ​Page: 164 14. The __________ is a term first introduced by Eric Raymond that is used to describe the result of sharing in which users of a “good” actually contribute to the overall value rather than detracting from it. Ans: inverse commons ​ ​ ​Page: 170 15. The ________ dates back to medieval England, where a “common” piece of land was set aside for the village to share, with each family being allowed to graze one cow on the commons. Ans: law of commons ​ ​ ​ ​Page: 170 16. The term __________ was first coined by a French social sciences researcher, who observed machinists creating complex and personal ornaments that they placed close to their workplace. Ans: bricolage ​ ​ ​ ​ ​Page: 171 17. You can use ___________ to find people whose passion to help improve society aligns with your ideas for a social venture. Ans: social networks ​ ​ ​ ​Page: 173 18. It is vital to realize and know how to deal with the various ______ that will be crucial to your success. Ans: interest groups ​ ​ ​ ​Page: 174 19. The ________ needs to demonstrate that the opportunity is expressed in a clear roadmap in order to compare and contrast where the business is going to where it was supposed to go. Ans: entrepreneur ​ ​ ​ ​Page: 174 20. Choosing an appropriate ________ is particularly important for a socially driven venture. Ans: business model ​ ​ ​ ​Page: 175 Multiple Choice 21. ______________ stakeholders to the social venture tend to place greater scrutiny on the venture. a. Internal b. Employee c. External d. Entrepreneurial Ans: C ​ ​ ​ ​ ​ ​Page: 161 https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 2 of 6  22. This type of model is a not-for-profit structure in which the enterprise is focused entirely on a social mission: a. Pure b. Hybrid c. Dual-mission d. Self-help ​Ans: A ​ ​ ​ ​ ​ ​Page: 163 23. This type of model uses a normal business structure where profits can be attractive enough for external investors to participate while the company fulfills a major social need: a. Pure b. Hybrid c. Dual-mission d. Self-help Ans: C ​ ​ ​ ​ ​ ​Page: 163 24. This type of model is where a legal structure is created to enable both a social and a business mission to exist in a mutually supportive relationship: a. Pure b. Hybrid c. Dual-mission d. Self-help b. Ans: B ​ ​ ​ ​ ​ ​Page: 163 25. All of the following are classifications of cooperatives except: a. purchasing b. producer c. consumer d. community Ans: D ​ ​ ​ ​ ​ ​Page: 164 26. Cooperative structures are much more common in all of the following places except: a. India b. United States c. Europe d. Asian countries Ans: B ​ ​ ​ ​ ​ ​Page: 164 27. All of the following are pros of a “pure” model except: a. Clear focus on social mission b. Low or zero tax liability c. Ease in attracting top talent d. Can get foundation grants Ans: C ​ ​ ​ ​ ​ ​Page: 165 28. All of the following are cons of a “pure” model except: a. Difficult to attract top talent b. Inability to attract equity investments c. Too many conflict-of-interest issues d. Inability for founders to participate financially https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 3 of 6  b. Ans: C ​ ​ ​ ​ ​ ​Page: 165 29. A nonprofit and a for-profit organization are linked in what model? a. Hybrid model b. Pure model c. Co-operative model d. Dual-mission model Ans: A ​ ​ ​ ​ ​ ​Page: 165 30. All of the following are pros of choosing a dual mission model except: a. Ease in maintaining social mission over time b. Simple governance and tax structure c. Can attract talent d. Provide social benefits and wealth creation Ans: A ​ ​ ​ ​ ​ ​Page: 168 31. All of the following are cons of choosing a dual mission model except: a. Exit strategies for investors limited b. Potential conflict of interests between founders and investors c. Difficult to maintain social mission over time d. High accounting and legal fees Ans: D ​ ​ ​ ​ ​ ​Page: 168 32. All of the following are pros of choosing a cooperative model except: a. Low or zero tax payments b. Easier to sustain over long time c. Founders significantly benefit financially d. Members can extract profits Ans: C ​ ​ ​ ​ ​ ​Page: 169 33. All of the following are cons of choosing a cooperative model except: a. Governance issues may be complex b. Deciding payments to management executives c. Difficult to maintain social mission over time d. Profit distributions can be contentious Ans: C ​ ​ ​ ​ ​ ​Page: 169 34. Which motivation deals with individuals who are motivated by a spiritual need to “leave the world a better place” for others? a. Altruism b. Bricolage c. Philosophy of Life d. Peer recognition Ans: C ​ ​ ​ ​ ​ ​Page: 171 35. Which motivation was the term first coined by a French social sciences researcher, who observed machinists creating complex