Test Bank for Entrepreneurship: The Practice and Mindset 1st Edition.

Test Bank For Entrepreneurship: The Practice and Mindset 1st Edition by Heidi M. Neck Christopher P. Neck ,Emma L. Murray beststudy284@gmail.com

Chapter 1: Entrepreneurship: A Global Social Movement Test Bank

Multiple Choice

1. The authors define entrepreneurship as

.

a. a discipline that seeks to understand how opportunities are discovered, created, andexploited, by whom, and with what consequences b. starting a small business by finding investors and launching a product c. developing a new market by creating a product that does not currently exist d. a mindset that compels people to start multiple ventures throughout a lifetime.Ans: A Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Medium AACSB Standard: Reflective thinking

2.

are small, short-term loans often associated with entrepreneurs in developing

countries. a. No-interest loans b. High-interest loans c. Microloans d. Miniloans Ans: C Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

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3. This is the discipline that seeks to understand how opportunities are discovered,created, and exploited, by whom, and with what consequences. a. imagineering b. storyboarding c. social engineering d. entrepreneurship Ans: D Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Medium AACSB Standard: Reflective thinking

4. Which of the following is NOT a truth about entrepreneurship? a. Entrepreneurship is reserved for startups. b. Entrepreneurship can be taught, as it is a method that requires practice. c. Entrepreneurs collaborate more than they compete. d. Entrepreneurship is a life skill.

Ans: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Debunking the Myths of Entrepreneurship Difficulty Level: Easy AACSB Standard: Reflective thinking

5. The media often cover the meteoric rise of entrepreneurs such as Bill Gates (Microsoft), Steve Jobs (Apple), Mark Zuckerberg (Facebook), Elon Musk (Tesla), andTravis Kalanick (Uber). According to the text, these stories

.

a. are inspirational but they do little to represent the reality of entrepreneurship b. are highly relatable beststudy284@gmail.com

c. have not captured the public imagination d. are accurate depictions of the entrepreneurs’ paths to successAns: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Media Images of Entrepreneurs Difficulty Level: Medium AACSB Standard: Contexts of organizations in a global society

6. A temporary organization in search of a scalable business model is known as a(n) . a. startup. b. corporation. c. LLC. d. entrepreneur.

Ans: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #1: Entrepreneurship is not reserved for startups Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

7. Effectuation is the theory that

.

a. businesses should have a positive impact on people’s lives b. the effects of ideas can be studied over time

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c. the future is unpredictable yet controllable d. emotions can influence decision-making Ans: C Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

8. Contemporary researchers focus on how entrepreneurs

.

a. think and act b. develop a desire for achievement c. build a tolerance for uncertainty d. develop an affinity for taking risks Ans: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

9.

are people who start several businesses, sometimes at the same time or

sometimes one after the other. a. Social entrepreneurs b. Serial entrepreneurs c. High-risk entrepreneurs d. Low-risk entrepreneurs Ans: B Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Easy beststudy284@gmail.com

AACSB Standard: Reflective thinking

10. Which of the following is true about effectual entrepreneurs? a. They focus on creating a future rather than predicting it. b. They find markets rather than make them. c. They do not accept failure. d. They rely on the initiative of stakeholders to fulfill their vision of the future.Ans: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Easy AACSB Standard: Reflective thinking

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11. According to the authors, what is the precursor to action? a. a business process b. the right mindset c. a business plan d. the acquisition of resources Ans: B Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Easy AACSB Standard: Reflective thinking

12. The entrepreneurial method requires consistent practice so that

can be

continuously developed and applied to future endeavors. a. a strong business plan b. education and application c. business processes d. knowledge and expertise Ans: D Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #3: Entrepreneurship can be taught (it’s a method that requirespractice) Difficulty Level: Medium AACSB Standard: Reflective thinking

13. The risk component for entrepreneurs

.

a. is unavoidable and entrepreneurship is ideal for extreme risk-takers b. can be reduced with a good business plan c. can be reduced with diversification d. can be managed with the cycle of act–learn–buildAns: D Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers Difficulty Level: Medium AACSB Standard: Reflective thinking

14. Successful entrepreneurs tend to follow this approach to collaboration. a. They do not collaborate and work in isolation. b. They collaborate with potential customers, but not with competitors. c. They collaborate with both potential customers and competitors. d. They collaborate with competitors, but not with potential customers.Ans: C Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge

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Answer Location: Truth #5: Entrepreneurs collaborate more than they competeDifficulty Level: Medium AACSB Standard: Reflective thinking

15. Research revealed what percentage of Inc. 500 wrote formal business plans prior to launching their companies? a. more than 90% b. more than 75% c. less than 50% d. less than 10% Ans: C Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #6: Entrepreneurs act more than they planDifficulty Level: Medium AACSB Standard: Reflective thinking

16. According to the text, which of the following is the least important when launching a company? a. creating a business plan b. connecting with customers c. building a network d. generating buzz Ans: A Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #6: Entrepreneurs act more than they planDifficulty Level: Easy AACSB Standard: Reflective thinking

17. What invention came to symbolize the ingenuity of colonial America? a. the spinning jenny beststudy284@gmail.com

b. the telegraph c. the lightning rod d. the light bulb Ans: C Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: Emergence of the Self-Made Man (Colonial America Before 1776) Difficulty Level: Easy AACSB Standard: Reflective thinking 18. Which founding father is considered one of history’s greatest entrepreneurs? a. Thomas Jefferson b. Benjamin Franklin c. George Washington

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d. Alexander Hamilton Ans: B Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: Emergence of the Self-Made Man (Colonial America Before 1776) Difficulty Level: Easy AACSB Standard: Reflective thinking

19. A launching pad for creativity and innovation, the

provided people with the

right to private property, access to a banking system, and protection in the form of patent laws. a. Twelfth Amendment b. Declaration of Independence c. Sixteenth Amendment d. U.S. Constitution Ans: D Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: An Entrepreneurial Nation (First Industrial Revolution 1776–1865) Difficulty Level: Easy AACSB Standard: Group and individual behaviors

20. During the

, everyone had a fairly equal chance of being an entrepreneur;

inventors became more commonplace, producing new products and services alongsidethe merchants and industrialists. a. First Industrial Revolution (1776–1865) b. Second Industrial Revolution (1865–1920) c. Interwar and Postwar America (1920–1975) d. Knowledge Economy (1975–present) Ans: A Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: An Entrepreneurial Nation (First Industrial Revolution 1776–1865) beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: Reflective thinking 21. During which period was entrepreneurship at its height? a. First Industrial Revolution (1776–1865) b. Second Industrial Revolution (1865–1920) c. Interwar and Postwar America (1920–1975) d. Knowledge Economy (1975–present) Ans: B Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: The Pinnacle of Entrepreneurship (Second Industrial Revolution1865–1920)

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Difficulty Level: Easy AACSB Standard: Reflective thinking

22. In the Pinnacle of Entrepreneurship (Second Industrial Revolution), the entrepreneur . a. was not well respected b. was considered “self-made” and was glorified in novels c. worked largely within large corporations d. paid higher taxes than their neighbors working in the factoriesAns: B Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Comprehension Answer Location: The Pinnacle of Entrepreneurship (Second Industrial Revolution1865–1920) Difficulty Level: Easy AACSB Standard: Diverse and multicultural work environments

23. During the period between 1920 and 1975, which of the following did NOT contribute to the decline of the traditional entrepreneur? a. an increase in production due to the expansion of the middle class b. the transition toward a knowledge-based economy c. the merger of small firms founded by entrepreneurs with larger organizations d. the Great Depression Ans: B Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Comprehension Answer Location: Rise of Institutional America (Interwar and Postwar America 1920–1975) Difficulty Level: Medium AACSB Standard: Reflective thinking

24. What era signaled a shift from the traditional entrepreneur to the big corporation? a. First Industrial Revolution, 1776–1865 b. Second Industrial Revolution, 1865–1920 beststudy284@gmail.com

c. Interwar and Postwar America, 1920–1975 d. Knowledge Economy 1.0, 1975–Present Ans: C Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Comprehension Answer Location: Rise of Institutional America (Interwar and Postwar America 1920–1975) Difficulty Level: Medium AACSB Standard: Reflective thinking

25. Which of the following led to entrepreneurship regaining its popularity over the last decades of the 20th century?

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a. changes in patent laws b. the rise of information technology c. the rise in venture capital funds d. all of these Ans: D Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Comprehension Answer Location: Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present) Difficulty Level: Medium AACSB Standard: Reflective thinking 26. During which period of time was the “tech entrepreneur” born? a. First Industrial Revolution, 1776–1865 b. Second Industrial Revolution, 1865–1920 c. Interwar and Postwar America, 1920–1975 d. Knowledge Economy 1.0, 1975–Present Ans: D Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present) Difficulty Level: Easy AACSB Standard: Reflective thinking

27. What generation is considered to be the most exposed to entrepreneurship education? a. Baby Boomers b. Generation X c. Millennials d. Generation Z Ans: C Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present) Difficulty Level: Easy AACSB Standard: Reflective thinking 28. Marian Croak’s idea to use the text messaging system she developed for the television series American Idol in disaster situations is an example of

.

a. corporate entrepreneurship b. entrepreneurs inside c. social entrepreneurship d. serial entrepreneurship Ans: A Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension

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Answer Location: Corporate Entrepreneurship Difficulty Level: Medium AACSB Standard: Reflective thinking

29. According to the text, why would some organizations not be enthusiastic about employees acting entrepreneurially inside a company? a. fear that workers will prioritize their entrepreneurial efforts over their essential jobduties b. fear that trade secrets will be accidentally released to the public c. fear that they will leave the company and start their own business d. fear that they will not seek approval from senior managers before starting work ontheir entrepreneurial initiatives Ans: C Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Corporate Entrepreneurship Difficulty Level: Medium AACSB Standard: Reflective thinking 30. The launch of the “inglorious vegetable” at the French Supermarket Intermarché asa way of reducing food waste by selling imperfect vegetables at a 30% discount is an example of a. corporate entrepreneurship b. entrepreneurs inside c. social entrepreneurship d. serial entrepreneurship Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Entrepreneurs Inside Difficulty Level: Medium AACSB Standard: Analytical thinking beststudy284@gmail.com

.

31. What is the process of creating new products, ventures, processes, or renewalwithin large organizations?

A. entrepreneurs inside B. tech entrepreneurship C. social entrepreneurship D. intrapreneurship Ans: D Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Corporate Entrepreneurship

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Difficulty Level: Medium AACSB Standard: Systems and processes in organizations

32. Tony is a manager for a company that builds solar panels. In his position as a manager, Tony used the feedback from his team members as the basis of a plan for thecompany to start installing the solar panels, as well, in order to enhance the company’s competitive position and profitability. Tony is an example of a(n)

.

a. entrepreneur b. marketing professional c. corporate entrepreneur d. strategist Ans: C Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Corporate Entrepreneurship Difficulty Level: Medium AACSB Standard: Interpersonal relations and teamwork

33. Joseph is a sales manager for ETC Corporation. ETC is a manufacturer of high-endkitchen appliances for restaurants. Joseph has been lobbying his manager to allow himto design and sell a range of consumer-grade appliances using ETC’s design and manufacturing resources. Joseph is a(n)

.

A. corporate entrepreneur B. franchisee C. entrepreneur inside D. social entrepreneur Ans: C Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Analysis Answer Location: Entrepreneurs Inside beststudy284@gmail.com

Difficulty Level: Hard AACSB Standard: Application of knowledge 34. Robert has a business that he wants to pass down to others in his family to run.Robert has . a. an entrepreneurship b. a family enterprise c. a role as a an entrepreneur inside d. interest in a benefit corporation Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application

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Answer Location: Family Enterprising Difficulty Level: Medium AACSB Standard: Application of knowledge

35. The nonprofit 1001 Fountains for Tomorrow, whose goal is to provide safe drinkingwater for small rural villages in Cambodia, is an example of

.

a. corporate entrepreneurship b. entrepreneurs inside c. social entrepreneurship d. serial entrepreneurship Ans: C Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

36. A benefit corporation (or B-Corp) is an organization certified by the nonprofit B Lab to ensure strict standards of social and environmental performance, accountability, and transparency are met. According to the book, which of the following statements is true? a. Large non-profits are leaders in this movement. b. To host a telethon to raise money, the organization must be a B-Corp. c. “Buy one, give one” promotions can generate sales while also raising awareness ofsocial issues. d. all of these Ans: C Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Social Entrepreneurship Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Diverse and multicultural work environments

37. Sam is tired of seeing injustice and mistreatment of children in inner cities and hasan innovative idea to help them develop self-esteem. Sam is an example of a a. social entrepreneur b. potential entrepreneur c. nascent entrepreneur d. benefit entrepreneur Ans: A Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Social Entrepreneurship Difficulty Level: Medium

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.

AACSB Standard: Application of knowledge 38. Richard Branson’s expansion of Virgin to include railway, music, media, and banking industries is an example of

.

a. global entrepreneurship b. nascent entrepreneurship c. social entrepreneurship d. serial entrepreneurship Ans: D Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Serial Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

39. Michael is a franchise restaurant owner. Which of the following best describes his franchising costs? a. a franchise fee to start, a monthly royalty as a percentage of sales, and other operational costs b. a royalty to the franchisor calculated as a percentage of net income plus other operational costs c. his costs are the same as any other restaurant owner d. a franchise fee to start plus other operational costsAns: A Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Buying a FranchiseDifficulty Level: Medium AACSB Standard: Application of knowledge beststudy284@gmail.com

40. Sally decided to look into buying a franchise as her entrance into entrepreneurship. Which of the following is NOT a benefit of franchising? a. A whole franchise network exists to reach out to for help and advice. b. potential competition from other franchise owners c. Real estate resources exist to help source the best location for your franchise. d. In-house personnel and field reps are available to help you and your businesssucceed.

Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Buying a FranchiseDifficulty Level: Medium AACSB Standard: System and processes in organizations

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41. ICHOR Restaurant Group was started by Brian Bailey and Tim Hug in 2006 and hassince opened three successful restaurant concepts, Old Carolina BBQ, Smoke: The Burger Joint, and Baja West Coast Kitchen with a dozen corporate-owned locations. They have begun to allow external entrepreneurs to purchase a license to operate their own location(s). Entrepreneurs purchasing such a license are engaging in A. corporate entrepreneurship B. franchising C. entrepreneurs inside D. social entrepreneurship Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Analysis Answer Location: Buying a franchise Difficulty Level: Hard AACSB Standard: Application of knowledge

42. Social entrepreneurs

.

a. must rely on fundraising to keep their company economically stable b. can only be found in the nonprofit sector c. must choose between making either a social or an economic impact d. seek innovative solutions to social and environmental problemsAns: D Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

43. To be certified as a benefit corporation (or B-Corp), an organization is rated on allthe beststudy284@gmail.com

.

following except

.

a. how its employees are treated b. its global mission c. how it benefits the community in which it operates d. its impact on the environment Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

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44. What is the survival rate of family businesses transitioning from the first to the second generation? a. less than 30% b. 40% c. 50% d. more than 75% Ans: A Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Family Enterprising Difficulty Level: Medium AACSB Standard: Analytical thinking

45. What percentage of U.S. businesses are family-owned or controlled by a family? a. less than 20% b. 20% to 30% c. 40% to 50% d. 80% to 90% Ans: D Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Family Enterprising Difficulty Level: Medium AACSB Standard: Analytical thinking

46. Bill is the paternal head of his family and the family enterprise. He is concernedabout the business and wants to ensure its survival for the long run. You, as a consultant, advise him to focus on

.

a. selling the company b. passing on an entrepreneurial mindset to his family members beststudy284@gmail.com

c. writing a detailed business plan d. establishing a trust for the business Ans: B Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Family Enterprising Difficulty Level: Medium AACSB Standard: Interpersonal relations and teamwork 47. Susan’s company continues to downsize, compelling her to start her own business. What type of entrepreneur is she? a. necessity-based entrepreneur b. nascent entrepreneur

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c. established business owner d. potential entrepreneur Ans: A Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Application of knowledge

48. According to the 2015/16 Global Entrepreneurship Monitor report, it is estimatedthat there are

entrepreneurs worldwide.

A. 4 million B. 40 million C. 400 million D. 4 billion Ans: C Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Knowledge Answer Location: Global Entrepreneurship Difficulty Level: Easy AACSB Standard: Contexts of organizations in a global society

49. Individuals who believe they have the capacity and know-how to start a businesswithout being burdened by the fear of failure are known as

.

a. venture capitalists b. angel investors c. potential entrepreneurs d. creative directors Ans: C Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments 50. Individuals who have set up a business they will own or co-own, which is less thanthree months old and has not yet generated wages or salaries for the owners, are known as . a. potential entrepreneurs b. prospective entrepreneurs c. new business owners d. nascent entrepreneurs Ans: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension

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Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

51. Individuals who have been actively involved in a business for over three months but less than three and a half years are known as

.

a. potential entrepreneurs b. nascent entrepreneurs c. new business owners d. established business owners Ans: C Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

52. Individuals who are still active in business for over three and a half years are knownas . a. potential entrepreneurs b. nascent entrepreneurs c. new business owners d. established business owners Ans: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

53. Individuals who have had their business for less than three months are referred toas .

A. established business owners B. nascent entrepreneurs beststudy284@gmail.com

C. necessity-based entrepreneurs D. new business owners Ans: B Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

54. Total entrepreneurial activity (TEA) is the percentage of the population of each country between the ages of 18 and 64, who are either a. a nascent entrepreneur or owner-manager of a new business

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.

b. a potential entrepreneur or established business owner c. a new business owner or established business owner d. a potential entrepreneur or a nascent entrepreneurAns: A Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

55. Which of the following is NOT an aspect of the Entrepreneurship Ecosystem described in the chapter? a. social norms b. physical infrastructure c. entry regulation d. open-access patent databasesAns: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Medium AACSB Standard: Contexts of organizations in a global society

56. Which of the following is NOT a condition for small and medium businesses to flourish in a country? a. entrepreneurship education b. support from government c. cultural and social norms d. large population size Ans: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments 57. Sarah is an accountant with desires to open her own business. She is looking for office space at a reasonable rate along with Internet service. Of the conditions that needto be put in place for the Entrepreneurial Ecosystem, she needs

.

a. cultural and social norms b. physical infrastructure c. entry regulation d. commercial and legal infrastructure Ans: B Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Analysis

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Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Hard AACSB Standard: Contexts of organizations in a global society

58. Rahul wants to start a spice business but wants a secure framework with experts in property rights, accounting, law, investment banking, and technology. Of the conditionsthat need to be put in place for the Entrepreneurial Ecosystem, he needs . a. cultural and social norms b. physical infrastructure c. entry regulation d. commercial

and

legal

infrastructureAns: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Application Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Medium AACSB Standard: Contexts of organizations in a global society

59. Angela wants to start a company developing apps. She needs access to research and development (R&D) to be able to use the newest technologies. Of the conditions that need to be put in place for the Entrepreneurial Ecosystem, she needs

.

a. financial resources b. support from government c. entrepreneurship education d. research and development transfer Ans: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Easy AACSB Standard: Contexts of organizations in a global society beststudy284@gmail.com

60. Maria wants to start a landscaping business, but she doesn’t know where to start. She thinks she will need tax incentives and lower interest rates on her business lines. Of the conditions that need to be put in place for the Entrepreneurial Ecosystem, she particularly needs

.

a. financial resources b. support from government c. entrepreneurship education d. all of these Ans: D Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Easy AACSB Standard: Contexts of organizations in a global society

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61. Anthony wants to start a restaurant but he knows he has a lot to learn about startinga business. Of the conditions that need to be put in place for the Entrepreneurial Ecosystem, he particularly needs

.

a. financial resources b. support from government c. entrepreneurship education d. research and development transfer Ans: C Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: What Makes a Country Entrepreneurial?

Difficulty Level: Easy AACSB Standard: Contexts of organizations in a global society True/False

1. Millennials are considered to be the most educated generation and the most exposedto entrepreneurship education.

Ans: T Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Easy AACSB Standard: Diverse and multicultural work environments

2. Microloans are loans given to individuals in niche markets.Ans: F Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Easy AACSB Standard: Diverse and multicultural work environments

3. Entrepreneurship is reserved for startups.Ans: F Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #1: Entrepreneurship is not reserved for startups Difficulty Level: Medium AACSB Standard: Reflective thinking

4. Bill Gates was an overnight success because it took only three months to become asuccess.

Ans: F

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Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Medium AACSB Standard: Reflective thinking

5. Scientific evidence has proven that a specific set of traits distinguishes entrepreneursfrom non-entrepreneurs.

Ans: F Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #2: Entrepreneurs do not have a special set of personality traitsDifficulty Level: Medium AACSB Standard: Reflective thinking

6. According to the authors, entrepreneurship is best taught as a linear process that willlead to a specific destination.

Ans: F Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #3: Entrepreneurship can be taught (it’s a method that requirespractice) Difficulty Level: Medium AACSB Standard: Reflective thinking

7. Entrepreneurs are traditionally extreme risk-takers.Ans: F Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers Difficulty Level: Medium AACSB Standard: Reflective thinking beststudy284@gmail.com

8. Risk cannot be averted by an entrepreneur’s activity or attitude.Ans: F Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers Difficulty Level: Medium AACSB Standard: Interpersonal relations and teamwork

9. The cycle of act–learn–build encourages entrepreneurs to take small actions in orderto learn and build that learning into the next action.

Ans: T Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge

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Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers Difficulty Level: Medium AACSB Standard: Reflective thinking

10. Successful entrepreneurs have a tendency to collaborate with competitors.Ans: T Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Truth #5: Entrepreneurs collaborate more than they competeDifficulty Level: Medium AACSB Standard: Reflective thinking

11. Entrepreneurship is a life skill.

Ans: T Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Truth #7: Entrepreneurship is a life skill.

Difficulty Level: Easy AACSB Standard: Interpersonal relations and teamwork

12. Entrepreneurship is a relatively new concept which began in 1880. Ans: F Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Knowledge Answer Location: Emergence of the Self-Made Man (Colonial America Before 1776) Difficulty Level: Easy AACSB Standard: Social responsibility

13. Corporate entrepreneurship and intrapreneurship are not the same thing.Ans: F Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Corporate Entrepreneurship Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Analytical thinking

14. Corporate entrepreneurs work within only large organizations whereas entrepreneurs inside can exist in any type of organization, big or small. Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Entrepreneurs Inside Difficulty Level: Medium AACSB Standard: Reflective thinking

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15. An entrepreneur can own his or her own business or work in a corporation with an entrepreneurial spirit.

Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Entrepreneurs Inside Difficulty Level: Medium AACSB Standard: Analytical thinking

16. A franchise is a type of license purchased by a franchisee from a franchisor to allowthem to trade under the name of that business.

Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Buying a FranchiseDifficulty Level: Easy AACSB Standard: Analytical thinking

17. Franchising can be a beneficial way for entrepreneurs to get a head start in launching their own businesses as they don’t have to pay the franchisor royalties afterbuying the franchise.

Ans: F Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Buying a FranchiseDifficulty Level: Easy AACSB Standard: Analytical thinking

18. Social entrepreneurship encompasses only not-for-profit ventures.Ans: F beststudy284@gmail.com

Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking 19. Social entrepreneurship is defined as the process of innovating new social mediabusiness opportunities.

Ans: F Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

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Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

20. Joan has pursued seven money-making ventures over the past ten years rangingfrom retail storefronts to mobile app development. Joan is a “serial entrepreneur.” Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Serial Entrepreneurs Difficulty Level: Medium AACSB Standard: Analytical thinking

21. Family enterprises are the dominant form of business organization worldwide. Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Family EnterprisingDifficulty Level: Easy AACSB Standard: Analytical thinking

22. Most family businesses do not survive the transition from the first to the second generation.

Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Family EnterprisingDifficulty Level: Easy AACSB Standard: Analytical thinking beststudy284@gmail.com

23. It is estimated that more than 80% of U.S. businesses are family-owned or controlled by a family.

Ans: T Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Knowledge Answer Location: Family EnterprisingDifficulty Level: Easy AACSB Standard: Analytical thinking

24. Buying an existing small business is not considered entrepreneurship.Ans: F

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Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Buying a Small BusinessDifficulty Level: Medium AACSB Standard: Analytical thinking

25. B-Corp certification recognizes organizations that achieve five or more years of consistent profitable growth.

Ans: F Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Social EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

26. Unlike necessity-based entrepreneurs, opportunity-based entrepreneurs freely maketheir own choice to get involved in a business.

Ans: T Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments

27. According to the 2015/16 GEM report, the percentage of entrepreneurs in the UnitedStates has declined to 3%—the lowest on record.

Ans: F Learning Objective: 1.5. Illustrate the global diversity of entrepreneurship and its impact.Cognitive Domain: Comprehension Answer Location: Global Entrepreneurship beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Diverse and multicultural work environments 28. Corporate entrepreneurship and intrapreneurship are not the same thing.Ans: F Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Comprehension Answer Location: Corporate Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

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Essay

1. Analyze the importance of action and practice in entrepreneurship.

Ans: With the right mindset, or mental attitude, you are able to start practicing. We, yourauthors, define entrepreneurship as actions taken by an individual or a group to create something new—a new idea, a new item or product, a new institution, a new market, a new set of possibilities.

Learning Objective: 1.1. Explain the importance of action and practice in entrepreneurship.

Cognitive Domain: Analyze Answer Location: Entrepreneurship Requires Action and PracticeDifficulty Level: Hard AACSB Standard: Interpersonal relations and teamwork

2. Compare and contrast three truths about entrepreneurship and your own experiencewith entrepreneurs.

Ans: This answer will be different for each student depending on his or her experiencewith entrepreneurs.

Truth #1: Entrepreneurship is not reserved for startups.

Truth #2: Entrepreneurs do not have a special set of personality traits.

Truth #3: Entrepreneurship can be taught (it’s a method that requires practice).Truth #4: Entrepreneurs are not extreme risk-takers.

Truth #5: Entrepreneurs collaborate more than they compete.Truth #6: Entrepreneurs act more than they plan.

Truth #7: Entrepreneurship is a life skill.

Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Analysis Answer Location: Entrepreneurship May Be Different From What You ThinkDifficulty Level: Hard AACSB Standard: Analytical thinking 3. Compare “entrepreneurship” with “startup.”

Ans: The term startup came into vogue during the 1990s dot-com bubble when a plethora of beststudy284@gmail.com

web-based companies were born. While the term has various meanings, wesubscribe to Steve Blank’s definition of startup: a temporary organization in search of ascalable business model. In the traditional view of startups, anyone who starts a business is called an entrepreneur. The entrepreneur creates a business based on research to assess the validity of an idea or business model. The business may be funded by seed money from family members or investors, but usually it is funded by theentrepreneurs themselves.

If the business is successful, the startup does not remain a startup. It can develop into an organization in its own right, be merged with another organization, or be bought or acquired by another company. In our parody example, lone-wolf Bob created a technology startup in his parents’ garage and sold it to a hugely successful organization.This traditional view of the startup, however, is not the only path for entrepreneurs. The

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truth is that entrepreneurs are everywhere, from corporations to franchises, to for-profitand nonprofit organizations, to family enterprises.

Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Analysis Answer Location: Entrepreneurship Is Not Reserved for StartupsDifficulty Level: Hard AACSB Standard: Application of knowledge 4. Discuss the statement “Entrepreneurship can be taught (it’s a method that requires practice.” Do you agree? Why or why not?

Ans: Many entrepreneurship courses are taught as a process, which involves identifyingan opportunity, understanding resource requirements, acquiring resources, planning, implementing, and harvesting (exiting a business). But the word process assumes known inputs and known outputs, as in a manufacturing process. A process implies youwill get to a specific destination.

For example, building a car on an assembly line is a manufacturing process. You know all the parts, you know how they fit together, and youknow the type of car you will have at the end. A process is quite predictable.

Entrepreneurship is not predictable and, therefore, cannot adequately be taught as a process.

Instead, a method or practice approach represents a body of skills or practicesthat together constitute a toolkit for entrepreneurial action. The entrepreneurial method requires consistent practice so that knowledge and expertise can be continuously developed and applied to future endeavors.

Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Analysis Answer Location: Entrepreneurship Can Be Taught Difficulty Level: Hard AACSB Standard: Analytical thinking

5. Discuss the Act–Learn–Build model as it relates to risk-takers.

Ans: Risk is very personal and relative. Things always seem more risky from the outsidelooking in because we really don’t know what calculations were made to take the next step. In fact, most entrepreneurs are very calculated risk-takers and gauge what they are willing to lose with every beststudy284@gmail.com

step taken. They practice a cycle of act–learn–build that encourages taking small actions in order to learn and build that learning into the next action (see Figure 1.1). Entrepreneurship should never be a zero-sum game—never an all-or-nothing decision. It’s not about ascending the summit without ropes or oxygen. It just looks that way from the outside.

Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.

Cognitive Domain: Analysis Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers Difficulty Level: Medium AACSB Standard: Analytical thinking

6. Discuss the confined re-emergence entrepreneur and his or her opportunities. Ans: The confined re-emergence entrepreneur identifies, creates, and acts on newopportunities, coming back into fashion with the rise of information technology,

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advanced software development, biotech medical research, and more. There is also thedevelopment of the service- and knowledge-based economy dominated by technology- related enterprises, a critical role in the changing economy.

Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.Cognitive Domain: Application, Comprehension Answer Location: Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present) Difficulty Level: Hard AACSB Standard: Diverse and multicultural work environments

7. Compare and contrast the pros and cons of owning a franchise.Ans: Pros

Cons

Ready-made business systems to help the

Franchise fee to be paid up front.

franchise to become operational right away.

Formal training program (online modules,

Royalties (percentage of sales) to bepaid

formal training class) after franchise

to franchisor every month.

agreement signed.

Technology designed to help manage

Strict franchisors’ rules with no wiggle

customers, and administrative tasks.

room.

Marketing/Advertising already in place to

Requirement to pay a percentage of

help launch your franchise.

gross sales into the franchisor’s marketing fund.

Excellent support systems (in-house

Most products and supplies need to be

personnel, field reps, etc.)

purchased from the franchisor.

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Real-estate resources to help source

Sale of franchise requires approval

best location for franchise.

from the franchisor.

A whole franchisee network to reach out

Potential competition from other

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to for help and advice.

franchisees in the network.

Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Application Answer Location: Buying a FranchiseDifficulty Level: Hard AACSB Standard: Analytical thinking 8. Discuss “social entrepreneurship” and describe the differences between entrepreneurial ventures and nonprofit organizations.

Ans: There has been some debate as to how to define social entrepreneurship. Some argue that all types of entrepreneurship are social, while others define it as purely an activity of the nonprofit sector. These blurred lines imply that entrepreneurs are forced to choose between making a social or an economic impact. We contend that social entrepreneurs can do both. It is possible to address a social issue and make a profit— keeping a company economically stable ensures its capability consistently meets the needs of its customers without relying on fundraising or other methods to keep it afloat.We therefore define social entrepreneurship as the process of sourcing innovative solutions for particular problems.

Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Analysis Answer Location: Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility 9. Analyze the benefit corporation (B Corp.) and describe its purpose and role for entrepreneurs.

Ans: A sub-category of social entrepreneurship is the Benefit Corporation, or B-Corp. This is a form of organization certified by the nonprofit B Lab which ensures that strict standards of social and environmental performance, accountability, and transparency are met. The voluntary beststudy284@gmail.com

certification is designed for for-profit companies aiming to achieve social goals alongside business ones. To be certified as a B-Corp, the organization is rated on how its employees are treated, its impact on the environment, and how it benefits the community in which it operates.

B-Corp certification ensures that the for-profit company fulfils its social mission as well as protecting it from lawsuits fromstakeholders that may claim that the company is spending more time or resources on social issues rather than maximizing profit.

Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Analysis Answer Location: Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility

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10. Describe family enterprise and apply the concept to your business concept.

Ans: This essay will have different answers depending on the student’s business concept. Here is the information on family enterprise: A family enterprise is a business which is owned and managed by multiple family members. What makes family enterprising part of the portfolio of entrepreneurship types is that each generation has an opportunity to bring the organization forward in new, innovative ways. An entrepreneurial agenda to move the family business forward is essential to business survival, as demonstrated by the fact that the survival rate of family businesses transitioning from the first to the second generation is less than 30%.

However, another50% of family businesses don’t survive when they move from the second to third generation. This may be because the family owners become stuck in the old ways of doing things and are unwilling to change their business structure as a result.

Many leading organizations which are family businesses are generally considered to bemore stable, not only because of their past history and experience, but because of theirability to take a long-term view, which inspires commitment and loyalty from their employees. Yet, a long-term view that becomes stagnant is detrimental and can lead the company into a downward spiral.

Family enterprises are the dominant form of business organization worldwide. It is estimated that 80% to 90% of US businesses are family-owned or controlled by a familyand 65% of the US workforce is employed by a family business (see Figure 1.3). Widelyknown businesses such as Wal-Mart in the US, supermarket chain Carrefour in France, and auto company Fiat in Italy are all long-standing family businesses that continue to go from strength to strength. To continue their cycle of growth and continuity, family members must pass on their entrepreneurial mindsets as well as their business ethos. Itis this mindset that ensures the survival of the family business for many years to come. Learning Objective: 1.4. Compare and contrast the different forms of entrepreneurship in practice today.

Cognitive Domain: Analysis Answer Location: Family EnterpriseDifficulty Level: Hard AACSB Standard: Interpersonal relations and teamwork

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Chapter 2: Practicing Entrepreneurship Test Bank

Multiple Choice

1. The older view to approaching entrepreneurship as a linear process (i.e., the stepsare followed and the outcomes can be expected) is known as

.

a. predictive logic b. the expected approach c. creation logic d. the organic approach Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

2. Entrepreneurs who determine their goals based on the resources they have are using . a. predictive logic b. the expected approach c. creation logic d. the organic approach Ans: C Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Analytical thinking 3. Planning for the catering at an event by sending out invitations and asking for RSVPsby a certain date is an example of

.

a. predictive logic b. the expected approach c. creation logic d. the organic approach Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship

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Difficulty Level: Medium AACSB Standard: Analytical thinking

4. Friends show up unexpectedly to your house and are hungry. You go through yourkitchen cupboards to see what ingredients you can throw together to prepare a satisfactory meal. This is an example of

.

a. predictive logic b. the expected approach c. creation logic d. the organic approach Ans: C Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Analysis Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

5. What is the dominant logic of large, established organizations? a. prediction b. creation c. experimentation d. creativity Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Analysis Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking 6. The idea that the future is unpredictable yet controllable and entrepreneurs can“effect” beststudy284@gmail.com

the future is called the theory of

.

a. predictability b. controllability c. causation d. effectuation Ans: D Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Analysis Answer Location: Prediction and Creation in Action Difficulty Level: Medium AACSB Standard: Analytical thinking

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7. According to the text, what is/are the main obstacle(s) that prevent(s) many novice entrepreneurs from employing the prediction approach to large endeavors, such as opening a new restaurant? a. unreliability of findings b. expense and time-commitment c. lack of initiative d. fear of failing Ans: B Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Analysis Answer Location: Prediction and Creation in Action Difficulty Level: Medium AACSB Standard: Analytical thinking

8. What skill frees the imagination, opens up the mind to a wealth of opportunities and possibilities, and helps foster innovation? a. skill of creativity b. skill of reflection c. skill of experimentation d. skill of play Ans: D Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Play Difficulty Level: Medium AACSB Standard: Analytical thinking

9. What skill is best described as acting in order to learn—trying something, learning from the attempt, and building that learning into the next iteration? a. skill of creativity beststudy284@gmail.com

b. skill of reflection c. skill of experimentation d. skill of play Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Experimentation Difficulty Level: Medium AACSB Standard: Analytical thinking

10. What skill best describes developing the ability to understand the emotion, circumstances, intentions, thoughts, and needs of others? a. skill of play

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b. skill of reflection c. skill of creativity d. skill of empathy Ans: D Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Empathy Difficulty Level: Medium AACSB Standard: Analytical thinking

11. What skill requires a general openness to the world and relates to unleashing ourcreative ability to create and find opportunities and solve problems? a. skill of play b. skill of reflection c. skill of creativity d. skill of empathy Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Creativity Difficulty Level: Medium AACSB Standard: Analytical thinking

12. What skill helps make sense of all of the other actions required of play, empathy, creativity, and experimentation? a. skill of consideration b. skill of reflection c. skill of expression d. skill of deliberation Ans: B beststudy284@gmail.com

Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

13. Alternative reality games and learning simulations are related to which skill? a. skill of creativity b. skill of reflection c. skill of experimentation d. skill of play Ans: D

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Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Play Difficulty Level: Medium AACSB Standard: Analytical thinking

14. The act of taking a prototype directly to potential customers in order to acquire feedback is a hallmark of which skill? a. skill of creativity b. skill of reflection c. skill of experimentation d. skill of play Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Experimentation Difficulty Level: Medium AACSB Standard: Analytical thinking

15. After conducting market research, Olivia is still uncertain how to price her honey jars.

She decides to bring samples to local farmer’s markets and sell them at differentprice points.

What skill is Jess practicing in this scenario? a. skill of creativity b. skill of reflection c. skill of experimentation d. skill of play Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application beststudy284@gmail.com

Answer Location: The Skill of Experimentation Difficulty Level: Medium AACSB Standard: Analytical thinking 16. After making a presentation, you reflect by describing what happened by considering what took place, what was said, and who was involved. What type of reflection does this describe? a. perceptive reflection b. analytical reflection c. evaluative reflection d. narrative reflection Ans: D Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

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Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

17. After making a presentation, you reflect by focusing on how you felt during the presentation and how you managed those feelings. What type of reflection does this describe? a. perceptive reflection b. analytical reflection c. emotional reflection d. critical reflection Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

18. After making a presentation, you reflect by focusing on your own perceptions and reactions as well as the perceptions and reactions of others. What type of reflection does this describe? a. perceptive reflection b. analytical reflection c. evaluative reflection d. narrative reflection Ans: A Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Analytical thinking 19. After making a presentation, you reflect by thinking about the skills and knowledgeyou gained from the experience and if anything you have learned relates to anything you have heard about before. What type of reflection does this describe? a. perceptive reflection b. analytical reflection c. evaluative reflection d. narrative reflection Ans: B Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application

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Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking 20. After making a presentation, you reflect by focusing on what went well and what didn’t go as well, and if the experience was useful or helpful. What type of reflection does this describe? a. emotional reflection b. analytical reflection c. evaluative reflection d. critical reflection Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

21. After making a presentation, you reflect by considering the part you played in the presentation, your approach, what else you might have done, what you have learnedabout the experience, what questions you have, and what you need to consider as a result. What type of reflection does this describe? a. emotional reflection b. analytical reflection c. evaluative reflection d. critical reflection Ans: D Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Analytical thinking 22. According to research, what proportion of entrepreneurs who start businesses in theUnited States fail within the first 18 months? a. 2 out of 10 b. 5 out of 10 c. 8 out of 10 d. 9 out of 10 Ans: C Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship is More a Method than a Process

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Difficulty Level: Medium AACSB Standard: Analytical thinking

23. According to the authors, what is the primary thing high performers engage in toachieve high levels of performance? a. observation b. deliberate planning c. deliberate practice d. disciplined research Ans: C Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

24. The means of identifying an opportunity, understanding resource requirements, acquiring resources, planning, implementing, and harvesting is called a(n) a. process b. method c. system d. approach Ans: A Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship is More a Method than a ProcessDifficulty Level: Hard AACSB Standard: Analytical thinking

25. Predictive logic should be used in situations of a. certainty b. uncertainty beststudy284@gmail.com

.

.

c. ambiguity d. conflict Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives of Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

26. Creation logic should be used in situations of a. certainty

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.

b. uncertainty c. clarity d. stability Ans: B Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

27. Bill wants to start a restaurant that fuses Mexican and Thai cuisines. He does not really know if this concept will be viable so he develops a limited menu and has friendsand family fill out a questionnaire to gather information. Bill is using

.

a. creation in action b. prediction in action c. business planning in action d. strategy development in action Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Prediction and Creation in Action Difficulty Level: Hard AACSB Standard: Application of knowledge

28.

is based on the idea that because the future is unpredictable yet

controllable and that entrepreneurs can affect the future. a. Control b. Experimentation c. Effectuation d. Entrepreneurship beststudy284@gmail.com

Ans: C Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Research at Work: The Creation Approach Difficulty Level: Easy AACSB Standard: Analytical thinking

29. A study by Darden School of Business Professor Saras D. Sarasvathy showed that89% of experienced, serial entrepreneurs used a. predictive and casual thinking b. creative and effectual thinking c. predictive and effectual thinking d. creative and causal thinking

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thinking.

