Q&A Hero

Q: In regards to thinking structurally, superficial similarities: A.exist when the underlying mechanisms of the technology resemble (or match) the underlying mechanisms of the market. B.exist when supply is less than demand. C.exist when entrepreneurs engage in bricolage. D.exist when the basic (relatively easy to observe) elements of the technology resemble the basic elements of the market.

Q: In Stage Two of the McMullen-Shepherd Model: A.the entrepreneur deals with the business failure through counseling. B.the entrepreneur decides whether or not there is an opportunity for him or her personally. C.the entrepreneur goes through the causal process of thinking structurally. D.the entrepreneur consults colleagues from previous jobs.

Q: In Stage One of the McMullen-Shepherd Model: A.the entrepreneur decides whether or not there is an opportunity for someone. B.the entrepreneur consults experts in the market area of interest. C.the entrepreneur decides whether the opportunity that exists is a match with their own knowledge and motivation. D.the entrepreneur engages in bricolage.

Q: Entrepreneurial Opportunities are defined as: A.new market entry through entrepreneur action. B.the entrepreneur's mental processes in deciding whether or not to act on a potential opportunity. C.a feasibility assessment. D.situations in which new goods, services, raw materials and organizing methods can be sold at greater than their production cost.

Q: In a social network there are two major properties, density and centrality.

Q: Role models can include family members as well as industry professionals.

Q: Role models are individuals who give psychological support to the entrepreneur especially during the start-up phase.

Q: Most entrepreneurs indicate that their most significant venture was not their first one.

Q: Dissatisfaction with various aspects of one's job often motivates the launching of a new venture.

Q: Previous start-up experience is a good predictor of starting subsequent businesses.

Q: Research indicates that male entrepreneurs tend to start their first significant venture in their middle 30s, while women entrepreneurs tend to do so in their early 30s.

Q: An entrepreneur is rarely able to start a new business without some form of formal education.

Q: Perceived desirability refers to the degree to which an individual has a favorable or unfavorable evaluation of the potential entrepreneurial outcomes.

Q: Entrepreneurs' intentions are based on their perception of feasibility rather than someone else's impression of whether it is feasible.

Q: Entrepreneurs have stronger intentions to act when taking action is perceived to be impossible and risky.

Q: A reflection task would involve thinking about what strategies should be used to solve a problem.

Q: Asking "How is this problem similar to problems I've already solved"? is an example of a connection task.

Q: Comprehension questions are designed to stimulate entrepreneurs to think about their own understanding.

Q: The question "What is this technology all about?" is a comprehension question.

Q: Demographics, ethnic origin, and marital status are examples of segmentation variables.

Q: The casual process of thinking starts with what one has and selects among possible outcomes.

Q: Is the example "Curry in a Hurry" is an example of the effectuation process?

Q: The effectuation process starts with what one has and selects among possible outcomes.

Q: Bricolage is entrepreneurs making do by applying combinations of the resources at hand to new problems and opportunities.

Q: Structural similarities exist when the underlying mechanisms of the technology resemble, or match, the underlying mechanisms of the market.

Q: Superficial similarities exist when the underlying mechanisms of the technology resemble, or match, the underlying mechanisms of the market.

Q: In the McMullen-Shepherd Model the first stage is the evaluation stage.

Q: In the McMullen-Shepherd Model first person opportunity beliefs come before third person opportunity beliefs.

Q: The McMullen-Shepherd Model explains how knowledge and motivation influence two stages of entrepreneurial action.

Q: The McMullen-Shepherd Model helps identify the common traits of successful entrepreneurs.

Q: Entrepreneurial action can be defined as those situations in which new goods, services, raw materials and organizing methods can be sold at greater than their production cost.

Q: Entrepreneurial opportunities are those situations in which new goods, services, raw materials and organizing methods can be sold at greater than their production cost.

Q: How Ewing Kauffman ran his business illustrates corporate entrepreneurship.

Q: Ewing Kauffman took a risk when he started his company Marion Labs in 1950.

Q: Acquisition - you create a business that someone will want to acquire at a future period. Your strategy could be that you want to create a business that will be valuable for a current competitor or a member of your distribution channel. The plan is that the purchase of your firm will pay you and your investors more than you put into the business. A rule of thumb for a small business is that the purchase price should be three times the firm's annual net profit.

Q: What are the four basic exit strategy possibilities? Describe them.

Q: Why is it not a good idea to tell investors in your business plan that your exit strategy is simply "to take the business public"?

Q: Three of the most common harvesting options include increasing the free cash flow, management buyout, and management stock ownership plan.

Q: When one is merging or being acquired, ________. A) it is typically a quick and emotionless process B) it is typically concluded within a few weeks C) it can be an emotionally draining experience and take over a year D) None of the above.

Q: Harvesting options include ________. A) an IPO B) merging or being acquired C) increasing cash flows and a management buy-out D) All of the above.

Q: To take a business public means to sell its stock on the stock market. The acronym for the first offering of a business' stock is ________. A) FIFO B) ALPO C) IPO D) IMPO

Q: One of the advantages of an Employee Stock Ownership Plan is that ________. A) the owner will have to look for buyers in the general public B) it will prevent employees from having control of the company C) employees will likely quit and leave D) ESOPs offer tax breaks to the company

Q: A disadvantage of harvesting cash over time as an exit strategy is that ________. A) the managers find out what the company is really worth B) the owner doesn't have to look for a buyer C) the owner will lose money D) it can take a long time to complete

Q: This harvest option has the advantage of financing growth that the company could not achieve on its own. A) increase the free cash flow B) management buyout C) employee stock ownership plan D) merger or acquisition

Q: This is an exit strategy when an entrepreneur sells his or her company to its managers. A) a merger B) a management buy-out C) a management takeover D) employee buy-out

Q: At what stage of starting and running your business should you inform investors of your exit strategy? It should be ________. A) in the business plan B) in your first annual report C) when you are ready to exit the business D) the years sales peak

Q: Describe three simple methods that can be used to estimate a selling price for a business:

Q: One of the methods for computing a company's valuation is called the market-based technique. This means to look at a company as assets minus liabilities.