and personal ornaments that they placed close to their workplace? a. Bricolage b. Peer recognition c. Fame d. Philosophy of Life Ans: A ​ ​ ​ ​ ​ ​Page: 171 36. Which motivation is the term used to describe the personal satisfaction comes from having your peers witness the excellent work that you have contributed? https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 4 of 6  a. Peer recognition b. Fame c. Altruism d. Bricolage Ans: A ​ ​ ​ ​ ​ ​Page: 171 37. Which motivation is the term used to describe the individual wants to be known for the excellence of his or her contribution? a. Altruism b. Fame ​ ​ c. Philosophy of Life d. Peer recognition Ans: B ​ ​ ​ ​ ​ ​Page: 171 38. When personal motivations create a(n) ____________, the network effects can be extremely powerful. a. physical activity b. social activity c. ethical activity d. physiological activity Ans: B ​ ​ ​ ​ ​ ​Page: 171 39. All of the following are ways to use social networks to find people whose passion to help improve society aligns with your ideas for a social venture except: a. ask them to volunteer b. ask them to engage their friends c. host a fundraiser d. send them messages asking them repeatedly to help Ans: D ​ ​ ​ ​ ​ ​Page: 173 40. Which of the following is a free social network for professionals? a. Huluplus b. Groupon c. LinkedIn d. Facebook Ans: C ​ ​ ​ ​ ​ ​Page: 173 41. Entrepreneur can use a business plan as a guide for all of the following except: a. seeking partners b. Measuring customers’ feedback c. defining a hiring plan d. establishing the direction of the company and the action steps needed Ans: B ​ ​ ​ ​ ​ ​Page: 174 42. Before drafting the plan, the entrepreneur will need to collect information on all of the following except: a. the “market” b. operating resources c. financial/cash flow d. the government Ans: D ​ ​ ​ ​ ​ ​Page: 175 https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 5 of 6  43. Which section of the business plan must establish the need for the product or service and the potential for the enterprise? a. marketing section b. company description section c. operations section d. finance section Ans: A ​ ​ ​ ​ ​ ​Page: 175 44. Which section of the business plan describes how the business will reach the beneficiaries of the social venture? a. HR section b. company description section c. operations section d. marketing and sales strategy section Ans: D ​ ​ ​ ​ ​ ​Page: 175 45. Which section of the business plan begins with a brief general description of the company? a. marketing section b. company description section c. marketing and sales strategy section d. operations section Ans: B ​ ​ ​ ​ ​ ​Page: 175 https://www.coursehero.com/api/v1/documents/download/12847513/ 19/03/2018, 2@43 PM Page 6 of 6  Chapter 8: Technology Entrepreneurship True / False 1. FDA is an example of a government agency in the United States that regulates all media communications. Ans: False ​ ​ ​ ​ ​Page: 188 2. According to Rogers’ bell curve, early adopters are the first group of people to use a product. Ans: False ​ ​ ​ ​ ​Page: 190 3. According to Rogers’ bell curve, laggards are the second set of group to adopt a product. Ans: False ​ ​ ​ ​ ​Page: 191 4. Patents are not visible on the balance sheet. Ans: True ​ ​ ​ ​ ​Page: 195 5. Interestingly, nonuseful items may still be patented. Ans: False ​ ​ ​ ​ ​Page: 196 6. When considering a patent, you should ask yourself “can it be applied to more than one market sector?” Ans: True ​ ​ ​ ​ ​Page: 196 7. Patent attorneys are usually cheaper than parent agents. Ans: False ​ ​ ​ ​ ​Page: 197 8. If an invention is judged to have been obvious to any person of ordinary skill in the field relating to the invention, it may be barred from receiving patent approval. Ans: True ​ ​ ​ ​ ​Page: 197 9. Fortunately, it is no more costly to file for overseas protection when acquiring a patent. Ans: False ​ ​ ​ ​ ​Page: 199 10. Unfortunately, only large corporations can have “Patent Pending.” Ans: False ​ ​ ​ ​ ​Page: 201 Short Answer / Fill in the Blank 11. “You can’t start from here” refers to ___________. Ans: path dependency ​ ​ ​Page: 185 https://www.coursehero.com/api/v1/documents/download/12847518/ 19/03/2018, 2@46 PM Page 1 of 6  12. _________ relate to the impact that one user of a product or service has on the value for others. Ans: Network effect ​ ​ ​ ​Page: 185 13. _________ are constructed so that one innovation can be seen in the context of all the others that are currently occurring. Ans: Technology roadmaps ​ ​ ​Page: 187 14. The _________ cycle is a graphic representation of the maturity, adoption, and social application of specific technologies. Ans: hype ​ ​ ​ ​ ​Page: 189 15. The _______ cycle describes that acceptance of a new product or