Ans: B Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Research at Work: The Creation Approach Difficulty Level: Hard AACSB Standard: Application of knowledge

30. According to the authors, a body of skills that together comprise a toolkit for entrepreneurial action is called a(n)

.

a. process b. method c. system d. approach Ans: B Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Comprehension Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Application of knowledge

31. Entrepreneurs who determine their goals and then look for the resources to enablethem to reach their goals are using

.

a. predictive logic b. the expected approach c. creation logic d. the organic approach Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Analytical thinking 32. What did Baekgaard and Miller do when they ordered the wrong size zippers fortheir handbags? a. resold the zippers for a profit b. returned the zippers for the correct size c. absorbed the loss d. designed a new bag that would work with the larger zipperAns: D Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge

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Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking 33. What was Baekgaard and Miller’s desired impact on the world? a. to offer a line of expensive, high-end bags for women b. create stylish, affordable bags for women c. to make environmentally responsible bags for women d. to become the most successful jewelry and clothing brand in the industryAns: B Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking

34. Which of the following is a component of The Practice of Entrepreneurship? a. create financial projections b. take small action c. write a business plan d. get financing Ans: B Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of The Practice of EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking 35. When you ask yourself “What am I willing to lose? What am I truly willing to give upin terms of money, reputation, time, and opportunity cost?” you are practicing which component of The Practice of Entrepreneurship? beststudy284@gmail.com

a. identifying your desired impact on the world b. starting with the means at hand c. describing the idea today d. calculating affordable loss Ans: D Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking

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36. When you ask yourself “What do I know? Whom do I know?” you are practicingwhich component of The Practice of Entrepreneurship? a. identifying your desired impact on the world b. starting with the means at hand c. describing the idea today d. calculating affordable loss Ans: B Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking 37. When you ask yourself “Should I quit or keep going? What’s my next step?” you are practicing which component of The Practice of Entrepreneurship? a. reflecting and being honest with yourself b. starting with the means at hand c. describing the idea today d. calculating affordable loss Ans: A Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking

38. Deliberate practice requires

.

a. high levels of focus, attention, and concentration b. avoiding possible weaknesses c. working without goals beststudy284@gmail.com

d. seeking perfection Ans: A Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

39. Someone using creative logic might say a. we can predict the future and create the future b. we can’t predict the future but we can create the future c. we can predict the future but not create the feature d. we can neither predict nor create the future Ans: B

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.

Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Analysis Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

40. An entrepreneur using predictive logic is likely to

.

a. avoid failure at all costs b. iterate c. take small actions d. embrace and leverage failure Ans: A Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

41. Your impact statement identifies your

.

a. immediate means at hand b. desired financial impact c. desired impact on the competition d. desired impact on the world Ans: D Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking beststudy284@gmail.com

42. Some of the benefits of deliberate practice are

.

a. enhanced ability to store and retrieve information b. the ability to discern the differences between relevant and irrelevant info c. a deeper understanding of complex patterns d. all of these Ans: D Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

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43. When Barbara Baekgaard and Pat Miller began bringing their bags to market by selling their prototype bags at trunk shows, walking into gift shops to obtain orders, andrequesting feedback from friends and family they were practicing

.

a. the skill of play b. calculating their affordable loss c. taking small actions d. reflecting and being honest with themselves Ans: C Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking 44. When Barbara Baekgaard and Pat Miller sent Barbara’s daughter to school with different bags in order to test their designs on the student market, they were practicing . a. the skill of play b. networking and enrolling others in their journey c. calculating their affordable loss d. reflecting and being honest with themselves Ans: B Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium AACSB Standard: Analytical thinking

45. When Jim Poss bought used kitchen trash compactors to tinker with and then tried some beststudy284@gmail.com

reverse engineering to test the feasibility of his solar-powered compactor, he waspracticing the skill of

.

a. experimentation b. empathy c. reflection d. prediction Ans: A Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

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46. When Jim Poss pondered the feedback he received on the prototype of his solar-powered trash compactor and decided to incorporate the feedback into the next production run, he was practicing the skill of

.

a. play b. empathy c. reflection d. prediction Ans: C Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking 47. The “Importance of Stupidity in Scientific Research” article argues that

.

a. becoming more comfortable with “being stupid” will allow us to wade deeper into the unknown and make big discoveries b. passion blindness and bumbling along are detrimental to scientific research c. productivity is hampered when we don’t have all the answers d. deliberate practice is not necessary to improve performanceAns: A Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

True/False

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1. The text defines entrepreneurship as a path of starting and growing a venture using alinear, step-by-step process.

Ans: F Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

2. The prediction and creation logics lead to opposing goals and outcomes.Ans: F Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension

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Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

3. Entrepreneurs who use the creation approach wait for extended periods of time to getwhat they need before taking action.

Ans: F Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

4. Prediction is the dominant logic of large, established organizations.Ans: T Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

5. Small enterprises will almost always begin with creation. Ans: T Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking beststudy284@gmail.com

6. Research has determined that if entrepreneurs who have failed try again, they are farmore likely to be successful in their second venture.

Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

7. Research shows that most failures occur in the first two years of business. Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

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Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

8. The Practice of Entrepreneurship provides a way for entrepreneurs to avoid uncertainty.

Ans: F Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Practice of Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

9. Deciding you want to open an Indian restaurant and then researching your market, gathering information, and opening the restaurant is an example of the creation approach.

Ans: F Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

10. Experimentation can also be thought of as learning by doingAns: T Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Experimentation Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Analytical thinking

11. Among the most common mistakes entrepreneurs make is getting blindsided bypassion in terms of being overly optimistic and confident in their skills and abilities. Ans: T Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

12. Prediction works best in an unstable environment.Ans: F

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Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Application Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

13. According to the authors, everyone is an expert creator from birth because the onlyway we learned as a baby was by trial and error.

Ans: T Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

14. Empathy allows you to connect with potential stakeholders in a more meaningful way, which could help to identify unmet needs, leading to the creation of new productsand services.

Ans: T Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Empathy Difficulty Level: Medium AACSB Standard: Analytical thinking

15. The creation approach allows entrepreneurs to determine their goals according towhatever resources they have at hand.

Ans: T Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship. beststudy284@gmail.com

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

16. The skill of creativity allows you to harness opportunities but not create opportunities.

Ans: F Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Creativity Difficulty Level: Medium

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AACSB Standard: Analytical thinking 17. The skill of creativity requires a high IQ. Ans: F Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Creativity Difficulty Level: Medium AACSB Standard: Analytical thinking

18. The skill of creativity allows you to harness opportunities but not create opportunities.

Ans: F Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Creativity Difficulty Level: Medium AACSB Standard: Analytical thinking

19. Reflection can be considered an action.

Ans: T Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

20. Entrepreneurship is more of a method than a process. Ans: T beststudy284@gmail.com

Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

21. The process approach to entrepreneurship is based on planning and prediction. Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium

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AACSB Standard: Analytical thinking 22. The process approach to entrepreneurship tends to work better for larger organizations and corporations than new ventures.

Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

23. According to the authors, entrepreneurial ventures are essentially small versions oflarge corporations.

Ans: F Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

24. Entrepreneurship is often ill-defined, unstructured, messy, and complex. Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

25. The Practice of Entrepreneurship applies to novices and experts regardless of experience levels.

Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

26. Entrepreneurship as a method consists of steps to complete, whereas entrepreneurship as a process involves phases of learning.

Ans: F Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

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Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

27. Entrepreneurship as a method is creative, whereas entrepreneurship as a processis predictive.

Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

28. Approaching entrepreneurship as a method is similar to following recipe directions.Ans: F Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

29. The Practice of Entrepreneurship emphasizes planning over action.Ans: F Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking 30. The Practice of Entrepreneurship encourages entrepreneurs to act sooner, evenwhen you don’t know exactly what to do.

Ans: T Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

31. The practice of entrepreneurship is inclusive (i.e., it includes any organization at anystage of the business) Ans: T

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Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Medium AACSB Standard: Analytical thinking

32. Entrepreneurship is rarely about just money or profit.Ans: T Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of Practicing Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

33. A higher sense of intuition is associated with entrepreneurs who have consistentlyused deliberate practice over a number of years.

Ans: T Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

34. Calculating affordable loss and taking small actions are both components of ThePractice of Entrepreneurship.

Ans: T Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Analytical thinking

35. Researchers found that medical students who used deliberate practice when studying were able to make more proficient use of their time, energy, and resources.Ans: T Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

36. Expert entrepreneurs who engage in deliberate practice are generally more skilledat understanding the meaning of complex patterns.

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Ans: T Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium AACSB Standard: Analytical thinking

37. Reflection is the least important entrepreneurial skill. Ans: F Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

38. The Practice of Entrepreneurship is about competition rather than collaboration andcocreation.

Ans: F Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of Practicing Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

39. In the entrepreneurial context, risk is absolute.Ans: F Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Using the Practice to Achieve Ongoing SuccessDifficulty beststudy284@gmail.com

Level: Medium AACSB Standard: Analytical thinking

Essay

1. Compare and contrast prediction and creation.

Ans: The two main perspectives on entrepreneurship are the predictive logic, the older and more traditional view; and the creation logic, which has been developed through recent advances in the field. Prediction is the opposite of creation. Whereas prediction thinking is used in situations of certainty, the creation view is used when the future is unpredictable. Prediction involves big planning, waiting until you get what you need, expected returns, linear process, optimization, avoiding failure at all costs, competition,and the knowable. Prediction believes to the extent we can predict the future, we can

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control it. Creation involves small actions, starting with what you have, acceptable loss, iteration, experimentation, embracing and levering failure, collaboration, and the unknowable. Creation believes to the extent we can create the future, we don’t need to predict it.

Learning Objective: 2.1. Compare and contrast the prediction and creation approachesto entrepreneurship.

Cognitive Domain: Comprehension Answer Location: Two Main Perspectives on Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

2. List and describe the five entrepreneurial skills essential for building an entrepreneurial mindset.

Ans: 

The skill of play frees the imagination, opens up minds to opportunities, andhelps us be innovative as entrepreneurs.



The skill of experimentation encourages us to take action, ask questions, validate assumptions, and take nothing for granted.



The skill of empathy involves understanding the emotions, circumstances, intentions, thoughts, and needs of others.



The skill of creativity requires a general openness to the world and relates to unleashing our creativity ability to create and find opportunities and solve problems.



The skill of reflection helps us make sense of our experience practicing otherskills and codify our learning from practice.

Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Five Skills Most Important to the Practice of EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

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3. Discuss different types of reflection and explain how the skill of reflection relates tothe other entrepreneurial skills.

Ans: 

Narrative reflection: describe what happened



Emotional reflection: focus on how you felt and managed your emotions



Perceptive reflection: focus on your perceptions and reactions as well as those ofothers



Analytical reflection: think about the skills and knowledge you gained and if anyof it relates to what you have heard before



Critical reflection: consider the part you played, the approach you took, what elsecould have been done

The skill of reflection helps make sense of all of the other actions required of play, empathy, creativity, and experimentation. It helps codify our learning from practicing thefour other skills.

Taking the time out to reflect is also an action, and it can be the most

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important of all the five skills. Reflection makes us aware of feelings of discomfort, helpsus to critically analyze our own feelings and the knowledge we possess, provides us with new perspectives, and allows us to evaluate outcomes and draw conclusions.

Learning Objective: 2.2. Create a portfolio of five skills essential to building a mindset for The Practice of Entrepreneurship.

Cognitive Domain: Application Answer Location: The Skill of Reflection Difficulty Level: Medium AACSB Standard: Analytical thinking

4. Describe how you would use the traditional steps of the entrepreneurship process tostart a new business.

Ans: Step 1: Think of an idea Step 2: Do market research Step 3: Get some financial projections Step 4: Find a partner/team Step 5: Write a business plan Step 6: Get financing Step 7: Find space, build a prototype, and hire peopleStep 8: Bring your product/service to market Step 9: Manage the business Step 10: Plan an exit Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Application Answer Location: Entrepreneurship Is More a Method Than a ProcessDifficulty Level: Hard AACSB Standard: Application of knowledge

5. Describe the benefits of the method approach.Ans: 

It applies to novices and experts regardless of experience levels.



It is inclusive; it includes any organization at any stage of business.

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

It requires continuous practice with a focus on doing then learning.



It is designed for an unpredictable environment.

Learning Objective: 2.3. Distinguish between entrepreneurship as a method and aprocess.

Cognitive Domain: Comprehension Answer Location: Table 2.3: Assumptions Underlying the Practice of EntrepreneurshipDifficulty Level: Medium AACSB Standard: Application of knowledge

6. Describe the powerful assurances of the practice of entrepreneurship.Ans: 

You will act sooner even when you don’t know exactly what to do.

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

For those things you can do, you will. For those things you cannot do, you will try.



You will try more times because at the early stage, trying is a low cost option.



You will fail sooner enabling better, higher-quality information to be included in future tries.



You will likely begin experimenting with many new ideas simultaneously.

Learning Objective: 2.4. Illustrate the key components of the practice of entrepreneurship.

Cognitive Domain: Application Answer Location: The Practice of Entrepreneurship Difficulty Level: Hard AACSB Standard: Group and individual behaviors 7. Develop your impact statement.

Ans: 

Include means at hand.



Include your affordable loss.



Include network and enrollment of others.

Learning Objective: 2.4. Illustrate the key components of the practice of entrepreneurship.

Cognitive Domain: Analysis Answer Location: The Practice of Entrepreneurship Difficulty Level: Hard AACSB Standard: Group and individual behaviors

8. Describe the components of deliberate practice. Ans: 

Requires high levels of focus, attention and concentration



Strengthens performance by identifying weaknesses and improving them



Is consistent and maintained for long periods of time



Must be repeated to produce lasting results



Requires continuous feedback on outcomes



Involves self-observation and self-reflection after practice sessions are

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completed Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Analysis Answer Location: The Concept of Deliberate Practice Difficulty Level: Hard AACSB Standard: Analytical thinking

9. Identify your strengths and weaknesses within the deliberate practice. How would youimprove in the areas of weaknesses?

Ans: Deliberate practices requires the following: 

Requires high levels of focus, attention and concentration



Strengthens performance by identifying weaknesses and improving them



Is consistent and maintained for long periods of time

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

Must be repeated to product lasting results



Requires continuous feedback on outcomes



Involves self-observation and self-reflection after practice sessions are completed

Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Application Answer Location: The Concept of Deliberate Practice Difficulty Level: Hard AACSB Standard: Analytical thinking 10. List the eight key components of The Practice of Entrepreneurship.

Ans: The Practice of Entrepreneurship is designed so entrepreneurs can embrace andconfront uncertainty rather than avoid it. The eight components include the following: identify your desired impact on the world; start with means at hand; describe the idea today; calculate affordable loss; take small action; network and enroll others in your journey; build on what you learn; and reflect and be honest with yourself.

Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of The Practice of EntrepreneurshipDifficulty Level: Medium AACSB Standard: Analytical thinking

11. Assess the role of deliberate practice in achieving mastery.

Ans: Practice doesn’t make perfect; rather, deliberate practice makes perfect. Starting with specific goals, deliberate practice involves consistent, targeted efforts for improvement.

Feedback and self-reflection are necessary for meaningful improvement,and repetition is required to achieve lasting results.

Learning Objective: 2.5. Assess the role of deliberate practice in achieving mastery.Cognitive Domain: Knowledge Answer Location: The Concept of Deliberate Practice Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Analytical thinking

12. Explain how your impact statement relates to other components of The Practice of Entrepreneurship.

Ans: To be successful at creating and building a new business, a new strategy, a new product, or anything radically new requires desire—you have to have a strong feeling toachieve something larger than yourself. Rarely is entrepreneurship about the money or the profit. Granted, fastgrowth companies are primarily concerned with wealth creation, but the general reasons for why people start businesses go much deeper. Some pursuewhat they love, others value their autonomy and ability to control their work experience,and others have a strong desire to bring something new to market. The profit motive is simply not sustainable in the long run because entrepreneurship is hard work and requires satisfaction and desire that is derived from deep within. Your impact statement is what drives you to practice the other components (e.g., calculating your affordable

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loss, taking small actions, etc.). It is only your impact statement that determines whether or not you continue with your idea. Quit only if you no longer have the desire inherent in your impact statement.

Learning Objective: 2.4. Illustrate the key components of The Practice of Entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Eight Components of Entrepreneurship Difficulty Level: Medium AACSB Standard: Analytical thinking

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Chapter 3: Developing an Entrepreneurial MindsetTest Bank

Multiple Choice

1. Robert Donat created a new hardware/software solution by drawing upon his knowledge from working in two diverse areas—the Army and hedge funds. His previousexperience and knowledge played a role in his success. What term describes the factorthat motivated him to start a business in the first place? a. intuition b. innovation c. mindset d. resiliency Ans: C Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Comprehension Answer Location: The Power of Mindset Difficulty Level: Easy AACSB Standard: Application of knowledge 2. Mindset has been traditionally described as

.

a. a person’s inherent traits b. a type of personality c. a person’s emotional intelligence d. an established set of attitudes held by someoneAns: D Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Power of Mindset Difficulty Level: Easy AACSB Standard: Application of knowledge beststudy284@gmail.com

3. The text describes two different types of mindsets. They are

.

a. growth mindset and stunted mindset b. fixed mindset and flexible mindset c. growth mindset and fixed mindset d. positive mindset and negative mindset Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Power of Mindset Difficulty Level: Easy AACSB Standard: Application of knowledge

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4. People with a fixed mindset

.

a. perceive their talents and abilities as set traits b. are fixated on perfection and precision c. like to challenge themselves d. realize their brains and talents are not enoughAns: A Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Power of Mindset Difficulty Level: Easy AACSB Standard: Application of knowledge

5. People with a growth mindset

.

a. are eager to enhance their talents and abilities b. are fixated on perfection and precision c. don’t like to challenge themselves d. tend to give up after experiencing a setbackAns: A Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Power of Mindset Difficulty Level: Easy AACSB Standard: Application of knowledge

6. Which of the following statements reflects a growth mindset? a. When I’m frustrated I give up. b. My natural abilities determine my success. c. I can learn anything I want to. d. I don’t like to be challenged.

Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Application beststudy284@gmail.com

Answer Location: What Is Mindset Difficulty Level: Medium AACSB Standard: Application of knowledge 7. Which of the following statements reflects a fixed mindset? a. When I’m frustrated, I persevere. b. I’m either good at something or I’m not. c. I like to be told that I try hard. d. I’m inspired by others’ successes.

Ans: B Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Medium

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AACSB Standard: Application of knowledge

8. Research has shown that overly praising someone only for their intelligence can . a. create a growth mindset b. create a fixed mindset c. inspire people to try harder d. encourage people to learn from failure Ans: B Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: What Is Mindset?

Difficulty Level: Easy AACSB Standard: Application of knowledge

9. Research has shown that praising someone for how hard they work and practice can . a. create a growth mindset b. create a fixed mindset c. foster a fear of failure d. cause people to avoid challenges Ans: A Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: What Is Mindset?

Difficulty Level: Easy AACSB Standard: Application of knowledge

10. When Mandi is frustrated, she perseveres until she resolves the issue causing her frustration. Mandi has a a. growth mindset b. fixed mindset beststudy284@gmail.com

.

c. angry mindset d. right attitude Ans: A Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Comprehension Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

11. George wants to challenge himself and feels entrepreneurism is his next challenge.George . a. has the risk tolerance of a business owner b. has the growth mindset c. has the challenged mindset

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d. will be successful as a business ownerAns: B Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Comprehension Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

12. Jenni is fine when she fails, as she sees failure as a way to learn. Jenni

.

a. has the growth mindset b. will always fail c. will go bankrupt d. should develop a business plan Ans: A Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Comprehension Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

13. Debra is always told by her faculty that she tries hard. As an entrepreneur, Debra . a. is a type A personality b. tries too hard to see the big picture c. has the growth mindset d. has the fixed mindset Ans: C Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge beststudy284@gmail.com

14. Cyndi and Mandi are co-workers. When Cyndi sees Mandi succeed, she says she is inspired.

Cyndi

.

a. has the growth mindset b. will be promoted after Mandi c. will be promoted before Mandi d. will learn to be successful from Mandi Ans: A Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge

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15. Paul is a very driven person who believes his effort and attitude determines everything. Paul

.

a. believes in the protestant work ethic b. has the growth mindset c. has the fixed mindset d. will succeed if only by his sheer will and effort Ans: B Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge 16. Bob believes he is either good at something or he’s not. It is as simple as that! Bob . a. has the fixed mindset b. is closed minded c. knows his skills and strengths d. can do anything he wants to do Ans: A Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge

17. People at work know not to frustrate Bill as he tends to just give up. Bill a. has the fixed mindset b. is closed minded c. is not easy to work with d. will have many different jobs in his career Ans: A beststudy284@gmail.com

.

Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge

18. Image you score low on a math test. If you had a fixed mindset, you might say whichof the following? a. I’ll try harder next time. b. I’ll seek out a math tutor to help me. c. I’ll never be good at math. d. I’ll do more practice problems before the next test.Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.

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Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

19. Which of the following is a benefit of having a growth mindset in the context of entrepreneurship? a. A growth mindset gives entrepreneurs confidence in their natural abilities. b. A growth mindset recognizes the importance of fixed traits. c. A growth mindset encourages entrepreneurs to take action even in uncertain circumstances. d. A growth mindset encourages entrepreneurs to view others’ success as mere luck.Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Analysis Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Application of knowledge

20. An entrepreneurial mindset can be described as

.

a. the ability to avoid failure and mistakes b. the ability to take action in stable, low-risk environments c. the ability to develop high-tech solutions in emerging markets d. the ability to quickly take action and get organized under uncertain conditionsAns: D Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Mindset for Entrepreneurship Difficulty Level: Easy AACSB Standard: Application of knowledge 21. What is another term for “thinking about thinking”? a. self-efficacy b. experimentation beststudy284@gmail.com

c. metacognition d. effectuation Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Mindset for Entrepreneurship Difficulty Level: Easy AACSB Standard: Application of knowledge

22. Which of the following is an example of metacognition? a. skimming over difficult sections when reading a document b. rereading text you don’t understand the first time

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c. reading text as quickly as possible d. skimming a document to get the gist Ans: B Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Analysis Answer Location: The Mindset for Entrepreneurship Difficulty Level: Hard AACSB Standard: Application of knowledge

23. The entrepreneurial mindset is about

.

a. who you know b. who knows you c. who you are d. what you know Ans: C Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Comprehension Answer Location: Passion and Entrepreneurship Difficulty Level: Medium AACSB Standard: Application of knowledge

24. In the context of entrepreneurship, passion is

.

a. an intense positive emotion that keeps entrepreneurs focused and motivated b. an intense negative emotion that keeps entrepreneurs focused and motivated c. always motivated by an entrepreneur’s financial interests d. an often weak and sporadic emotion occasionally experienced by the entrepreneurAns: A Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Mindset for Entrepreneurship Difficulty Level: Easy AACSB Standard: Application of knowledge beststudy284@gmail.com

25. Some of the positive effects of passion can be

.

a. energy b. resilience c. joy d. all of these Ans: D Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Mindset for Entrepreneurship Difficulty Level: Easy AACSB Standard: Application of knowledge

26. Some of the negative effects of passion can be

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.

a. failure to heed warning signs b. failure to hear negative feedback c. failure to see other opportunities d. all of these Ans: D Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Mindset for Entrepreneurship Difficulty Level: Easy AACSB Standard: Application of knowledge

27. Habit can be best understood as

.

a. a predisposed condition b. a pattern of negative behaviors c. a pattern of behavior carried out infrequently d. a pattern of behavior carried out often and regularlyAns: D Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: Entrepreneurship as a Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

28. Barb is trying to take control of her time by using an online time tracking system thattracks her time spent on tasks and projects. She heard that if you do something for seven weeks it becomes a habit. The activity in our brain that decides whether a behavior should be repeated and stored is a. a habit b. a habit loop c. self-leadership habit d. a compulsion in development Ans: B beststudy284@gmail.com

.

Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: Entrepreneurship as a Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

29. In the context of entrepreneurship,

is a process whereby people can influence

and control their own behavior, actions, and thinking to achieve self-directionand selfmotivation. a. effectuation b. self-leadership c. vesting d. offering Ans: B

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Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

30. Self-leadership involves

.

a. self-reward b. self-preservation c. self-sabotage d. all of these Ans: A Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

31. Which of the following is a behavior-focused strategy? a. self-observation b. self-goal setting c. self-punishment d. all of these Ans: D Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

32. Self-observation is the process of

.

a. compensating ourselves when we achieve our goals with tangible or intangiblerewards beststudy284@gmail.com

b. examining our own behaviors in a constructive way in order to reshape these behaviors c. raising our awareness of how, when, and why we behave the way we do in certain circumstances d. setting individual goals for ourselves Ans: C Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

33. Self-correcting feedback is the process of

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.

a. compensating ourselves when we achieve our goals with tangible or intangiblerewards b. examining our own behaviors in a constructive way in order to reshape these behaviors c. raising our awareness of how, when, and why we behave the way we do in certain circumstances d. setting individual goals for ourselves Ans: B Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

34. Self-reward is the process of

.

a. compensating ourselves when we achieve our goals with tangible or intangiblerewards b. examining our own behaviors in a constructive way in order to reshape these behaviors c. raising our awareness of how, when, and why we behave the way we do in certain circumstances d. setting individual goals for ourselves Ans: A Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

35. Self-goal setting is the process of

.

a. compensating ourselves when we achieve our goals with tangible or intangiblerewards b. examining our own behaviors in a constructive way in order to reshape these behaviors c. prompting that acts as a reminder of desired goals and keeps you focused on what you are beststudy284@gmail.com

trying to achieve d. setting individual goals for ourselves Ans: D Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

36. Self-cueing is the process of

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.

a. compensating ourselves when we achieve our goals with tangible or intangiblerewards b. examining our own behaviors in a constructive way in order to reshape these behaviors c. prompting that acts as a reminder of desired goals and keeps you focused on what you are trying to achieve d. setting individual goals for ourselves Ans: C Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

37. When you stop and deliberately ask yourself questions about what you are accomplishing, what you are not accomplishing, and what is standing in your way, youare practicing . a. self-goal setting b. self-observation c. self-cueing d. self-correcting feedback Ans: B Learning Objective3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

38.

help entrepreneurs form positive and productive ways of thinking that canbenefit

performance. a. Destructive thought patterns b. Fixed mindsets c. Constructive thought patterns d. Right-brain thinking patterns beststudy284@gmail.com

Ans: C Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Knowledge Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

39. Creativity is

.

a. only expressed by artists and writers b. the capacity to produce new ideas, insights, and inventions that are valuable andunique c. something we are born with

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d. the capacity to develop intricate, complicated solutionsAns: B Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: The Creativity Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

40.

can prevent an entrepreneur from practicing creativity.

a. Self-reliance b. Fear c. Motivation d. Persistence Ans: B Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: The Fear Factor Difficulty Level: Easy AACSB Standard: Application of knowledge

41.

can cause self-doubt, insecurity, and discomfort.

a. Self-reliance b. Fear c. Motivation d. Persistence Ans: B Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: The Fear Factor Difficulty Level: Easy AACSB Standard: Application of knowledge beststudy284@gmail.com

42. In his book A Whole New Mind, author Daniel Pink argues that

.

a. we live in a conceptual age that requires us to use both the left side and right side ofour brains b. we live in a conceptual age that requires us to use primarily the left side of our brains c. we live in a conceptual age that requires us to use primarily the right side of ourbrains d. we live in an industrial and agricultural age that requires us to use primarily the leftside of our brains Ans: A Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: A Creative Mind Difficulty Level: Easy AACSB Standard: Application of knowledge

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43. Luther is known at work for being direct, detail-oriented, and linear while focused on processes. He likes to finish Step A before moving onto Step B, then Step C, and so on. Luther is . a. left-brain thinking b. a self-leader c. right-brain thinking d. self-rewarding Ans: A Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: A Creative Mind Difficulty Level: Easy

44. Maddox is emotional, likes to present possibilities, and is focused on big-picture projects. Overall, Maddox is using

.

a. left-brain thinking b. self-leadership c. right-brain thinking d. self-rewarding Ans: C Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: A Creative Mind Difficulty Level: Easy AACSB Standard: Application of knowledge

45. A research study conducted by Mihaly Csikszentmihalyi showed that creativepeople tend to a. be right-brained b. be left-brained c. have polarized traits beststudy284@gmail.com

.

d. have conflicting traits Ans: C Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: A Creative Mind Difficulty Level: Easy AACSB Standard: Application of knowledge

46. Identify the example of polarized traits. a. disciplined; playful b. proud; humble c. high energy; quiet at rest d. all of these Ans: D

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Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Knowledge Answer Location: A Creative Mind Difficulty Level: Easy AACSB Standard: Application of knowledge

47.

is the art of spontaneously creating something without preparation.

a. Improvisation b. Creativity c. Self-leadership d. Innovation Ans: A Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Knowledge Answer Location: The Improvisation Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

48. With improvisation, all the following statements are true EXCEPT

.

a. improvisation is not just for actors or musicians b. there’s no such thing as being wrong c. nothing suggested is questioned or rejected d. everything is unimportant Ans: D Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Knowledge Answer Location: The Improvisation Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

49. When jazz players improvise, MRI scans show a. no differences in brain activity beststudy284@gmail.com

.

b. that musicians tended to switch on the self-censoring part of their brain c. that musicians tended to switch off the self-censoring part of their brain giving themthe ability to express themselves without restriction d. decreased brain activity Ans: C Learning Objective: 3.5. Explain how to develop the habit of improvisationCognitive Domain: Comprehension Answer Location: The Improvisation Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

50. Which of the following is appropriate during improvisation? a. I’m not sure and b. No and

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c. Maybe and d. Yes and Ans: D Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Comprehension Answer Location: The Improvisation Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

51. A recent study showed that

.

a. improvisational behavior was more evident in entrepreneurs starting new ventures b. improvisational behavior was less evident in entrepreneurs starting new ventures c. there was no connection between improvisational behavior and entrepreneurs d. improvisation only matters in the context of comedy Ans: A Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Comprehension Answer Location: The Improvisation Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

52. Improvisation is defined as the art of

.

a. spontaneously creating without preparation b. stand-up comedy c. creating with deliberate preparation d. thinking deeply about complex problems Ans: A Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Application Answer Location: The Improvisation Habit Difficulty Level: Hard AACSB Standard: Application of knowledge beststudy284@gmail.com

53. According to improvisation guidelines,

.

a. everything is important b. anything can be questioned c. anything can be rejected d. everything is highly scripted Ans: A Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Application Answer Location: Improvisation Guidelines Difficulty Level: Hard AACSB Standard: Application of knowledge

54. Improvisation is connected to the entrepreneurial mindset because

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.

a. it helps develop objective thinking b. it helps develop the ability to change direction quickly c. it helps develop linear thinking d. it helps develop comedic timing Ans: B Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Application Answer Location: Improvisation Guidelines Difficulty Level: Hard AACSB Standard: Application of knowledge

55. Abbie learned that the entrepreneurial mindset requires the habits of self-leadership, creativity, and improvisation. The

is the pathway to action.

a. offering b. mindset c. idea d. movement Ans: B Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Application Answer Location: The Mindset as the Pathway to ActionDifficulty Level: Hard AACSB Standard: Application of knowledge

56. According to the text, the only way to get results is to

.

a. think deeply b. plan obsessively c. take action d. avoid risk Ans: C Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: The Mindset as the Pathway to ActionDifficulty Level: Medium AACSB Standard: Application of knowledge

57. Entrepreneurial self-efficacy is the

.

a. belief that entrepreneurs have in their own ability to begin new ventures b. belief that entrepreneurs are born, not made c. ability to efficiently maximize returns d. ability for entrepreneurs to be self-deprecating despite their successesAns: A Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

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Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

58. Which of the following would apply to someone who scores high on The GeneralSelfEfficacy Scale? a. If someone opposes me, I usually acquiesce. b. Handling unforeseen situations doesn’t come easily to me. c. When I am confronted with a problem, it’s difficult for me to find a solution. d. If I am in trouble, I can usually think of a solution.

Ans: D Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

59. Which of the following would NOT apply to someone who scores high on The General Self-Efficacy Scale? a. If someone opposes me, I usually get what I want. b. I can confidently deal with unexpected events. c. I get flustered when facing difficulties. d. If I am in trouble, I can usually think of a solution.

Ans: C Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

60. Sven somehow always remains calm when facing difficulties. He prides himself onthe beststudy284@gmail.com

ability to rely on his coping abilities. Sven is

.

a. a highly creative entrepreneur b. high on the self-efficacy scale c. low on the self-efficacy scale d. very efficient in managing his business plan Ans: B Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

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61. Gwen is very resourceful and she always knows how to handle the unforeseen. Sheis . a. an efficiency expert b. high on the self-efficacy scale c. low on the self-efficacy scale d. an event planner Ans: B Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

62. Kurt has always developed new ideas, insights, and inventions. His peers consider him to be unique and of value to all. Kurt uses

.

a. creativity b. self-observation c. a growth mindset d. passion Ans: A Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: The Creativity Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

63. Janis is an intense person who uses positive emotion to work on entrepreneurialventures with tasks and activities. Janis a. uses creativity b. is passionate c. uses self-goal setting d. has a fixed mindset beststudy284@gmail.com

.

Ans: B Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Passion and Entrepreneurship Difficulty Level: Medium AACSB Standard: Application of knowledge

64. Bentley likes to form positive and productive ways of thinking to benefit his performance. He uses a. constructive thought patterns

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.

b. creative thought patterns c. entrepreneurial self-efficacy d. habits Ans: A Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Hard AACSB Standard: Application of knowledge

65. Jaylah likes to tinker in her workshop. She knows that models help her form positiveand productive ways of thinking that improve her performance. She uses

.

a. constructive thought patterns b. passion c. self-observation d. self-goal setting Ans: A Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Easy AACSB Standard: Application of knowledge

True/False

1. Having a strong and effective mindset is important to being a successful entrepreneur.

Ans: T Learning Objective: 3.1. Appraise the effectiveness of mindset in entrepreneurship.Cognitive Domain: Application Answer Location: The Power of Mindset beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Reflective thinking

2. When people believe their talents and abilities are set traits, they have a growthmindset.

Ans: F Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

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3. Someone practicing the self-leadership habit can influence her own behavior, actions, and thinking to achieve the self-motivation needed to build her entrepreneurial ventures. Ans: T Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

4. Behavior-focused strategies include self-observation, self-goal setting, and self-reward.

Ans: T Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: The Leadership Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

5. Improvisation is about being spontaneous, imaginative, and dealing with the unexpected.

Ans: T Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Knowledge Answer Location: Improvisation Guidelines Difficulty Level: Easy AACSB Standard: Application of knowledge

6. A person who is very confident that he can deal efficiently with unexpected eventswould rate low on the GSES (General Self-Efficacy Scale).

Ans: F Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Application Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Application of knowledge

7. A person who believes he can learn anything that he wants has a fixed mindset.Ans: F Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Application Answer Location: What Is Mindset?

Difficulty Level: Medium AACSB Standard: Application of knowledge

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8. According to the text, missing opportunity is one of the biggest risks of not having an entrepreneurial mindset.

Ans: T Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: The Role of Mindset in Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Application of knowledge

9. When jazz pianists improvised while in an MRI machine, researchers saw no difference in their brain activity.

Ans: F Learning Objective: 3.5. Explain how to develop the habit of improvisation.Cognitive Domain: Analysis Answer Location: The Improvisation Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

10. Self-efficacy can change over time.

Ans: T Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge 11. According to Csikszentmihalyi’s Polarity of Creative Individuals, a person cannot beboth disciplined and playful.

Ans: F Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: A Creative Mind beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Application of knowledge

12. Creativity is something we are born with.

Ans: F Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: A Creative Mind Difficulty Level: Medium AACSB Standard: Application of knowledge

13. There is strong research support that people are either left-brained or right-brained.

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Ans: F Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: A Creative Mind Difficulty Level: Medium AACSB Standard: Application of knowledge

14. Self-punishment and self-goal setting are the same behavior strategy. Ans: F Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: A Creative Mind Difficulty Level: Medium AACSB Standard: Application of knowledge

15. Fear can have a detrimental effect on creativity. Ans: T Learning Objective: 3.4 Explain how to develop the habit of creativity.

Cognitive Domain: Comprehension Answer Location: The Fear Factor Difficulty Level: Medium AACSB Standard: Application of knowledge

16. Research suggests that when we believe in our ability to succeed in something, weare more likely to actively take the steps to make it happen.

Ans: T Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge 17. If you score low on the General Self-Efficacy Scale (GSES) you are likely to put in ahigher beststudy284@gmail.com

level of effort, persist with an idea, and persevere with a task more than those people who possess high levels of self-efficacy.

Ans: F Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

Essay

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1. Compare and contrast a growth mindset and fixed mindset.Ans: Fixed: 

Perceive talents and abilities as set traits



Their brains and talents are enough for success



Go through life with the goal of looking smart all the time

Growth: 

Believe their abilities can be developed through dedication, effort and hard work



Do not believe that brains and talents are the key to success but just a startingpoint



Eager to improve their lives through learning, training and practice



See failure as an opportunity to improve



Tend to persevere rather than giving up

Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Analysis Answer Location: What Is Mindset?

Difficulty Level: Hard AACSB Standard: Reflective thinking 2. Discuss how the entrepreneurial mindset is related to the mindset for entrepreneurship.

Ans: The entrepreneurial mindset is the ability to quickly sense, take action, and get organized under uncertain conditions. The ability to persevere, accept, and learn fromfailure and get comfortable with a certain level of discomfort is essential.

Entrepreneurship demands action and practice to be successful.

Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Application Answer Location: The Mindset for Entrepreneurship Difficulty Level: Medium AACSB Standard: Application of knowledge

3. Define the components of the self-leadership habit.

Ans: Self-leadership is the process of influencing and controlling one’s own behavior,actions beststudy284@gmail.com

and thinking. The components of self-leadership are self-observation, self- cueing, selfpunishment, self-reward, and self-goal setting.

Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

4. Describe how self-punishment and self-cueing are related.Ans: Self-punishment (self-correcting) feedback: Examine our behaviors in a constructiveway to reshape behavior

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Self-cueing: Use certain environmental cues as a way to establish constructive behaviors and reduce or eliminate destructive ones; for example, making lists, notes, orhaving motivational posters on your wall Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

5. List six main emotional roadblocks that prevent us from practicing creativity. Ans: Fear No appetite for chaos Preference for judging over generating ideas Dislike for incubating ideas Perceived lack of challenge Inability to distinguish reality from fantasy Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Analysis Answer Location: The Fear Factor Difficulty Level: Easy AACSB Standard: Application of knowledge 6. Describe Psychology Professor Mihaly Csikszentmihalyi’s Polarity of Creative Individuals.

Ans: 

It is inaccurate to characterize people as left or right brained.



Conflicting traits are not commonly found in the same person (e.g., introvert and extrovert).



Creative individuals polarize traits like discipline and playfulness.



Individuals have a sense of reality and a vivid imagination



Individuals have pride and humility

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Learning Objective: 3.4. Explain how to develop the habit of creativity.

Cognitive Domain: Analysis Answer Location: The Creative Mind Difficulty Level: Medium AACSB Standard: Thinking creatively 7. Explain how improvisation can help develop an entrepreneurial mindset.Ans: 

Creating something without preparation



Change direction quickly



Ability to function under uncertain world



Dealing with obstacles



Developing the ability to quickly adapt

Learning Objective: 3.5. Explain how to develop the habit of improvisation.

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Cognitive Domain: Analysis Answer Location: The Improvisation Habit Difficulty Level: Medium AACSB Standard: Thinking creatively

8. List the improvisation guidelines.

Ans: 

Improvisation is not just for actors or musicians.



There is no such thing as being wrong.



Nothing suggested is questioned or rejected (no matter how crazy it might sound!).



Ideas are taken on board, expanded, and passed on for further input.



Everything is important.



It is a group activity—you will have the support of the group.



You can trust that the group will solve a certain problem.



It’s about listening closely and accepting what you’re given.



It’s about being spontaneous, imaginative, and dealing with the unexpected.

Learning Objective: 3.5. Explain how to develop the habit of improvisation. Cognitive Domain: Analysis Answer Location: The Improvisation Habit Difficulty Level: Easy AACSB Standard: Thinking creatively

9. Explain how an entrepreneurial mindset is related to entrepreneurial action.

Ans: As entrepreneurship demands practice to achieve success, the right mindset is necessary for that practice to be successful. When people believe they can succeed, they’re more likely to pursue the right activities to make that happen.

Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: The Role of Mindset in Opportunity RecognitionDifficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Application of knowledge

10. Define natural reward strategies and give one example of a natural reward strategy.Ans: Natural reward strategies endeavor to make aspects of a task or activity more enjoyable by building in certain features or by reshaping perceptions to focus on the most positive aspects of the task and the value it holds. For example, if you are workingon a particularly difficult or boring task, you could build in a break to listen to some music or take a short walk outside. In addition, rather than dreading the nature of the work, you could refocus on the benefits of what you are doing and how good it will feel when it is done.

Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Medium

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AACSB Standard: Application of knowledge

11. Explain the possible negative effects of passion.

Ans: It is possible to become blinded by passion and so obsessed by an idea or new venture that we fail to heed the warning signs or refuse to listen to negative informationor feedback. This type of negative passion can actually curb business growth and limit the ability to creatively solve problems Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: Passion and Entrepreneurship Difficulty Level: Medium AACSB Standard: Application of knowledge

12. Explain the relationship between habits and the habit loop.

Ans: Habit is a sometimes unconscious pattern of behavior that is carried out often and regularly.

Good habits can be learned through a “habit loop”—a process by which our brain decides whether or not a certain behavior should be stored and repeated. If we feel rewarded for our behavior, then we are more likely to continue doing it. For example, toothpaste companies instigate a habit loop in consumers by not just advertising the hygiene benefits of brushing teeth, but also the “tingling, clean feeling” we get afterwards—the reward. People are more likely to get into a tooth brushing habit loop as a result.