Q: In valuing a business, the methods that buyers and sellers can use include ________. A) market-based value B) book value C) future earnings D) Any of the above.

Q: Ways to value a business include comparison to other firms, benchmarking, or looking at a multiple of net earnings. Any of the methods is an attempt to arrive at a ________. A) future value B) net present value C) fair market value D) profit maximizing price

Q: One way to value a business is to ________. In general, the business should sell for 3 to 5 times its annual net earnings. A) look at a multiple of its net earnings B) look at a comparison with similar businesses C) use an appropriate benchmark D) look at a professional appraisal

Q: If you want to buy a business that is growing rapidly, what is the best valuation method to use to determine a fair price for it? A) book value method B) market-based approach C) future earnings method D) pay-back method

Q: Harvesting means to sell, take public, or merge a company to yield proceeds for the owner(s).

Q: William Petty's article on harvesting quotes Steven Covey who says, ________. A) "The key to being effective in life is, 'beginning with the end in mind'." B) "Your chance to sell or to merge typically occurs within the first two years of the life of the business." C) "You may have only one chance to harvest your business." D) None of the above.

Q: The harvest or exit strategies set out in a business's plan is important not only to the entrepreneur but also to ________. A) consumers B) the IRS C) investors D) employees

Q: It typically requires at least ________ years to develop a company worth harvesting. A) twenty B) fifteen C) twelve D) ten

Q: Which of the following is a harvest strategy, not an exit strategy? A) merger B) IPO (initial public offering) C) acquisition D) franchising

Q: What is franchising and how is it different from licensing?

Q: The benefits of franchising include growth with medium capital investment, lower marketing but higher promotional costs, and royalties.

Q: Benefits of franchising for the franchisor include ________. A) lower marketing and promotional costs B) growth with minimal capital investment C) royalty payments D) All of the above.

Q: Which of the following is not a benefit of franchising to the franchisor? A) growth with minimal capital investment B) higher marketing and promotional costs C) royalties D) the minimal number of regulations regarding franchising

Q: If you buy a McDonald's franchise and agree to pay a royalty fee of 12.5% annually, how much money will you owe McDonald's at the end of a year in which you sell $98,000 of product? A) $12,000 B) $12,100 C) $12,200 D) $12,250

Q: A ________ represents the company's promise to consistently deliver a specific set of benefits to customers. A) product life cycle B) product line extension program C) brand D) customer service policy

Q: What did Ray Kroc do when he franchised McDonald's that set the bar for future franchise operations? A) He provided training and support to franchisees to ensure that quality would be consistent in every McDonald's restaurant. B) He licensed the McDonald's name to a wide variety of products such as hats and shirts. C) He sold franchises in competing territories to encourage franchise owners to compete and come up with new innovations for the company. D) He improved the quality of hamburgers and customer service.

Q: Licensors must be careful that a licensee ________. A) franchises the brand to as many others as possible B) doesn't damage the licensing company's name C) controls every aspect of the licensor's business D) doesn't fail to pay royalties

Q: A ________ identifies the products or services of a company and differentiates them from those of competitors. A) copyright B) product line C) mission D) brand

Q: If you are a franchisor and you charge a royalty of 5% on revenue and you have franchisees that have revenues of $1 million, $2 million, $1.5 million, and $2.5 million, how much would you earn in royalties? A) $3,500,000 B) $3,000,000 C) $300,000 D) $350,000

Q: Which business is an example of a franchise? A) Sears B) Burger King C) Federal Express D) The U.S. Postal Services

Q: A ________ is a business that markets a product or service in the manner prescribed by the parent business. A) license B) franchise C) replica D) branch

Q: Once you have established your brand, you can develop new products and use the brand to promote it. This marketing strategy is called ________. A) line extension B) branding C) line promotion D) brand extension

Q: Explain replication strategies and harvesting and how they differ.

Q: One way to grow your business is to use diversification, which is the addition of offerings beyond your core product or service.

Q: ________ is the addition of offerings beyond the company's core product or service. A) Franchising B) Diversification C) Licensing D) Complementing

Q: ________, or spreading out the brand among many products and product lines can increase market share, but it can also ________ the company. A) Product line extension/unfocus B) Alliances/focus C) Diversification/focus D) Diversification/unfocus

Q: Licensing is ________. A) the right to sell knockoffs of a product B) the right to start a business and run it exactly as the licensor wants it run C) the right to operate a business D) renting your brand or other intellectual property to increase sales

Q: ________ is the ethical obligation of a company to its community. A) Corporate governance B) Social entrepreneurship C) Corporate social responsibility D) None of the above.

Q: As a business, ethical practices involve doing the right things and doing them ethically.

Q: Some basics of corporate governance include keeping accurate records, using financial controls, creating an advisory board, using company profits as personal funds as needed.

Q: Make sure your business is run in an ethical manner by ________. A) keeping accurate records and using financial controls B) never taking company profits just to pay yourself C) creating an advisory board D) All of the above.

Q: As your business grows, have its financial records (its "books") checked annually by a reputable ________. A) CPO B) accountant C) lawyer D) software program