innovation, according to the demographic and psychological characteristics of a defined adopter groups. Ans: technology adoption ​ ​ ​Page: 190 16. ________ requirement includes anything man-made, including genetically altered cells in animals. Ans: Utility ​ ​ ​ ​ ​Page: 196 17. Inventors who want to establish a filing date, but are not fully prepared, can file a(n) __________ application. Ans: provisional ​ ​ ​ ​Page: 200 18. When filing a patent, legally you only own what you ___________. Ans: claim ​ ​ ​ ​ ​Page: 201 19. In the future, under the __________ rule, relaying on private records to prove internship will no longer be an option. Ans: first-to-file ​ ​ ​ ​Page: 202 20. If corporate partnering is a part of your business model, it may be advantageous to negotiate ________ to a patent being granted. Ans: prior ​ ​ ​ ​ ​Page: 203 Multiple Choice 21. When a tipping point is reached and the network expands rapidly it is called: a. influencers b. going viral c. technology roadmaps d. innovation Ans: B ​ ​ ​ ​ ​Page: 186 22. A service mark: a. Indicates product quality b. Indicates product usefulness c. Is only used on services d. Has no usefulness https://www.coursehero.com/api/v1/documents/download/12847518/ 19/03/2018, 2@46 PM Page 2 of 6  Ans: C ​ ​ ​ ​ ​Page: 191 23. Which of the following cannot be protected by a trademark? a. Word or slogan b. Particular sound c. Symbol d. Machine ​Ans: D ​ ​ ​ ​ ​Page: 191 24. The initial registration for a trademark lasts: a. 20 years. b. 17 years. c. 14 years. d. 30 years. ​Ans: A ​ ​ ​ ​ ​Page: 191 25. To apply for a trademark: a. The mark must actually have been used on goods. b. Intent to use the mark is required. c. The mark must be copyrighted. d. You must be 21 years old. Ans: B ​ ​ ​ ​ ​Page: 192 26. A copyright does not protect the following from unauthorized copying: a. Books b. Software c. Chemical formulas. d. Drawings Ans: C ​ ​ ​ ​ ​Page: 193 ​ 27. Work not owned by the author or work performed in some other salaried or compensated capacity is known as: a. Copyright b. Work for hire c. Novelty d. Intellectual Property Ans: B ​ ​ ​ ​ ​Page: 193 28. Patents are granted by the government in order: a. To restrict imports. b. To encourage the sharing of knowledge. c. To help inventors make money. d. To generate revenue for the patent office. ​Ans: B ​ ​ ​ ​ ​Page: 194 29. A patent is a contract between: a. Inventors and the Federal Government. b. Inventors and their Employers. c. Two or more inventors. d. Inventors and Licensees. Ans: A ​ ​ ​ ​ ​Page: 194 https://www.coursehero.com/api/v1/documents/download/12847518/ 19/03/2018, 2@46 PM Page 3 of 6  30. _______ are issued to individuals who have invented novel processes, machines, and compositions of matter, or improvements thereof. a. Utility patent b. Design patent c. “Patent Pending” notice on the product d. Disclosure document Ans: A ​ ​ ​ ​ ​Page: 195 31. ______ are issued to individuals who have created a novel ornamental design. a. Utility patent b. Design patent c. Plant patent d. Disclosure statements Ans: B ​ ​ ​ ​ ​Page: 195 32. A patent has a life-span from date of filing of: a. 10 years. b. 14 years. c. 20 years. d. Perpetuity. Ans: C ​ ​ ​ ​ ​Page: 194 33. Patent infringement occurs when: a. A patented product is copied, improved upon, and sold. b. A product that provides the same customer benefits in a different way is sold. c. A product patented in the US is made and sold in China. d. A brand new product is created. Ans: A ​ ​ ​ ​ ​Page: 195 34. Which of the following statements about utility patents are true? a. They allow the inventor to exclude others from making an article having the same appearance. b. They allow the inventor to make and sell his products to the exclusion of others. c. They allow the inventor to prevent others selling products that use his or her invention. d. They allow the inventor to sell their product worldwide. Ans: C ​ ​ ​ ​ ​Page: 195 35. A patent portfolio: a. only contains pending applications b. is only used in large corporations c. is illegal under federal law d. contains all patents owned by a venture Ans: D ​ ​ ​ ​ ​Page: 195 36. Which is NOT a requirement of an invention? a. Nonobvious b. Ability to make money c. Utility d. Novelty https://www.coursehero.com/api/v1/documents/download/12847518/ 19/03/2018, 2@46 PM Page 4 of 6  Ans: B ​ ​ ​ ​ ​Page: 196 37. Which of the following is NOT prior art: a. Previously patented inventions. b. Previously published information. c. Products already on the market. d. A product that has not been invented yet Ans: D ​ ​ ​ ​ ​Page: 196 ​ 38. The average cost of acquiring a patent is: a. Less than $1,000. b. Between $1,000 and $5,000. c. Between $7,500 and $25,000. d. Over $30,000 Ans: C ​ ?