Learning Objective: 3.2. Define “mindset” and explain its importance to entrepreneurs.Cognitive Domain: Knowledge Answer Location: Entrepreneurship as a Habit Difficulty Level: Hard AACSB Standard: Application of knowledge

13. Describe how behavior-focused strategies can benefit entrepreneurs.

Ans: Behavior-focused strategies help increase self-awareness to manage behaviors particularly when dealing with necessary but unpleasant tasks. Behavioral strategies aredesigned to bring about successful outcomes through positive behaviors and suppress or eliminate those negative behaviors that lead to bad consequences. beststudy284@gmail.com

Learning Objective: 3.3. Explain how to develop the habit of self-leadership.

Cognitive Domain: Application Answer Location: The Self-Leadership Habit Difficulty Level: Medium AACSB Standard: Application of knowledge

14. Explain the benefits and potential risks of scoring high on entrepreneurial selfefficacy.

Ans: Self-efficacy is an essential part of the entrepreneurial mindset, and it is thought tobe a good indicator of entrepreneurial intentions as well as a strong precursor to action. In fact, recent research suggests that entrepreneurial self-efficacy can enable the entrepreneur to more effectively confront demands or stressors and thus improve entrepreneurial performance.

Research suggests that when we believe in our ability to

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succeed in something, we are more likely to actively take the steps to make it happen.However, sometimes there is a fine line between self-confidence, self-efficacy, and arrogance. Arrogance leads a person to believe that he or she achieved success without help from others; further, the arrogant person may feel entitled to success andentitled to “bend the rules” to get ahead.

Learning Objective: 3.6. Relate the mindset for entrepreneurship to entrepreneurialaction.

Cognitive Domain: Comprehension Answer Location: Self-Efficacy and Entrepreneurial Intentions Difficulty Level: Medium AACSB Standard: Application of knowledge

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Chapter 4: Supporting Social EntrepreneurshipTest Bank

Multiple Choice

1. Social entrepreneurs and traditional entrepreneurs are similar in that

.

a. both measure success solely based on profit b. both have the same mission and goals c. both measure success solely based on improving societal well-being d. both identify opportunities Ans: D Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Application Answer Location: The Role of Social Entrepreneurship Difficulty Level: Easy AACSB Standard: Social responsibility

2. Social entrepreneurship is the process of

.

a. forming strictly nonprofit ventures b. sourcing innovative solutions for any type of problem c. sourcing innovative solutions for social and environmental problems d. rebranding a company’s image to appear more socially responsibleAns: C Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Comprehension Answer Location: The Role of Social Entrepreneurship Difficulty Level: Easy AACSB Standard: Social responsibility

3. Social entrepreneurship differs from other forms of entrepreneurship in that it giveshigher priority to beststudy284@gmail.com

.

a. social value creation b. value capture c. investors d. assets Ans: A Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Comprehension Answer Location: The Role of Social Entrepreneurship Difficulty Level: Easy AACSB Standard: Social responsibility

4. Jim Poss created Bigbelly, Inc., a for-profit company that builds trash cans that allowsgarbage to be compacted using solar energy. Jim Poss is an example of a(n)

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.

a. angel investor b. social entrepreneur c. traditional entrepreneur d. venture capitalist Ans: B Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Comprehension Answer Location: The Role of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

5. A NGO is

.

a. a government organization b. a nongovernmental organization c. a nonprofit operation of the government d. the operational name of the United Nations Ans: B Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Knowledge Answer Location: The Role of Social Entrepreneurship Difficulty Level: Easy AACSB Standard: Social responsibility

6. Dr. G. Venkataswamy was able to treat tens of millions of patients in India through his Aravind Eye Care System by

.

a. applying conventional problem-solving techniques b. seeking financial assistance from the government c. building his own manufacturing plan that used less expensive technology d. not accepting patients who couldn’t travel to his hospitalsAns: C Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world. beststudy284@gmail.com

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility 7. Wicked problems are defined as

.

a. problems without conflicting values b. large, complex social problems with no clear solution c. problems with clear and abundant information d. problems with obvious solutions Ans: B Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Knowledge

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Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

8. Which of the following is an example a wicked problem? a. a startup that is running out of cash b. a founder who is determining her target market c. a venture striving to reduce childhood mortality d. a venture striving to diversity its offerings Ans: C Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

9. Which of the following is an example of a wicked problem? a. a community attempting to prevent terrorism b. a community building a new hospital c. a community seeking to attract entrepreneurs d. a community focused on repaving its roads Ans: A Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

10. Overpopulation and the dramatic increase in life expectancy are examples of . beststudy284@gmail.com

a. easily solved problems b. wicked problems c. issues only relevant to developing countries d. problems with a clear solution Ans: B Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Analysis Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

11. Which of the following is an example of a wicked problem? a. widespread famine in war-torn regions in Africa

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b. limited access to healthcare in rural India c. the global refugee crisis d. all of these Ans: D Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Analysis Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

12. Nigerian investor and philanthropist Tony Elumelu has an alternate solution to therefugee problem. He has decided to

.

a. ask the United Nations for special sanctions and funding b. invest $100 million to support entrepreneurship in African countries with refugeesliving in poverty c. lobby to roll back governmental regulations d. start a food bank in Nigeria Ans: B Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Hard AACSB Standard: Social responsibility

13. Which of the following is NOT true of wicked problems? a. Every wicked problem is essentially the same. b. Solutions to wicked problems are not right or wrong. c. Wicked problems have no given alternative solutions. d. Every solution to a wicked problem is a “one shot operation.”Ans: A beststudy284@gmail.com

Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Comprehension Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

14. The aim of a social purpose venture is to

.

a. only resolve a social problem b. only make a profit c. both resolve a social problem and make a profit d. create awareness about a social issueAns: C Learning Objective: 4.3. Identify the different types of social entrepreneurship.

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Cognitive Domain: Application Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

15. The organic clothing company PACT designs, manufactures, and distributes premium cotton underwear without using pesticides, fertilizers, or chemicals. PACT isan example of a . a. nonprofit venture b. social purpose venture c. tech start-up d. government organization Ans: B Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

16. Social consequence entrepreneurship describes a

.

a. for-profit venture whose primary market impact is financial b. non-profit venture whose primary market impact is financial c. non-profit venture whose primary market impact is social d. for-profit venture whose primary market impact is social Ans: D Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Social Consequence Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

17. Sword and Plough hires army veterans to recycle surplus military materials such as beststudy284@gmail.com

parachutes, sleeping bags, and tents, into fashionable bags and accessories. It donates10% of its profits to veteran organizations. Sword and Plough is an example of a. a nonprofit venture b. social consequence entrepreneurship c. a social purpose venture d. a traditional venture Ans: B Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Social Consequence Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility

18. In enterprising nonprofits,

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.

.

a. both the venture mission and the market impact are for social purposes b. profits can be distributed to the owners c. profits can be shared with stakeholders d. a small percentage of profits can be challenged back into the organizationAns: A Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Enterprising Nonprofits Difficulty Level: Hard AACSB Standard: Social responsibility

19. Which type of venture primarily has an economic market impact and economicventure mission? a. traditional venture b. social purpose venture c. social consequence venture d. enterprising nonprofit venture Ans: A Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

20. Which type of venture primarily has a social market impact and social venture mission? a. traditional venture b. social purpose venture c. social consequence venture d. enterprising nonprofit venture Ans: D Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

21. Which type of venture primarily has an economic market impact and social venture mission? a. traditional venture b. social purpose venture c. social consequence venture d. enterprising nonprofit venture Ans: B Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension

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Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

22. Which type of venture primarily has a social market impact and economic venture mission? a. traditional venture b. social purpose venture c. social consequence venture d. enterprising nonprofit venture Ans: C Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility

23. Earned income activities allow enterprising nonprofits to

.

a. accept funding from the government b. accept donations from other nonprofits c. receive financial assistance such as grants with a high level of engagement by thefunder d. sell products or services that are used as a source of revenue generationAns: D Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

24. The Woodland Park Zoo sells exotic animal dung to the public who can then use thedung as garden fertilizer. This is an example of a. earned-income activities b. venture philanthropy funding beststudy284@gmail.com

.

c. performance measurement d. nonfinancial support Ans: A Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

25. Venture philanthropy funding

.

a. combines financial assistance with a high level of engagement by the funder b. offers financial assistance with no engagement by the funder

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c. allows enterprising nonprofits to sell products or services to generate revenue d. offers high level of engagement from consultants with no financial supportAns: A Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

26. A venture philanthropist who is focused on building the long-term viability of the organization, achieving greater social impact, and operational efficiency is focused on . a. providing multiyear support b. organizational capacity building c. performance measurement d. tailored financing Ans: B Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

27. A hybrid model of social entrepreneurship describes a(n)

.

a. social venture that offers both products and services b. organization with a purpose the primarily emphasizes social goals c. organization with a purpose that equally emphasizes both economic and social goals d. organization with a purpose the primarily emphasizes economic goalsAns: C Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Comprehension Answer Location: Enterprising Nonprofits Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Social responsibility

28.

can seek investment from social venture capitalists known as impact-

investment funds. a. Both nonprofit and for-profit organizations b. Only nonprofit organizations c. Only for-profit organizations d. Only social purpose ventures Ans: A Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Application

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Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Medium AACSB Standard: Social responsibility

29. Estimates are that the SVC (social venture capitalist) market could grow to due to the rise of more socially conscious entrepreneurs looking for impact investment opportunities. a. $1 billion b. $500 billion c. $1 trillion d. $3 trillion Ans: D Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Analysis Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Medium AACSB Standard: Social responsibility

30. In the context of social entrepreneurship, stakeholders refer to

.

a. all the people or groups effected by or involved with the social enterprise’s objectives b. only the customers of the social enterprise c. only the investors supporting the social enterprise d. only the board members involved with the social enterpriseAns: A Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility beststudy284@gmail.com

31. According to the text, there are three primary attributes of stakeholders to consider. a. personality, influence, loyalty b. position, legitimacy, location c. intelligence, wealth, power d. power, legitimacy, urgency Ans: D Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Hard AACSB Standard: Social responsibility

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32.

behave in ways that are appropriate, proper, and desired in the context ofthe

organization or community. a. Powerful stakeholders b. Legitimate stakeholders c. Urgent stakeholders d. Dangerous stakeholders Ans: B Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

33. Stakeholders who hold power but do not tend to use that power unless they aregiven a reason to do so are considered

.

a. dormant stakeholders b. discretionary stakeholders c. dependent stakeholders d. definitive stakeholders Ans: A Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

34. Stakeholders who hold no power to influence and no urgent claims but who have legitimacy are considered a. dormant stakeholders b. discretionary stakeholders beststudy284@gmail.com

.

c. demanding stakeholders d. definitive stakeholders Ans: B Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

35. Stakeholders who possess the urgency attribute but have no power or legitimacyare considered

.

a. dormant stakeholders b. discretionary stakeholders

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c. demanding stakeholders d. definitive stakeholders Ans: C Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

36. Stakeholders who have both urgency and legitimacy but lack the power to influenceare considered

.

a. dormant stakeholders b. discretionary stakeholders c. dependent stakeholders d. definitive stakeholders Ans: C Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

37. Stakeholders who have power, legitimacy, and strong influence are considered . a. dominant stakeholders b. discretionary stakeholders c. dependent stakeholders d. definitive stakeholders Ans: A Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can beststudy284@gmail.com

help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

38. Stakeholders who possess both power and urgency but may use their power tocoerce are considered a. dominant stakeholders b. dangerous stakeholders c. dependent stakeholders d. definitive stakeholders Ans: B

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.

Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

39. Stakeholders who posses power, legitimacy, and urgency are considered

.

a. dormant stakeholders b. discretionary stakeholders c. dependent stakeholders d. definitive stakeholders Ans: D Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

40. Donald likes to hold power but does not tend to use that power unless he is given areason to do so. Donald is an example of a

.

a. dormant stakeholder b. discretionary stakeholder c. demanding stakeholder d. dominant stakeholder Ans: A Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Social responsibility

41. Judge Holder has no power to influence and has no urgent claims, but she doeshave legitimacy by using her influence. Judge Holder is an example of a

.

a. dormant stakeholder b. discretionary stakeholder c. demanding stakeholder d. dominant stakeholder Ans: B Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium

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AACSB Standard: Social responsibility

42. Michele has both power and legitimacy. You would be wise to communicate with her regularly and respond to her queries efficiently and accurately to maintain a good relationship with her. Michele is an example of a

.

a. dormant stakeholder b. discretionary stakeholder c. demanding stakeholder d. dominant stakeholder Ans: D Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

43. Janell has the sense of urgency and is legitimate but she does not have the power to influence. She is passionate and her passion usually attracts dominant stakeholders.Janell is an example of a

.

a. dependent stakeholder b. dangerous stakeholder c. definitive stakeholder d. dominant stakeholder Ans: A Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility beststudy284@gmail.com

44. Robert has power and a strong sense of urgency but he has been known to use thispower to coerce and manipulate. Social issues can be emotive and he can be a hindrance for resolution.

Robert is an example of a

.

a. dependent stakeholder b. dangerous stakeholder c. definitive stakeholder d. dominant stakeholder Ans: B Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

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45. Alison possesses power, legitimacy, and urgency. She usually has a significant roleto play in an organization and must be given priority when it comes to handling her issues. Alison is an example of a

.

a. dependent stakeholder b. dangerous stakeholder c. definitive stakeholder d. dormant stakeholder Ans: C Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

46. CSR stands for

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a. corporate social responsibility b. consolidated social reporting c. customer service relationships d. customer social responsibility Ans: A Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Knowledge Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Easy AACSB Standard: Social responsibility

47. A corporation with profit goals can have a CSR strategy if a. it treats its customers responsibly beststudy284@gmail.com

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b. it pursues social objectives in addition to pursing profit c. it maximizes its charitable contributions d. it reinvests all profits into the company Ans: B Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

48. The biggest difference between social entrepreneurship and corporate social responsibility is

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.

a. social entrepreneurship places equal emphasis on social and economic goals b. corporate social responsibility places equal emphasis on social and economic goals c. social entrepreneurship eschews economic goals d. corporate social responsibility prioritizes social goals over economic goalsAns: A Learning Objective: 4.6. Distinguish between corporate social responsibility and socialentrepreneur ship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

49. Which of the following is a business benefit of CSR? a. decreased costs by reducing packaging, energy expenses, and shipping b. increased number of engaged customers c. improved public image d. all of these Ans: D Learning Objective: 4.6. Distinguish between corporate social responsibility and socialentrepreneur ship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

50. A work integration social enterprise (WISE) is a social enterprise that

.

a. aims to provide at-risk youth with employment opportunities b. aims to integrate people who have been socially excluded into work and societythrough productive activity c. allows workers to unionize in sustainability-related fields d. aims to bring together social entrepreneurs in the communityAns: beststudy284@gmail.com

B Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Hard AACSB Standard: Social responsibility

51. Which of the following is an example of a work integration social enterprise? a. a venture that trains former gang members to be personal trainers b. a venture that sources all its resources from local sources c. a venture that donates one pair of shoes for every pair of shoes it sells d. a venture that sells donated books online

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Ans: A Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium AACSB Standard: Social responsibility

52. Which of the following is an example of a work integration social enterprise? a. a venture that provides solar-powered kiosks that charge phones at a low cost b. a venture that provides educational services for women in prison c. a venture that sells an internal combustion engine that decreases greenhouse gasemission d. a venture that provides sustainable waste and recyclingAns: B Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium AACSB Standard: Social responsibility

53. Which of the following is an example of a work integration social enterprise? a. a venture that provides doctors and nurses with better patient data b. a venture that improves the quality of drinking water c. a venture that hires out employees with autism d. a venture that improves access to clean energyAns: C Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Social responsibility

54. Jing has no power or legitimacy; she is quite often the only dissenting voice in theroom.

Jing is an ideal example of a

.

a. dormant stakeholder b. discretionary stakeholder c. demanding stakeholder d. dominant stakeholder Ans: C Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application

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Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

True/False

1. Large, complex social problems where there is no clear solution are described aswicked problems.

Ans: T Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

2. A refugee crisis is an example of a wicked problem. Ans: T Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Easy AACSB Standard: Social responsibility

3. Issues relating to the environment, poverty, sustainability, equality, education, child mortality, sanitation, terrorism, and health and wellness are all examples of wicked problems.

Ans: T Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application beststudy284@gmail.com

Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

4. According to the typology of ventures, there are four types of models: traditional,social purpose, social consequence, and enterprising nonprofits.

Ans: T Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

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5. Ventures with social consequence and social purpose are the same type of venture.Ans: F Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

6. It is not possible for enterprising nonprofits to use both venture philanthropy fundingand earned-income activities.

Ans: F Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

7. Earned income activities are the sale of products or services that are used as asource of revenue generation.

Ans: T Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

8. Organizations using the hybrid model of social entrepreneurship prioritize social goalsover economic goals.

Ans: F Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Hybrid Models of Social Entrepreneurship Difficulty Level: Hard beststudy284@gmail.com

AACSB Standard: Social responsibility 9. The “buy one give one” campaign of companies wanting to be socially aware may becausing more problems than the problem they are trying to solve. For example, Tom’s Shoes might actually be injuring the local businesses as it stifles local industry and potentially increases local unemployment in the country getting the give-away shoes. Ans: T Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Analysis Answer Location: Entrepreneurship Meets Ethics Difficulty Level: Hard AACSB Standard: Social responsibility

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10. Social entrepreneurs use the fundamental principles of entrepreneurship to build businesses of economic and social value.

Ans: T Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium AACSB Standard: Social responsibility

11. Labor unions can be considered a stakeholder in the context of entrepreneurship. Ans: T Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility 12. It’s common for all stakeholders to be in immediate agreement in the context ofsocial entrepreneurship Ans: F Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

13. Stakeholder attributes are relatively fixed.

Ans: F Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur. beststudy284@gmail.com

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

14. A CEO is an example of a discretionary stakeholder.Ans: F Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Easy AACSB Standard: Social responsibility

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15. CSR helps improve social issues but often at the expense of business issues.Ans: F Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

16. A company striving to improve environmental well-being in order to improve their brand and image is engaging in social entrepreneurship.

Ans: F Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

17. A company where improving social issues is core to its mission is engaged in corporate social responsibility.

Ans: F Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Differences Between Social Entrepreneurship and Corporate Social Responsibility Difficulty Level: Medium AACSB Standard: Social responsibility

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18. Social entrepreneurs must continuously monitor stakeholders and maintain relationships with them.

Ans: T Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

19. Microloans are small short-term loans given to people living in poverty that enablesthem to engage in entrepreneurship.

Ans: T

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Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Application Answer Location: Microloans as A Source of Social Financing Difficulty Level: Hard AACSB Standard: Social responsibility

20. Organizational capacity building is a feature of venture philanthropy. Ans: T Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

21. It is possible for venture philanthropists to provide nonfinancial support.Ans: T Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility 22. There are no downsides to the “buy-one, give-one” business model. Ans: F Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Application Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Hard AACSB Standard: Social responsibility

23. The Woodland Park Zoo selling animal waste as fertilizer in order to reduce wasteand beststudy284@gmail.com

generate revenue is an example of an earned-income activity.

Ans: T Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Knowledge Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Medium AACSB Standard: Social responsibility

24. Typically the goal of venture philanthropy funding is to provide financial support forthree to five years with the result of enabling the venture to eventually become financially independent.

Ans: T

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Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Knowledge Answer Location: Enterprising Nonprofits Difficulty Level: Medium AACSB Standard: Social responsibility

25. Achates Power Inc, a company that develops an improved internal combustionengine that increases fuel efficiency, is an example of a work integrations social enterprise (WISE).

Ans: F Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium AACSB Standard: Social responsibility

Essay

1. Describe a wicked problem and how you would organize a social entrepreneurship toalleviate the wicked problem.

Ans: Wicked problem characteristics 

The problem is not understood until after the formulation of a solution.



Wicked problems have no stopping rule.



Solutions to wicked problems are not right or wrong.



Every wicked problem is essentially novel and unique.



Every solution to a wicked problem is a “one shot operation.”



Wicked problems have no given alternative solutions.

The student’s solution would be individualistic but should include critical thinking tocome up with a creative solution. beststudy284@gmail.com

Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Analysis Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Hard AACSB Standard: Social responsibility 2. Using the typology of ventures, list and describe the four types of ventures in terms oftheir venture mission and primary market impact.

Ans:

Venture Mission Primary Market Impact

Economic

Social

Economic

Traditional Venture

Social Purpose Venture

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Social

Social Consequence

Enterprising Nonprofits

Venture Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility 3. Provide an example of a social purpose venture and discuss why you consider it asocial purpose venture.

Ans: A social purpose venture aims to resolve a social problem and make a profit.Learning Objective: 4.3. Identify the different types of social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Purpose Ventures Difficulty Level: Medium AACSB Standard: Social responsibility 4. Discuss the differences between traditional nonprofit entrepreneurs and enterprising nonprofits.

Ans: Enterprising nonprofit entrepreneurs typically have a higher survival rate for the first 5 years compared with traditional nonprofit entrepreneurs. Enterprising nonprofit entrepreneurs are more likely to be older (on average), be women, and have a collegedegree.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility

5. Describe venture philanthropy funding.

Ans: It combines financial assistance such as grants with a high level of engagement bythe funder.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive beststudy284@gmail.com

Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Easy AACSB Standard: Social responsibility 6. Describe the features of venture philanthropy. Ans: high

engagement

multiyear support tailored financing organizational capacity building nonfinancial support

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performance measurement Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility

7. Discuss the pros and cons of a buy-one, give-one business model.

Ans: On the surface, the model of a commercial business helping by giving product freeto a third world nation is helping. In deeper reflection, the impact of the giveaways would/could be devastating to the third world nation’s economy by putting local businesses out of business (particularly the businesses in the industries selling the giveaways).

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Analysis Answer Location: Hybrid Models of Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility

8. Compare and contrast the high-engagement and multiyear support characteristics ofventure philanthropists.

Ans: High engagement: Venture philanthropists have a close, hands-on relationship with the social entrepreneurs and ventures they support, driving innovative and scalable models of social change. Some may take board positions on these organizations, and all are far more intimately involved at strategic and operational levels than are traditionalnonprofit funders. Multiyear support: Venture philanthropists provide substantial and sustained financial support to a limited number of organizations. Support typically lasts at least 3 to 5 years, with an objective of helping the organization to become financially self-sustaining by the end of the funding period.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Analysis Answer Location: Hybrid Models of Social Entrepreneurship Difficulty Level: Hard AACSB Standard: Social responsibility beststudy284@gmail.com

9. Describe the tailored-financing characteristics of venture philanthropists.Ans: 

Takes an investment approach to determine the most appropriate financing foreach organization



Depending on their own missions and ventures they choose to support, they canoperate across the spectrum of investment returns.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Analysis Answer Location: Hybrid Models of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

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10. List four examples of impact investment funds.

Ans: sustainable trade financing low-income housing clean energy access clean drinking water Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Application Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Hard AACSB Standard: Social responsibility

11. Describe what role social entrepreneurship plays in society.

Ans: Social entrepreneurship is the process of sourcing innovative solutions to social and environmental problems. While many companies strive simply to maximize shareholder value, social entrepreneurs are often more committed to causes centeredon preserving and protecting future generations.

Learning Objective: 4.1. Describe what role social entrepreneurship plays in society.Cognitive Domain: Analysis Answer Location: The Role of Entrepreneurship in SocietyDifficulty Level: Medium AACSB Standard: Social responsibility

12. Explain how social entrepreneurship can help resolve wicked problems around theworld.

Ans: Social entrepreneurship can help resolve wicked problems such as those related to water shortages, education, health care, poverty, energy, forced migration, and globalwarming by creating innovative solutions that make a real impact on the lives and livelihoods of others.

Learning Objective: 4.2. Explain how social entrepreneurship can help resolve wickedproblems around the world.

Cognitive Domain: Application beststudy284@gmail.com

Answer Location: Social Entrepreneurship and Wicked ProblemsDifficulty Level: Medium AACSB Standard: Social responsibility

13. Identify the different types of social entrepreneurship and explain how they differ. Ans: There are three primary types of social entrepreneurship: social purpose ventures,social consequence entrepreneurship, and enterprising nonprofits.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Types of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

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14. Explain how social entrepreneurs can use capital markets to fund their ventures. Ans: Social entrepreneurs can seek funding from social venture capitalists (SVCs) and community funded venture capital to support operations. Microlending is another sourceof capital available for social entrepreneurs.

Learning Objective: 4.4. Explain how social entrepreneurs can use capital markets tofund their ventures.

Cognitive Domain: Application Answer Location: Capital Markets for Social Entrepreneurs Difficulty Level: Hard AACSB Standard: Social responsibility

15. Identify the primary attributes of stakeholders and explain how stakeholders canhelp or hinder a social entrepreneur.

Ans: Stakeholders are all those involved in and affected by the activities of a social venture.

Building relationships with key stakeholders is typically important for any entrepreneur, social or otherwise; but often social issues need additional support to gaintraction with the majority of stakeholders. There are three primary attributes of stakeholders to consider when you are trying to achieve your objectives: power, legitimacy, and urgency. A stakeholder in a position of power has the ability to either help or hinder your social objectives. The second attribute is legitimacy.

Legitimate stakeholders are those whose actions are appropriate, proper, and desired in the context of the company, organization, or community. The third attribute is urgency, which describes the extent to which stakeholders demand your attention.

Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Medium AACSB Standard: Social responsibility

16. Distinguish between corporate social responsibility and social entrepreneurship. Ans: Corporate social responsibility and social entrepreneurship differ in one critical sense: the beststudy284@gmail.com

primary objective of the enterprise. Corporations seek to incorporate social initiatives into broader strategic and tactical objectives, while social entrepreneurs put those social issues front and center. To many corporations, social responsibility causesmay just be another means to a successful business end.

Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Table 4.7: Corporate Social Responsibility Versus SocialEntrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

17. Assess the value of social inclusion globally within social entrepreneurship.

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Ans: Social inclusion is meant to directly confront some of the inequity that creates personal marginalization and its resulting social issues head-on. Many individuals will not have some of the same opportunities so common for their peers; many around theworld have dedicated their careers to breaking down social issues plaguing society, encouraging inclusion with a heavy dose of hope.

Learning Objective: 4.7. Assess the value of social inclusion globally within social entrepreneurship.

Cognitive Domain: Application Answer Location: Social Entrepreneurship and Global Inclusion Difficulty Level: Medium AACSB Standard: Social responsibility

18. Explain how dormant stakeholders, discretionary stakeholders, and demanding stakeholders differ.

Ans: Dormant stakeholders are “sleepers”—they hold power but do not tend to use thatpower unless they are given a reason to do so. However, dormant stakeholders may become significant when they begin to utilize their power. Discretionary stakeholders have no power to influence and no urgent claims, but they have legitimacy. They may come in the form of philanthropists who donate to your organization and are willing to support social causes. Demanding stakeholders possess the urgency attribute. They have no power or legitimacy and may be the only dissenting voice in the room.

Learning Objective: 4.5. Identify the primary attributes of stakeholders and howstakeholders can help or hinder a social entrepreneur.

Cognitive Domain: Application Answer Location: Types of Stakeholders Difficulty Level: Hard AACSB Standard: Social responsibility

19. Explain why CSR makes good business sense.

Ans: Effective CSR can result in more engaged customers, lead to real innovations, decrease costs, decrease waste, save energy expenses, reduce packaging, increasepublic image, improve brand, and bring people together. beststudy284@gmail.com

Learning Objective: 4.6. Distinguish between corporate social responsibility and social entrepreneurship.

Cognitive Domain: Application Answer Location: Table 4.7: Corporate Social Responsibility Versus SocialEntrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

20. Explain how the hybrid model of entrepreneurship differs from social purpose ventures and enterprising nonprofits.

Ans: A hybrid model of social entrepreneurship describes an organization with a purpose that equally emphasizes both economic and social goals. Whereas social purpose ventures and enterprising nonprofits value their social mission over their economic mission, in the hybrid model of social entrepreneurship, social mission and

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economic mission are given equal weight. Traditional ventures and social consequenceventures value economic mission more than their social mission.

Learning Objective: 4.3. Identify the different types of social entrepreneurship.Cognitive Domain: Application Answer Location: Hybrid Models of Social Entrepreneurship Difficulty Level: Medium AACSB Standard: Social responsibility

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

Chapter 5: Generating New Ideas Test Bank Multiple Choice

1. What are the three central characteristics of opportunity? a. size of the market, level of disposable income of the customer, and access to manufacturing b. the niche appeal, degree of innovation, and knowledge of market c. affordability, simplicity, and reliability d. potential economic value, novelty or newness, and perceived desirabilityAns: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: What Is an Opportunity?Difficulty Level: Easy AACSB Standard: Thinking creatively

2. According to the text, what is the most common form of value? a. practical b. environmental c. social d. economic Ans: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Knowledge Answer Location: What Is an Opportunity?

Difficulty Level: Easy AACSB Standard: Thinking creatively

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3. The Bigbelly waste management and recycling company is an example of a companythat generates what kind of value? a. economic and environmental value b. social and emotional value c. only environmental value d. only economic value Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Application Answer Location: What Is an Opportunity?

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

Difficulty Level: Medium AACSB Standard: Thinking creatively 4. Opportunity is defined as

.

a. the worth of something in terms of the amount of other things for which it can be exchanged b. any conception, thought, or notion existing in the mind as a result of mental understanding and awareness c. being perceived as desirable d. an apparent way of generating value through unique, novel, or desirable products orservices that have not been previously exploited Ans: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Knowledge Answer Location: The Entrepreneurial Mindset and Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively

5. Maci has an idea for a business. For it to be recognized as a viable opportunity, theidea must

.

a. have the capacity to generate value b. include a pitch deck c. be tried and true d. be market researched already Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: The Entrepreneurial Mindset and Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively beststudy284@gmail.com

6. A shoe company starts an initiative to manufacture an affordable shoe for the poor in developing countries. This is an example of what form of value? a. economic value b. market value c. social value d. environmental value Ans: C Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Analysis Answer Location: What Is an Opportunity?

Difficulty Level: Hard AACSB Standard: Thinking creatively

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

7. According to the text, all forms of value are predicated on what assumption? a. The entrepreneur is emotionally invested in the product or service. b. There is an existing market for a product or service that can be tapped into. c. There is a market populated with enough people to buy your product or service. d. The product or service is able to reach a large, diverse audience.Ans: C Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: What Is an Opportunity?Difficulty Level: Medium AACSB Standard: Thinking creatively 8. Bette Nesmith Graham’s Liquid Paper correction fluid is an example of an

.

a. improvement that developed into an innovation b. innovation that developed into an improvement c. improvement that developed into an invention d. invention that developed into an innovation Ans: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Analysis Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Hard AACSB Standard: Thinking creatively 9. According to the text, on what dimension would today’s smartphone score the highestin the idea framework? a. innovation b. invention c. improvement d. irrelevant beststudy284@gmail.com

Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Medium AACSB Standard: Thinking creatively

10. Mila has an idea that is high on value and usefulness and high on degree of novelty.

According to the Neck Idea Generation Matrix, the idea has the quality of a. innovation b. invention c. improvement

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.

Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

d. irrelevant Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Medium AACSB Standard: Thinking creatively

11. Nan has an idea that is high on value and usefulness and low on degree of novelty.

According to the Neck Idea Generation Matrix, the idea has the quality of

.

a. innovation b. invention c. improvement d. irrelevant Ans: C Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Medium AACSB Standard: Thinking creatively

12. Val has an idea that is low on value and usefulness and high on degree of novelty.

According to the Neck Idea Generation Matrix, the idea has the quality of

.

a. innovation b. invention c. improvement d. irrelevant Ans: B Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Easy AACSB Standard: Thinking creatively

13. Tracy has an idea that is low on value and usefulness and low on degree of novelty.

According to the Neck Idea Generation Matrix, the idea has the quality of

.

a. innovation b. invention c. improvement d. irrelevant Ans: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Easy AACSB Standard: Thinking creatively 14. According to the text, what three criteria does an idea have to meet in order to berated as an innovation? a. longevity, utility, inventiveness b. efficiency, creativity, and authenticity c. reliability, profitability, and desirability d. novelty, usefulness, and value Ans: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Easy AACSB Standard: Thinking creatively

15. In what area does the difference between innovation and invention lie? a. demand b. cost c. originality d. value Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Analysis Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Hard AACSB Standard: Thinking creatively

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16. What accounted for the popularity of Bette Nesmith Graham’s Liquid Paper correction fluid? a. It was novel, useful, and practical. b. It was efficient, affordable, and reliable. c. It was an improvement on existing correction fluid. d. It was cleverly marketed.

Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Application Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Medium AACSB Standard: Thinking creatively

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

17. What is the first step in creating and identifying opportunities? a. market analysis b. cost benefit analysis c. idea generation d. product testing Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Opportunities Start With Thousands of Ideas Difficulty Level: Easy AACSB Standard: Thinking creatively 18. What strategies involve taking time to think carefully about a problem by breaking it up into parts, or looking at it in a more general way in order to generate ideas about howcertain products or services can be improved or made more innovative? a. analytical strategies b. search strategies c. imagination-based strategies d. development strategies Ans: A Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively 19. What strategies involve using memory to retrieve information to make links or connections based on past experience that are relevant to the current problem usingstimuli? beststudy284@gmail.com

a. analytical strategies b. search strategies c. imagination-based strategies d. development strategies Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

20. What strategies involve suspending disbelief and dropping constraints in order tocreate unrealistic states, or fantasies? a. analytical strategies

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b. search strategies c. imagination-based strategies d. development strategies Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively 21. What are techniques that help to break our minds out of mental fixedness in order tobring about creative insights? a. analytical strategies b. interpersonal strategies c. relationship-seeking strategies d. habit-breaking strategies Ans: D Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

22. What strategies involve consciously making links between concepts or ideas thatare not normally associated with each other? a. development b. interpersonal strategies c. relationship-seeking strategies beststudy284@gmail.com

d. habit-breaking strategies Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

23. What strategies are employed to enhance and modify existing ideas in order tocreate better alternatives and new possibilities? a. development strategies b. interpersonal strategies c. relationship-seeking strategies d. habit-breaking strategies Ans: A

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Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

24. What technique involves group members stimulating each other to come up withnew or improved ideas? a. development strategies b. interpersonal strategies c. relationship-seeking strategies d. habit-breaking strategies Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

25. By envisioning themselves as human hairs, which strategy did the Gillette team useto come up with a new shampoo? a. analytical strategy b. search strategy c. imagination-based strategy d. development strategy Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born. beststudy284@gmail.com

Cognitive Domain: Application Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively 26. What strategy is related to the technique of thinking about the opposite of somethingyou believe, in order to explore a new perspective? a. development strategies b. search strategy c. imagination-based strategy d. habit-breaking strategies Ans: D Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea Generation

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Difficulty Level: Easy AACSB Standard: Thinking creatively 27. Asking yourself “What would Napoleon do?” in order to perceive what he would do in a situation is a technique related to which of the following strategies? a. development strategy b. search strategy c. imagination-based strategy d. habit-breaking strategies Ans: D Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

28. Brainstorming is an example of what idea generation strategy? a. development strategies b. interpersonal strategies c. relationship-seeking strategies d. habit-breaking strategies Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively

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29. The

approach is a concept that assumes that opportunities exist

independent of entrepreneurs and are waiting to be discovered. a. mountain b. idea location c. finding d. searching Ans: C Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Knowledge Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

30. The

approach states that opportunities do not exist independent of

entrepreneurs but are, instead, a product of the mind. a. building

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b. mind product c. opportunity d. entrepreneurial Ans: A Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Knowledge Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

31. Having had no prior knowledge of the market for his product sweater, what approach did Jack McCarthy of Ugly Christmas Sweaters utilize when putting his product up for sale? a. discovery approach b. finding approach c. exploration approach d. building approach Ans: D Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Analysis Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Hard AACSB Standard: Thinking creatively 32. What method is used by entrepreneurs in systematically attempting to discoverexisting opportunities? a. active search b. experimentation c. surveying d. trial and error beststudy284@gmail.com

Ans: A Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Knowledge Answer Location: Opportunities Through Active Search and AlertnessDifficulty Level: Easy AACSB Standard: Thinking creatively

33. What term do the authors use to describe the ability some people have to identify opportunities? a. perception b. alertness c. intuition d. instinct Ans: B

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Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Knowledge Answer Location: Opportunities Through Active Search and AlertnessDifficulty Level: Easy AACSB Standard: Thinking creatively 34. Why do Bette Nesmith Graham’s experiences inventing Liquid Paper correction fluidadhere to the concept of alertness? a. She was able to identify an opportunity by conducting a systematic search. b. She was able to recognize an opportunity while not actively searching for one. c. She was able to use prior knowledge in order to identify a need for a product. d. She was able to employ a rational process to narrow down what was needed in themarket.

Ans: B Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities through active search and alertness.

Cognitive Domain: Analysis Answer Location: Alertness Difficulty Level: Hard AACSB Standard: Thinking creatively

35. Which of the following is NOT a reason entrepreneurs may be more adept atspotting opportunities than non-entrepreneurs? a. They have access to more information. b. They may be more prone to pursuing risks rather than avoiding them. c. They have a greater tolerance for failure. d. They may possess different cognitive styles from those of non-entrepreneurs. Ans: C Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Alertness Difficulty Level: Medium AACSB Standard: Thinking creatively 36. Pattern recognition is the process of identifying links or connections between . a. unrelated things or events b. related things or events c. product and customer d. value and demand Ans: A Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities through active search and alertness.

Cognitive Domain: Application

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Answer Location: Building Opportunities: Prior Knowledge and Pattern RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively 37. Put the following in order of increasing relevance (from low to high) to founding new ventures: idea generation creativity opportunity recognition a. creativity, idea generation, opportunity recognition b. creativity, opportunity recognition, idea generation c. idea generation, creativity, opportunity recognition d. idea generation, opportunity recognition, creativity Ans: C Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Analysis Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Hard AACSB Standard: Thinking creatively

38. Idea generation is defined as

.

a. production of ideas for something profitable b. production of ideas for something new c. production of ideas for something useful d. production of ideas for something scalable Ans: B Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy beststudy284@gmail.com

AACSB Standard: Thinking creatively 39. Opportunity recognition is defined as

.

a. recognition that ideas are not only new and potentially useful, but have the potentialto generate economic value b. production of ideas for something new c. production of ideas for something that is also potentially useful d. the results of brainstorming with friends and family Ans: A Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively

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40. What are the three processes that entrepreneurs typically go through before theyare able to identify an opportunity for a new business venture? a. cost benefit analysis, market research, and product development b. networking, resourcing, and marketing c. funding, team building, and resource allocation d. idea generation, creativity, and opportunity recognition.Ans: D Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively 41. What term describes the capacity to focus on and sustain new ideas? a. expanding b. challenging c. securing d. exposing Ans: C Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively

42. What term describes the broadening or the acquisition of new skills that enablepeople to generate ideas and share knowledge? a. expanding b. challenging c. securing beststudy284@gmail.com

d. exposing Ans: A Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively 43. What term is used to describe the skills required to open ourselves to diverse and fluctuating circumstances and events? a. expanding b. challenging c. securing d. exposing Ans: D Learning Objective: 5.5. Connect idea generation to opportunity recognition.

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Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively 44. What term is used to describe the process of building on past failures by bravingnew encounters? a. expanding b. challenging c. securing d. exposing Ans: B Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Knowledge Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Easy AACSB Standard: Thinking creatively

45. What is the most dominant of the strategies for idea generation within group scenarios? a. development strategies b. interpersonal strategies c. relationship-seeking strategies d. habit-breaking strategies Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Thinking creatively 46. Whereas decision-making is perceived as within the finding approach,decisionmaking is thought to be

in the building approach.

a. time-consuming; quick b. simple; complex c. risky; uncertain d. uncertain; risky Ans: C Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Analysis Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Hard AACSB Standard: Thinking creatively

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47. Bentley has the innate ability to identify opportunities. Which of the following termsapply to Bentley? a. active search b. alertness c. analytical strategies d. building approach Ans: B Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Comprehension Answer Location: Alertness Difficulty Level: Easy AACSB Standard: Thinking creatively

48. Janet likes to take the time to think carefully about a problem by breaking it into pieces. This way she can look at it in a more general way. This, she finds, helps her generate ideas about how certain products and services can be improved or made moreinnovative. Which of the following terms apply to Janet? a. active search b. alertness c. analytical strategies d. building approach Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively

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49. Mila assumes that opportunities do not exist independent of entrepreneurs and that opportunities are a product of the mind. Mila believes in

.

a. active search b. alertness c. analytical strategies d. building approach Ans: D Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively

50. Khloe is very persistent. Her process is one of building on her past failures by engaging in new encounters. Khloe’s process is a. challenging

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b. securing c. expanding d. exposing Ans: A Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively 51. Chloe’s process includes plans of action that involve enhancing and modifying existing ideas to create better alternatives and new possibilities. Her process is

.

a. challenging b. development strategies c. expanding d. exposing Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively 52. Paisley is always broadening and acquiring new skills. She uses these skills to helppeople generate ideas and share knowledge. Paisley’s process is a. challenging b. development strategies c. expanding d. exposing beststudy284@gmail.com

.

Ans: C Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

53. Brantley has a strong skill set that requires him to be open to diverse and fluctuating circumstances and events. Brantley’s process is

.

a. challenging b. development strategies c. expanding d. exposing Ans: D Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension

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Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively 54. Ryker uses an approach that assumes opportunities exist independent of entrepreneurs and are waiting to be found. Ryker’s approach is

.

a. finding approach b. habit-breaking strategies c. imagination-based strategies d. interpersonal strategies Ans: A Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively

55. Maddox likes to use techniques to help break his mind out of mental fixedness tobring about creative insights. Maddox uses which of the following? a. finding approach b. habit-breaking strategies c. imagination-based strategies d. interpersonal strategies Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively beststudy284@gmail.com

56. Gael is an entrepreneur. To get new ideas, she suspends disbelief and drops constraints in order to create unrealistic states or fantasies. Gael uses which of thefollowing? a. finding approach b. habit-breaking strategies c. imagination-based strategies d. interpersonal strategies Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively

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57. Stefan is an entrepreneur who involves group members to stimulate each other tocome up with new or improved ideas. Stefan uses which of the following? a. finding approach b. habit-breaking strategies c. imagination-based strategies d. interpersonal strategies Ans: D Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively

58. Sven believes that the best way to generate profit is through unique, novel, or desirable products which have not been previously exploited. Sven uses which of thefollowing? a. opportunity b. pattern recognition c. prior knowledge d. interpersonal strategies Ans: A Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: What Is an Opportunity?Difficulty Level: Medium AACSB Standard: Thinking creatively 59. Luther, to get new ideas, consciously makes links between concepts or ideas thatare not normally associated with each other. Luther uses which of the following? a. relationship-seeking strategies beststudy284@gmail.com

b. search strategies c. securing d. prior knowledge Ans: A Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively 60. Martin’s ideas come from using memory to retrieve information to make links or connections based on past experiences that are relevant to the current problem usingstimuli.

Martin uses which of the following?

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a. relationship-seeking strategies b. search strategies c. securing d. prior knowledge Ans: B Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Difficulty Level: Medium AACSB Standard: Thinking creatively 61. Lyla likes to focus on and sustain new ideas. She uses which of the following? a. relationship-seeking strategies b. search strategies c. securing d. prior knowledge Ans: C Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

62. Arabella in her entrepreneurship course was exploring value. She found out fromthe text that all of the following is true EXCEPT a. value can take many forms b. the most common form is economic value c. another value is social value d. value is always measured in currency Ans: D beststudy284@gmail.com

.

Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Knowledge Answer Location: What Is an Opportunity?

Difficulty Level: Medium AACSB Standard: Thinking creatively 63. The Idea Classification Matrix presented in the text

.

a. compares the degree of value with the degree of usefulness b. compares the degree of usefulness with the degree of inventiveness c. compares the creativeness with the degree of value d. compares the degree of novelty with the degree of value and usefulnessAns: D Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Knowledge

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Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Medium AACSB Standard: Thinking creatively 64. According to the text, what conclusion can be drawn from Eli Whitney’s cotton ginand Thomas Edison’s light bulb? a. Inventors are often lone-wolves whose inventions come to fruition through a processof trial and error. b. Inventions often spring fully formed into an inventor’s mind. c. Inventions are often a result of the work of a group of different people who made improvements over a long period of time. d. Products are often attributed to individuals who had little or nothing to do with their invention.

Ans: C Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: The Myth of the Isolated Inventor Difficulty Level: Medium AACSB Standard: Thinking creatively

65. According to research, where do entrepreneurs primarily source their information? a. personal contacts and relevant publications b. newspapers, magazines, or other trade publications c. industry leaders d. television, podcasts, and blogs Ans: A Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Opportunities Through Active Search and AlertnessDifficulty Level: Easy AACSB Standard: Thinking creatively 66. Cognitive styles attributed to successful entrepreneurs include a higher degree of . a. single-mindedness, self-discipline, and willpower b. intelligence, creativity, and self-efficacy c. selflessness, emotional intelligence, and self-motivation d. attention to detail, positivity, and adaptability Ans: B Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Knowledge Answer location: Alertness Difficulty Level: Easy

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AACSB Standard: Thinking creatively

True/False 1. Jack McCarthy—founder of a business selling ugly Christmas sweaters online— hadan entrepreneurial mindset because he was attuned to the unexpected.

Ans: T Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Application Answer Location: The Entrepreneurial Mindset and Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

2. A large market is required for a product or service to have value. Ans: F Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: What Is an Opportunity?Difficulty Level: Medium AACSB Standard: Thinking creatively 3. If an invention does not reach the market or appeal to consumers, then it will be rendered useless.

Ans: T Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: Thinking creatively

4. Ideas need to be unique or novel to appeal to customers. Ans: F Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Comprehension Answer Location: Innovation, Invention, Improvement, or Irrelevant?Difficulty Level: Easy AACSB Standard: Thinking creatively

5. Researchers have defined many formal methods of idea generation that are effectivein the generation of new ideas for entrepreneurs.

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Ans: T Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Comprehension Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Easy AACSB Standard: Thinking creatively 6. During the idea generation process, it’s best not to consider ideas that are impractical, overly obvious, wild, or even silly.

Ans: F Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Application Answer Location: Opportunities Start With Thousands of Ideas Difficulty Level: Medium AACSB Standard: Thinking creatively

7. History shows that inventions are often created by more than one individual over along period of time and are often improvements on existing products.

Ans: T Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Knowledge Answer Location: The Myth of the Isolated Inventor Difficulty Level: Easy AACSB Standard: Thinking creatively 8. The finding approach views decisions as risky.

Ans: T beststudy284@gmail.com

Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

9. The finding approach to idea generation assumes that opportunities already exist independent of an entrepreneur.

Ans: T Learning Objective: 5.3. Apply the two primary pathways to opportunity identificationCognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

10. In the building approach, opportunities are found, not created.

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Ans: F Learning Objective: 5.3. Apply the two primary pathways to opportunity identificationCognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

11. In the building approach, information about how to proceed is readily available. Ans: F Learning Objective: 5.3. Apply the two primary pathways to opportunity identificationCognitive Domain: Comprehension Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Easy AACSB Standard: Thinking creatively

12. Entrepreneurs who have alertness rationally and systematically search their environment or their particular information sets for opportunities.

Ans: F Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Comprehension Answer Location: Alertness Difficulty Level: Medium AACSB Standard: Thinking creatively

13. Research shows that entrepreneurs with preexisting knowledge of an industry or market are more likely to recognize opportunities than entrepreneurs who have less experience.

Ans: T Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer location: Building Opportunities: Prior Knowledge and Pattern Recognition Difficulty Level: Medium AACSB Standard: Thinking creatively 14. Typically, entrepreneurs go through three processes before they are able to identifyan opportunity for a new business venture: idea generation, creativity, and opportunity recognition.

Ans: T Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer location: From Idea Generation to Opportunity Recognition Difficulty Level: Medium AACSB Standard: Thinking creatively

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15. The purpose of the creativity stage is to transform ideas into opportunities.Ans: T Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively 16. Every idea is an opportunity.

Ans: F Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

17. There are no formal approaches to thinking creatively, so creative inspiration mustbe left to chance.

Ans: F Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Comprehension Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

Essay

1. Take a newly launched product (you can use new television commercials as yoursource) beststudy284@gmail.com

and evaluate where it is placed on the Idea Classification Matrix.

Ans: Answers will vary, but should refer to the Matrix on page 125.

Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Analysis Answer Location: Innovation, Invention, Improvement, or Irrelevant? | Figure 5.1 Idea Classification Matrix Difficulty Level: Hard AACSB Standard: Thinking creatively

2. List the seven main strategies for idea generation and give an example of each. Ans: Researchers have defined many formal methods of idea generation, and out ofthese we have chosen seven main strategies which we believe are effective in the generation of new ideas for entrepreneurs. They are 

analytical strategies,

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

search strategies,



imagination-based strategies,



habit-breaking strategies,



relationship-seeking strategies,



development strategies, and



interpersonal strategies.

Learning Objective: 5.1. Explain how the entrepreneurial mindset relates to opportunityrecognition.

Cognitive Domain: Application Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium AACSB Standard: Thinking creatively

3. Describe habit-breaking strategies for idea generation and how you would use it as a technique for your employer or business venture.

Ans: Habit-breaking strategies are techniques which help to break our minds out ofmental fixedness in order to bring about creative insights. 

One strategy is to think about the opposite of something you believe in order toexplore a new perspective.



Another method focuses on taking the viewpoint of someone who may or maynot be involved in the situation.



A popular habit-breaking strategy is to take the role of a famous or admired individual and think about how they would perceive the situation. This is sometimes called the Napoleon technique, as in “What would Napoleon do?”referring to the skills of this famous military and political leader.

Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Analysis Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Medium beststudy284@gmail.com

AACSB Standard: Thinking creatively 4. Identify one of the everyday spinoffs from NASA noted in the book. Using an imaginationbased strategy, spin-off this idea further: how could this product be used oradapted to meet a different need or a different market?

Ans: Answers will vary; however, the spinoffs from NASA listed in Figure 5.2 include GPS, memory foam, invisible braces, food safety standards, enriched baby formula, airplane winglets, and water filtration systems.

Learning Objective: 5.2. Employ strategies for generating new ideas from whichopportunities are born.

Cognitive Domain: Application Answer Location: Seven Strategies for Idea GenerationDifficulty Level: Hard AACSB Standard: Thinking creatively

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5. You are an entrepreneur. Describe how you would use the finding approach to create opportunities. Please be specific.

Ans: The finding approach is based on the concept that entrepreneurial opportunitiesexist as a result of the changing landscape in technology, consumer preferences, government regulations, and demographics.

Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Application Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively 6. You are an entrepreneur. Describe how you would use the building approach tocreate opportunities. Please be specific.

Ans: In the building approach, opportunities are created, not found.

They originate from the entrepreneur’s prior knowledge and experience, which equip the entrepreneur to create them. To identify opportunities, this approach advocates using what you know, who you know, and who you are. Your role as an entrepreneur is to take action and see how the market responds, recognize patterns, and learn from iteration to define the opportunity as it evolves.

Learning Objective: 5.3. Apply the two primary pathways to opportunity identification.Cognitive Domain: Application Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively

7. Discuss the building opportunities strategies of prior knowledge and pattern recognition. How would you use these strategies in your own entrepreneurial endeavors?

Ans: Prior knowledge is preexisting information gained from a combination of life and work experience. Pattern recognition is the process of identifying links or connectionsbetween beststudy284@gmail.com

apparently unrelated things or events. Pattern recognition takes place whenpeople “connect the dots” in order to identify and then build on opportunities. Beyond these definitions, the students are asked to apply these strategies to their own endeavors and each essay should be different.

Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Application Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively 8. Define pattern recognition and describe how you would apply this to opportunities generated for your entrepreneurship.

Ans: Pattern recognition is the process of identifying links or connections between apparently unrelated things or events. Pattern recognition takes place when people“connect the dots” in order to identify and then build on opportunities. Beyond this

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definition, the students are asked to apply this strategy to their own endeavors and eachessay should be different.

Learning Objective: 5.4. Demonstrate how entrepreneurs find opportunities throughactive search and alertness.

Cognitive Domain: Application Answer Location: Two Pathways to Opportunity Identification Difficulty Level: Medium AACSB Standard: Thinking creatively

9. Describe Figure 5.4 Idea Generation, Creativity, and Opportunity Recognition Continuum and include the relevance to an entrepreneur.

Ans: Answers may vary, but will be based on Figure 5.4 on page 136. Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Application Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Medium AACSB Standard: Thinking creatively

10. Researchers have identified four skills to enhance creativity through training with a focus on transforming our ideas into opportunities. Please describe the SEEC acronym and its relevance to entrepreneurs.

Ans: These four skills yield the acronym SEEC: securing, expanding, exposing, and challenging. 

Securing is the capacity to not only focus on new ideas, but also sustain them.



Expanding is the broadening or the acquisition of new skills which enablepeople to generate ideas and share knowledge.



Exposing involves the skills required to open ourselves to diverse and fluctuating circumstances and events.



Challenging is the process of building on past failures by braving new encounters.

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Learning Objective: 5.5. Connect idea generation to opportunity recognition.Cognitive Domain: Application Answer Location: From Idea Generation to Opportunity RecognitionDifficulty Level: Hard AACSB Standard: Thinking creatively

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Chapter 6: Using Design Thinking Test Bank Multiple Choice 1. In the “Entrepreneurship in Action” case study, Haupt and Alstin began their designprocess by doing which of the following? a. designing an unusual safety helmet b. by finding out why the conventional product was not used c. by improving a currently existing helmet d. by studying current trends in the safety industry Ans: B Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: Anna Haupt and Terese Alstin, Founders, HövdingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 2. In the “Entrepreneurship in Action” case study, what was the method that Haupt andAlstin used to gather information about adults’ current attitudes toward helmets? a. one-on-one interviews b. anonymous questionnaires c. overhearing customers talk about the product d. monitoring social media websites Ans: B Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: Anna Haupt and Terese Alstin, Founders, HövdingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

3. In the “Entrepreneurship in Action” case study, once Haupt and Alstin knew the reasons why people did not use helmets, what additional information did they gather? a. information about bicycle accidents b. information about different helmets used around the world c. information from engineers who study the safety features of helmets d. information from professional cyclists regarding why they wear helmetsAns: A Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: Anna Haupt and Terese Alstin, Founders, HövdingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

4. According to the description of Haupt and Alstin’s process, what source did theyenlist to design the new safety product? a. safety engineers b. helmet manufacturers c. professional cyclists d. their college professors Ans: C Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: Anna Haupt and Terese Alstin, Founders, HövdingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 5. Design thinking uses this term to refer to human emotions and desires. a. sensitivity b. initiating desires c. needs d. stimuli Ans: C Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Knowledge Answer Location: What Is Design Thinking?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. What is the biggest obstacle to design thinking? a. lack of knowledge b. inexperience beststudy284@gmail.com

c. fear of failure d. lack of financial resources Ans: C Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Knowledge Answer Location: What Is Design Thinking?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. The starting point of design thinking is which of the following? a. Will the idea make money? b. Can it be done? c. What do people need? d. How can this product or service be improved?

Ans: C

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Knowledge Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 8. When the CEO of IDEO, Tim Brown, says, “How Might We?” what is the significanceof how? a. How assumes that the answer is unknown. b. How invites others to participate in the solution. c. How implies that a solution exists and needs to be unearthed. d. How implies a challenge of doubt.

Ans: C Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Knowledge Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 9. When the CEO of IDEO, Tim Brown, says “How Might We?” what is the significanceof might? a. Might assumes an attitude of power. b. Might invites people to suggest ideas without wondering if they will work. c. Might assumes that all answers are workable. d. Might assumes some editing of ideas.

Ans: B Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing beststudy284@gmail.com

on customers and their needs.

Cognitive Domain: Knowledge Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 10. When the CEO of IDEO, Tim Brown, says “How Might We?” what is the significanceof We? a. We encourages collaboration. b. We is a polite way of asking for help. c. We suggests that everyone is expected to provide input. d. We means that the speaker does not have the answer.Ans: A Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Knowledge

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Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. What are the three criteria for a successful idea in design thinking? a. feasibility, market competitiveness, longevity b. feasibility, financial benefit, market competitiveness c. creativity, feasibility, financial benefit d. feasibility, viability, desirability Ans: D Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Knowledge Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 12. In what way did IDEO study the needs of the nurses and patients at Kaiser? a. They shadowed nurses, sought feedback, and made observations. b. They interviewed the key stakeholders. c. They reviewed all nurse and patient complaints. d. They interviewed patients, nurses, and families of patients. Ans: A Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Knowledge Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

13. What method was used by IDEO to investigate the patient experience in the emergency room? a. An IDEO employee went undercover, filming the experience in the emergency room. b. An employee of IDEO “stepped into the shoes” of hospital personnel by observingthem at work. c. Emergency room patients were interviewed about their experience. d. Emergency staff members were interviewed about their experiences. Ans: A Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs.

Cognitive Domain: Comprehension Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 14. The act of knowing what people want, how they behave, what they think, and howthey feel is referred to by which of the following terms? a. customer identification b. needs assessment c. empathy d. observation Ans: C Learning Objective: 6.3. Describe the role of empathy in the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Design Thinking Requires Empathy Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 15. When IDEO studied Chicago’s commuters for the Ford Company, what did theylearn about the commuters? a. Commuters had specific and similar needs. b. There were three distinct groups of commuters with different needs. c. Speed was preferred over comfort. d. Commuters had asked for phone apps to help them with their commutes.Ans: B Learning Objective: 6.3. Describe the role of empathy in the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Design Thinking Requires Empathy Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

16. How does IDEO look at the design thinking process? a. It requires a series of successive steps. b. It is a circular process with no specific start or end. c. It occurs in overlapping phases. beststudy284@gmail.com

d. It follows a predictive approach.

Ans: C Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: The Design-Thinking Process: Inspiration, Ideation, Implementation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

17. What is the best description of divergent thinking? a. You think differently than the normal way of thinking. b. You follow tangents of thought that lead you away from the starting thought. c. You expand your perspective to generate as many ideas as possible. d. You follow traditional problem-solving methods.

Ans: C Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

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Cognitive Domain: Comprehension Answer Location: The Design-Thinking Process: Inspiration, Ideation, Implementation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

18. What is the best description of convergent thinking? a. a voting process that chooses the best ideas b. a process that helps people think in the same way c. a way of identifying which ideas have the best chance of success d. an abstract thinking process used in creative thinkingAns: C Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: The Design-Thinking Process: Inspiration, Ideation, Implementation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 19. In design thinking, what is meant by inspiration? a. an emotional moment that stirs creativity b. an idea for a product, service, or solution c. a motivation or promise of reward d. the problem or opportunity that starts the search for a solutionAns: D Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Inspiration Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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20. Drew notices that her electric cables and cords are unsightly and could causesomeone to trip. She asks, “How might these wires be secured differently?” This question is known as which of the following? a. initiating question b. a design challenge c. a customer vision d. an end state Ans: B Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Knowledge Answer Location: Inspiration Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

21. Generating and developing new ideas based on observations gained during the inspiration process is called which of the following?

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

a. brainstorming b. inspiration c. generation d. ideation Ans: D Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Knowledge Answer Location: Ideation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 22. Needs we have but don’t know we have them are called

.

a. unknown needs b. latent needs c. sleeping needs d. pre-formed needs Ans: B Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Knowledge Answer Location: Ideation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 23. Which of the following would NOT be considered a requirement in IDEO’s brainstorming? a. Stay focused on the topic. b. Encourage wild ideas. c. Hold back judgement. d. Eliminate ideas that would not work. beststudy284@gmail.com

Ans: D Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Knowledge Answer Location: Ideation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 24. According to IDEO’s brainstorming rules, how many ideas should be generated in a successful brainstorming session? a. a minimum of 10 great ideas b. up to 100 ideas in a period of 60 minutes c. up to 10 ideas in a period of 60 minutes d. between 5 and 10 ideas Ans: B Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension

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Answer Location: Ideation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

25. During this phase of design thinking, ideas generated through the ideation processare transformed into concrete actions. a. action phase b. concretization phase c. ideation phase d. implementation phase Ans: D Learning Objective: 6.4. Illustrate the key parts of the design thinking process.Cognitive Domain: Comprehension Answer Location: Implementation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 26. The main purpose of the implementation phase is to do which of the following? a. Choose the best ideas and move forward with them. b. Eliminate all but the best ideas. c. Test assumptions of new ideas to shape them into viable opportunities. d. Start creating the designs selected through previous phases.Ans: C Learning Objective: 6.4. Illustrate the key parts of the design thinking process.Cognitive Domain: Comprehension Answer Location: Implementation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

27. How are ideas tested in the implementation stage? beststudy284@gmail.com

a. through a second round of brainstorming b. through low-cost prototypes c. by designing the final product d. by producing products and having the customer use themAns: B Learning Objective: 6.4. Illustrate the key parts of the design thinking process.Cognitive Domain: Comprehension Answer Location: Implementation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 28. What might have been the design challenge in IDEO’s design of Shimano’s bicycle? a. How can we create a bicycle for baby boomers? b. How can we create a coasting bicycle? c. How can we create a simple bike for adults?

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 d. How can we create a bicycle that looks like it was created between 1946 and 1964?Ans: C Learning Objective: 6.4. Illustrate the key parts of the design thinking process.Cognitive Domain: Application Answer Location: The Three Phases of Design Thinking in ActionDifficulty Level: Medium AACSB Standard: General business and management knowledge areas 29. When looking at the example of Shimano, the idea of a coasting bicycle was produced in which stage of the design-thinking process? a. diversification b. implementation c. ideation d. inspiration Ans: C Learning Objective: 6.4. Illustrate the key parts of the design thinking process.Cognitive Domain: Comprehension Answer Location: The Three Phases of Design Thinking in ActionDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. Closely monitoring the behavior and activities of users in their own environment iscalled which of the following? a. environmental scanning b. capturing c. observation d. situational monitoring Ans: C Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Pathways Toward Observation and Insights Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. Insight might best be described as which of the following? a. observing people and gathering information b. an idea generated from combining an obvious observation with a potential solution c. a question raised while observing d. an interesting, non-obvious piece of observation information that drives opportunitiesAns: D Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Comprehension

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Answer Location: Pathways Toward Observation and Insights Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. An insight is

.

a. a new idea for a product or service b. the combined force of all information gathered from observation and interviews c. an interpretation of an observation that provides new understanding d. a complete knowledge of the observed persons’ actions in a particular situationAns: C Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Comprehension Answer Location: Pathways Toward Observation and Insights Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 33. Janelle notices that a consumer rubs a piece of candle over the outer edge of a canbefore replacing the lid. She asks the customer to explain why he does that. The answer to the question will provide Janelle with which of the following? a. new knowledge of consumer application b. a product idea c. insight into consumer behavior d. expanded experience Ans: C Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Comprehension Answer Location: Pathways Toward Observation and Insights Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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34. Under the dimensions of observation, what is meant by space? a. the amount of time it takes for a consumer to complete a task b. the physical things that are present at the time the task is performed c. the physical place or places in which the behavior is performed d. the emotions felt and repressed Ans: C Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 35. Under the dimensions of observation, what is meant by object? a. the physical things that are present at the time of the behavior b. the product or service being observed c. single actions that people do d. the physical place or places Ans: A Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: AACSB Standard: General business and management knowledgeareas 36. Under the dimensions of observation, what is meant by event? a. the physical things that are present at the time of the behavior b. the product or service being observed c. a particular span of time d. a set of related activities that people carry outAns: D Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 37. Under the dimensions of observation, what is meant by goal? a. a set of unrelated activities that people carry out b. the sequencing of events c. the set of related activities that someone carries out d. what the person is trying to accomplish beststudy284@gmail.com

Ans: D Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 38. In the acronym AEIOU, what does A stand for? a. alternatives b. activities c. attitude d. assessment

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Ans: B Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: AACSB Standard: General business and management knowledgeareas 39. In the AEIOU model, what is meant by Interactions? a. the people whose needs and behaviors are being observed b. the people that are involved in the activity c. the nature of exchange between the person and something or someone else d. the physical items that people interact with Ans: C Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 40. In the AEIOU model, what is meant by users? a. the people whose needs and behaviors are being observed b. the people that are involved in the activity c. the nature of exchange between the person and something or someone else d. the physical items that people interact with Ans: A Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

41. What should be included as an introduction to an interview? a. the script of the questions you will be asking b. the sponsor of the interview c. the intentions and purpose of the interview d. a description of how you hope the interview will concludeAns: C Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 Answer Location: Interviewing as a Useful Technique for Identifying NeedsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. Interviews should have open-ended questions. Which of the following represents anopenended question? a. What concerns would you have in using this product? b. Have you used this product in the past? c. Are you comfortable with using this product? d. Would you purchase this product?

Ans: A Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Application Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

43. What is the “golden rule” of interviewing? a. Ask the questions consistently as written. b. Keep focused on the questions you need to ask. c. Actively listen to the other person. d. Try to use “yes” and “no” answers for easier recording and clarity. Ans: C Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

44. Which of the following would indicate that a person is actively listening? a. The interviewer reflects back or paraphrases what the person just said. b. The interviewer engages in normal conversation, giving opinions as well as asking forthem. c. The interviewer interrupts the interviewee in order to ask further questions. d. The interviewer stays one step ahead of the conversation, anticipating the next question.

Ans: A Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview Difficulty Level: Medium

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 AACSB Standard: General business and management knowledge areas

45. You are interviewing someone about a new concept in debit cards. The interviewee immediately tells you that he hates debit cards and never uses them. What would be the appropriate next step? a. Terminate the interview as this person will not give you knowledgeable information. b. Ask him about the new debit card concept anyway. c. Explore why he hates debit cards. d. Ask about a similar product, but not the debit card.Ans: C Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Application Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 46. What is an empathy map? a. a tool that helps you rate and organize the emotional content of an interview b. a tool that helps you collate and integrate your observations to discover new insights c. a tool that helps you organize your thoughts during the interview d. a tool that helps you define your assumptions and beliefsAns: B Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: The Empathy Map Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

47. What would be the insight if the empathy map revealed that someone said he enjoyed being a vegetarian, but sighed and said that he had trouble making food so thatthe family would not miss meat? a. The person is struggling with being a vegetarian. b. There is a conflict between his enjoyment and the goals of serving the family whatthey like. c. Vegetarians cause family discord. d. The interviewee would like all the family to become vegetarian. Ans: B Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Application Answer Location: The Empathy MapDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

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48. What is the difference between the IDEO method of design thinking and that of the Stanford Design School? a. The Stanford approach provides for more time with the client. b. The Stanford approach is more complex. c. The Stanford approach provides for more ideation. d. There is no essential difference as the both implement the same design thinking.Ans: D Learning Objective: 6.7. Identify and describe other approaches to design thinking.Cognitive Domain: Comprehension Answer Location: Variations of the Design-Thinking Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 49. Which of the following elements of design thinking aligns with the practice of entrepreneurship? a. It involves getting out and taking action. b. It requires the practice of continuous learning. c. It incorporates play, empathy reflection, creation, and experimentation. d. all of these Ans: D Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Knowledge Answer Location: What Is Design Thinking?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

50. In order to discover how to improve his teaching techniques, Professor Kaine observes his students as they explore their online learning site, noting what resourcesare used and how they interact with one another as they study. He asks questions thatexplore the reasoning behind beststudy284@gmail.com

their approaches. What phase of the design process is professor Kaine using? a. feasibility thinking b. empathy c. needs assessment d. problem recognition Ans: B Learning Objective: 6.3. Describe the role of empathy in the design-thinking process.

Cognitive Domain: Application Answer Location: Design Thinking Requires Empathy Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. Why is it important to spend time developing the design challenge statement? a. How you word the statement will guide the entire design process.

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 b. Unless the customer is described, the product may not be viable. c. It helps narrow the goal. d. It guides the powers of observation.

Ans: A Learning Objective: 6.3. Describe the role of empathy in the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Inspiration Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

52. A small and diverse group meets to brainstorm ways that they can raise money for anew theater group. In what type of thinking is the group engaged? a. inspirational thinking b. convergent thinking c. divergent thinking d. guided thinking Ans: C Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: The Design-Thinking Process: Inspiration, Ideation, Implementation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 53. “How might we create a glue that is flexible?” is an example of which of the following? a. a design process b. a design solution c. a design challenge d. an ideation beststudy284@gmail.com

Ans: C Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Inspiration Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

54. Why is it important to consider only one idea at a time during a brainstorming session? a. It is hard to hear if too many ideas are coming at once. b. It is more likely to build on an idea and make a creative leap. c. It is more creative if one is polite. d. It is important to slow the process down as much as possible. Ans: B Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension

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Answer Location: Ideation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

55. Why is design thinking important as an entrepreneurial skill? a. It reduces the cost of engineering and production. b. Today’s businesses are faced with complex challenges with no easy answers. c. Today’s customers are more demanding than ever before. d. It is difficult to get quality products at a reduced price.

Ans: B Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: What Is Design Thinking?

Difficulty Level: Easy AACSB Standard: General business and management skills area

True/False

1. The concept of design thinking aligns with many of the facets of the practice of entrepreneurship.

Ans: T Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship in Action Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. The best way to discover latent needs is to interview people. Ans: beststudy284@gmail.com

F Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Ideation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Ideation teams consist of a diverse, multidisciplined group of people, most of whomhave some business or marketing experience.

Ans: T Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Ideation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 4. Brainstorming requires that no idea be criticized until all ideas have been expressed.Ans: T Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Comprehension Answer Location: Ideation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 5. Observation is simply looking or talking to other people.

Ans: F Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Pathways Toward Observation and Insights Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 6. The purpose of a design interview is to gain validation of a design concept.Ans: F Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. After an interview, it is a good idea to write down additional observations and insightsfrom body language and tone of voice.

Ans: T Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. The empathy map can spot contradictions and certain tensions which can spark awhole host of interesting insight.

Ans: T Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018

9. In the peel-the-onion approach to interviewing, the interviewer begins with the coreroot of the problem, then explores solutions.

Ans: F Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. The ability to observe cannot be improved with techniques or practice. Ans: F Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Knowledge Answer Location: Observation Techniques Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

Essay

1. Describe why asking what people need is or is not the best start to the designprocess.

Ans: It is the best way because it focuses on the person who will ultimately use the product or service and encourages the entrepreneur to go out and interact with them. It is not enough to ask the question because people have latent needs. These are needsthat the person has but may not know they have them. It is better to start with a technique that encourages empathy so that you can gain insight from the process of observing customers and their needs.

Learning Objective: 6.2. Demonstrate design thinking as a human-centered processfocusing on customers and their needs. beststudy284@gmail.com

Cognitive Domain: Analysis Answer Location: Design Thinking as a Human-Centered Process Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. Describe how one can “step into the shoes” of another in order to empathize.

Ans: The important part of empathy is to understand what the consumer experiences inan event.

Empathy may involve observation that can be documented in a variety of ways. Methods explained in the book include the AEIOU process or the empathy map. Observation can lead to insight, which provides the path to creating the solution. In

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 addition to observation, the entrepreneur can also ask clarifying questions through conversation or interviews. Observation will include everyone affected by the process. Learning Objective: 6.5.

Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Application Answer Location: Observation Techniques Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Describe five open-ended questions that you could use to explore why people procrastinate paying their taxes.

Ans: Answers will vary. However, all answers should use open-ended questions such as, “What do you think of when you hear the word taxes?” “Describe how you go aboutgathering information about your taxes.”

Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Application Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Describe what techniques or practices you would use in demonstrating active listening during an interview.

Ans: Don’t interrupt, keep eye contact, stay focused on the speaker, do not think ahead to the next question, ask clarifying questions, paraphrase what the speaker stated as a way of summarizing, ask open-ended questions, and do not indicate a desired responseor share what your opinion is.

Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Preparing for an Interview Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Describe what is done during a peel-the-onion process. Explain why the process isused.

Ans: Peel the onion, is a way of delving into a problem one layer at a time. The interviewer begins with the challenges the person faces and then continues to dig deeper in order to understand the core root of the problem. Asking “Why?” or saying “Tell me more about

”

will help you gain a deeper understanding. The process helps get at the core of the issue so that greater insight can be gained. People often talkabout symptoms of an issue rather than the core.

People may not be aware of the core of the issue until the process is used. The process should discover emotions, what is done, what is behind the actions, and note tone and body language.

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Comprehension Answer Location: Preparing for an Interview Difficulty Level: Hard AACSB Standard: General business and management knowledgeareas 6. Observe the way you brush your teeth. You may also observe someone you know.

Document the process using an empathy map and note any insights you may have. Ans: Answers will vary, but will follow the format of the empathy map.

Say: What sort of things did you say? Are there any interesting quotes you canuse? Do: What sort of actions and behavior were displayed by the person? Any particular body language that you noticed?

Think: What might the person be thinking? What sort of beliefs or attitudes might be relevant?

Feel: What sort of emotions do you think the person is experiencing?

Learning Objective: 6.6. Demonstrate how to interview potential customers in order tobetter understand their needs.

Cognitive Domain: Application Answer Location: The Empathy MapDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Demonstrate the design thinking process: Identify challenges or obstacles for a necessary task in your life, and explore solutions by providing four “How Might We?”questions.

Ans: Answers will vary. One example might be: given that people might procrastinate when preparing taxes, how might we help ensure that tax documents are easy to access? How might we ensure information is available for people who have questionsabout filing taxes?

Learning Objective: 6.3. Describe the role of empathy in the design-thinking process.

Cognitive Domain: Application beststudy284@gmail.com

Answer Location: Inspiration Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Illustrate how you would ensure that a brainstorming session is successful.

Ans: Start with a good design challenge question. Continue the brainstorming session until all suggestions have been exhausted. Go for quantity, not quality. Do not judge anyof the suggestions, take one suggestion at a time, use and instead of but when adding to an idea, be open to wild suggestions, and improve on others’ ideas.

Learning Objective: 6.4. Illustrate the key parts of the design-thinking process.

Cognitive Domain: Analysis

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Instructor Resource Neck, Entrepreneurship SAGE Publishing, 2018 Answer Location: The Design-Thinking Process: Inspiration, Ideation, Implementation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Select an activity that is new or that you do all the time. Use the AEIOU model torecord your observations.

Ans: Answers will vary but should use the model that defines the following: Activities (what people do to accomplish their goal), Environments (what the function ofthe individual, shared, and overall space is), Interactions (what the nature of exchangesbetween the person and other people or things is), Objects (what people use, how theyused in the activities), Users (What are their goals, values, motivations, roles, prejudices, and relationships? Who are they?).

Learning Objective: 6.5. Demonstrate how to observe and convert observation data intoinsights.

Cognitive Domain: Application Answer Location: Observation Techniques Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Explain why design thinking is important to the entrepreneur.

Ans: Today’s business environments are complex, requiring constant innovation and problem solving. The design thinking process helps the entrepreneur develop new insights that can lead to new products and unique solutions. Through the design process, ideas can take leaps of creativity to address latent or new needs. The design process aligns with the overall entrepreneurial activity of exploration, interacting with the customer, experimentation, and continuous learning. Using a process can be learned sothat entrepreneurs can develop increased skills in observation, ideation, and implementation.

Learning Objective: 6.1. Define design thinking.

Cognitive Domain: Comprehension Answer Location: Entrepreneurship in Action beststudy284@gmail.com

Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

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Chapter 7: Testing and Experimenting in MarketsTest Bank

Multiple Choice

1. What phase of design thinking is associated with experimentation? a. inspiration b. ideation c. implementation d. nonlinearization Ans: C Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Knowledge Answer Location: What Are Experiments?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. Why is experimentation required? a. to meet the requirements of investors and loan officers b. to strengthen ideas c. to help with inspiration d. to form hypotheses Ans: B Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Knowledge Answer Location: What Are Experiments?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Why is experimentation required? beststudy284@gmail.com

a. to meet the requirements of investors and loan officers b. to generate ideas that can be used in further business development c. to make sure that entrepreneurs have the right assumptions about meeting thedemands of potential customers d. to form hypotheses about customer behavior towards their product or serviceAns: C Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Knowledge Answer Location: What Are Experiments?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. What is a hypothesis? a. an assumption tested through experimentation

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b. a method used to prove or disprove the validity of an idea c. the process of conducting a research study d. a widespread belief Ans: A Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. Which of the following is an important benefit of experimentation? a. It makes you get out from behind the desk. b. Assumptions are validated or proven false. c. It generates new ideas. d. It generates new business plans.

Ans: B Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Experiments need to have a clear purpose, be achievable, and generate

.

a. positive outcomes b. product ideas c. reliable results d. action Ans: C Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

7. Rather than just gathering data, an experiment matches an outcome to which of the following? a. the hypothesis b. the data collection method c. the business problem d. the business opportunity Ans: A Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Knowledge Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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8. If an experiment outcome indicates that the original hypothesis was incorrect, whatshould the entrepreneur do? a. conduct another experiment b. adapt the original assumption c. move forward until there is another assumption to test d. terminate the product or business conceptAns: B Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. The first step of the scientific process for an entrepreneur is which of the following? a. to conduct a thorough Internet search b. to develop the hypothesis c. to ask a lot of questions d. to analyze the data Ans: C Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

10. What did the founder of Amazon come to discover that encouraged him to begin the scientific process? a. He read about the growth of online shopping on the Internet. b. He read about the huge growth of Internet usage. c. He read that bookstores were struggling to keep up with the costs of keeping book inventories. beststudy284@gmail.com

d. He read that bookstores were experiencing a decline in sales.Ans: B Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. What was the first step of experimentation that the founder of Amazon began usingthe process to assess online business opportunities? a. He asked questions about shopping behavior and mail order shopping. b. He browsed the Internet for online shopping sites. c. He conducted a survey about interest in online shopping. d. He tested product online, using someone else’s website.

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Ans: A Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. As an entrepreneur, one should think like a scientist and

.

a. act like one as well b. not put as much time or precision in experiments as a scientist would c. conduct experiments with more precision since the results will be acted upon d. use the same methods as a scientist Ans: B Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Comprehension Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 13. In experimentation, an entrepreneur’s goal should be to do which of the following? a. Use continual iteration to test and shape ideas. b. Create perfect experiments for perfect outcomes. c. Use scientific rigor in the testing of his or her products. d. Use the scientific method sparingly so as to save resources.Ans: A Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. What is the last step of the scientific process? a. analyze the data beststudy284@gmail.com

b. run the experiment c. assess the results of the data analysis d. redesign the product or service Ans: C Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. Anthony is thinking of starting a small hot-dog cart that he will take to the beach area in San Diego, California. Before starting, he investigates city ordinances and talksto vendors in the beach area. He also talks to people at the local parks who sell hot

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dogs to find out what makes their business successful. Anthony is conducting whatstage of the scientific process? a. background research b. experimentation c. data analysis d. testing the hypothesis Ans: A Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

16. Anthony is thinking of starting a small hot dog cart that he will take to the beach areain San Diego, California. Before starting, he asks an ice cream vendor if he can offer hot dogs using his stand for a small rental fee. He will only need to use space for one day. Anthony is conducting what stage of the scientific process ? a. testing the hypothesis by running an experiment b. implementation of the plan c. developing a hypothesis d. carrying out background research Ans: A Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Comprehension Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. The owner of Amazon.com developed a site for a relatively low cost and offeredbooks on the site.

What stage of the scientific process was the owner executing by doing this? a. testing the hypothesis by running an experiment beststudy284@gmail.com

b. implementation of the plan c. developing a hypothesis d. carrying out background research Ans: A Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Comprehension Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. What question is asked when an entrepreneur draws conclusions from the results ofthe data analysis? a. What can be put into charts and graphs? b. Can the results be communicated?

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c. Do the results support the hypothesis? d. How can the observations be summarized?Ans: C Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. How should an entrepreneur approach experimentation? a. invest high levels of time and resources to strictly adhere to the scientific method b. use quick, low cost methods of experimentation informed by scientific thinking c. focus on asking lots of questions and ignore the scientific method d. rely upon historical data rather than collecting experimental dataAns: B Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

20. What hypothesis did Subway marketers make during the 2008 recession? a. Sales would improve if there were fewer stores. b. Selling foot-long subs at the reduced price of $5 would increase sales. c. More foot-long subs would sell if more expensive items were removed from the menu. d. Subway sales would improve after the recession were over.Ans: B Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

21. How did Subway carry out their experiment to test the effect of $5 subs? a. They lowered the price of the sub throughout the summer of 2008. b. They tested the price of the sub at selected stores for a limited period of time. c. They tested the price of the sub at their flagship store. d. They conducted a survey to see if people would be willing to purchase the $5 sub.Ans: B Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

22. The best way to conduct an experiment is to

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.

a. test the product, service, or idea in a controlled environment b. test the product, service, or idea with family and friends c. test the product, service, or idea with real customers d. conduct the experiment in another location where you will not be using “real” customers Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

23. In general, how many different types of customers are there? a. one b. three c. six d. 10 Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

24. People with a large following who can affect purchasing decisions are called . a. recommenders b. end users c. influencers d. decision makers Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive beststudy284@gmail.com

Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

25. Customers who have the ability to approve large scale purchases are called whichof the following? a. recommenders b. economic buyers c. decision makers d. end users Ans: B Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge

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Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

26. What is the term for customers who have a high level of authority in their ability to approve purchases others make due to their high position in the hierarchy? a. recommenders b. economic buyers c. decision makers d. end users Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

27. A customer who delays or vetoes the purchasing decision is referred to as which ofthe following? a. influencer b. decliner c. negator d. saboteur Ans: D Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

28. Angelina makes all purchases of printers and small computers for her company, a company that employs over 1000 people. However, all purchases must be approved byher district vice beststudy284@gmail.com

president. The district vice president would be listed under which of the following customer types? a. decision maker b. saboteur c. recommender d. approver Ans: A Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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29. Which of the following participant right is an ethical requirement when performing an experiment? a. the right to informed consent b. the right to review the results of the experiment c. the right to be paid d. none of these Ans: A Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: The Rights of Research Participants Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

30. The main problem with analyzing historical data is that

.

a. There is never enough of it to provide reliable data. b. The data collected was for another purpose than that addressed by the current issue. c. Historical data can provide insight into past behaviors, but may not predict behavior innew environments. d. Historical data was gathered on a different market segment.Ans: C Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

31. Which of the following is the main problem regarding intuition in the role of decision making? a. People tend to lack sufficient experience. b. It does not provide evidence to support the idea. c. Few people have good intuition. beststudy284@gmail.com

d. Intuition is not real and cannot be trusted.

Ans: B Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

32. Why do some organizations discourage experimentation? a. Their product or service is already optimized. b. They lack the skills required for experimentation. c. They no longer have the time to engage in experimentation. d. They fear failure or incurring short-term loss.

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Ans: D Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

33. In designing experimentation opportunities, on which of the following should the entrepreneur focus? a. partners b. customers c. distributors d. all of these Ans: D Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Table 7.1 The Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

34. What do the authors suggest about using data that was not specifically gathered totest the hypothesis? a. It can be discarded as it will not address the issue at hand. b. It should not be ignored. Keep track of everything. c. It should be kept if it is positive information. d. Discard it unless there is a minimum of six pieces of information saying the samething.

Ans: B Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Table 7.1 The Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

35. The ability to make connections, expand our knowledge, and become more innovative is often the result of which of the following? a. formal in-depth study b. gaining experience in a particular industry or profession c. trying out new experiences and learning new skills d. hours of work in a particular area Ans: C Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Comprehension

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Answer Location: Trying Out New Experiences Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

36. Taking apart products and putting them together again can be thought of as experimentation because doing so

.

a. generates ideas about how we can make our products or services work better b. gives us important information about how products are made c. increases creativity as one imagines how to put the parts together again d. increases general creative capacities that can transfer to other projectsAns: A Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Knowledge Answer Location: Taking Things Apart Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

37. A pilot test

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a. is a small-scale study conducted to assess the feasibility of a product or service b. is a study restricted to the field of aviation c. is a the launch of a single, “solo” product d. is a prototype of a product Ans: A Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Knowledge Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

38. What is necessary for a prototype to be effective? a. It must be a working model of the product or service. b. It must communicate what our ideas look like, behave like, and how they work. c. It must be the same as the model that will be launched at the start of the business. beststudy284@gmail.com

d. It must include engineering models or, for a service, an operational plan. Ans: B Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Comprehension Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

39. A high-level view of thoughts and ideas displayed in sequence through drawings, sketches, or illustrations is called a a. process flow b. high view c. storyboard

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.

d. pictogram Ans: C Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Knowledge Answer Location: The Power of Storyboarding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

40. A storyboard is classified as what category of business development tools? a. drawings b. prototyping c. beta tests d. pilots Ans: B Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

41. Who is credited with developing the idea of storyboarding? a. Warner Brothers b. Walt Disney c. Bell Laboratories d. U.S. Steel Ans: B Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 42. What is the advantage of storyboarding that makes it so effective? a. It is shorter. b. it provokes discussion. c. The visual element gets the idea across quickly. d. all of these Ans: D Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

43. In storyboarding, who or what is at the center of the story? a. the company b. the customer c. the manufacturer d. the viewer Ans: B Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

44. A city is suggesting that homeowners participate in a mandatory recycle program. Which of the following would most likely be sketched as the benefit (remember that storyboards are from the customer’s perspective)? a. overflowing landfills b. people not paying the bill c. neat recycling bins placed near the curb and a happy resident d. overflowing trash cans Ans: C Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

45. What are the elements in the framework for storyboarding? a. problem, solution, benefit beststudy284@gmail.com

b. solution, approval, action c. problem, product, organization d. need, mindset, product Ans: A Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Knowledge Answer Location: The Power of Storyboarding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

46. What does one hope the storyboard will do when presented? a. generate questions b. gain approval

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c. encourage people to invest in the idea d. answer all questions Ans: A Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

47. How does one formulate a hypothesis? a. One simply states what one thinks would happen as a result of the experiment. b. by asking questions, conducting background research, and creating theories of what might work c. by considering the potential outcomes of the experiment d. by studying the business and determining why things work the way they doAns: B Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Comprehension Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

48. Sean is thinking about creating an automatic cat feeder similar to one that he created for dogs. He talks to several cat owners to find out what they dislike about feeding their cats. He also takes a look at current cat feeders and asks the same catowners what they like and don’t like about the feeders. What is this action called? a. asking questions and a pilot study b. asking questions and hypothesis testing c. asking questions and background research d. asking questions and prototyping Ans: C Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive beststudy284@gmail.com

Domain: Comprehension Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. Sean is thinking about creating an automatic cat feeder similar to one that he created for dogs. He believes that cats eat several times a day. He also believes that cats can be trained to come to the sound of a slight ding, indicating that a new tray offood has been opened. He has several friends set out small trays of food, sounding ading to see if cats will associate the sound with curiosity about the food. This action iscalled . a. testing the hypothesis b. forming a hypothesis

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c. analyzing data d. assessing results Ans: A Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Comprehension Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

50. Sabrina just received a toy for her seventh birthday. She is describing all the thingsshe likes and dislikes about the new toy. What type of customer is Sabrina? a. engaged user b. end user c. early adopter d. decision maker Ans: B Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

51. Sabrina just received a toy from her mother for her seventh birthday. She is describing all the things she likes and dislikes about the new toy. What type of customer is Sabrina’s mother? a. decision maker b. end user c. intermediary d. economic buyer Ans: A Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Testing Hypotheses With Potential Customers beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 52. Sabrina just received a toy from her mother for her seventh birthday. The toy was recommended by her elementary school teacher for its educational value. The teacher has been conducting lectures on educational toys for children. Sabrina’s teacher is whatkind of customer? a. decision maker b. recommender c. influencer d. economic buyer Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.

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Cognitive Domain: Knowledge Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

53. Carmen has recently published her first book and is delighted when she sees an A-list actor praising it on a morning talk show. What kind of customer is the actor? a. a recommender b. an influencer c. an end user d. a decision maker Ans: B Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Comprehension Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

54. Kristin is a buyer for a local Costco. She is interested in having your line of one-of-a-kind jewelry displayed during a weekend promotion. However, her supervisor, Dave, says they have had too many unsuccessful jewelry displays lately and he does not wantto present the idea to the store manager. What type of customer is Dave? a. a saboteur b. an economic buyer c. an end user d. a decision maker Ans: A Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Comprehension Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

55. Sarah is a musician who is frequently photographed for celebrity magazines. Readers often inquire about where to buy the fashions she is seen wearing in thephotographs.

What kind of customer would Sarah be? a. a saboteur b. a decision maker c. an influencer d. a recommender Ans: C Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Comprehension Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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True/False

1. Experiments do not have to have a clear purpose; they only need to be observed andhave an outcome.

Ans: F Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. If the experiment fails to deliver the results the entrepreneur anticipated, the experiment is a failure.

Ans: F Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 3. A new perfume manufacturer wants to test peoples’ reaction to the scent. As people enter a large department store, they are sprayed with the product and asked to fill out aquestionnaire in exchange for a free sample. This would be an acceptable way of conducting the experiment.

Ans: F Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: The Rights of Research Participants Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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4. A prototype is often created before a pilot test is conducted.Ans: T Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Knowledge Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. For a prototype to be effective, it must communicate what our ideas would look like,behave like, and how they work.

Ans: T Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Knowledge

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Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. Observations are not acceptable data in an experiment. Ans: F Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Comprehension Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Experiments do not need to be completed in order to produce results.Ans: F Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Knowledge Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. A true experiment identifies a clear hypothesis.

Ans: T Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. One of the disadvantages of storyboarding is that it requires artistic talent.Ans: F Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 10. The customers who actually buy, use, and give feedback on your product are called decision makers.

Ans: F Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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11. The main problem regarding experience in the role of decision making is that somenew ideas are better than convention or what we thought we knew.

Ans: T Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. A pilot experiment is a large-scale study to assess the feasibility of a product orservice.

Ans: F Learning Objective: Learning Objective: 7.5. Identify three types of experiments mostcommonly used.

Cognitive Domain: Knowledge Answer Location: Testing Ideas Through Pilots and Prototypes Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. When gathering data about customers, it is almost impossible to observe direct outcomes of advertising.

Ans: T 7.4. Explore different ways of generating data and describe the rules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. An entrepreneur following the scientific process of experimentation should conduct background research before forming a hypothesis.

Ans: T beststudy284@gmail.com

Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. Entrepreneurs should avoid experimenting with potential customers.Ans: F Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Knowledge Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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16. Using historical data will only provide insights into past behaviors—they cannot predict how people might react to new products and innovations.

Ans: T Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Entrepreneurs have more freedom to experiment than larger organizations, as theyhave less to lose.

Ans: T Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Entrepreneurs are more likely to generate new business ideas if they stick to aroutine of familiar experiences.

Ans: F Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Comprehension Answer Location: Trying Out New Experiences Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

19. Taking apart a product or a process to understand how it works can help an entrepreneur generate new ideas. beststudy284@gmail.com

Ans: T Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Knowledge Answer Location: Taking Things Apart Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

20. A written description of a product is a better way to generate discussion from potential customers than a storyboard.

Ans: F Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Knowledge

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Answer Location: The Power of Storytelling Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

21. When there is insufficient data available, intuition and experience are reliable to useto make decisions.

Ans: F Learning Objective: 7.4. Explore different ways of generating data and describe therules of experimentation.

Cognitive Domain: Knowledge Answer Location: Generating Data and the Rules of ExperimentationDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

Essay

1. Describe how the idea of experimentation helps a company move forward in a carefuland cost effective manner.

Ans: Experimentation allows the entrepreneur to test assumptions in a repeatable andplanned manner. Experimentation helps the entrepreneur avoid costly mistakes.

Experiments, if carried out with purpose, will produce reliable results that the entrepreneur can use to guide his or her business. Experimentation can occur with the product, to test customer assumptions and distribution assumptions, and all other areasof the business.

Learning Objective: 7.1. Define experiments and describe the steps of experimentation.Cognitive Domain: Comprehension Answer Location: What Are Experiments?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. Antoinette wants to test her new vegetarian burger and test the hypothesis that people will not be able to tell it is not beef. She tests her product at a local big box storeand hands samples beststudy284@gmail.com

out, telling people that it is a new hamburger product. She then asks them to fill out a questionnaire about the product. Discuss how this experiment is or is not being conducted in an ethical manner.

Ans: The experiment is not being conducted in an ethical manner. Participants were deceived about the product. Legal rules apply when testing food items or any product that comes into contact with the human body. The product may contain food products towhich the participant was allergic and ate under false information.

Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Comprehension Answer Location: Hypotheses and Customer Identification Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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3. Imagine that you are a salesperson for a whiteboard tool that is used in schools. Theboard is exceptionally easy to clean and does not glare when pictures of it are taken. Describe the various customers you may have to work with in selling this product.

Ans: Answers may include the end users (teachers and students), the influencers (otherschools using the board), the decision maker (school principal), the economic buyers (school district), and potential saboteurs.

Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Analysis Answer Location: Hypotheses and Customer Identification Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Diego has developed a software program idea that will help students organize their study notes. The program will interface with online readers that highlight components ofthe book, allow the student to upload notes taken on a notebook or tablet, and will storerelevant audio excerpts. All forms of notes can be tagged for categorization. Design a hypothesis that will determine interest in this product and discuss how the experiment might be carried out.

Ans: Answers will vary. Since this is an idea, and not a prototype, Diego might focus on assumptions about study habits. The experiment design will depend on the hypothesis. For example, “ students integrate various forms of notetaking while studying” might be an underlying hypothesis that could be tested by observation. Diego can also create a storyboard for his product and see what questions are raised. In this case, the hypothesis might be, “students will see value in the software idea.”

Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Application Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Imagine that you are in a Starbucks restaurant and are testing the hypothesis thatmost people are in the store for less than 10 minutes. How would you test that hypothesis?

Ans: Sit at a Starbucks store and note how long people take from entrance to exit. The data can be beststudy284@gmail.com

organized into counts showing the number of people who are there for lessthan 5 minutes, between 6 and 10 minutes, over 10 minutes, and so on.

Learning Objective: 7.2. Identify and describe the six steps of scientific experimentation.Cognitive Domain: Application Answer Location: The Six Steps of Scientific Experimentation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Demonstrate how taking apart a residential smoke detector might help you apply experimentation to improve the product.

Ans: Answers will vary. While taking the unit apart, several questions will be asked andanswered: How do customers reach the unit? How difficult is it to remove? How and

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where are the wires connected? Is the plastic durable? The answers to all thesequestions may provide valuable information in improving the product.

Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Application Answer Location: Taking Things Apart Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Describe an experience you had while traveling or engaging in a new activity. Identifywhat the experience was and what elements you later incorporated into your life.

Ans: Answers will vary. These may include the following: coursework may have been used in the work environment, a new food may have been incorporated into daily menus, a sport experience may have generated ideas for a new business, people mayhave started language lessons.

Learning Objective: 7.5. Identify three types of experiments most commonly used.Cognitive Domain: Comprehension Answer Location: Trying Out New Experiences Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Consider a situation where you were the end user of a product. What other “customers” were involved in your decision to purchase the product?

Ans: Answers will vary. There may be a saboteur who delayed the decision and an influencer or recommender. If in a corporate environment, there may have been a decision maker who needed to approve the purchase. You may have been an economicbuyer or may have the product because of an economic buyers’ decision.

Learning Objective: 7.3. Demonstrate how to test hypotheses and identify customers.Cognitive Domain: Application Answer Location: Testing Hypotheses With Potential Customers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

9. Describe why storyboarding is an effective form of experimentation.

Ans: The visual feature of a storyboard allows people to quickly grasp the concept. Questions are generated to clarify the picture, thus raising important concerns. The storyboard is short, encouraging more interaction. It is easier to produce than a physicalprototype but communicates the idea and working of your concept.

Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Comprehension Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 10. Observe the two-lane option of a McDonald’s drive-through service. Create a storyboard that prototypes this service.

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Ans: The storyboard should identify the problem the customer faces without the two-lane option, the proposed solution, and how the customer will benefit from the two lanes.

Learning Objective: 7.6. Illustrate the power of storyboarding as a form of prototypingand a basis for experiments.

Cognitive Domain: Application Answer Location: The Power of Storyboarding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Chapter 8: Building Business ModelsTest Bank

Multiple Choice

1. What would be the best definition of a business model? a. a small pilot of the business as it will be practiced b. a series of hypotheses that suggest business practices c. a plan for expansion d. a framework that describes how a company creates, delivers, and extracts valueAns: D Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management skills area

2. How will the business model create value? a. unmet needs will be met in an existing market b. profits will be made c. the stock will be valued d. customers will be differentiated Ans: A Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

3. Which of the following is a way that a business model will lend value? a. by explaining how revenue will be obtained beststudy284@gmail.com

b. by explaining how profits will be made c. by explaining how the company will serve customers in new markets d. by describing the elements of the financial forecastAns: C Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management 4. On what does the business model focus in terms of a business’s service or product? a. durability b. quality

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c. differentiation d. viability Ans: C Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management

5. What is the relationship between the business plan and the business model? a. The business model will not be possible without a business plan. b. The business model will support the business plan, explaining how to attain the plan’sgoals. c. They are the same thing. d. A business plan supports the business model, explaining how to attain the model’sgoals.

Ans: D Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

6. A

is a formal document that provides, among other things, background and

financial information about the company. a. business model b. business plan c. business strategy d. investor plan Ans: B Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management

7. According to the text, it is typically easier for new businesses to change their business model because new businesses a. have the capital to fund business model changes b. have more changeable business models c. tend to be more open to change d. tend to be smaller and more agile Ans: D Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension

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.

Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

8. BlackBerry, which gained significant market share in the early 2000s in the business, government, and consumer markets, lost market share because

.

a. demand for smartphones declined b. competitors offered phones with better designs and more features c. competitors lowered prices to undercut BlackBerry d. all of these Ans: B Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

9. While startups can be flexible in their model, what should be the general guide forexisting models? a. Existing models should not be changed. b. Existing models should be replaced frequently. c. Organizations should be prepared to adjust their existing model as markets change. d. Existing models require annual updating.

Ans: C Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. What are the four parts of a business model? a. target customers, employees, founders, investors beststudy284@gmail.com

b. financing, infrastructure, employees, customers c. the offering, customers, infrastructure, financial viability d. financing, customers, product, service Ans: C Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: The Four Parts of a Business Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. The offering addresses

.

a. the value generated for customers b. the amount given to investors in return for capital c. the features of the product or service

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d. the people in your target market Ans: A Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: The Four Parts of a Business Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

12. Within a business model, customers refer to

.

a. people who express loyalty to your brand b. people who have purchased your product or service c. the segments of the market your offering intends to serve d. people in the geographic reach of the businessAns: C Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Customers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. Infrastructure can be thought of as

.

a. all the resources that are needed to deliver the CVP b. only technological resources that are needed to deliver the CVP c. only financial resources that are needed to deliver the CVP d. only human resources that are needed to deliver the CVPAns: A Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Infrastructure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

14. Which of the following would be included when describing the infrastructure? a. financial viability b. customers c. facilities d. the offering Ans: C Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Infrastructure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. The revenue and the cost structures would be included in which part of the businessmodel? a. revenue structures

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b. cost structures c. financial viability d. financial statement Ans: C Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Financial Viability Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

16. How is the section on financial viability more than a financial model? a. It carries less detail. b. It carries more detail. c. It explains why customers would give you money. d. It explains the size of the market.

Ans: C Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Financial Viability Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Which of the following is necessary for an effective customer value proposition (CVP)? a. It must not have any direct competitors. b. It must offer better value than the competitors. c. It must cost less than the competitors. d. It must offer the exact same value as the competitors.Ans: B Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 18. Which of the following is necessary for an effective CVP? a. It must be lower in cost than that offered by competitors. b. It must offer a giveaway or something extra. c. It must be measureable in monetary terms. d. It must offer discounts and rewards for loyal customers. Ans: C Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension

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Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

19. Which of the following is necessary for an effective CVP? a. It must include various pricing options. b. It must have the ability to perform over a considerable length of time. c. It must delivered with greater speed than the competitors. d. It must be delivered with more sophisticated technology than the competitors.Ans: B Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

20. A CVP requires that you think about your business from the perspective of whatgroup? a. the employees b. the investors c. the customers d. the operations team Ans: C Learning Objective: 8.3 Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

21. What is required to create a successful CVP? a. an understanding of customers’ financial situation b. an understanding of how customers consume media c. an understanding of what customers want and need beststudy284@gmail.com

d. an understanding of what customers have alreadyAns: C Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

22. The first step in creating your CVP is

.

a. persuading customers to purchase your product or service

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b. persuading customers to sign up for your marketing emails c. uncovering your customers’ contact information d. uncovering what your customer really needsAns: D Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

23. What problem did IKEA solve for customers in its CVP? a. lack of attractive low-cost furniture b. lack of do-it-yourself furniture c. lack of European designs d. lack of antique furniture Ans: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

24. What problem did FedEx solve for customers in its CVP? a. the lack of easy, door-to-door, overnight delivery of packages b. the lack of customer signatures of received goods c. the lack of alternatives to the USPS d. the lack of prepackaged envelopes Ans: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

25. To develop a good CVP, products must not only fulfill a need but also

.

a. include a technological component b. fit into customers’ lifestyles c. fill a large market d. appeal to affluent customers Ans: B Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension

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Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

26. Which of the following allowed Tata cars to be successful? a. their low-cost cars b. their small cars c. their self-parking capabilities d. their line of scooters Ans: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

27. What elements of car design did Tata change in order to produce their CVP? a. product design b. manufacturing process c. service model d. all of these Ans: D Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: The Customer Value Proposition Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

28. What are the four major categories of problems experienced by customers? a. lack of time, lack of money, lack of skill, lack of access b. lack of money, lack of contacts, lack of interest, lack of time c. lack of skill, lack of knowledge, lack of support, lack of money beststudy284@gmail.com

d. lack of access, lack of support, lack of money, lack of friendsAns: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: Four Problems Experienced by Customers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

29. What major customer problem did MinuteClinic solve in their CVP? a. lack of time b. lack of access

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c. lack of skill d. lack of money Ans: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: Lack of Time Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. Andrew owns a popular but expensive Chinese restaurant. In order to introduce more people to his brand, he offers a series of one-time “taste fairs” in which he brings his recipes to a locally sponsored event. Customers are able to pay modest amounts forsmall servings of his creations while not paying for the ambiance of the famous restaurant. What need is Andrew addressing? a. the restaurant’s lack of customers b. customers’ lack of money c. the owner’s lack of infrastructure d. the customers’ lack of access Ans: B Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: Lack of Money Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

31. Charisse sells gourmet meal kits that can create full dinners for four in fifteen minutes or less. What need is Charisse addressing in her CVP? a. a lack of time b. a lack of skill c. a lack of access d. a lack of money Ans: A Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail. beststudy284@gmail.com

Cognitive Domain: Comprehension Answer Location: Lack of Skills Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 32. Food Flight offers unique food options that are flown in fresh from key cities. Customers can order smoked salmon from Alaska, shrimp creole from Louisiana, andTexas ribs from Dallas. What problem does Food Flight address? a. lack of skill b. lack of money

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c. lack of access d. lack of time Ans: C Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Comprehension Answer Location: Lack of Access Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

33. Which approach to CVP involves listing all the advantages of your product orservice without comparing it to others? a. the list approach b. the all-benefits approach c. the pro and con listing d. the pitch approach Ans: B Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

34. Christine has obtained a job pitching a product at a local state fair. Her job is to demonstrate cookware, highlighting its features and demonstrating its use as she prepares food for visitors who can watch her cook and try samples. Christine will beselling the cookware based on which of the following CVPs? a. hard-sell approach b. points of difference approach c. all-benefits approach d. customer engagement approach Ans: C beststudy284@gmail.com

Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 35. A package of Supreme Security Software compares the software’s features against its competitors’ features. The result is a matrix with check marks and Supreme SecuritySoftware has more checks than its competitors. This approach to CVP demonstrates which of the following? a. all-benefits approach b. points-of-difference approach

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c. point-summary approach d. competitive assessment approach Ans: B Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

36. What is the key feature of the resonating-focus approach to CVP? a. It focuses on why people like your product. b. It describes all of the features of the product relative to competitors. c. It tells customers why they should buy your product. d. It describes all the positive features of your product.Ans: A Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 37. Which of the following is considered the “gold standard” of a CVP? a. all-benefits approach b. points-of-difference approach c. resonating-focus approach d. low-cost advantage Ans: C Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 38. Which of the following best defines the term mass market? a. a generic group outside the target market b. a large crowd of nondiscriminating consumers c. a large group of customers with similar needs or problems d. a global market Ans: C Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge

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Answer Location: Types of Customer Segments Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 39. Gift Prescriptions is a company that offers small gifts that can be left behind in doctors’ offices. Gift Prescriptions sells their gifts to pharmaceutical companies, therapists, and medical supply stores who want to leave doctors a small gift in appreciation for their time. Gift Prescriptions’ market segment would be described as a . a. mass market b. niche market c. segmented market d. diversified market Ans: B Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Comprehension Answer Location: Types of Customer Segments Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

40. Breaking up your customer segments into groups of common needs and problemswould create which of the following markets? a. segmented market b. market niche c. mass market d. diversified market Ans: A Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Customer Segments beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 41. Which of the following offers a variety of products to two or more customer segments with different needs, even if the resulting markets are unrelated to oneanother? a. segmented market b. market niche c. mass market d. diversified market Ans: D Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge

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Answer Location: Types of Customer Segments Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. This market describes two or more customer segments that are linked but independent of each other. a. mass market b. diversified market c. matching markets d. multisided markets Ans: D Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Customer Segments Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

43. Under the business model canvas (BMC), what is covered under the offering? a. the value proposition and customer segments b. customer segments c. the value proposition d. customer segments and channels Ans: C Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

44. Under the business model canvas (BMC), what components are related to customers? beststudy284@gmail.com

a. customer segments, channels, and customer relationships b. customer segments and value proposition c. customer segments and key activities d. customer segments and channels onlyAns: A Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

45. Under the business model canvas (BMC), what components are related to infrastructure? a. organizational design, facilities, key resources

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b. key assets, key resources, organization c. key activities, key resources, key partners d. computers, organization design, facilities Ans: C Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

46. Under the business model canvas (BMC), what components are related to financial viability? a. revenue streams and market size b. cost structure and revenue streams c. investment funds and revenue streams d. revenue streams and growth projections Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 47. The answer to the question, “What are the different ways I can reach my customer?”will result in what element of the BMC? a. market segment b. channels c. value proposition d. customer segment Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 48. Which of the following BMC element refers to building positive feelings about your business and customer loyalty? a. value proposition b. customer relationships c. market segmentation d. customer loyalty plans Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge

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Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 49. In Southwest’s BMC, the company decided to fly only one type of aircraft. What element of the BMC did this address and what was the effect? a. resources; it affected the key activities required to repair and maintain the aircraft b. resources; it affected customers c. key activities; it resulted in reduced customer relationships d. key activities; it resulted in the value proposition Ans: A Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Comprehension Answer Location: The BMC in Action Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

50. In creating your own BMC, what side of the canvas should you focus on first? a. the value delivery side b. the value creation side c. start anywhere d. start with your product description Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Comprehension Answer Location: Create Your Own BMC Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

51. Uber and Airbnb both a. have the same key partners b. use peer-to-peer business models beststudy284@gmail.com

.

c. provide a unique service d. use traditional business models Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: Peer-to-Peer Business Models Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

52. A type of CVP that describes why people will really like your product and focuses onthe customers and what they really need and value is the a. resonating-focus approach b. points-of-difference approach c. all-benefits approach

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.

d. customer satisfaction approach Ans: A Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

53. Danielle will be offering a tool sharpening service at her garden and landscaping store on the first Tuesday of every month. She assumes that this will be a need of her customers, and they will help spread the word about her location and services. Which ofthe following BMC elements is Danielle addressing? a. value proposition b. customer relationships c. market segmentation d. customer loyalty plans Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Comprehension Answer Location: The Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 54. General Motors advertised an “automobile for all ages.” By this, what market was General Motors addressing? a. a target market b. a niche market c. a mass market d. a diversified market Ans: C Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand beststudy284@gmail.com

learn how to identify your target customers.

Cognitive Domain: Comprehension Answer Location: Types of Customer Segments Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

55. In a peer-to-peer business model,

.

a. businesses sell products that are unique to a limited number of peer customers b. products and services are better than traditional services c. distribution occurs in a different way from traditional services d. interactions are business to business Ans: C Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge

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Answer Location: Peer-to-Peer Business Models Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

56. A type of approach that focuses on the product or service relative to the competitionand how the offering is different from others on the market is known as the a. resonating-focus approach b. points-of-difference approach c. all-benefits approach d. customer satisfaction approach Ans: B Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

57. What is the main problem SolarCity is solving by devising solar programs that canbe accessible to entire communities? a. lack of access b. lack of money c. lack of skills d. lack of access Ans: D Learning Objective: 8.3. Explore the importance of the Customer Value Propositionin further detail.

Cognitive Domain: Comprehension Answer Location: Lack of Access Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

.

58. When determining your revenue stream, what question should you ask yourself? a. How do I establish and maintain relationships with customers? b. How much are my customers willing to pay? c. What are the most important costs inherent in the business model? d. What resources are the most expensive to get?Ans: B Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Application Answer Location: The Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

59. When determining your cost structure, what question should you ask yourself? a. How do I establish and maintain relationships with customers?

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b. How much are my customers willing to pay? c. What activities can be outsourced? d. What resources are the most expensive to get?Ans: D Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Application Answer Location: The Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

True/False

1. Business models must be changed whenever a company launches a new product orservice.

Ans: F Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Hard AACSB Standard: General business and management

2. The business model of an entrepreneur must be flexible in order to respond to new information.

Ans: T Learning Objective: 8.1. Define the business model.

Cognitive Domain: Comprehension Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management

3. Entrepreneurs should try to address every potential customer in a market.Ans: F Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive beststudy284@gmail.com

Domain: Knowledge Answer Location: Customers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. The infrastructure of the business model does not identify people only technology and facilities.

Ans: F Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Infrastructure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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5. A diversified market offers a variety of service to two or more customer segmentswith different needs and problems.

Ans: T Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Customer Segments Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 6. The resonating-focus approach is the “gold standard” because it considers yourproduct or service from the perspective of the customer.

Ans: T Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. Amazon serves a diversified market because it has multiple products and servicesthat serve several unrelated groups of customers.

Ans: T Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Comprehension Answer Location: Types of Customer Segments Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Multisided markets describes a variety of services that serve two or more segmentswith beststudy284@gmail.com

very different needs or problems.

Ans: F Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Customer Segments Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Coke and Pepsi are examples of companies that address the mass market.Ans: T Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge

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Answer Location: Types of Customer Segments Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Blackberry and Kodak are examples of companies who were able to successfullychange their business models in order to adapt to changes in the market.

Ans: F Learning Objective: 8.1. Define the business model.

Cognitive Domain: Knowledge Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 11. Procter & Gamble didn’t need to change its business model to accommodate thesuccess of the Swiffer brand because it fit squarely with its existing model.

Ans: T Learning Objective: 8.1. Define the business model.

Cognitive Domain: Knowledge Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. The business model is just about revenue and costs. Ans: F Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Knowledge Answer Location: Financial Viability Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. The all-benefits approach is the most impactful approach for creating a value proposition because of its large focus on the product. beststudy284@gmail.com

Ans: F Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Types of Value Propositions Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. There are 10 components of the business model canvas. Ans: F Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy

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AACSB Standard: General business and management knowledge areas

Essay

1. Consider the business models of Amazon.com. Describe two of its business models. Ans: The answer may cover the business model for vendors, books, products, groceries, music, digital services, food delivery, for example. The answer should includethe specific market served by the model, how the product or service is different from competitors, and how the model is scalable.

Learning Objective: 8.1. Define the business model.

Cognitive Domain: Analysis Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

2. Define the market segment targeted by Facebook. Describe how that segment mayor may not be the same as originally planned.

Ans: Originally the target market included only college students. It then attracted olderteens and other young adults. Since then, the market has expanded with the fastest growing segment being older adults who use the product to stay in touch with family. Learning Objective: 8.2. Identify the four core areas of a business model.

Cognitive Domain: Analysis Answer Location: Customers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Identify the customer value proposition of your local cable company.

Ans: Answers will vary. Target market will include families who want unique and readilyavailable television viewing that is recordable with access to special viewing options.

The offering must have the latest in technology to be reliable and adaptable to individualviewing needs. beststudy284@gmail.com

Learning Objective: 8.2. Identify the four core areas of a business model.Cognitive Domain: Application Answer Location: The Offering Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Pick a product that you use every day. Describe the customer segment or segmentsthis product would appeal to.

Ans: Answers may consider age, gender, income level, location, nationality, professional status, risk-taking tendencies, purchasing habits, and need to be atrendsetter.

Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Knowledge

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Answer Location: Defining Your Target Customer Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. Consider the manufacturer of a solar lighting system. Identify who the key partners might be.

Could some activities be outsourced? Who would you negotiate with to modifyyour BMC? Ans: Answers will vary. Options include suppliers, franchise associates, distributors, sales agents, and installers. Appointment setting could be outsourced. The business could negotiate with any one of these to establish prices or revenue sharing.

Learning Objective: 8.5. Identify the nine components of the business model canvas.

Cognitive Domain: Analysis Answer Location: The Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Explain why a shopping center is an example of a multisided market.

Ans: A multisided market appeals to two market segments that are linked but independent of one another. In a shopping center, the shopping center has the vendor(stores) as one customer who pays rent. A dependent market (the customers of the stores) are another market. The shopping center must consider both in its BMC. Learning Objective: 8.4. Describe the different types of Customer Value Propositions and learn how to identify your target customers.

Cognitive Domain: Knowledge Answer Location: Defining Your Target Customer Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. Select a shopping mall of your choosing. Define a CVP for at least two market segments.

Ans: Answers will vary but need to address how the shopping mall addresses the needsof the vendors (segment one) and the shopper (segment two). Depending on the stores in the mall, there may be other market segments (e.g., children’s stores and big-and-tallmen’s stores). The CVP should explain why the customer would want to visit and purchase from the mall. beststudy284@gmail.com

Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Application Answer Location: The Customer Value Proposition Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

8. Consider that you are selling a Jeep SUV to a customer. Identify the key points in anallbenefits approach to CVP.

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Ans: Answers will vary. Benefits can include the cost, durability, terrain handling, cargospace, two- and four-wheel drive, and comfort features. There should be no comparisons with other SUVs. Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Application Answer Location: Types of Value Propositions Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Consider that you are selling a Jeep SUV to a customer. Identify the key points in a resonating-focus approach.

Ans: Answers will vary but should focus on the purchase from a customer perspective. For example, this includes that the four-wheel drive will make the SUV manageable on any terrain, the safety features will keep your family safe, the warm seats will keep you warm and comfortable during winter, the backup cameras will keep you from tragedy orharm.

Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Application Answer Location: Types of Value Propositions Difficulty Level: Medium AACSB Standard: General Business and Management Knowledge Areas 10. Consider the online store, Amazon.com. Describe some of the ways that the store’sBMC achieves customer relationship.

Ans: Answers can include answers within any market segment. Efforts build a sense of customer loyalty. Activities may include customer ratings, personalization of the websitein presenting products based on past purchases, return policies, stored account information, e-mail notifications, daily deals, recommended products, shopping cart features, and order tracking.

Learning Objective: 8.5. Identify the nine components of the business model canvas.Cognitive Domain: Application Answer Location: The Business Model Canvas beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. Define the business model and identify the four core areas of a business model. Ans: The business model is the framework for creating and delivering consumer value,while extracting value for the entrepreneur as well. Broken into four parts, each business model includes an offering, customers, infrastructure, and financial viability. Learning Objective: 8.1. Define the business model.

Cognitive Domain: Knowledge Answer Location: What Is a Business Model?

Difficulty Level: Easy AACSB Standard: General business and management

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12. Explore the importance of the CVP in further detail.

Ans: The CVP outlines exactly how the firm will generate value, how it will generate it inexcess of its competition, and how it will continue to do so in the future. As the true measure of any business is creating value, the true measure of a business model is its customer value proposition.

Learning Objective: 8.1. Define the business model.

Cognitive Domain: Analysis Answer Location: What Is a Business Model?

Difficulty Level: Medium AACSB Standard: General business and management

13. Describe the different types of Customer Value Propositions and how to identifyyour target customers.

Ans: Businesses tend to have different CVPs for each customer segment. This is to ensure they are meeting the needs of the customers within each segment. Examples ofdifferent customer segments targeted by different types of businesses include mass market, niche market, segmented market, diversified market, and multisided markets.

Types of CVPs include all-benefits, points of difference, and resonating focus. Learning Objective: 8.3. Explore the importance of the Customer Value Proposition infurther detail.

Cognitive Domain: Application Answer Location: The Customer Value Proposition Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

14. Identify all the components of the business model canvas.

Ans: The four core elements of a business model can be expanded to nine business model components. Separating core elements into their respective components makesthem easier to define and integrate with one another. The offering constitutes the (1) value proposition.

Customers relate to (2) customer segments, (3) channels, and (4) customer relationships.

Infrastructure includes (5) key activities, (6) key resources, and (7) key partners. Financial viability includes (8) cost structure and (9) revenue streams.Learning beststudy284@gmail.com

Objective: 8.5. Identify the nine components of the business model canvas. Cognitive Domain: Knowledge Answer Location: The Business Model Canvas Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. Explain the differences among the following markets: niche market, segmentedmarket, diversified market, and multisided market.

Ans: A niche market is a small market segment comprising customers with specific needs and requirements. The CVP is tailored to meet these particular needs. A segmented market involves breaking customer segments into groups according to theirdifferent needs and problems. A diversified market offers a variety of services to serve two or more customer segments with different needs and problems, which bear no

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relationship to each other. Multisided markets describe two or more customer segmentsthat are linked but are independent of each other.

Learning Objective: 8.4. Describe the different types of Customer Value Propositionsand learn how to identify your target customers.

Cognitive Domain: Analysis Answer Location: Types of Value Propositions Difficulty Level: Medium AACSB Standard: General Business and Management Knowledge Areas

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Chapter 9: Planning For Entrepreneurs Test Bank Multiple Choice

1. What are the most beneficial ways to develop a business idea? a. collect data b. gather feedback c. test the business model d. all of these Ans: D Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. A description of the future one envisions for a business, including what one plans todo and how one plans to do it, is called

.

a. white-boarding b. planning c. brainstorming d. surveying Ans: B Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 3. What can be attributed to the success of Bark ‘N Leash? a. analyzing the market, and then building the business to meet its needs beststudy284@gmail.com

b. minimal competition in the area c. heavy demand for the services offered by Bark ‘N Leash d. the founder’s experience in a similar industry Ans: A Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 4. Which of the following did Bark ‘N Leash investigate as part of the planning? a. financial costs of franchises offering the same service b. services, staff, pricing, location, schedules of local competitors

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c. a similar service in another part of the country d. willingness of local veterinarian offices to refer their clients Ans: B Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 5. How did Bark ‘N Leash determine how often her competitors were used? a. by talking with the owners of competitive stores b. by observing the frequency of activity on Facebook and Instagram c. by observing customers going in and out of the stores d. by checking with the local Chamber of Commerce Ans: B Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 6. What competitive strategy did Bark ‘N Leash learn from observing posts of competitors’ Facebook and Instagram sites? a. establishing locations b. learning about competitor weaknesses in customer service, marketing, and operational skills c. learning the different areas where dog walking was allowed d. hours of service Ans: B Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 7. What competitive information did Bark ‘N Leash gain from talking with friends? a. most customers of dog walking services did not have time to find a new service, evenif they did not love their current dog walker b. most customers were happy with their dog-walking service c. most service providers offered prompt and regular service d. there were many alternatives for service in the target market areaAns: A Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas 8. What competitive information did Bark ‘N Leash gain from talking with family and friends? a. there was too much competition in the area b. people were flooded with advertising and marketing for dog-walking services c. professionalism was often lacking in competitors d. people were not willing to pay for dog-walking services Ans: C Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 9. What attention to professionalism became a surprising selling point for Bark ‘N Leash? a. late-night appointments b. all employees were trained in pet CPR c. early-morning appointments d. all employees knew all the dog names Ans: D Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. What is the primary value of a plan? a. It records the answers to questions. b. It helps one take the first steps toward building a new venture. c. It helps crystalize one’s thoughts. beststudy284@gmail.com

d. all of these Ans: D Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. TRIM stands for

.

a. team, resources, idea, market b. trial, research, implement, market c. trial, research, investigate, market d. test, research, implement, manage Ans: A

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Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 12. What areas would be explored under the “T” phase of TRIM? a. who needs to be on the start team b. the assets needed to start the business c. the benefits of your product d. knowing who your customer will be Ans: A Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 13. What areas would be explored under the “R” phase of TRIM planning? a. who needs to be on the start team b. the assets needed to start the business c. the benefits of your product d. knowing who your customer will be Ans: B Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 14. What areas would be explored under the “I” phase of TRIM planning? a. deciding whether equipment should be loaned or leased beststudy284@gmail.com

b. deciding what trends support the business or product idea c. determining the cost of acquiring a customer d. determining the market size Ans: B Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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15. What areas would be explored under the M-phase of TRIM planning? a. deciding whether equipment should be loaned or leased b. deciding what trends support the business or product idea c. determining the cost of acquiring a customer d. determining the market size Ans: D Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 16. What question might you ask yourself when trying to determine your “T” when usingthe TRIM Framework? a. Who needs to be on the team from the beginning? b. What can I currently use to get started? c. What is the clearest description of the idea? d. Who is my primary customer?

Ans: A Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Lianna is deciding how customers will learn about her product. What area of TRIM planning is Lianna focusing on? a. team b. resources c. idea d. market Ans: D beststudy284@gmail.com

Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Santiago is paying close attention to writing a statement that expresses how his product solves a specific need. What area of TRIM planning is Santiago addressing? a. team b. resources c. idea

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d. market Ans: C Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. Which of the following should be included in the business plan? a. the answer to critical questions such as the availability of resources b. the company vision c. timelines for important goals d. all of these Ans: D Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

20. What is the term used in the text to describe a rough sketch of a basic business planon any available paper? a. a rough draft b. an outline c. a back-of-the-napkin plan d. a blueprint Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

21. Which is true of back-of-the-napkin plans? a. They are highly detailed. b. They help clarify and communicate ideas. c. They are complicated. d. They are time consuming to create.

Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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22. A gallery sketch is

.

a. a large sketch plan that indicates all major components of the idea b. a formal business document often required by banks for granting loans c. the same as a feasibility study d. the same as a back-of-the-napkin plan Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 23. Why are “before and after” sketches useful? a. They show the effect of the company’s product or service on the customers’ lives. b. They show the potential for profitability. c. They show what can be accomplished with the initial investment. d. They show the status of the company in one year’s time.Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

24. What is done through the Vivid Vision exercise? a. The entrepreneur tries to imagine what the business will look like 3 years into thefuture. b. The entrepreneur assesses what the business looks like in the present. c. The entrepreneur envisions how he or she is going to build the business and thesteps needed to take to get there. d. The entrepreneur tries to imagine what the business will look like in 10 years. Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

25. Killian decides that he needs a few days away from it all to think out his ideas. He takes up an offer from a friend to spend a few days in his mountain cabin. During this time, Killian imagines what his business will look like in 3 years. He pictures his customers using his product and coming into his facility. Killian is engaging in a practicecalled: a. Strategic Planning b. Vivid Vision c. Detailing

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d. Business Model Canvas Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

26. Word of mouth is an example of a

.

a. channel b. customer segment c. revenue structure d. key activity Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Plans Take Many Forms Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

27. A type of visual plan that is especially useful for identifying gaps in the business ideais called the

.

a. back of the napkin b. business model canvas c. key component model d. customer relationship model Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

28. This process is a type of visual plan that is especially useful for integrating thevarious components of the business

.

a. back of the napkin b. business model canvas c. key component model d. customer relationship model Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Business Model Canvas Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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29. A two to three page document outlining the company’s value proposition, customers, and milestones is referred to as a

.

a. back of the napkin b. business plan c. business brief d. feasibility study Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Business Brief Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. This planning tool helps entrepreneurs test the possibilities of an initial idea to see ifit is worth pursuing. a. the business brief b. the back-of-a-napkin plan c. the feasibility study d. the market research study Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

31. Which of the following would be considered in a feasibility study? a. financial projections b. the size of the market c. the founding team d. the three year plan Ans: B beststudy284@gmail.com

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. Which of the following is the main purpose of the feasibility study? a. to establish a base for further planning b. to help investors know whether or not to fund the company c. to help the entrepreneur reach a “go” or “no-go” decision d. to solidify the image and purpose of the businessAns: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension

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Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

33. The key to a feasibility study is

.

a. formality b. completeness c. complexity d. speed Ans: D Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

34. A document of no more than 10 pages, this tool answers essential questions withdata from interactions with potential customers, suppliers, distributors, and others. a. the business brief b. back of the napkin c. feasibility study d. storyboard Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

35. To produce a feasibility study, what action is needed? a. documenting important parts of your business b. testing, information gathering, and analysis beststudy284@gmail.com

c. creating a well-defined financial forecasts d. meeting with the founders who will agree on the plan of actionAns: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

36. What type of plan are traditional investors and bankers likely to require? a. a pitch deck b. a traditional business plan c. a business brief d. a feasibility study

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Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneursCognitive Domain: Knowledge Answer Location: The Business Plan Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

37. Who is the primary audience of the pitch deck? a. banks b. family c. team members d. early investors Ans: D Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

38. Which of the following would be most appropriate to visualize the future potential? a. a sketch b. a feasibility plan c. a pitch deck d. a business model Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Pitch Deck Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

39. What distinguishes a business plan from other forms of business planning? beststudy284@gmail.com

a. The business plan is for internal use only. b. The business plan is less detailed than the pitch deck. c. The business plan is more formal. d. The business plan does not include a financial forecast.Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

40. How many slides do pitch decks need to have? a. 5 b. 10

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c. 25 d. There are no strict rules for pitch deck length.

Ans: D Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Pitch Deck Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

41. According to the text, what is the typical length of a business plan? a. less than 5 pages b. 5 to 10 pages c. 20 to 40 pages d. over 40 pages Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

42. What is described in the business concept part of the business plan? a. the industry, structure, products, services b. a description of potential customers, plan implementation c. the overall implementation plan d. the operations and management Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Table 9.6: Components of a Traditional Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

43. What is described in the Marketing Plan section of the business plan? a. the industry, structure, products, services b. a description of potential customers and competitors c. the overall description of customers and the implementation plan d. the operations and customer service Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Table 9.6: Components of a Traditional Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

44. What is included in the Financial Plan section of a business plan?

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a. the industry, structure, products, services b. a description of potential customers and competitors c. income and cash flow, balance sheets, and financial projections d. financial projections only Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Table 9.6: Components of a Traditional Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

45. What would be considered under Critical Risks? a. financial assumptions b. distribution strategy c. competitor retaliation d. developmental strategy Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Table 9.6: Components of a Traditional Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

46. What would be considered in the Offering section of a business plan? a. contingency plans b. market incentives c. product descriptions d. investment requirements Ans: D Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Table 9.6: Components of a Traditional Business Plan beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 47. At what stage are business plans usually created? a. at the onset of the business idea b. after the feasibility study and pitch deck c. after the business model but before the feasibility study d. after the business model but before the pitch deck. Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Business Plan Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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48. Who is the primary audience of a business model canvas? a. friends and family b. team members and advisors c. investors d. banks and early funders Ans: B Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: Summary of Different Types of Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. According to IdeaLab, how important were business plans in the success of the company? a. Those who had good business plans tended to have more successful businesses. b. Business plans were more important than timing. c. Business plans were ranked as the least important of the five success factors. d. Business plans were ranked as the most important of the five success factors.Ans: C Learning Objective: 9.4. Debate the value of writing business plans Cognitive Domain: Comprehension Answer Location: The Business Plan Debate Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

50. A study by William Gartner from Clemson University showed that business plans . a. increased the likelihood that entrepreneurs will actually set up their businesses b. were necessary for all types of businesses c. almost guaranteed success d. had no impact on the business Ans: A beststudy284@gmail.com

Learning Objective: 9.4. Debate the value of writing business plans.

Cognitive Domain: Comprehension Answer Location: The Business Plan Debate Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. According to the text, what is the most important element of a business plan? a. the ability to have a document b. the formalization of your plan c. the exploration, experimentation, and market research that went into creating it d. the company overview Ans: C Learning Objective: 9.5. Implement the tips for writing business plans.

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Cognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

52. Why do you want to remove any fluff from your business plan? a. Decorative language can be distracting. b. Direct language is best. c. Jargon can take away from the main message. d. all of these Ans: D Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension Answer Location: Remove Any of the Fluff Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

53. Which of the following is recommended when presenting your plan? a. Give the best-case scenario for your business in order to attract others. b. Be conservative in your financial and market forecasts. c. Be certain that you can capture 30% to 40% of the targeted market. d. Be certain that you can overtake your main competitor within one year.Ans: B Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

54. Nan presents her plan for a slip-on shoe that is water repellent, inexpensive, and highly fashionable. She believes that the market for the product is “everyone in the city of Seattle.”

Because of this, she forecasts that she will capture 40% of the market. What is the business plan beststudy284@gmail.com

error that Nan is incurring? a. too much fluff in the presentation b. no clear product benefits c. the exaggerated hockey stick d. There is no error. This is a reasonable estimate.Ans: C Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension Answer Location: Avoid the Exaggerated Hockey Stick Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

55. Of the following, what is the best time to write a business plan? a. When you have the data to prove your concept.

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b. When you have the founder team. c. When you have adequate time. d. At any time in the formation of the business.

Ans: A Learning Objective: 9.5. Implement the tips for writing business plansCognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 56. David writes the following at the start of his business plan: “Computers are used by almost everyone in today’s tech-savvy world. Computers are here to stay.” What advicewould you give David? a. Reserve this statement for the marketing section of the business plan. b. Revise this statement to explain why computers are here to stay. c. Remove the statement. It does not communicate new information. d. Keep the statement where it is as it will help establish the market size.Ans: C Learning Objective: 9.5. Implement the tips for writing business plansCognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

57. In what order should an entrepreneur proceed from idea generation to businessplan? a. idea generation, feasibility study, pitch deck, business model canvas, business plan b. idea generation, business model canvas, pitch deck, feasibility study, business plan c. idea generation, business model canvas, feasibility study, pitch deck, business plan d. idea generation, pitch deck, feasibility study, business model canvas, business planAns: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Business Plan Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

58. How many pages should the Business Model Canvas be? a. 1 page b. 3 pages c. 4 pages d. 5 to 10 pages Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Business Model Canvas Cognitive Domain: Knowledge

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Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

59. A document that can easily be sent to stakeholders that will give them an at-a-glance understanding of who you are, the business, and its potential, is called the . a. business brief b. pitch deck c. business model canvas d. business plan Ans: A Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: The Business Brief Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

60. What are the benefits of using visuals in a business plan? a. They allow you to exaggerate your financial projections. b. They are a good way to break up the text. c. They help you avoid typos. d. They help you avoid the exaggerated hockey stick.Ans: B Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

61. What is one of the criticisms of the business plan? a. There are no known benefits of business plans. b. Business plans are only valuable at the earliest stages of entrepreneurship. beststudy284@gmail.com

c. It is hard to create a business plan with team members. d. Business plans become dated quickly.

Ans: D Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension Answer Location: Tips for Writing Business Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

62. A feasibility study involves

.

a. a 5-year plan to scale the business b. at least 15 pages of appendices for investors to examine c. action, testing, information gathering, and analysis d. the creation of detailed financial projections and cash flow analysis

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Ans: C Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Feasibility Study Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 63. “What are your customers willing to pay?” is a key question to ask when determiningthe of your TRIM framework. a. Team b. Resources c. Idea d. Market Ans: D Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 64. “Can I lease equipment?” is a key question to ask when determining the your TRIM framework. a. Team b. Resources c. Idea d. Market Ans: B Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

of

65. “What are my startup costs?” is a key question to ask when determining the of your TRIM framework. a. Team b. Resources c. Idea d. Market Ans: B Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge

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Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 66. “What problem is being solved?” is a key question to ask when determining the of your TRIM framework. a. Team b. Resources c. Idea d. Market Ans: C Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 67. “How is the network of each member?” is a key question to ask when determiningthe of your TRIM framework. a. Team b. Resources c. Idea d. Market Ans: A Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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True/False

1. Regardless of the type or size of service, every business needs to start with a plan.Ans: T Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. If your plan is not described in a formal document, chances are you do not reallyhave a plan.

Ans: F

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Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Assets, rent, and advisor knowledge would be some of the considerations in the “resources” step of the TRIM planning approach.

Ans: T Learning Objective: 9.1. Examine “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. The purpose of the feasibility study is to provide a short-term plan for launching your business.

Ans: F Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. The pitch deck is a presentation highlighting the essential elements in a feasibilitystudy and business plan.

Ans: T Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Pitch Deck Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

6. The pitch deck has replaced the formal business plan in most cases.Ans: T Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Pitch Deck Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. In general, it is not a good idea to use visuals in a business plan. Ans: F Learning Objective: 9.5. Implement the tips for writing business plans.

Cognitive Domain: Comprehension

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Answer Location: Use Visuals Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. All experts agree that writing a formal business plan is necessary for the success of astartup.

Ans: F Learning Objective: 9.4. Debate the value of writing business plans.

Cognitive Domain: Comprehension Answer Location: The Business Plan Debate Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Planning is the same as a plan.

Ans: F Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Knowledge Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. A Vivid Vision should always be presented as a written document rather than agallery sketch, a photo montage, or a video.

Ans: F Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Sketches on a Page Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 11. According to the text, you won’t be able to decide whether a business idea is viableuntil you have talked to at least 50 potential customers.

Ans: T beststudy284@gmail.com

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Feasibility Study Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. According to the text, a business plan must be thought of as a work in progressbecause nothing goes according to plan.

Ans: T Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: The Business Plan Cognitive Domain: Knowledge Difficulty Level: Easy

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AACSB Standard: General business and management knowledge areas

13. The authors advise writing a formal business plan before testing ideas in the realworld.

Ans: F Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Summary of Different Types of Plans Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 14. According to Dan Roam, author of The Back of the Napkin, we can visually solve problems with pictures.

Ans: T Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Back of a Napkin Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. An entrepreneur must create a single business plan that will work for all audiences.Ans: F Learning Objective: 9.5. Implement the tips for writing business plans.Answer Location: Tips for Writing Business Plans Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

Essay

1. Imagine that you are opening a store that offers landscaping supplies to homeowners. Select which methods you would use in creating your plan for the business. beststudy284@gmail.com

Ans: Social media research; Google Maps to identify competitors in the local area; talking with family and friends about what they like and don’t like about current services;visit competitor sites; understand the competition; obtain a “wish list” from competitor customers; observe pricing, staff, schedules, location, etc.

Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. Imagine that you are starting a small dollar store in your community. Describe what you would consider in implementing the “T” aspect of the TRIM process.

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Ans: Who needs to be on the team, what type of skills are needed and are there gaps, what would be each member’s goals, how will ownership be divided, what skills do we need to attract and how will we attract them, what personal network does each person have that would contribute to contacts and customers?

Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Imagine that you are starting a small dollar store in your community. Describe what you would consider in implementing the “R” aspect of the TRIM process.

Ans: What current resources do you have; what is your cash and what resources do youhave that would add cash, labor, or other resources; who can be of help besides your founding team; what are the resources that you need to start; can you find a low-cost location to start in; can you lease equipment at the start; what will be your expenses?

Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: The TRIM Framework Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. Describe how you would incorporate ethics into the plan for your business.

Ans: Most ethical decisions are in the “gray area” and thus are hard to plan for. A company plan should outline the framework for ethical behavior. Ethical behavior shouldbe defined in the corporate plan as well as how ethical management will be rewarded.

The methods of training should be discussed as well as how ethics will becommunicated to customers, employees, and investors.

Learning Objective: 9.2. Define TRIM and explain its importance to entrepreneurialplanning.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship Meets Ethics: Ethical Business PlanningDifficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

5. Imagine that you are thinking of starting a home care business for those recovering from illness or requiring home assistance. What research would be appropriate when preparing a feasibility study?

Ans: Talk with a minimum of 50 people including potential customers, relatives, hospitals, and doctors’ offices. Identify barriers, market size, competitors, and willingness to use the service, including potential price points. Determine the legal requirements and liabilities.

Assess competitors and determine if there is enough distinction in your service to meet the demand. Determine potential revenue streams(financial services, simple supplies, shopping services). Determine the market size.

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Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. You have been talking to a friend who may be interested in investing in your company.

However, he would like to see a plan to be assured that the business would work given the business environment, market, and ability to carry out the plan. Describethe planning tool advisable in this situation and itemize the elements of the plan.

Ans: A pitch deck is advisable when presenting a plan to a potential investor. It would typically include a brief set of slides meant to persuade the potential investor to have afollowup meeting.

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Application Answer Location: Feasibility Study Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Describe what a business brief is and how it would be used as part of the entrepreneur’s planning process.

Ans: A two to three page document outlining the company overview, value proposition,customer, and milestones. Best used with investors, advisors, and other interested stakeholders.

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Business Brief Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Take an existing company and describe it in terms of a back-of-a-napkin plan.Ans: Answers will vary based on selected company. It should identify the value proposition of the company, its target market, and a description of the product orservice. It may beststudy284@gmail.com

describe how the customers’ lives are different with the use of theproduct.

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Back of a Napkin Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Imagine that you want to engage in a planning experience with your team membersand early investors. Select a planning tool and explain why that tool would be appropriate.

Ans: Feasibility studies assess the potential of a new concept. It can serve as a deciding point for the start of the business. Business model canvas could be used to

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identify gaps and see how the components of the business would work. Other forms (back of the napkin and sketches) should already have been done before investors areinvolved. Business briefs would be more formal but advisable for investors.

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Application Answer Location: Summary of Different Types of Plans Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Describe why you do or do not believe that writing a business plan would be important to your business success.

Ans: It will help clarify the elements of the business. Important research is conducted in the process of preparing your business case and can save the entrepreneur time and money if he or she discovers that the plan is not solid. It may be needed for any pitch to investors. Businesses with plans are more likely to be implemented. However, they may not be needed and the entrepreneur can use the time to gather information and start thebusiness. Research shows that business plans are not correlated with success.

Learning Objective: 9.4. Debate the value of writing business plans.

Cognitive Domain: Comprehension Answer Location: The Business Plan Debate Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. Explain the importance of planning for entrepreneurs.

Ans: From an entrepreneurial perspective, planning helps clarify the entrepreneurial vision and helps the entrepreneur articulate where the business is going and how it cansucceed.

Entrepreneurs can use alternative planning methods, including simplified plans, planning with preparation, and planning with imagination Learning Objective: 9.1. Explain “planning” from an entrepreneurial perspective.Cognitive Domain: Comprehension Answer Location: The Importance of Planning to Entrepreneurs Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

12. List three critical questions that a feasibility study should answer.Ans: May include any of the following: Does the idea fulfill a need or solve a big problem?

Is there both a short- and long-term market potential? Who are the customers, and what are they willing to pay?Does the opportunity provide competitive uniqueness?

Is the business model feasible (can it be done) and viable (can it be sustainable)?Is this a go or a no-go?

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Feasibility Study Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

13. Explain how a back-of-the-napkin plan can be beneficial.

Ans: It can be a highly effective way of gaining clarity on the business idea and how it will work. There is something about sketching and pictures that makes an idea come alive. The back-of-the-napkin technique has connotations of social settings in cafes, restaurants, and bars, where people meet to discuss their ideas and find themselves jotting down spontaneous ideas on the closest thing to hand. Indeed, many great ideasstarted on the back of a napkin.

Learning Objective: 9.3. Explain the different types of plans used by entrepreneurs. Answer Location: Back of a Napkin Cognitive Domain: Knowledge Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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Chapter 10: Creating Revenue Models Test Bank Multiple Choice

1. Revenue can be described as which of the following? a. all the money that a company has to work with b. the money from loans, sales, and contributions c. money gained from the sale of goods or services d. money gained from sales minus the cost of creating the goodsAns: C Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. A business model: a. means the same thing as a revenue model b. focuses on how the product or service will serve a market need c. determines how profits will be made d. determines how revenue will be earned Ans: B Learning Objective: 10.1. Define a revenue model and distinguish it from a businessmodel Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Which of the following is true about a revenue model? a. It is the same as a business model. b. It is a separate planning model from the business model. c. It is minor component of the business model. beststudy284@gmail.com

d. It is a key component of the business model. Ans: D Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. Which of these questions will not provide information for the revenue model?

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a. How will my service add value to my customer? b. How much will my customers be willing to pay? c. How many customers do I need? d. How much cash can be generated from sales?Ans: A Learning Objective: 10.1. Define a revenue model and distinguish it from a businessmodel Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. How does Chicago Food Planet Food Tours and Food Tour Pros generate revenue? a. food tasting tours and business courses for entrepreneurs b. business courses and entrepreneur courses c. travel and food tasting d. food tasting tours and cooking lessons Ans: A Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: Entrepreneurship in Action: Shane Kost, Founder, Chicago FoodPlanet Food Tours and Food Tour Pros Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. If a company has more than one revenue stream, what must the entrepreneur ask inrelation to revenue? a. How many customers will I need for each stream? b. How much will each revenue stream contribute to total revenue? c. How many more revenue streams will I need? d. Will my revenue streams compete with each other?Ans: B Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. Tony owns a bicycle shop where he sells bicycles, repairs them, and sells accessories. How many revenue streams does Tony’s business have? a. one b. two c. three d. it cannot be determined

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Ans: C Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. Different revenue streams may affect which of the following: a. the industry your company operates in b. the geography your company will operate in c. who your customers will be d. all of these Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Different Types of Revenue Models Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. This revenue model measures the amount of revenue generated by the number ofitems sold by the company. a. razor-and-razor-blade b. unit sales c. data revenue d. intermediation Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

10. Cylle installs a unique home entertainment center. He charges a flat fee of $1,200for the system and the installation. What revenue model does Cylle employ? a. razor-and-razor-blade b. unit sales c. data revenue d. Intermediation Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension

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Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. What can be sold as unit sales? a. food and beverages b. digital products c. software support offered by the hour d. all of these Ans: D Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

12. Which of the following would be considered an intangible? a. clothing b. food c. hardware d. iTunes download Ans: D Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. The razor-and-razor-blade revenue model: a. includes tangible and intangible sales beststudy284@gmail.com

b. involves offering an item at no or low-cost to encourage the sale of expensive complimentary or disposable products later c. involves the sale of a high-cost product with easy-to-replace parts d. includes additional products as an add-on to the saleAns: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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14. Carol sells a downloadable product that uses bar codes to conduct comparison shopping. Carol’s product is an example of: a. a tangible revenue model b. an intangible sale c. a data revenue model d. a licensing revenue model Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

15. Why is the razor-and-razor-blade model also known as the printer-and-ink model? a. the technique is only used by printing companies b. the razor blade is not used that much c. the printer is sold at a low cost, but ink or toner is priced much higher d. printers are expensive, but ink is readily available Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Unit Sales Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

16. Intermediation revenue is associated with: a. direct buyer-seller relationships b. the use of third parties (or “middlemen”) c. repeat sales d. dispute management beststudy284@gmail.com

Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Intermediation Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Airbnb is considered an intermediation revenue model because: a. they help people in a real-estate-related industry b. they advertise on behalf of the homeowner/renter c. they charge commission for connecting home renters and home owners d. they are purely web-based Ans: C

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Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Intermediation Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Which of the following is the role of the broker in an intermediation revenue model? a. sell to the ultimate buyer b. organize transactions between buyer and seller c. represent the buyer in legal cases d. represent the seller in legal cases Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Intermediation Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. What are the two revenue sources of Airbnb? a. air travel and gambling b. commission from the homeowner and a booking fee from visitors c. commission on the booking fee d. advertisement of the rooms Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Intermediation Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

20. The revenue model associated with giving permission to other parties to use protected intellectual property in exchange for fees is called: a. fee revenue model b. licensing revenue model c. intellectual property model d. intermediation model Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Licensing Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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21. A popular sports company grants a license to people who use their logo on T-shirts and caps. They charge the company for the rights to use the logo. This is an example ofwhich of the following revenue models? a. advertising revenue model b. intermediation revenue model c. licensing revenue model d. razor-and-razor-blades model Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Licensing Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

22. Pam developed an application for the iPhone that Apple sells to their customers.Through what revenue model does Pam get revenue? a. licensing revenue model b. intermediation c. copyright d. advertising revenue model Ans: A Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Licensing Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

23. Which of the following might be used with permission in a licensing revenue model? a. copyrights beststudy284@gmail.com

b. patents c. trademarks d. all of these Ans: D Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Licensing Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

24. What is a likely reason why someone would pay money for a franchise? a. they are not aware of basic business practices

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b. they will not have to spend the same amount of time marketing and building thebrand c. they do not have knowledge in the industry or business model d. they will not have to work as hard in running the businessAns: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location. Franchising Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

25. Clinton owns a popular coffee shop in downtown Seattle. Rather than open up a second shop, he allows another business owner to use his company name and followthe same operations. The second business owner, in turn, pays him an initial monthlyfee for operational support and the use of the company name. What revenue model does this represent? a. intermediation model b. franchising model c. licensing model d. professional revenue model Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location. Franchising Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

26. This revenue model involves charging customers to gain continuous access to aproduct or service: a. licensing revenue model b. franchising revenue model c. revolving revenue model beststudy284@gmail.com

d. subscription revenue model Ans: D Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Subscription Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

27. Massage Envy, a franchised spa offering massages and facials, offers discounts for people who automatically purchase a monthly service or services. What revenue model does this represent?

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a. licensing revenue model b. franchising revenue model c. revolving revenue model d. subscription revenue model Ans: D Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Subscription Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

28. This revenue model provides professional services on a time and materials contract. a. contractor revenue model b. utility and usage revenue model c. professional revenue model d. franchising revenue model Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Professional Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

29. Joe owns a construction company and prices his services based on labor hours andthe cost of material. Which of the following revenue models is Joe using? a. contractor revenue model b. utility and usage revenue model c. professional revenue model d. franchising revenue model Ans: C beststudy284@gmail.com

Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Professional Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. This revenue model charges customers fees based on how often goods or servicesare used: a. contractor revenue model b. utility and usage revenue model c. professional revenue model d. franchising revenue model Ans: B

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Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Utility and Usage Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. A mobile telephone company charges a base fee plus additional minutes for datausage.

What revenue model is demonstrated in this example? a. contractor revenue model b. utility and usage revenue model c. professional revenue model d. franchising revenue model Ans: B Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Utility and Usage Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. This revenue model mixes free basic services with premium or upgraded services: a. utility and usage revenue model b. professional revenue model c. freemium revenue model d. premium revenue model Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location. Freemium Revenue Model Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

33. Myhours.com offers a free individual time reporting system. However, it charges for additional users and services. This is an example of which of the following revenue models: a. utility and usage revenue model b. professional revenue model c. freemium revenue model d. premium revenue model Ans: C Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Comprehension

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Answer Location: Utility and Usage Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

34. What is the primary source of revenue for Skype, a company that offers free onlinevideo and phone service? a. the money they charge for a connection b. the money they charge for Skypeout, the service that calls land lines and cell phones c. the long-distance fees d. the monthly subscription fee Ans: B Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Knowledge Answer Location: Generating Revenue From “Free.”

Difficulty Level: Easy AACSB Standard: AACSB Standard: General business and management knowledgeareas

35. Which of the following refers to pricing a product or service above its market valueto cover the cost of giving a product away for free or for a marked discount? a. direct cross-subsidies b. price plus c. freemium plus d. BOGO pricing Ans: A Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Knowledge Answer Location: Direct Cross-Subsidies Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 36. A cell phone company offers a promotion in which they give away a free phone to people who purchase the highest-level data usage plan. This is an example of which ofthe following? beststudy284@gmail.com

a. balance subsidies b. promotional subsidies c. direct cross-subsidies d. risk reduction subsidies Ans: C Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Knowledge Answer Location: Direct Cross-Subsidies Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

37. What is the main reason customers are attracted to direct cross-subsidies? a. they get two products for the price of one b. it eliminates the upfront cost of a product or service c. it is the most cost-effective model d. they rarely calculate the true costs Ans: B Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Knowledge Answer Location: Direct Cross-Subsidies Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

38. Which of the following refers to the model that gives the product away to one partybut charges another party? a. dual system b. multiparty business c. single-party marketing d. double-bind pricing Ans: B Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Knowledge Answer Location: Multiparty MarketsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

39. Profit will depend primarily on which of the following? a. the amount of revenue that your company can bring in b. both revenue and cost c. the value of the company d. the number of customers generated beststudy284@gmail.com

Ans: B Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue and Cost Drivers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

40. What is the first key driver of revenue? a. price b. selling process c. customer d. frequency

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Ans: C Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

41. The four elements of revenue are: a. customers, frequency, selling process, price b. profit, sales, employees, selling process c. selling process, price, employees, profit d. customers, revenue streams, frequency, priceAns: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. The component of revenue that is addressed when a company offers a frequentshopper award is: a. frequency b. selling price c. selling process d. customers Ans: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as costCognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

43. When Sally placed cookies by the side counter of her coffee shop, which revenue component was she addressing? a. frequency b. selling price c. selling process d. customers Ans: C Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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44. Kelly charges a premium price for her marketing services. In her sales pitch, shemakes sure that she distinguishes key elements of quality not offered by her competitors. What key element of revenue is Kelly addressing by doing this? a. frequency b. selling price c. selling process d. customers Ans: B Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

45. How should a new startup address the issues of revenue before the businessmakes money? a. conduct a most likely financial forecast b. actively test assumptions c. look at businesses in other areas d. think things through carefully Ans: B Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Revenue Drivers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

46. What are the two types of costs that should be taken into consideration when understanding the cost driver? a. cost of goods sold and operating expenses b. cost of startup and cost of operations c. cost of pre-startup and cost of operations beststudy284@gmail.com

d. employee costs and infrastructure costsAns: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Cost Drivers Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

47. The costs that include design, material, manufacturing, packaging, and other costsbefore a sale can be made to the customer is referred to as: a. customer directed costs b. presales costs c. cost of goods sold d. operating costs

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Ans: C Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Cost of Goods Sold Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

48. The cost of running the business, including rent, utilities, administration, salaries, marketing, etc., is referred to as which of the following? a. cost of goods sold b. operating expenses c. infrastructure costs d. nonsales costs Ans: B Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Operating Expenses Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. Another term for an income statement is: a. profit and loss statement b. income tax statement c. balance sheet d. credit report Ans: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

50. The financial report that measures the financial performance of your business on amonthly or an annual basis is: a. profit and loss statement b. income tax statement c. balance sheet d. credit report Ans: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. The income statement:

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a. subtracts the cost of goods sold from the total revenue to get net income b. subtracts the operating expenses from the total revenue to get net income c. subtracts the cost of goods sold and operating expenses from the total revenue to getnet income d. reports all income with no adjustment for cost of goods sold or operating expensesAns: C Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: AACSB Standard: General business and management knowledgeareas

52. Depreciation can be thought of as: a. the cost of wear and tear on physical assets such as equipment b. a discount placed on aspects of your business c. the result of business losses d. the value of used goods Ans: A Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

53. In this pricing strategy, prices are guided by the price other businesses set forsimilar products and services: a. customer-led pricing b. loss-leader pricing c. competition-led pricing d. skimming Ans: C Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Competition-Led Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

54. In this pricing strategy, a product or service is offered at or below cost in order toattract more customers: a. skimming b. loss leader c. customer-led d. competition-led Ans: B

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Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricing their product and service.

Cognitive Domain: Knowledge Answer Location: Loss Leader Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

55. In this pricing strategy, customers are asked how much they would pay for the product: a. skimming b. loss leader c. customer-led d. competition-led Ans: C Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Knowledge Answer Location: Customer-Led Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

56. A form of pricing high, this strategy is used for new products that have no competition: a. customer-led b. competition-led c. skimming d. loss-leader Ans: C Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Knowledge Answer Location: Skimming beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 57. A hardware store offers highly discounted sale items to attract people into the store.This is an example of which kind of pricing strategy? a. introductory offer b. sale pricing c. customer-led pricing d. loss leader Ans: D Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Application

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Answer Location: Loss Leader Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

58. In this type of pricing, customers are encouraged to believe that the product is less expensive than it really is: a. skimming b. fair pricing c. psychological pricing d. customer led pricing Ans: C Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Knowledge Answer Location: Psychological Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

59. A grocery store offers cans of vegetables at 10 for $10. This is most likely which ofthe following pricing strategies: a. skimming b. fair pricing c. psychological pricing d. customer-led pricing Ans: C Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Application Answer Location: Psychological Pricing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

60.

is the degree to which both businesses and customers believe that thepricing

is reasonable. a. lowest cost pricing b. loss-leader pricing c. customer-led pricing d. fair pricing Ans: D Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Knowledge Answer Location: Fair Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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61. This pricing strategy packages goods together at a lower price than if they were sold separately: a. bundled pricing b. discount pricing c. fair pricing d. introductory offer Ans: A Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Knowledge Answer Location: Bundled Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

62. Cost-led pricing refers to which of the following pricing calculations: a. calculating the cost of manufacturing and delivering the product and adding a profit margin b. calculating the cost based on how much profit you have targeted in your businessplan c. calculating the price based on the maximum price a customer will pay d. calculating the price based on competitive productsAns: A Learning Objective: 10.6. Explain different methods of calculating price.

Cognitive Domain: Knowledge Answer Location: Cost-Led Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

63. In target-return pricing, the cost is determined by which of the following: a. the maximum amount that your customers will pay b. the cost of creating the product and adding a profit margin c. pricing is based on how much you have invested in your business d. the price you need to charge to meet your company goalsAns: C beststudy284@gmail.com

Learning Objective: 10.6. Explain different methods of calculating price.

Cognitive Domain: Knowledge Answer Location: Target Return Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

64. This method of pricing involves pricing the product based on how it benefits the customers: a. target-return pricing b. customer-led pricing c. value-based pricing d. benefit pricing

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Ans: C Learning Objective: 10.6. Explain different methods of calculating price.

Cognitive Domain: Knowledge Answer Location: Value-Based Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 65. A specialty tour company markets its service as offering “an experience of a lifetime.” Which of the following would be the most likely pricing strategy? a. customer-led pricing b. psychological pricing c. value-based pricing d. bundled pricing Ans: C Learning Objective: 10.6. Explain different methods of calculating price.

Cognitive Domain: Analysis Answer Location: Value-Based Pricing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

66. A company prices a product at market levels but packages the product to read “introductory pricing.” This would indicate which of the following pricing strategies? a. customer-led pricing b. psychological pricing c. freemium pricing d. bundled pricing Ans: B Learning Objective: 10.6. Explain different methods of calculating price.

Cognitive Domain: Analysis Answer Location: Value-Based Pricing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

67. A local hardware store offers flashlights at “3 for a dollar.” This action would indicatewhich of the following strategies? a. psychological pricing b. skimming c. value-based pricing d. fair pricing Ans: A Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Analysis Answer Location: Loss Leader Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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68. If free products are not attracting customers, what action would be appropriate? a. discontinue the free product b. explain why upgrades would be appropriate c. add features to the free product d. lower the features in the free product Ans: C Learning Objective: 10.4. Identify the drivers that affect revenue as well as costs.Cognitive Domain: Analysis Answer Location: From Freemium to Premium Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

True/False

1. A revenue model explains how an entrepreneur will make money from the customervalue proposition.

Ans: T Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. A business model and a revenue model mean the same thing. Ans: F Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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3. The razor-and-razor-blade model is an example of an intermediation revenue model. Ans: F Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Unit Sales Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. An advertising revenue model gets revenue through advertising products and service.Ans: T

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Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Advertising Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. Real estate brokers represent an intermediation revenue model because they helpmanage the transaction between the home seller and the home buyer.

Ans: T Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Intermediation Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. In general, reducing operating costs is the most effective way of yielding long-termgains.

Ans: F Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Comprehension Answer Location: Operating Expenses Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. The income statement is a report that measures the financial performance of yourbusiness on an annual or monthly basis.

Ans: T Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

8. According to research, if several people sign up for free products but do not upgrade to the premium products, then the free products offer too much and should be cut back. Ans: T Learning Objective: 10:4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Research at Work: From Freemium to PremiumDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. In an income statement, taxes are the last expense item before net income.Ans: T

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Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Regardless of the type of business, all businesses need to generate revenue. Ans: T Learning Objective: 10.1. Define a revenue model and distinguish it from the businessmodel.

Cognitive Domain: Knowledge Answer Location: What Is a Revenue Model?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. The operating profit represents the amount left over from revenue once all costs and operating expenses are subtracted Ans: T Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Knowledge Answer Location: Income Statement Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

Essay

1. Identify a product that uses a razor-and-razor-blade revenue model. Describe why it demonstrates this model.

Ans: Answers can vary but will have the characteristics of an initial, tangible product thatis dependent on the sale of follow-up expensive products such as a printer/ink, coffeemaker/pod, iPod/downloaded music.

Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by beststudy284@gmail.com

entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Unit Sales Revenue Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. Find an example of sponsored or suggested content. Describe how the revenuemodel works.

Ans: Sponsored content contains ads that appear in the flow of content. The ads may be obvious or appear smoothly so that the users may not even be aware that someonehas been paid for it.

Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

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Cognitive Domain: Comprehension Answer Location: Advertising Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Identify a company that sells database information. Describe how the data is protected for privacy and how the data results in sales. Discuss what revenue streamsmight be associated with the sale.

Ans: Examples should include reasonable data sales of high quality, exclusive and valuable information. Revenue streams may include consulting or connection with other resources. It is important to protect privacy rights when sharing information. This may come from removing the names from the database and selling the data only for research purposes. Alternately, the person giving the information may release his or hername.

Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Analysis Answer Location: Data Revenue Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Imagine that you help organize a car pool organization that helps connect riders with passengers. Describe the revenue stream from this business and identify the revenue model associated with it.

Ans: Answers will vary. If the revenue stream is made by charging the rider and the passenger for connecting them, then it is an intermediation revenue model. If the company only makes money from listing the availability of drivers (i.e., advertising), thenit is an advertising revenue model.

Learning Objective: 10.2. Illustrate the ten most popular revenue models being used by entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Intermediation Revenue Model Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

5. Assume that you want to study the cost of goods sold for your business, a companythat produces customer T-shirts for school sports teams. Discuss what should be considered in this study.

Ans: Considerations should include the taking of orders, the material, the design of thelogo, the processing of the logo on the T-shirt, packaging, etc. The answer should not include the operational expenses.

Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Analysis Answer Location: Cost of Goods Sold Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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6. Imagine that you are trying to determine the price for your new product, an ergonomicchair that reduces back strain. How would you go about pricing the chair?

Ans: Answers should include checking with the competition in ergonomic furniture, talking with competitors to learn of their pricing experiences, checking with people whohave purchased these chairs in the past, and asking friends and family how much theywould pay. Consider the paying capabilities of your customers.

Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Analysis Answer Location: Pricing Strategies Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Consider that you have designed an ergonomic chair that reduces back strain. Youwant the top price for your high-quality product. Discuss what can be done to ensure that customers will buy at the higher-end price.

Ans: Emphasis should be placed on the product as a luxury product. People expect to pay more for quality and will doubt the quality if the price is low. The entrepreneur should focus on explaining the uniqueness of the product relative to competitors. Careshould be taken to define the brand by choosing the name, logo, and designs.

Communicate the brand in a way that sets the product apart from others.

Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Analysis Answer Location: Pricing Strategies Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Imagine that you are offering an Internet-based software service that helps peopleplan group projects and calendar events. Design a freemium program to attract customers.

Ans: Some service can be given away for free to attract customers. For example, the calendar beststudy284@gmail.com

can be given for free for one user and pricing can begin when new customersare added. The calendar can be given away altogether, getting groups to use the software and start collaborating. Then the planning software can be sold.

Learning Objective: 10.3. Explain how companies generate revenue by profiting from“free.”

Cognitive Domain: Application Answer Location: Generating revenue from “free.”

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. Imagine that you have started a freemium strategy and want to monitor it. Discusshow you will do this and what potential corrective actions you can take.

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Ans: If products are not attracting customers, enrich the free product; if new users sign on to the free product but do not buy the premium, scale back the free product. If customers do not understand why they need to purchase the premium product, improvethe communication. Ensure that rewards for referrals are kept at a level that will ensure multiple referrals.

Learning Objective: 10.4. Identify the drivers that affect revenue as well as cost.Cognitive Domain: Application Answer Location: From Freemium to Premium Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Explain the advantages of bundled pricing and give an example.

Ans: A form of psychological pricing, bundling will appear to offer a better deal. Customers purchase features and add-ons that they might not buy if making individualdecisions.

Customers are more likely to buy if they feel that they are getting a lower price. Examples will vary but may include “meals of the day” at restaurants, restaurant “meals” at fast-food establishments, cable television, phone packages, etc.

Learning Objective: 10.5. Identify different strategies entrepreneurs use when pricingtheir product and service.

Cognitive Domain: Application Answer Location: Bundled Pricing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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Chapter 11: Learning From Failure Test Bank Multiple Choice

1. According to the text, what is the major advantage of business failure? a. Once the business is closed, stress is reduced. b. Avoiding failure makes the entrepreneur more vigilant. c. Failure makes learning for future performance more intensive. d. Those who aren’t suited for business get out early. Ans: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. A pivot would be described as which of the following? a. a difficult situation that changes the nature of your business b. the nature of the obstacle that must be overcome to avoid failure c. a change in direction in response to a small failure d. a change in direction in response to a catastrophic failureAns: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. What can be said of small failures in the entrepreneurial journey? a. They usually lead to the overall failure of the company. b. They usually have no ultimate effect on the business or the entrepreneur. beststudy284@gmail.com

c. They are the low points but are manageable and help the entrepreneur learn. d. They cannot be reversed.

Ans: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. Pedro just learned that a competitor to his fast-food restaurant is opening up. Pedro responds by revising his menu to include more ethnic specialties and starts a customer loyalty club that gives free drinks for every five visits. This is an example of which of thefollowing?

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a. a marketing plan b. a pivot c. a small failure d. an over reaction Ans: B Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 5. Describe a successful entrepreneur’s typical reaction to failures, particularly smallones. a. They have very few failures because they do everything to avoid them. b. They get out of the business as early as possible in order to cut their losses. c. They see failures as opportunities to build on what they learned or capture new opportunities. d. They try to make failures happen to increase the overall creative tension. Ans: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 6. If we develop the ability to “see” the learning opportunity in failure, which of the following will occur? a. We will be able to potentially mitigate the risks of big failure. b. We will be able to expect failure. c. We will be able to embrace the learning opportunity. d. all of these Ans: D Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Frances had an innovative product, but her salesforce frequently argued over salestactics and territories. Conflicts arose over issues unrelated to the business, such as lifestyles and work start times. Which startup failure was represented in this scenario? a. no market need b. not the right team c. poor marketing d. bad location Ans: B

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Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Justin opened a physical therapy business in a new location and hired two well- known therapists. The therapists started their own physical therapy clinic that uses newer, more effective techniques. Many of Justin’s patients left for the therapists’ newclinic. Which startup failure was represented in this scenario? a. bad location b. no market need c. get outcompeted d. poor marketing Ans: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

9. Nour operated a successful massage and health spa in a lucrative resort location. She used the same business model and the same pricing strategy when she built a newspa in a less affluent town. While she had the same services and the same quality, the business failed. Which startup failure would most likely be represented in this scenario? a. product mis-timed b. pivot gone bad c. pricing/cost issues d. investor interest Ans: C Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Amy C. Edmondson, professor of leadership and management at Harvard BusinessSchool, describes a spectrum for failure that runs from blameworthy to praiseworthy. According to Edmondson, the most praiseworthy reason for failure is

.

a. uncertainty—taking unreasonable actions due to lack of clarity c. deviance—defying ethical and legal boundaries b. inattention—getting sidetracked from the core business d. exploratory experimentation—conducting market tests to get early feedbackAns: D Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension

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Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11.

is caused by crossing an ethical boundary, leading to mismanagement ofthe

venture. a. Inattention b. Deviance c. Lack of ability d. Uncertainty Ans: B Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Deviance Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

12. Rory and Katie manufactured a smartphone-related product marketed for personalsafety.

Unsure about the best market segment to target, they developed a product for older adults and the general public. They also had a version of the product for children. Which of the following might be a cause for failure? a. inattention b. deviance c. lack of ability d. uncertainty Ans: D Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Uncertainty Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

13. Peter discovered difficulties in his business, a home-decorating company that sold blinds, window wear, and fabric-based solutions. Peter won many awards for his designs and was very well liked by his talented employees. They all worked hard and the business began to grow quickly. As orders began coming in more quickly, the company began to misplace orders that resulted in lost business. Which of the followingwould be the most likely cause of the failure? a. lack of ability b. process inadequacy c. uncertainty d. inattention Ans: B Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension

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Answer Location: Process Inadequacy Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

14. Founding CEO Alison led a team of talented programmers. The company quickly grew.

Alison eventually stepped down as CEO because while she had strong technicalskills, she realized she lacked the vision and skillset a CEO needed to lead a large corporation. Which of the following would be the likely reason Alison stepped down? a. lack of ability b. process inadequacy c. uncertainty d. inattention Ans: A Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Lack of Ability Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

15. Ellen has been in business for less than 3 months. Because she wants to build theclient base, she concentrated primarily on marketing and neglected the operations. Which of the following would be the likely cause of failure? a. lack of ability b. process inadequacy c. uncertainty d. inattention Ans: D Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Inattention Difficulty Level: Hard AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

16. People with a strong fear of failure tend to exhibit which of the following characteristics? a. anxiety b. low self-esteem c. a reluctance to try new things d. all of these Ans: D Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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17. Why is it important for entrepreneurs to manage the negative emotions associatedwith failure? a. so they can begin the process of learning from failure b. so they can avoid all the consequences of failure c. so they can understand the external reasons for their failure d. so they can blame others for their failure Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 18. According to the text, we don’t always hear about the reasons for business failuresbecause . a. expressing the emotions of failure are difficult so people do not talk about the failure b. people may be unaware of their role in the failure c. people blame external reasons for their failure d. no one is interested in hearing about failuresAns: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 19. According to the text, studies have shown that individuals who go out of their way toavoid failure were

.

a. raised in uncertain environments b. raised to believe failure is unacceptable c. raised to view failure as a learning opportunity beststudy284@gmail.com

d. raised to believe failure is acceptable Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

20. According to the text, which of the following is a good coping mechanism to dealwith fear of failure? a. reframe specific goals so they are more achievable

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b. separate your personal feelings from facts c. allow yourself to feel your failure d. all of these Ans: D Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Research at Work: Grief and Business FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

21. Dean Shepherd suggests that failure should be seen as a natural part of entrepreneurism and that opportunities exist only because

.

a. facts about the business are certain b. there is uncertainty c. failure is a part of everyone’s life d. the entrepreneur is likely to make many mistakesAns: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Research at Work: Grief and Business FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

22. How quickly you recover from failure depends on

.

a. the type of business that failed b. the strength of the entrepreneur c. the way you approach failure—both before and after the failure d. whether or not you were personally at fault Ans: C Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Research at Work: Grief and Business FailureDifficulty beststudy284@gmail.com

Level: Medium AACSB Standard: General business and management knowledge areas

23. Which of the following suggests you might have fear of failure? a. You raise people’s expectations rather than lowering them. b. Failing makes you worry about disappointing people whose opinion you value. c. When you fail, you can easily imagine how you might have done things differently. d. You get started on projects early and try not to procrastinate.Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

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Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

24. Which of the following suggests you might have fear of failure? a. You stay easily focused and don’t get distracted by less important tasks. b. You often get last-minute headaches, stomachaches, or other physical symptomsthat disrupt your ability to work. c. You don’t worry about what other people think about you. d. You don’t doubt your abilities or talents.

Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

25. Once you establish the extent of your fear of failure, which of the following would bea good step to cope with it? a. reframe goals so that they are more achievable b. keep your goals exactly the same c. reframe goals so they are harder to achieve d. stop being goal-oriented Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

26. Once you establish the extent of your fear of failure, which of the following would bea good beststudy284@gmail.com

step to cope with it? a. focus your attention on perfection b. focus your attention on learning instead of achieving c. focus your attention on others’ perceptions of you d. focus your attention on avoiding failure Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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27. Once you establish the extent of your fear of failure, which of the following would bea good step to cope with it? a. deliberately allow yourself to feel the fear b. try to suppress your fear c. try to distract yourself so you don’t feel your fear d. pretend you are fearless Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

28. To help cope with the emotions associated with fear, which of the following wouldhelp shift negative feelings and trigger a calm response? a. deep breathing b. avoiding high stress situations c. lowering your expectations of success d. not recognizing the fear Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 29. According to The Global Entrepreneurship Monitor report, which area of the worldhas the lowest fear of failure? a. Africa b. Oceania c. Asia beststudy284@gmail.com

d. Europe Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

30. In studying failure around the world, The Global Entrepreneurship Monitor report recognized three types of economies. Which one of the following represents an economy focused on unskilled labor and natural resources?

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a. efficiency-driven b. factor-driven c. people-driven d. innovation-driven Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. In studying failure around the world, The Global Entrepreneurship Monitor report recognized three types of economies. Which one of the following represents an economy focused on innovative products and services? a. efficiency-driven b. factor-driven c. people-driven d. innovation-driven Ans: D Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

32. In studying failure around the world, The Global Entrepreneurship Monitor report recognized three types of economies. Which one of the following represents an economy that is helped by more efficient processes, higher wages, and better productquality? a. efficiency-driven b. factor-driven c. people-driven d. innovation-driven beststudy284@gmail.com

Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

33. What economic environment is associated with the highest entrepreneurial selfperceptions (feeling they could start a business)? a. efficiency-driven

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b. factor-driven c. people-driven d. innovation-driven Ans: B Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

34. What economic environment is associated with the lowest entrepreneurial selfperceptions (feeling they could start a business)? a. efficiency-driven b. factor-driven c. people-driven d. innovation-driven Ans: D Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

35. The United States in an example of a(n)

.

a. factor-driven economy b. efficiency-driven economy c. innovation-driven economy d. manufacturing-driven economy Ans: C Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty beststudy284@gmail.com

Level: Easy AACSB Standard: General business and management knowledge areas

36. What is the reason that people in innovation-driven economies may be less likely tostart a business? a. lack of confidence b. cultural differences c. the different types of businesses that exist in this type of economy d. all of these Ans: D

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Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas 37. In the context of experimentation, what is another way to think about the word failure? a. intentional iteration b. bad failures c. controlled research d. unnecessary mistakes Ans: A Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Learning from Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

38. A way of describing failures that provide valuable new knowledge that can help astartup innovate and stride ahead of its competition is called

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a. constructive failures b. intentional failures c. intelligent failures d. planned failures Ans: C Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Learning from Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

39. The process of prototyping, testing, analyzing, and refinement is called a. unintentional iteration b. intentional iteration c. intelligent failure d. constructive failure Ans: B Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Learning from Failure Difficulty Level: Easy

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.

AACSB Standard: General business and management knowledge areas 40. By being aware of “shiny objects,” entrepreneur Kurt Theobald referred to which ofthe following? a. attraction to opportunities without a strategic way of assessing the opportunity b. attraction to products that are expensive to produce c. attraction to high-tech products that are high risk d. attraction to products that offer high potential Ans: A Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Table 11.3: Lessons Learned by Kurt TheobaldDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 41. By “fail fast . . . but not too fast,” entrepreneur Kurt Theobald referred to which of the following? a. not giving up too soon b. cutting your losses as soon as possible c. forcing failure d. avoiding too many failures Ans: A Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Table 11.3: Lessons Learned by Kurt TheobaldDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 42. By “find your formula,” entrepreneur Kurt Theobald referred to which of the following? a. always using the same set of tactics b. understand what makes your business viable beststudy284@gmail.com

c. use a formulaic approach to evaluating your assets d. use a formulaic approach for building your business teamAns: B Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Table 11.3: Lessons Learned by Kurt TheobaldDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 43. By “focus on others,” entrepreneur Kurt Theobald suggested that entrepreneursshould .

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a. focus on their employees b. focus on their team c. focus on their suppliers d. all of these Ans: D Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Table 11.3: Lessons Learned by Kurt TheobaldDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 44. By “find your deeper purpose,” entrepreneur Kurt Theobald believes

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a. entrepreneurs should have a spiritual practice b. entrepreneurs should be focused on solving social problems c. entrepreneurs should focus on the accumulation of wealth d. entrepreneurs should have a non-financial reason for starting a businessAns: D Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Table 11.3: Lessons Learned by Kurt TheobaldDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 45. What is described as a blame-free environment? a. an environment where entrepreneurs can never be blamed b. an environment where everyone in the business is comfortable admitting mistakesand learning from them c. an environment where mistakes are not acknowledge or discussed d. an environment where blame is always directed at the entrepreneur rather than theemployee Ans: B Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Building a Blame-Free Environment beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

46. One way to build a blame-free environment is to

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a. require managers to accept all the blame b. ensure that all failures are anonymous c. communicate clearly what types of failures are acceptable and what types are unacceptable d. realize that any type of failure is acceptable

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Ans: C Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Building a Blame-Free Environment Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

47. Which of the following contributes to an environment that is NOT blame-free? a. holding regular meetings that review problems to discover who was on duty at thetime. b. focusing on the solution when someone reports a problem c. encouraging employees to report a situation that may cause a problem down the road d. distinguishing the difference between acceptable and nonacceptable errorsAns: A Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Building a Blame-Free Environment Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

48. Which of the following contributes to a blame-free environment? a. clear lines of distinction between founders and employees b. treating everyone in the company as equal members c. not noticing mistakes when they happen d. allowing the same mistakes to reoccur several times before addressing themAns: B Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Knowledge Answer Location: Building a Blame-Free Environment Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 49. Psychologist Angela Lee Duckworth describes grit as which of the following? a. a form of intelligence b. the ability to work hard and sustain interest in long-term goals beststudy284@gmail.com

c. the ability to suppress emotion when confronted with failure d. the ability change course when interest has been lostAns: B Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Easy

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AACSB Standard: General business and management knowledge areas

50. Based on her studies, Angela Lee Duckworth determined that grit a. is primarily a factor in physically demanding tasks b. was only a factor for success in the military c. contributed to success in all fields and roles studied d. was related to IQ Ans: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

51. Despite multiple failures and setbacks, Terri perseveres in her efforts to solve an engineering problem. This is an example of which of the following? a. market research b. team building c. grit d. pitching Ans: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 52. What is the relationship between a growth mindset and grit? a. People with a growth mindset have less grit. b. People with a fixed mindset have more grit. beststudy284@gmail.com

.

c. People with a growth mindset have more grit. d. Mindset is unrelated to grit.

Ans: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

53. In the context of grit, people are courageous when they a. are not afraid to fail b. understand that failure might be necessary for success c. view failure as part of the learning process

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.

d. all of these Ans: D Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

54. Conscientiousness

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a. can reduce grit because of a need to be perfect b. can lead to more grit because it helps a person work tirelessly when challenged c. can lead to less grit because the person is focused on what others think d. leads to a loss of self confidence Ans: B Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: ConscientiousnessDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 55. Which of the following best defines the term perseverance? a. the ability to easily accomplish tasks b. the ability to be detailed-oriented c. the commitment to long-term goals through deliberate practice d. the indifference to long-term goals Ans: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Perseverance beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: AACSB Standard: General business and management knowledgeareas 56. Which of the following best defines the term resilience? a. the ability to maintain a positive attitude b. the ability to easily accomplish tasks c. the strength to recover from failure in order to persevere toward goals d. the strength to hold steadfast to your beliefsAns: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge

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Answer Location: Resilience Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 57. In the context of grit, excellence refers to which of the following? a. the ability to maintain a positive attitude b. the commitment to activities that enhance skills and promote improvement c. the commitment to achieving perfection d. the desire to be the best Ans: B Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Excellence Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

58. The conscientious, highly structured effort to learn new skills, carried out with an eyefor long-term achievement, describes which of the following terms? a. fixed mindset b. perseverance c. deliberate practice d. structured learning Ans: C Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Perseverance Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 59. Why would a growth mindset contribute to a person’s grit? beststudy284@gmail.com

a. Both are a way to measure intelligence. b. A desire to learn will help overcome failure and allow the person to persevere. c. People with a growth mindset need to make things perfect. d. People with grit will keep doing the same thing repeatedly. Ans: B Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for Failure.Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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60. Lee just lost a major client. The next day, she made a list of potential new clientsand started calling them to set up an introductory meeting. Which of the following characteristics is associated with this action? a. resilience b. creativity c. learning d. adaptation Ans: A Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Building Grit Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

61. Which of the following is NOT part of the failure spectrum? a. deviance b. inattention c. lack of ability d. certainty Ans: D Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 62. An entrepreneur who is overextended and lacks the skillset to get the job donecould suffer from a. deviance b. inattention c. lack of ability beststudy284@gmail.com

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d. uncertainty Ans: C Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

63. An entrepreneur who conducts market tests to get early feedback and acquire important learning and information is an example of a. exploratory experimentation b. inattention c. lack of ability d. uncertainty

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.

Ans: A Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

64. An entrepreneur who takes unreasonable actions due to a lack of clarity aboutfuture events could suffer from

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a. deviance b. inattention c. lack of ability d. uncertainty Ans: D Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

65. According to The Global Entrepreneurship Monitor report, the fear of failure in theUnited States is higher than which region? a. Latin America b. Oceania c. Asia d. Europe Ans: A Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

True/False

1. Because of their personalities, entrepreneurs do not experience the emotional pain offailure.

Ans: F Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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2. Many entrepreneurs who have failed feel more confident, prepared, and motivated toattempt another startup.

Ans: T Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. The biggest cause of business failure is a lack of market need.Ans: T Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 4. “Burn out,” while a cause of business failure, would be a lesser cause, accounting for8% of startup failures.

Ans: T Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Studies have shown that people with a high IQ will be more likely to achieve success. Ans: F Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for Failure.Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

6. Grit combines with deliberate practice to help the entrepreneur achieve success. Ans: T Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Knowledge Answer Location: Getting Gritty: Building a Tolerance for Failure.Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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7. Informing people of what is and is not an acceptable mistake will help create a blame-free environment.

Ans: T Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Building a Blame-Free Environment Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. Experimentation is a form of planned failure that is necessary for achieving goals.Ans: T Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Learning From FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. Cultural differences may influence the way we approach failureAns: T Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 10. If, after experiencing a failure, you cannot imagine what you could have done differently, you may have a fear of failure.

Ans: T Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Knowledge Answer Location: Grief and Business Failure Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

11. According to the text, bankruptcy or forced sale is probably the biggest failure for astartup.

Ans: T Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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12. Researchers have suggested that the origins of fear of failure may lie in parent–child relations.

Ans: T Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. Deviance is an attribute of grit.

Ans: F Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Comprehension Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

14. People living in factor-driven economies perceive the most entrepreneurial opportunities.

Ans: T Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas 15. People living in innovation-driven economies perceive the most entrepreneurial opportunities.

Ans: F Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs. beststudy284@gmail.com

Cognitive Domain: Comprehension Answer Location: Global Fear of FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

Essay

1. Describe failure and its effect on entrepreneurs.

Ans: Learning and further opportunities often come with failure. Failure does, however,come with extreme costs (financial and emotional) that need to be well managed to enable success down the road. If failure is seen as an acceptable step on the path to

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success, it is much more likely that failure may serve to hone the business and theentrepreneurs behind it.

Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. Identify several reasons for failure.

Ans: Failures come in all shapes and sizes. Common types of failure include deviance, inattention, lack of ability, process inadequacy, poor business process flow, communication uncertainty, and exploratory experimentation.

Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Comprehension Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Describe the consequences of fear of failure for entrepreneurs.

Ans: Fear of failure makes the entrepreneur less likely to pursue and achieve thetransformative power of learning from failure.

Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Fear of Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Explain the different ways entrepreneurs can learn from failure.

Ans: Failure often goes hand-in-hand with experimentation, with each iteration bringinga product or service nearer to the state necessary for market success. Something can be learned from any failure, and it’s important that the firm and its founders establish a blame-free climate in which learning can be maximized. beststudy284@gmail.com

Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Learning from Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 5. Describe the significance of “grit” and its role in building tolerance for failure.

Ans: Grit is that “special something” that enables people to persevere though prolongedhardship to maintain commitment and achieve long-term goals.

Learning Objective: 11.5. Describe the significance of “grit” and its role in building tolerance for failure.

Cognitive Domain: Comprehension

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Answer Location: Getting Gritty: Building a Tolerance for FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Jill had to close a cupcake bakery that she had established close to home. Her total investment was just under $7,000, representing all her personal savings. She attributes her failure to a poor business model. She had assumed that customers would come from wealthy residential areas when, in fact, customers seemed to be employees of large corporations who bought the cupcakes for office celebrations. In spite of her losses, Jill is hoping to start another cupcake bakery. Explain why this might be so. Ans: The experience of failure has heightened Jill’s learning experience. She has identified the cause of failure and can correct the error by locating near a business district in the future. In addition, she can transfer all her business experience to the nextbusiness, making success more probable.

Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Jeremiah has just closed his lumber yard. Based on construction demand, his business suffered during a decline in new construction. This, combined with unemployment in the area leading to fewer home improvement projects, created alimited market. Describe Jeremiah’s potential reaction to this failure based on the principles of “small” and “big” failures.

Ans: A big failure is a process that occurs over time. A small failure is a barrier that requires a change in strategy. This situation would be defined as a big failure in that the market changes would have had to occur over time. Whether Jeremiah experiences thebusiness as a failure depends on what potential strategies might have been developed in response to the situation.

Unless a market could be found for the lumber, the business was doomed to fail. Big failures are felt as being more personal, and the emotional impact for Jeremiah would be strong.

Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Failure and Entrepreneurship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 8. Explain how the ability to pivot can avoid a “big failure.”

Ans: Small failures are unavoidable. Being able to change strategies in reaction to challenges helps prevent a mistake from building into a longer process that would leadto failure. Pivoting and adapting to change allows us to learn faster and can be viewed as an opportunity to better products or services. Pivoting is an entrepreneurial skill, helping us to persevere toward success. As a habit, it will prevent us from quitting too early and helps the business get back on track.

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Learning Objective: 11.1. Describe failure and its effect on entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure and Entrepreneurship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 9. Contrast a “bad” failure from a “good failure.”

Ans: At the low end of the spectrum, a “bad” failure would be the result of an ethical or legal transgression. These would be considered “bad” because they are founded in a bad intention or violation of standard business practice. There is more personal blame in a failure of this kind. A good failure is one where the intentions were well placed and the entrepreneur made his or her decision in a firm foundation of ethical and honorablepractice. Good failures lead to learning experiences and a confirmation of one’s senseof self-worth. Good failures will lead to success because they inform the next venture. Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Analysis Answer Location: The Failure Spectrum Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Explain how an entrepreneur might fail from lack of ability.

Ans: An entrepreneur can become overextended. The skills that are necessary at the start of the business change as the business grows. The skills that are required to make the business grow may not be in the entrepreneur’s skillset. Businesses may grow in their functions, requiring higher-level knowledge in specialty areas such as human resources, business law, and marketing.

The overall growth of the business may requirethat the entrepreneur specialize, interfering with his or her ability to learn at the pace of business growth.

Learning Objective: 11.2. Identify several reasons for failure.

Cognitive Domain: Analysis Answer Location: Lack of Ability Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

11. Describe the steps you can take to create a blame-free environment.

Ans: Clearly define what is and what is not an acceptable error, distinguishing between errors due to negligence and poor workmanship from errors due to ineffective strategies or misconceptions. React to errors as opportunities to learn and improve the product or service.

Create an atmosphere of equality where errors are freely discussed. Encouragepeople to recognize an error early. Experiment. Be resilient and change approach.

Create an atmosphere of fun around learning.

Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Building a Blame-Free Environment Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

12. Entrepreneur Kurt Theobald suggests that entrepreneurs focus on others. Explainhow this will help entrepreneurs learn from failure.

Ans: When someone focuses on helping vendors, customers, suppliers, stakeholders, and team members succeed, they are more likely to focus on solutions. Personal feelings of guilt are reduced as one focuses on moving forward. Since many people contribute to success, focusing on others helps identify problems early and encouragesothers to call situations, challenges, and problems to your attention. Focusing on otherscontributes to a blame-free environment. It is more likely that you will find the motivating, higher purpose in your work.

Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Analysis Answer Location: Learning From Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 13. Define the term intentional iteration and explain why it is important.

Ans: Intentional iteration is the process of prototyping, testing, analyzing, and refinement. The process understands that learning occurs in steps and excellence is a process. It preconditions the entrepreneur to learn from each attempt and, rather than look at the steps as failure, the steps are progressive toward a better service or product.Because intentional iteration is planned, there is an expectation that the results will be reviewed so as to assure a quick pivot and adjustment.

Learning Objective: 11.4. Explain the different ways entrepreneurs can learn fromfailure.

Cognitive Domain: Comprehension Answer Location: Learning From FailureDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

14. Explain why people in innovation economies may be less likely to start a business. What can be done to encourage entrepreneurship in these economies?

Ans: People in innovation economies must depend on new discoveries to start a successful business. Hard work is not enough. Thus, people are likely to feel that they do not have the beststudy284@gmail.com

appropriate skills or knowledge. There is a tendency to have products and services that involve more complex technology. Due to the higher complexity, thereis greater fear of failure. There is a greater variety of business types, so the meaning ofstarting a business is more complicated.

People in innovative economies need to focuson learning initial skills and learning to run their businesses with a plan of intentional iteration. This will support the innovative process.

Learning Objective: 11.3. Describe the consequences of fear of failure forentrepreneurs.

Cognitive Domain: Analysis

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Answer Location: Global Fear of Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 15. Why would it be helpful to create and share a “failure resume”?

Ans: We learn from our failures. By noting our failures, we can examine how we felt about them emotionally and how we reacted to the failure both before and after the failure. We can also look at the failures in terms of what we learned from each of them and how learning from the failure contributed to our successes later in life. Knowing thatwe recovered from failure enables us to build our ability to deal with them in the future. Learning Objective: 11.4. Explain the different ways entrepreneurs can learn from failure.

Cognitive Domain: Analysis Answer Location: Learning From Failure Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Chapter 12: Bootstrapping for ResourcesTest Bank Multiple Choice

1. When someone states, “I don’t have money to start a business,” what fact might one consider? a. Most businesses start without any formal investment. b. This is a valid reason for not starting a business. c. Formal investment will be needed to make a successful company. d. People who have no money cannot start a business. Ans: A Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: What Is Bootstrapping?Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. What percentage of startup businesses start without any formal investment?a. 98% b. 75% c. 50% d. 24% Ans: A Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: What Is Bootstrapping?Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. What is the name given to the process of building a business with very little funding? a. seed startup b. bootstrapping beststudy284@gmail.com

c. zero funding d. skeleton funding Ans: B Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: What Is Bootstrapping?Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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4. Jose starts a small restaurant. On weekends, he works with his cousin to construct the tables, chairs, and counters that will go into the restaurant. What is the name givento the result of these efforts? a. labor equity b. owner labor c. sweat equity d. family ownership Ans: C Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Knowledge Answer Location: The Bootstrapped Startup Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. SuLin is setting up a small construction shop and uses his personal credit card to purchase the company’s basic equipment. This process is referred to as which of thefollowing: a. venture capital b. credit c. external funding d. bootstrapping Ans: D Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: The Bootstrapped Startup Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. What is the advantage of angel investor funding? a. You may gain advice and guidance. b. You will not have to pay for the investment. c. You will not be expected to use your own money toward your business. beststudy284@gmail.com

d. The funding is easy to attain.

Ans: A Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping or External Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. What are the "3 Fs"? a. The three major sources of formal funding.

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b. A slang term meaning angel investors. c. Family, friends, and fools. d. Free financial funding.

Ans: C Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Knowledge Answer Location: What is Bootstrapping?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. Which of the following is an advantage of bootstrapping? a. You can expand your business faster. b. You will avoid risk. c. Outside investors are more likely to fund you if you have bootstrapped. d. All of these.

Ans: C Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping or External Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. A company launching 100% through boostrapping would use this source of funding: a. angel investor b. venture capital funds c. the use of personal funds d. a bank loan Ans: C Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Knowledge Answer Location: What is Bootstrapping?

Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

10. Using whatever resources you have to save money while you are getting yourbusiness started is referred to as which of the following? a. seed money b. guerilla startup c. penny pinching d. skeletal startup Ans: C Learning Objective: 12.2. Identify common bootstrapping strategies used byentrepreneurs.

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Cognitive Domain: Knowledge Answer Location: Bootstrapping Strategies Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. Seth starts his company with computers that he found on craigslist.com and someoffice furniture from the basement of his parents’ home. This strategy would be considered which of the following? a. startup b. sweat equity c. penny pinching d. zero-based funding Ans: C Learning Objective: 12.2. Identify common bootstrapping strategies used byentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping StrategiesDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. Which of the following would be considered an acceptable penny-pinching strategy? a. hire employees but don’t pay them b. pay yourself a salary c. attend networking events to get connections d. offer low quality goods or services in order to save moneyAns: C Learning Objective: 12.2. Identify common bootstrapping strategies used byentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Table 12.1: Common Bootstrapping StrategiesDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. Which of the following would be considered an acceptable penny-pinching strategy? beststudy284@gmail.com

a. offer company equity instead of paying employees up front b. never offer discounts on the sale of your product or service c. never outsource tasks d. don’t pay vendors until the business is successfulAns: A Learning Objective: 12.2. Identify common bootstrapping strategies used byentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Table 12.1: Common Bootstrapping StrategiesDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

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14. What should a startup focus on when thinking about funding? a. Focus on following your balance sheet. b. Focus on the money on hand. c. Remember how much money you will make when the business is successful. d. Build a strong financial forecast.

Ans: B Learning Objective: 12.2. Identify common bootstrapping strategies used byentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping StrategiesDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

15. Crowdfunding can best be described as: a. obtaining funds from a group of investors b. obtaining funds from a small audience, who together form “the crowd” c. raising capital from a large audience, usually through the Internet d. a high-risk strategy to raise startup money Ans: C Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Knowledge Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 16. In reference to crowdfunding, a backer is best described as: a. a person who will pay back a loan if you fail to do so b. a person who contributes support in a crowdfunding venture c. a financial institution that lends money to a startup d. the financial institution that manages the transfer of moneyAns: B Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Crowdsourcing refers to which of the following? a. attending every possible networking event to make valuable business connections b. increasing value or ownership interest created by someone as a result of hard work c. reimbursing all of your advisers and consultants with equity d. using the Internet to attain free or reduced labor from people interested in yourproduct or cause

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Ans: D Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Comprehension Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Crowdfunding and crowdsourcing would both be considered which of the following strategies? a. formal fundraising b. bootstrapping c. angel funding d. none of these Ans: B Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Knowledge Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. Sharing medical information so as to help in the development of pharmaceuticals and medical devices that can be used to improve medical treatment is an example of: a. networking b. crowdfunding c. crowdsourcing d. angel investing Ans: C Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Analysis Answer Location: Crowdsourcing to Improve Medical TreatmentDifficulty Level: Hard AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

20. PatientsLikeMe is a social network for people living with a wide variety of diseasesand medical conditions. Which of the following is an example of how PatientsLikeMe uses crowdsourcing in its business model? a. pharmaceutical companies provide financial backing for the site’s network resourcesto reduce infrastructure costs b. members enter detailed medical information themselves to reduce labor costs associated with aggregating data c. founders host monthly social events for all full-time employees to promote a sense of community across the company

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d. a small group of members are paid to participate in market research projects in orderto adjust the site in response to members’ needs Ans: B Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Analysis Answer Location: Crowdsourcing to Improve Medical TreatmentDifficulty Level: Hard AACSB Standard: General business and management knowledge areas

21. Wikipedia encouraging its users to edit and update its free online encyclopedia is anexample of: a. patronage b. equity c. crowdfunding d. crowdsourcing Ans: D Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Comprehension Answer Location: Crowdsourcing to Reduce Labor CostsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

22. Which of the following describes the primary benefit crowdsourcing provided Local Motors? When building a new sports car, the company focused on designing essentialparts like the engine and chassis that require expertise, while Local Motors had its community of hobbyists, designers, and engineers compete to design secondary exterior parts. a. They rapidly increased the number of employees working for the company. b. They raised money quickly to fund their development. c. They saved labor costs while improving efficiency. d. They were able to employ 3D design software.Ans: C Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding. beststudy284@gmail.com

Cognitive Domain: Application Answer Location: Crowdsourcing to Reduce Labor CostsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

23. Wikihouse freely provides user-submitted blueprints for anyone who wishes to buildan affordable custom-built house with 3-D printing. This is an example of because

.

a. crowdsourcing; it uses the expertise of the crowd to greatly reduce the cost of designand construction

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b. crowdfunding; it uses the Internet to quickly generate a large user base for Wikihouse c. bootstrapping; it allows amateur designers an opportunity to disrupt the constructionbusiness d. Wikifunding; it uses the open-source Wikipedia platform to generate new solutionsand opportunities Ans: A Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Analysis Answer Location: Crowdsourcing Through Technology Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

24. Which of the following needs can be addressed primarily through crowdsourcing? a. A company wants to procure a library of freely downloadable photographs for itsphoto app. b. A company wants to increase profits by raising subscription fees to its video streaming app. c. A company wants to reduce waste in its manufacturing process by working with asingle vendor. d. A company wants to raise funding to support expansion of its product lines. Ans: A Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Analysis Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

25. According to the text, small companies and individuals may choose to manufacture prototypes in China because Chinese factories can manufacture in costs. a. multiple; moderate b. small; low c. frequent; high d. large; low beststudy284@gmail.com

batches at

Ans: B Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Comprehension Answer Location: Crowdsourcing Through Technology Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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26. Users of the popular GPS app Waze periodically report driving conditions while onthe road, allowing all users to benefit from live traffic updates. Waze is an example of crowdsourcing because: a. users have free access to the same traffic information. b. users freely contribute traffic information for use by the app. c. the app has a very large and loyal user base. d. the app asks for donations at the end of each drive.Ans: B Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Analysis Answer Location: Crowdsourcing Through Technology Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

27. What businesses can use crowdfunding? a. mostly photographers and filmmakers b. mostly high-tech startups c. mostly retail and real estate d. all of these Ans: D Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Crowdfunding Startups and EntrepreneurshipsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

28. How much money can be raised through crowdfunding? a. only small amounts, under $1,000 b. small amounts, generally under $5,000 c. as much money as can be raised through family and friends d. from small amounts to amounts in the millions of dollarsAns: D beststudy284@gmail.com

Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Crowdfunding Startups and EntrepreneurshipsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

29. What is the typical profile of the crowdfunding backer? a. retirees who enjoy the more direct form of investment b. young 24- to 35-year-olds who have an income over $100,000 a year c. 40- to 60-year-olds with incomes over $250,000 d. millionaires looking to help the social good Ans: B Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.

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Cognitive Domain: Comprehension Answer Location: Crowdfunding Startups and EntrepreneurshipsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. How does Kickstarter get its money? a. by charging a percentage of the funds obtained from each successful project b. by charging members a modest fee for posting their request c. by using crowdfunding themselves d. by listing themselves as a nonprofit and getting grantsAns: A Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 31. What project falls outside of Kickstarter’s rules? a. technology products b. charities c. food and restaurant businesses d. retail stores Ans: B Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. What must be offered by someone who uses Kickstarter for a fundraising project? a. They must create something to share with others. b. They must offer to return the exact amount of the contributed funds within a givenperiod beststudy284@gmail.com

of time. c. They must offer to give a portion of their funds to a charity. d. A moneyback guarantee if a backer decides to rescind his or her contribution. Ans: A Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

33. In addition to raising funds in a given period of time, what else is required in a Kickstarter project? a. The project must be available on a global basis since contributors can come from anywhere.

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b. Participants must subject themselves to a background check. c. A specific fundraising goal must be set and met within the time period allowed. d. They must create a video demonstrating or talking about their project.Ans: C Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

34. What happens in Kickstarter if the funds are not raised in the given amount of time? a. The project is automatically extended for another 30 days. b. The project owner can keep the money raised up to the end of the period. c. The project owner can transfer funds earned to a project of his or her choice. d. The money is not earned and no money will be received. Ans: D Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

35. What happens if the funds raised on Kickstarter exceed those specified at the startof the project? a. The excess money is contributed to a general fund. b. The owner of the project can keep the excess funds. c. No one is allowed to contribute once the goal has been attained. d. The excess must be returned to the last contributors. Ans: B Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

36. Which of the following could not be offered in a Kickstarter campaign? a. free product or product sample b. participation in a cash award raffle c. presale delivery of the product or service d. free tickets to a play Ans: B Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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37. What is the most effective reward to offer to Kickstarter contributors? a. a cash award b. awards-in-kind that offer equivalent value for the cash contributed c. promising contributors that they will be the first to receive the product, along with a contribution award d. offering to list the person as a founding contributor on all product and service literature Ans: C Learning Objective: 12.4.Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

38. How does equity crowdfunding differ from other types of crowdfunding? a. Investors are given the opportunity to become company shareholders. b. Funds are raised from a community of angel and venture capitalists. c. Funds are provided by the government. d. Financial institutions are allowed to raise funds on these sites.Ans: A Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Equity Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

39. What made equity crowdfunding possible? a. the success of other crowdfunding sites b. the JOBS Act, signed by President Obama c. changes in Dow Jones d. advances in the software of crowdfunding sitesAns: beststudy284@gmail.com

B Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Equity Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

40. What percentage of Kickstarter projects have been successful?a. 28% b. 48% c. 68% d. 88% Ans: B Learning Objective: 12.5. Define the four contexts for crowdfunding.

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Cognitive Domain: Knowledge Answer Location: Research at Work: Crowdfunding: A Revolutionary Change inFunding New Ventures Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

41. What is the characteristic of the patronage model of crowdfunders? a. investors provide financial support with no expectation of direct return b. investors are given prizes for their financial support, such as product samples or experiences c. equity is exchanged for the contribution d. funds are treated as loans Ans: A Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: Patronage Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. What is the characteristic of the investor model of crowdfunders? a. investors provide financial support with no expectation of direct return b. investors are given prizes for their financial support, such as product samples or experiences c. equity is exchanged for the contribution d. funds are treated as loans Ans: C Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: The Investor Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

43. What is the characteristic of the lending model of crowdfunders? a. investors provide financial support with no expectation of direct return b. investors are given prizes for their financial support, such as product samples or experiences c. equity is exchanged for the contribution d. funds are treated as loans Ans: D Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: Lending Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

44. What is the characteristic of the reward model of crowdfunders?

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a. investors provide financial support with no expectation of direct return b. investors are given prizes for their financial support, such as product samples or experiences c. equity is exchanged for the contribution d. funds are treated as loans Ans: B Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: Reward-Based Crowdfunding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

45. Crowdfunding can help you save money on marketing because it: a. provides customer service automation b. provides your customers with a free sample of your product c. provides you with an idea of the level of interest in your product d. provides all of these Ans: C Learning Objective: 12.6. Explain the advantages of crowdfunding for globalentrepreneurs.

Cognitive Domain: Knowledge Answer Location: The Advantages of Crowdfunding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

46. Of the following, what best describes the value of crowdfunding? a. Projects are easy to conduct. b. There are various options to funds other than giving a part of the company away. c. It is relatively risk free. d. It is the easiest way to get worldwide recognition.

Ans: B Learning Objective. 12.6. Explain the advantages of crowdfunding for globalentrepreneurs.

Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Locations: The Advantages of Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

47. What should be done with the product concept in order to conduct a successful campaign? a. Provide schematic designs or service examples so that the product is clear. b. Offer samples of the product so that the investor can have a hands-on experiencewith the product. c. Test and refine the idea so that the product is clear and the investor knows whatproblem the product solves. d. Test the product with a survey or beta test prior to the campaign.

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Ans: C Learning Objective: 12.7 Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: A Quick Guide to Successful Crowdfunding | Test and Refine YourIdea Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

48. Which of the following is NOT a common crowdfunding mistake? a. setting a realistic funding goal b. having no, or little, social media presence c. failure to deliver the product or rewards after the campaign is over d. choosing the wrong crowdfunding platform Ans: A Learning Objective: 12.7 Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Table 12.3: Common Crowdfunding Mistakes Difficulty Level: Medium AACSB Standard: General business and management knowledge areas Answer Location: A Quick Guide to Successful Crowdfunding | Seek and Accept AdviceDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. Kevin is about to launch a crowdfunding campaign and posts a request on his Facebook page, asking people to share their experiences on crowdfunding sites. Whatelement of conducting a campaign is Kevin observing? a. set the right fundraising goal b. practice the pitch c. seek and accept advice d. get the campaign started Ans: C beststudy284@gmail.com

Learning Objective: 12.7 Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Application Answer Location: A Quick Guide to Successful Crowdfunding | Seek and Accept AdviceDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

50. Gerry is working on getting the description of his product down to two sentences. Healso tries out his pitch with people who have not heard of his product before. What element of conducting a campaign is Gerry observing? a. set the right fundraising goal b. practice the pitch c. seek and accept advice

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d. get the campaign started Ans: B Learning Objective: 12.7 Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Application Answer Location: A Quick Guide to Successful Crowdfunding | Seek and Accept AdviceDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. Greg is using a fundraiser site and is offering 10 shares of stock to those who contribute a minimum of $100 to his product. What model of crowdfunding is Gregusing? a. investor b. patronage c. reward d. lending Ans: A Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Application Answer Location: The Investor Model Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

52. Lorraine offers to give people a percentage of the profits earned from her theater production as a reward for donating $100 to the production’s equipment. Kickstarter didnot approve her campaign because: a. it was a theater production and not a product b. she wanted to offer a financial reward c. she was asking too much of an investment, given the reward d. she was asking too little of an investment, given the reward Ans: B Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Application beststudy284@gmail.com

Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

53. According to the textbook, which is the most established crowdfunding site? a. Kickstarter b. Quirky c. Indiegogo d. Rockethub Ans: A Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge

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Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

54. Which of the following is NOT one of the basic rules of the crowdfunding site Kickstarter? a. Projects must create something to share with others. b. Projects must launch products within two months. c. Projects must be honest and clearly presented. d. Projects cannot fund-raise for charity.

Ans: B Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

55. One of the problems with the Coolest Cooler on Kickstarter was that: a. the USB charger caused electric shocks to several customers b. shipping was too expensive for more customers c. supporters lost faith over delayed production d. they crowdfunded on multiple sites, betraying community guidelinesAns: C Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

56. Crowdfunding that gives backers the opportunity to become shareholders in a company is called a. crowdsourcing beststudy284@gmail.com

.

b. shared entrepreneurship c. professional fund management d. equity crowdfunding Ans: D Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

57. According to the text, in the crowdfunding model, the a. formal proposal b. video pitch c. written description

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is everything.

d. sales pitch Ans: B Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Focus on the PitchDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

58. As recent studies have shown, projects with spelling mistakes are how much lesslikely to be successful than projects without? a. 13% b. 27% c. 50% d. 75% Ans: A Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Focus on the PitchDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

59. The biggest problem experienced by successful crowdfunders includes: a. underestimating the costs associated with manusfacturing there products b. manufacturing too many products without enough consumer demand c. delays and setbacks in product delivery, and failure to deliver the promised rewards d. manufacturing products that fail to meet consumer expectations for quality and reliability Ans: C Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Avoid the Crowdfunding Curse!

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

60. Crowdfunding entrepreneurs should set a funding target that is: a. aggressive to signal confidence in the product or service for potential investors. b. low and easy to outperform in order to generate buzz around the product or service. c. realistic enough to attract backers but high enough to cover costs. d. as high as possible to generate as much initial cash as possible to infuse into thebusiness.

Ans: C Learning Objective: 12.7: Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign

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Cognitive Domain: Comprehension Answer Location: Money Matters Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

True/False

1. When borrowing from friends and family, it is better to treat the arrangement as aformal loan.

Ans: T Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: What Is Bootstrapping?Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. Crowdsourcing would be the fastest way of raising financial capital for your business.Ans: F Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Comprehension Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. You would like to raise funds for a foodbank in your local community. Kickstarter would be an excellent source for the initial funds.

Ans: F Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Comprehension Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

4. In the investor model, crowdfunding backers will expect an equity stake in your business.

Ans: T Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: The Four Contexts of Crowdfunding.

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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5. In the patronage model, investors will contribute to your project with no expectation ofdirect return.

Ans: T Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: Patronage Model Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. John is raising money on a crowdfunding site, and in return for contributions, offers tolet the contributor purchase prelaunch product. John is using a patronage model of crowdfunding.

Ans: F Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: Reward-Based Crowdfunding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. One of the advantages of crowdfunding is that the audience does not expect you tohave a good product pitch. They understand that you are in the early stages of your product or service development.

Ans: F Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Focus on the PitchDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. It is important to be conservative in setting the financial goal in a crowdfunding campaign.

Ans: T beststudy284@gmail.com

Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Comprehension Answer Location: A Quick Guide to Successful Crowdfunding | Money MattersDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. According to the text, a disadvantage of bootstrapping and building up a businesspiece by piece is that you’re less likely to generate a larger customer base.

Ans: F Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Knowledge

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Answer Location: The Bootstrapped Startup Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

10. Most entrepreneurs choose to seek out angel investors or other external investors inthe beginning.

Ans: F Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping or External Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. According to the text, crowdfunding is increasing in popularity all over the world.Ans: T Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Knowledge Answer Location: The Four Contexts of Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. Crowdfunding is a resource for talent and labor, and crowdsourcing is a resource forfor money.

Ans: F Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Comprehension Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. When setting a funding goal, be aware of how much money you would like to haverather than how much you will need. beststudy284@gmail.com

Ans: F Learning Objective: 12.7: Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Comprehension Answer Location: Money Matters Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. Research has shown that the majority of crowdfunded projects are delivered laterthan expected.

Ans: T

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Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Avoid the Crowdfunding Curse!

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. Crowdfunding has been used to raise billions of dollars for all kinds of industries. Ans: T Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Crowdfunding Startups and EntrepreneurshipsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

16. There is no time limit for trying to raise funds through Kickstarter.Ans: F Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Indiegogo is the largest global crowdfunding site.

Ans: T Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Knowledge Answer Location: Types of Crowdfunding Sites Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Bootstrapping and starting slowly enables entrepreneurs to avoid any and all risk.Ans: F beststudy284@gmail.com

Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Knowledge Answer Location: The Bootstrapped Startup Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. Backers invest solely on the merits of a product rather than their impression of the entrepreneur involved with the product.

Ans: F Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

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Cognitive Domain: Knowledge Answer Location: Focus on the PitchDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

20. The first step entrepreneurs should take before starting a crowdfunding campaign isto begin manufacturing the product.

Ans: F Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct a successful crowdfunding campaign.

Cognitive Domain: Knowledge Answer Location: Be Prepared Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

Essay

1. Imagine that you have developed a software application and want to raise money forlegal advice, filing initial business and regulatory forms, and funding your travel and marketing expenses. Describe how you would fund these early efforts.

Ans: The answer should first exhaust traditional bootstrapping measures such as usingpersonal funds; borrowing from family, friends, and fools; using credit cards; taking a second mortgage.

Since some of the options are high risk, the answer should address the potential gain relative to the risk. Angel funding might be considered in cases whereimmediate expansion is necessary and justifiable.

Learning Objective: 12.1. Define bootstrapping and illustrate how it applies toentrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping or External Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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2. Imagine that you have developed a software application and are now ready to “openshop.”

Describe some of the penny-pinching techniques you would use to get your business started.

Ans: Avoid taking a salary, reimburse with equity and goodwill, offer discounts, do muchof the work yourself, buy used, use the lowest cost travel, negotiate payment terms, etc.Learning Objective: 12.2. Identify common bootstrapping strategies used by entrepreneurs.

Cognitive Domain: Comprehension Answer Location: Bootstrapping StrategiesDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Imagine that you have developed a concept for a wood chipper that will provide moresafety than current products. You have some rough designs but would like to use

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Internet-based sources to develop these ideas into a prototype that can be tested. Whatresources would you use, and how would you use them?

Ans: Answers should recognize that it is more important to get the skills needed thanraise money. Thus, crowdsourcing (not crowdfunding) should be the focus of this campaign. The goals should be to reduce labor costs of developing the prototype.

Foreign manufacturers might be identified to come up with relatively inexpensiveprototypes and relationships established for future manufacturing.

Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Application Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Imagine that you have just written a book on urban farming. You need money in orderto print and distribute your first printing. How would you use Internet-based resources for this purpose?

Ans: Both crowdfunding and crowdsourcing might be used for this purpose. Some labormight be available for copy layout or translation of layout into various print formats.

Advice might be available for mobile and e-books. Crowdfunding is ideal because printing costs of the initial print are within the funding range that is good for crowdfunding. Specific sites exist for artistic endeavors. Urban farming might also beconsidered a social enterprise if the idea is also supporting “greener” solutions, so crowdfunding sites serving this purpose should be considered.

Learning Objective: 12.3. Explain the difference between crowdsourcing andcrowdfunding.

Cognitive Domain: Application Answer Location: Crowdfunding Versus Crowdsourcing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Select a product that you might want to fund on Kickstarter. Explain the steps you would take to make sure that your campaign fulfills the requirements of the Kickstartersite.

Ans: The product should be in line with the types allowed on Kickstarter. For example, it cannot be a financial or charity project. The capital requirements and timeline should bedefined. The beststudy284@gmail.com

money asked for should be attainable so that funds do not have to be abandoned if a larger amount is not raised. A suitable reward needs to be designed andoffered. The answer might also include the fact that supportive videos or website links should be provided so that the audience can learn more about the product. Social media should be engaged to link people to the opportunity. The company should be prepared to act on the funds raised, including the fulfillment of the reward, and delivery of the product.

Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Application

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Answer Location: Types of Crowdfunding Sites Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Suppose that a friend of yours is considering crowdsourcing for a new smartphone app.

Since he is not a programmer, he needs help developing the software. However, your friend has significant marketing outreach because he is in contact with the very people who would be most likely to download and pay for the app. Describe the adviceyou would give your friend, informing him of the advantages and disadvantages of crowdsourcing for his project.

Ans: The advantages would include the access to lower-cost sources of programmingand programming advice. The friend is in a good position to partner because of his marketing capabilities. The friend might consider giving up a portion of ownership through equity (investor model) since the programming skills are so critical to the product. By the same token, the danger of crowdsourcing is that the idea will be well known and, without programming skills, members of the audience might get to market on their own.

Learning Objective: 12.4. Describe the effects of crowdfunding on entrepreneurship.Cognitive Domain: Application Answer Location: Crowdfunding Startups and Entrepreneurship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Compare the investor model of crowdfunding with the lending model. What are the advantages and disadvantages of each for the entrepreneur?

Ans: The amount contributed will be considered a loan in the lending model. However, in some cases, it will only need to be paid if the project is successful. Because it is a loan, the contributor has no control over the product or service. However, the entrepreneur has taken on a liability. In the investor model, the investor will be given equity. As with any equity investment, care must be taken to ensure that the investor’s involvement will be additive to the project. This may be difficult unless some screening is possible. The investor may help in the success of the product, which would be ideal. Learning Objective: 12.5. Define the four contexts for crowdfunding.

Cognitive Domain: Analysis beststudy284@gmail.com

Answer Location: The Four Contexts of Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Imagine that you have started a company that provides training in real estate, focusing on house “flipping.” You are emphasizing the training aspect in your business.Explain how you would use reward-based crowdfunding or crowdsourcing to quickly expand your audience reach.

Ans: Access to the audience and travel expenses may be important to this type of business.

Discounts for the training would be a good idea, especially if the supportercan help with transportation, training site, etc. Support in the way of “free follow-up”

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consulting might also be appropriate, as well as free training or free training for a familymember.

Rewards would be appropriate for both crowdfunding and crowdsourcing.

Learning Objective: 12.5. Define the four contexts for crowdfunding.Cognitive Domain: Application Answer Location: Reward-based Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. You are ready to start your crowdfunding campaign. Describe what you should do toensure a successful campaign.

Ans: Focus should be placed on refining the product and making sure that you know what problem the product or service is trying to address. Prepare your description of theproduct using less than two sentences, and test the concept to make sure that your message is easily understood. Make sure you are ready to go if your campaign is successful. Get feedback and advice from other crowdfunders. Make sure that you havegood media coverage and communicate with your backers. Create links and excitement for your campaign through social media. Set a realistic fundraiser goal, and make sure that you are using an appropriate crowdfunding platform.

Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Application Answer Location: A Quick Guide to Successful Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. Identify a project that could use crowdfunding and crowdsourcing. Identify the many opportunities that would benefit from these online sourcing and funding sources.

Ans: Answers will vary but should emphasize the many stages of product developmentthat can benefit from crowdsourcing and funding. Answers may include finding design and product development support, manufacturing resources, and marketing advice.

Partners may be identified and multiple relationships formed that can benefit the company later on. Engaging the audience will stimulate interest in the product and mayhelp identify the first beststudy284@gmail.com

buyers. Manufacturing options might be found through sourcing, and costs of production can be reduced through outsourcing various parts of the manufacturing (or service). Funds can be raised for various stages of development under a variety of funding arrangements.

Learning Objective: 12.7. Describe 10 ways in which entrepreneurs can conduct asuccessful crowdfunding campaign.

Cognitive Domain: Application Answer Location: A Quick Guide to Successful Crowdfunding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Chapter 13: Financing for Startups Test Bank Multiple Choice

1. Equity financing is defined as

.

a. the value of the total company assets b. the value a company earns and borrows against c. the sale of shares of stock in exchange for cash d. a debt incurred by a company Ans: C Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: What Is Equity Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. The cofounders for Contap received $275,000 from venture capitalists. What did the investors receive in return? a. 5% royalties from future sales b. 15% equity of the business c. 50% equity of the business d. 10% royalties from future sales Ans: B Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: What Is Equity Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 3. The cofounder of Contap, Jason Craparo, measures his company’s success by and

.

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a. the number of people downloading apps; financial success b. the returned value to the shareholders; company equity c. the returned value to the shareholders; number of users d. financial success; shareholder value Ans: A Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: What Is Equity Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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4. When Google attained investors, what portion of the company did they retain?a. 90% b. 49% c. 51% d. 16% Ans: D Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Splitting the Ownership Pie Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5.

consist(s) of small amounts of capital given to help prove a concept.

a. Startup loans b. Seed-stage financing c. Startup financing d. Early-stage financing Ans: B Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Stages of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6.

is/are provided to help implement an entrepreneur’s research and

development. a. Startup loans b. Seed-stage financing c. Startup financing d. Early-stage financing Ans: C Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages. beststudy284@gmail.com

Cognitive Domain: Knowledge Answer Location: Stages of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. A(n)

is a type of investor who uses his or her own money to provide funds toyoung

startup private businesses run by entrepreneurs who are neither friends nor family. a. seed investor b. bridge investor

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c. equity investor d. angel investor Ans: D Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Forms of Equity Financing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Which of the following would be most likely to fund $500,000 or more in early to latestage companies? a. crowdfunding b. angel investors c. venture capitalists d. friends Ans: C Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Forms of Equity Financing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. How is a seed company valued? a. on the anticipation of future growth b. on the value that it has on hand c. by the number of shareholders d. on the basis of its financial history Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: The Basics of Valuation Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas 10. The easiest way to determine a startup company’s potential is to a. see how similar companies in the same industry are being valued b. determine the economic health in the market area c. look at the track record of the cofounding team d. analyze the company’s financial forecast Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Can Entrepreneurs Value Their Companies?Difficulty Level: Medium

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.

AACSB Standard: General business and management knowledge areas

11. Sites such as

will help you find out how much businesses are worth in your

industry. a. Indeed.com b. SBA.gov c. Entrepreneur.com d. BizBuySell Ans: D Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Can Entrepreneurs Value Their Companies?Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

12. Even though you may not be profitable, investors will want to know how many customers you have because it will show potential

.

a. customer satisfaction b. to scale the business c. marketability d. revenue from that base Ans: B Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Comprehension Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13.

is the company’s value before it receives outside investment.

a. Post-money valuation b. Seed money valuation c. Pre-money valuation beststudy284@gmail.com

d. Startup valuation Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Do Investors Value Startups?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14.

is the company’s value after it receives a round of financing.

a. Post-money valuation b. Seed money valuation c. Pre-money valuation d. Startup valuation Ans: A

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Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Do Investors Value Startups?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15.

is a short-term loan that can be turned into equity when future financing isissued.

a. Convertible debt b. Angel funding c. Business loan d. Equity loan Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 16. Which of the following is another term for convertible debt? a. convertible bond b. convertible stock c. loan forgiveness d. revolving debt Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. Convertible debt can turn into a. equity beststudy284@gmail.com

when future financing is issued.

b. conventional debt c. stock d. venture capital funds Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

18. One of the primary values of convertible debt is that it: a. is money that doesn’t need to be paid back b. removes the need for valuation

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c. is less expensive than other types of loans d. eliminates a need for venture capitalist fundsAns: B Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

19. One of the primary values of convertible debt is that it is attractive to investors because: a. their risk of loss is minimized b. they will be repaid for the loan when the company is successful c. they may be entitled to discounts on the share price d. they will be the first to own stock in your company Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

20. What qualifies someone as an accredited investor? a. only a willingness to invest b. net worth of the equivalent being invested c. net worth over $1 million or income over $200,000 d. net worth over $200,000 Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Investors Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

21. What is a typical investment range for angel investors? a. less than $5,000 b. Less than$20,000 c. between $25,000 and $100,000 d. between $75,000 and $150,000 Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Investors Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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22. How much return does a typical angel investor expect from his or her investment? a. angel investors have no expectation of return b. double the amount invested within 2 years c. 10 times the investment in 5 years d. 3 times the investment within 3 years Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Finding an Angel Investor Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

23. After friends and family, what percentage of outside equity is provided by angel investors? a. 20% b. 40% c. 50% d. 90% Ans: D Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Table 13.3: Why Angels and Entrepreneurs Are Good for Each OtherDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

24.

angels are individuals who have already started and successfully operatedtheir

own businesses. a. Corporate b. Entrepreneurial c. Professional d. Enthusiast Ans: B beststudy284@gmail.com

Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Entrepreneurial Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

25.

angels can be former business executives who want to attain profit and playa large

part in the company. a. Corporate b. Entrepreneur c. Professional d. Enthusiast Ans: A Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

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Cognitive Domain: Knowledge Answer Location: Corporate Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

26. Generally speaking, many corporate angels seek this within the venture: a. a match to his or her own values b. a higher rate of return than other investors c. a paid position d. global expansion Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Corporate Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

27.

angels sometimes seek to be paid advisers. They generally come from a

profession such as lawyers or accountants. a. Corporate b. Entrepreneur c. Professional d. Enthusiast Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Professional Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

28.

angels, often independently wealthy, tend to invest for pleasure.

a. Corporate beststudy284@gmail.com

b. Entrepreneur c. Professional d. Enthusiast Ans: D Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Enthusiast Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

29.

angels are successful entrepreneurs who want active involvement in the

companies they invest in. a. Entrepreneur b. Professional

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c. Enthusiast d. Micromanagement Ans: D Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Micromanagement Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

30. What type of angel is most likely to intervene if the business is not going well? a. entrepreneur b. professional c. enthusiast d. micromanagement Ans: D Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Micromanagement Angels Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. Which of the following describes an angel group? a. a group formed from entrepreneur and professional angels b. a group of investors who listen to your pitch as a group c. a group of angels who share knowledge and collaborate in their investments d. an angel who invests on behalf of others Ans: C Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Groups Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

32. Minority business angels account for what percentage of the total angel population?a. 4.5% b. 10% c. 15% d. 25% Ans: A Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Groups Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

33. What type of investment vehicle do venture capitalists use?

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a. bank loan b. limited partnership c. angel account d. investment bonds Ans: B Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Venture Capitalists (VCs) Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

34. In spite of media hype, what is the likely rate of failure for companies backed by venture capitalists? a. 1 out of 10 b. 50% c. 1 out of 4 d. 3 out of 4 Ans: D Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Research at Work: Talk About the LossesDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

35. In 1979, the venture capital industry benefited from what action? a. an economic boom b. the ability of a pension fund to invest in venture capital c. federal fund availability to entrepreneurs d. the ability of small businesses to offer stock Ans: B beststudy284@gmail.com

Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: A Brief History of Venture Capital Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

36. Which of the following spawned the growth of a whole new generation of venture capitalist companies? a. general business growth b. the improving economy of second- and third-world countries c. the rise of smartphones and tablets d. the 10-year cycle of venture capitalists Ans: C

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Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: A Brief History of Venture Capital Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

37. In short, VCs look for

, big markets, and innovative ideas.

a. early seed funding b. midsize companies c. great teams d. local companies Ans: C Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Comprehension Answer Location: How Venture Capital Works Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

38. How often will additional funding be awarded by a VC, assuming the company is growing? a. every 8 years b. every 10 years c. every year or two d. every 3 years Ans: C Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Finding the Right VC for Your Venture Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

39. Venture capitalists often reject plans and proposals for which of the following reason(s)? a. the business is not a good fit with the fund’s criteria b. the VC only invests in companies with a referral c. the VC does not operate in your geographical area d. all of these Ans: D Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Finding the Right VC for Your Venture Difficulty Level: Easy

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AACSB Standard: General business and management knowledge areas

40.

is a rigorous process that evaluates an investment opportunity.

a. Investment investigation b. Valuation c. Due diligence d. Investor assessment Ans: C Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Knowledge Answer Location: Due Diligence Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

41. Who is involved in the due diligence process? a. angel investors b. venture capitalists c. angel investors and venture capitalists d. banks Ans: C Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Knowledge Answer Location: Due Diligence Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. What will be the first opportunity for the investor to sell stocks on the stock market? a. at any time after the initial investment b. when the company is profitable, usually after 5 years c. with the company’s initial public offering (IPO) d. whenever there is a buyer Ans: C beststudy284@gmail.com

Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Comprehension Answer Location: Exits/Harvesting Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

43. What signals the end of the due diligence period? a. within 30 days of the initial offer b. within 6 months of the initial offer c. when the investor has resolved all questions and issues d. when all the issues of both parties have been resolvedAns: D Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Knowledge

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Answer Location: Exits/Harvesting Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

44. What is the ultimate reason for trading equity for financial support? a. it is more likely that the entrepreneur will build a more valuable company b. it is usually a deal/no deal option c. there will be more people interested in the company’s success d. preparing for the questions asked in pitching and due diligence will ultimately improvethe company Ans: A Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Comprehension Answer Location: Rich or King/Queen? The Trade-off Entrepreneurs Make Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

45. What two sources of investors are available for a private company? a. accredited investors and family/friends b. family/friends and shareholders c. investors and family/friends d. investors and banks Ans: A Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Comprehension Answer Location: Finding Early FundingDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

46. What feature of registering a company allows you to set aside a portion of yourstock for future employees? a. reserve funds beststudy284@gmail.com

b. option pools c. stock reserves d. employee stock option plans Ans: B Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Knowledge Answer Location: Registering the Company Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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47. This action allows the stock to be purchased on the open market and gives investors a chance to get a return of cash. a. liquidation b. IPO c. exit plans and clauses d. company registration Ans: B Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Knowledge Answer Location: Going Public Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

48. When valuing a seed-stage, startup, or early-stage company, which of the followingis most likely to be considered? a. the company’s history of sales b. how much time it will take for the business to become profitable c. the length of time invested in developing the product or service d. the amount of capital already raised by the foundersAns: B Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: The Basics of Valuation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. Which of the following would be useful when valuing your company? a. advice from family and friends b. success of a similar company in another part of the country c. advice from an accountant who has clients in a similar market and industry d. industry experts from another part of the country Ans: C beststudy284@gmail.com

Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Can Entrepreneurs Value Their Companies?Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

50. Pre-money valuation is the post-money valuation minus the a. the value of the company at the end of 1 year b. the value of the company at the end of 5 years c. investment d. cost of the obtaining the investment Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.

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.

Cognitive Domain: Knowledge Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. An entrepreneur is asking for $1 million for 30% of his company. What is the entrepreneur’s post-money valuation? a. $3.33 million b. $300,000 c. $2 million d. it cannot be determined Ans: A Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Analysis Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 52. A company’s pre-money valuation is $500,000 and the post-money valuation is $600,000. How much did the angel invest?a. $5,000 b. $50,000 c. $100,000 d. it cannot be determined Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Analysis Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

53. An investor offers $150,000 for 30% of the company. What is the post-money beststudy284@gmail.com

valuation of the company? a. $350,000 b. $500,000 c. $50,000 d. it cannot be determined Ans: B Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Analysis Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

54. An investor has offered $150,000 for 20% of the company. The company has a pre-money valuation of $350,000. Should the entrepreneur consider the offer?

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a. No, the investor is asking too great a percentage. b. Yes, the investor is asking for less than the value of the investment. c. No, the investor is not offering enough for the value of the company. d. it cannot be determined Ans: B Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Analysis Answer Location: How Do Investors Value Startups?

Difficulty Level: Hard AACSB Standard: General business and management knowledge areas 55. When potential investors think about value add, what are they considering? a. the value of the financial investment b. the post-money valuation c. the value of the investor’s advice and guidance d. the value from other sources of investment Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Table 13.2: Valuation Factors That Investors Take Into Account Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 56. What is a market comparable? a. how much your company is worth b. the average price of your product, based on global competition c. the comparability of your product against other products in the market d. how much stock would be worth in an IPO Ans: C Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Table 13.2: Valuation Factors That Investors Take Into Account beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 57. Which of the following is an important distinction between angels and VCs? a. angels will make decisions with committees b. angels carry out informal due diligence c. angels will form a fund of limited partnerships d. angels will fund up to $500,000 in personal fundsAns: B Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Comprehension Answer Location: Table 13.1: The Differences Between Angels and VCs Difficulty Level: Easy

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AACSB Standard: General business and management knowledge areas

58. Which of the following is an important distinction between angels and VCs? a. VC decisions are made with committees b. VCs are responsible for their own decisions c. VCs provide investments to seed companies d. VCs invest personal funds Ans: A Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Comprehension Answer Location: Table 13.1: The Differences Between Angels and VCs Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

59. A company has a value of $400,000 and is looking for $500,000 in order to move into other markets and build the production capability to do so. What is the most likelysource of funding? a. family and friends b. IPO c. angel investor d. venture capitalist Ans: D Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Comprehension Answer Location: Forms of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

60. An entrepreneur is looking for funds to form a prototype and pitch the product.Which of the following should NOT be considered at this stage? a. crowdfunding b. family and friends beststudy284@gmail.com

c. personal loans d. venture capitalists Ans: D Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Comprehension Answer Location: Forms of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

61. An entrepreneur has conducted crowdfunding to raise enough money for patentsand building the founding team. He is now looking for funds to form a prototype and

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pitch the product to new investors. Which of the following is the most likely source offunds? a. angel investor b. venture capitalist c. family and friends d. venture capitalist groups Ans: A Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Comprehension Answer Location: Forms of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

62. Karen has formulated a line of green cleaning products, which she has tested with local commercial entities with great results. She is now ready to seek money to place the product in stores. What stage of financing is Karen interested in? a. seed stage financing b. startup financing c. early-stage financing d. continuity financing Ans: C Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Application Answer Location: Stages of Equity Financing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

63. How far back can we track the history of venture capital? a. to the dot com investments of the early 90s b. to venture capital startups in the 1980s c. to the 1958 Small Business Investment Act d. to the 20th century investors such as the Rockefellers and the BessemersAns: D Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance beststudy284@gmail.com

entrepreneurs.

Cognitive Domain: Knowledge Answer Location: A Brief History of Venture Capital Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

64. Venture capitalists work with investment portfolios. What does this mean? a. the capitalists invest in more than one company at a time b. details are kept for ready access about all company information c. they have a defined type of businesses they would like to invest in

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d. they have a list of investors on behalf of whom they investAns: C Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: How Venture Capital Works Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

65. This practice allows larger companies to purchase smaller companies to increase profitability or eliminate competition. a. acquisitions b. mergers c. IPOs d. buybacks Ans: A Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Comprehension Answer Location: Exits/Harvesting Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

66. This exit strategy allows the entrepreneur an opportunity to buy back venture capitalstock at cost and an additional premium. a. IPO b. exit clause c. buyback d. retract clause Ans: C Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Knowledge Answer Location: Exits/Harvesting beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 67. As a general theme for this chapter, what sequence should an investor take whenseeking financial support for his or her startup? a. family and friends, angel investor, venture capitalists, IPO b. angel investors, family and friends, venture capitalists c. family and friends, angel investors, IPO d. angel investors, venture capitalists, IPO Ans: A Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Comprehension

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Answer Location: A View From the Top Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

True/False

1. In early-stage financing, small amounts are given so that entrepreneurs can prove abusiness concept Ans: F Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Stages of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. Seed-stage financing consists of small amounts of capital to help entrepreneursprove a concept.

Ans: T Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Stages of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. One of the dangers of seeking financing too early is that you may give investors moreequity than you should.

Ans: T Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Stages of Equity Financing Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

4. An angel investor is frequently a family member or close friend. Ans: F Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: Forms of Equity Financing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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5. The experience of the cofounders and previous successes will influence an investor’s willingness to invest in your company Ans: T Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: The Basics of Valuation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. If an entrepreneur issues convertible debt, he or she will lose control of the company. Ans: F Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Convertible Debt Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

7. Angel investors are eligible to invest as long as they are accredited investors.Ans: T Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Investors Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. Generally speaking, there are more minority angel funding groups than women angelgroups.

Ans: F Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Groups Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 9. Because they are investors, angel investors and venture capitalists do not usuallyhave an beststudy284@gmail.com

exit plan.

Ans: F Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Application Answer Location: Exits/Harvesting Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. When working with a venture capitalist, it is possible to be demoted within your own company.

Ans: T

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Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Comprehension Answer Location: Rich or King/Queen? The Trade-off Entrepreneurs Make Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. The authors recommend finding investors early in the game so that you can focus onbuilding the company.

Ans: F Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Knowledge Answer Location: What is Equity Financing?

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. Typically entrepreneurs value their companies based on its current financial performance.

Ans: F Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Can Entrepreneurs Value Their Companies?Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. By issuing convertible debt, the entrepreneur will become the minority stockholderand lenders will assume control over how the company is run.

Ans: F Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: Benefits and Advantages Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

14. Research suggests that women are better investors than men, as they take moretime researching potential entrepreneurial ventures, and take on less risk.

Ans: T Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Groups Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. Generally, if a venture is at an early stage, then venture capital is the most likelysource of funding.

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Ans: F Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Groups Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

16. Angel investors usually look for opportunities in young startups that can be expectedto return 10 times their investment in five years.

Ans: T Learning Objective: 13.3. Describe angel investors and how they finance entrepreneurs.

Cognitive Domain: Knowledge Answer Location: Angel Investors Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

Essay

1. You and your cofounders have spent a year building and testing a home wireless system that is easy to install and will integrate media streaming from phones, television,and the Internet.

You have tested the product on family and friends and built a prototype. You now need money to build a pilot test, creating 100 systems and placing them in a display at five selected stores.

Identify the best source(s) of capital that you and your cofounders should seek (you will need $100,000).

Ans: As an early-stage company, and at the high end for an angel investor, thecompany could seek capital from this source. Bootstrapping methods (e.g., crowdfunding) are likely to be exhausted at this point.

Learning Objective: 13.1. Define equity financing for entrepreneurs and outline its mainstages.

Cognitive Domain: Application Answer Location: Forms of Equity Financing beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. Imagine that you are about to go on Shark Tank to obtain financial backing. Describewhat factors you should consider when valuing your company.

Ans: Answers should address the market conditions, competition, market opportunity (who will be attracted to the product), what the value of the investor would be in funds and guidance, and market comparables. Also of interest would be distribution channels,the experience of the founding team, and current market base.

Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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3. Assume that you are an entrepreneur faced with giving up 20% of your company in exchange for venture capital. What factors would you consider in accepting this offer? Ans: Answers should focus on the pre- and post-valuation of the company, including theability to scale the business after funding. Changes in projected company value should be considered. It is better to own a small piece of a large pie than a small pie. Other considerations might be the amount of control that the investor wants to impose and the value of guidance the investor might provide.

Learning Objective: 13.2. Illustrate the basics of enterprise valuation.Cognitive Domain: Knowledge Answer Location: How Do Investors Value Startups?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Imagine that you have a new, tested invention that will require a million dollars in order to produce enough of the product to return a profit. What considerations shouldyou review before approaching a venture capitalist?

Ans: Ideally, the entrepreneur should have some seed money in order to legitimize the venture.

One should have the ability to return 10 times the value over the next 5 years. They should be willing to give up some control over running the business.

Learning Objective: 13.4. Explain the role of venture capitalists (VCs) and how theyfinance entrepreneurs.

Cognitive Domain: Analysis Answer Location: Venture Capitalists (VCs) Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

5. Describe what might occur during the legal aspect of due diligence, prior to the actual investment.

Ans: Answers should address a background check assuring no past or pending legal action exists, criminal investigations, checks on intellectual property, and the correct filing of patents or copyrights. If the company has employees, labor laws and employeepractices will be checked.

Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive beststudy284@gmail.com

Domain: Application Answer Location: Due Diligence Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Describe what might occur during the market analysis component of due diligence,prior to the actual investment.

Ans: Consideration should be given to establishing the size of the market. Customer motivation for the product or service should be investigated relative to competitors forthe same product or service. What are the strengths and weaknesses of the product with the competitive market? What distribution channels exist? How is the product distinct from the competition?

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Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Application Answer Location: Due Diligence Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. What people might be interviewed in the course of due diligence?

Ans: The founding team will be assessed for leadership ability, integrity, and good judgment. Credentials will be checked as well as the overall strength of the management team. Investors may talk to existing customers, other investors, and competitors.

Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Application Answer Location: Due Diligence Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Describe what you should look for during your assessment of a venture capitalist. Ans: In addition to considering the financial deal, the entrepreneur should investigatethe previous investments of the venture capitalists and how his or her investment companies have fared.

The entrepreneur should see if there is a good personality fit since the investor will be involved in the business and potentially be a member of theteam. He or she should check for common vision, values, and ethical standards. Learning Objective: 13.5. Describe how investors carry out due diligence processes. Cognitive Domain: Application Answer Location: Due Diligence Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Consider that you have just been offered a million dollars to grow your business. However, the venture capitalist group will be stepping in as the management team, and you will retain 16% of the company. What should you consider in making your decision?Ans: Most entrepreneurs give up a portion of their company and are more likely to succeed if they do so. One should consider one’s personal need for control as well as what the investors are likely to bring to the beststudy284@gmail.com

company to help it succeed. One can consider the compatibility of goals and the likelihood of working together successfully. Consideration should be given to the postinvestment growth potential and what the remaining percentage may translate to in terms of cash value.

Learning Objective: 13.6. Explain the money versus power trade-off and the funding lifecycle.

Cognitive Domain: Application Answer Location: Rich or King/Queen? The Trade-off Entrepreneurs Make Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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10. During the due diligence process, many questions are asked that cannot be answered immediately. What ground rules might you establish to make sure that theparties remain ethical during the process?

Ans: Answers should talk about the ground rules that ensure ample time and interpersonal engagement to answer the questions that each party may have. Due diligence will be conducted by both parties and time should be allotted for the accuratecollection of data. During due diligence, previous information should be corrected if it is later found to be inaccurate. Due diligence will conclude only after all issues have beenaddressed by both parties.

Learning Objective: 13.5. Describe how investors carry out due diligence processes.Cognitive Domain: Application Answer Location: Due Diligence Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Chapter 14: Developing Networks Test Bank Multiple Choice

1. What is social capital? a. having a network of people who willingly cooperate, exchange information, and build trusting relationships b. people with whom you connect on social networks c. all of your friends and family members d. business contacts and vendors Ans: A Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. Which of the following reflects the three dimensions of social capital? a. financial, product, and service b. financial, production, and market c. relational, structural, and cognitive d. relational, durational, and commitment Ans: C Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 3. This dimension describes the type of social ties you have or don’t have. a. relational beststudy284@gmail.com

b. structural c. dimensional d. cognitive Ans: B Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. Paul is assessing his social ties and starts by listing everyone he knows, regardlessof the type of relationship. He then intends to classify them. On which dimension of social ties is Paul working?

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a. relational b. structural c. dimensional d. cognitive Ans: B Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Application Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. This dimension describes the characteristics of your bond with your contacts. a. relational b. structural c. dimensional d. cognitive Ans: A Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 6. When deciding to hire someone for her new startup, Laura states, “We will have to train him, but he has the right attitude and spirit about this company.” What aspect of the social network is Laura referring to? a. relational b. structural c. dimensional d. cognitive Ans: D Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive beststudy284@gmail.com

Domain: Application Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. The degree with which you share norms, visions, values, and beliefs with others describes which of the following dimensions? a. relational b. structural c. dimensional d. cognitive Ans: D Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge

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Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. According to the Organisation for Economic Cooperation and Development, connections with people who have a common identity but may come from different backgrounds and cultures would be called which of the following? a. familial b. bonds c. bridges d. linkages Ans: C Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. Lonney attends a company picnic. Although most of the people in his company are older and come from different backgrounds, he feels it is important to go since they all work together. Lonney is acknowledging which of the following aspects about building social capital? a. familial b. bonds c. bridges d. linkages Ans: C Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Application Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

10. According to the Organisation for Economic Cooperation and Development, the connections with people who represent a different level of society, such as poor, middleclass, or high society, would be considered what kind of social capital? a. familial b. bonds c. bridges d. linkages Ans: D Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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11. Steve has just started as a telemarketing assistant in a large company. During a holiday party, he has an extended conversation with the vice president of operations, during which they discover a common interest in antique maritime artifacts. They talk atlength. What is the characteristic of this new relationship? a. familial b. bond c. bridge d. linkage Ans: D Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

12. Janice asks her grandmother to help her out in her day care center while one of her employees is out on vacation. What is the nature of the social capital used in this action? a. bond b. bridge c. linkage d. generational Ans: A Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. Sang attends a conference on 3D printing and discovers that, while everyone is interested in the technology, people attending come from all walks of life. What is thenature of the social capital that Sang has an opportunity to develop? beststudy284@gmail.com

a. bond b. bridge c. Linkage d. generational Ans: B Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

14. If you are in a networking group of 20 to 40 people, how many possible referrals andleads could you obtain from this group?

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a. at least 10 b. at least 15 c. 40 d. an almost incalculable number Ans: D Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Comprehension Answer Location: The Value of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. According to the text, what are the three main advantages to networks? a. more contacts, information, and ideas b. private information, power, and diverse skillsets c. sales, contacts, and supporters d. supporters, sales, and business partnersAns: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Comprehension Answer Location: Advantages to Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 16. Private information refers to which of the following? a. information marked confidential by the company b. information disclosed at a shareholder meeting c. information passed on after signing a nondisclosure document d. information not normally available to the general public Ans: D Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Advantages to Networks beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

17. At a church outing, Kelly learns from one of the participants that he just finished working with a company’s exterior construction work and that the company is planning on redoing the landscaping. Kelly uses the opportunity to contact the company about hislandscaping and water conservation products. Kelly is taking advantage of which of the following? a. insider trading b. private information c. bonds d. linkages Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.

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Cognitive Domain: Application Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 18. What do diverse skillsets refer to, as they relate to social networks? a. the full scope of skills required for the production of your product b. the full scope of skills required for the delivery of your service c. people with different perspectives, skills, information, and backgrounds d. people in other professions Ans: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Advantages to Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 19. Power refers to which of the following? a. senior executives who can introduce you to other powerful people b. people who have the ability to fund your project c. experts in the field d. the ability that you have to convince others of your endeavor.Ans: A Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Advantages to Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

20. Casey makes sure that he introduces himself to an IT director of a company he hasbeen interested in, even though the director is not familiar with Casey’s profession of market research. Why would Casey feel it was an important connection? beststudy284@gmail.com

a. the director might hire him for his research skills b. the director has power within the organization c. the director represents a bond d. the director has a different skillset.

Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Application Answer Location: Advantages to Networks Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

21. Which of the following would be most strongly associated with career support? a. a promise of promotion b. challenging assignments

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c. friendship d. inspirations Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Comprehension Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 22. Caine has been asking her boss for a promotion. Yesterday, Caine’s supervisor asked Caine to take on an assignment that will require some overtime. The task is difficult, but the supervisor says that she will coach her through it. Caine considers theassignment but thinks that it will be too much work and declines. What advantage to networking did Caine decline? a. psychosocial support b. role modeling c. social banking d. career support Ans: D Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Application Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

23. Which of the following would be most strongly associated with psychosocial support? a. sponsorship b. coaching c. personal feedback d. career support Ans: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive beststudy284@gmail.com

Domain: Comprehension Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

24. Marcus tells his best friend about issues he is having with his new startup. He is about to close the business because he has been rejected for funding twice. His friend reminds Marcus that he often gives up just before the big win. He reminds him of similarsituations and how trying a little longer would have paid off or did pay off. What advantage to social networking can Marcus benefit from in this situation? a. career support b. personal feedback c. confirmation

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d. acceptance Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Application Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

25. What characteristics may impede an individual from building networks while still a student? a. lack of good role models b. lack of access to mentors c. impression management and lack of confidence d. knowledge Ans: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Advantages to Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

26. Which of the following is considered the act of paying conscious attention to the waypeople perceive you, and attempting to be perceived in a certain way? a. impression management b. interview management c. social dishonesty d. manipulative Ans: A Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Impression Management and Self-confidence Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

27. Kirby is selling to an IT company that is known for a casual work attire. Even thoughKirby has just finished with a presentation and is in a sports jacket and tie, he stops off at home to put on a casual shirt and sweater. What is Kirby’s action indicative of? a. duplicity b. reflection management c. impression management d. social mobility Ans: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Application Answer Location: Impression Management and Self-confidence Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

28. Harvard professor Francesca Gino says which of the following as a suggestion tofeel better about networking? a. Start networking with people of lower power and work your way up. b. Focus on what you can offer to the relationship. c. Think of networking as making friends. d. Bring a friend with you to networking meetings as a way of building confidence. Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Research at Work: The “Dirtiness” of Professional NetworkingDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

29. Shari hates networking. She feels that it is awkward to ask people for business or tomake friends when she really just wants them to buy her product. What advice would you give Shari, given that you know the advantages of networking? a. find other ways of marketing her business b. think of networking as making friends c. focus on how she can help others succeed in their business or personal life d. take on a role in the meeting where talking with others is not criticalAns: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Application Answer Location: Research at Work: The “Dirtiness” of Professional NetworkingDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

30. Trice is a fellow student who heard about your business idea and put you in contactwith his brother-in-law who might have similar interests. What is the role that Trice is playing? a. a mentor beststudy284@gmail.com

b. a self-selected stakeholder c. a role model d. he is just being nice guy Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. A self-selected stakeholder is characterized by which of the following? a. He or she is willing to fund the company or purchase stock.

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b. He or she has asked for a personal pitching session to see if your idea can be embraced. c. He or she has some potential gain or loss in your company. d. He or she feels motivated to help you gain access to information and resources thatyou currently do not have.

Ans: D Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

32. What is the motive of a self-selected stakeholder? a. They anticipate some form of gain form the relationship. b. They anticipate that you will want to help them in return. c. They are moved by your vision and want to be a part of it. d. They make a habit of supporting entrepreneurs, much like venture capitalists. Ans: C Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

33. Peter Senge, founding chairperson for the Society for Organizational Learning, suggests which of the following for engaging others in your vision? a. Emphasize the highest possible benefits of your product or services. b. Be confident of your own vision or opportunity. Believe in it. c. Prepare a well-organized pitch. d. Try to convince people by understanding potential objections. Ans: B Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

34. What is a Meetup group? a. a nickname for informal meetings b. an international network for entrepreneurs c. local meetings with others who share a similar interest of any kind d. networking meetings sponsored by the local chamber of commerceAns: C Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Knowledge Answer Location: Building Networks

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Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

35. Which of the following would represent a successful networking venture? a. a large stack of business cards and business contact information b. a good conversation with someone in which you exchanged information c. a good conversation that resulted in a sale d. inclusion in the formal membership of the group Ans: B Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Comprehension Answer Location: Learning How to Network Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

36. Carlos has just entered a networking event and looks around the room. Which of the following groups would indicate that Carlos could easily enter the group and make a contribution? a. a medium-size group that is engaged in the talk of an obviously knowledgeableperson b. a small group that is standing with shoulders apart and glancing occasionally to seewho is in the room c. a small group that is actively discussing a topic d. a group of two people taking turns talking and are standing apart; occasionally, theyinterrupt each other to interject their opinion Ans: B Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Application Answer Location: Networking Events Difficulty Level: Medium AACSB Standard: General skills area

37. What conversational stance does a good networker take? beststudy284@gmail.com

a. generally takes the lead in the conversation b. actively listens, leaning forward, and mirroring the speaker’s gestures c. tends to join the larger group where more people can hear his or her message d. will listen at first, then turn the conversation to his or her entrepreneurial goalAns: B Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Application Answer Location: Networking Events Difficulty Level: Medium AACSB Standard: General skills area

38. Guy Kawasaki, author of The Art of the Start, suggested the following tip to avoid canned email or the appearance of mass mailing.

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a. send the emails out on different days b. send the email out using a personal email account c. mention at least one personal item d. address the email with the person’s name Ans: C Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Knowledge Answer Location: The give and take of networkingDifficulty Level: Easy AACSB Standard: General skills area

39. Which of the following actions is suggested for finding a mentor? a. send out a letter to influential people asking if they will be your mentor b. consider who in your personal network knows you best c. let people know at networking events that you are looking for a mentor d. look for directories of mentors in one of the major networking organizationsAns: B Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Comprehension Answer Location: Networking to Find Mentors Difficulty Level: Medium AACSB Standard: General skills area 40. What social website is one of the easiest ways of connecting with people you don’tknow? a. Facebook b. LinkedIn c. Twitter d. Instagram Ans: C Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Knowledge Answer Location: Virtual Networking beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General skills area 41. YouTube is used primarily by entrepreneurs for which of the following? a. as a primary social networking site b. for identifying experts and watching video tutorials c. for finding role models d. for posting links to interesting YouTube videos on your blogs and websitesAns: B Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Knowledge Answer Location: Virtual Networking Difficulty Level: Easy

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AACSB Standard: General skills area

42. Social networking can sometimes conflict with workplace ethics. According to a study conducted by CareerBuilder, what percentage of employers have fired employeesfor unprofessional posts on social media? a. 5% b. 12% c. 28% d. 57% Ans: C Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Knowledge Answer Location: Entrepreneurship Meets Ethics: Ethics and Social Media in theWorkplace Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

43. Which of the following best describes the purpose of a founding team? a. to brainstorm business ideas, finding one that will be most profitable b. to build and grow the company and provide economic and social return c. to fund the business and create its business structure d. to finalize the business product or service Ans: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Networking to Build the Founding TeamDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

44. According to research studies, what element was reported as the most importantfactor to new venture success? a. the uniqueness of the product or service to fulfill a customer need b. the financial support to help the company through the initial years beststudy284@gmail.com

c. the lead entrepreneur and quality of the initial team d. the size of the lead entrepreneurs networkAns: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Networking to Build the Founding TeamDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

45. What two questions should be asked when considering founding team members? a. Can I build the company without them? Can I find someone else like them? b. How loyal will they be to me? What conflicts would they have in joining the team?

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c. How well will they support my vision of the company? How many people have similar skills? d. How strong is their loyalty to the company? How loyal will they be to me?Ans: A Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Networking to Build the Founding TeamDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

46. Which set of characteristics is associated with a great founding team? a. technical skills, intelligence, ability to cope with pressure b. ability to cope with pressure, social and technical skills, ability to overcome complex obstacles c. financial backing, large social networks, business-related skillsets d. ability to cope with pressure, social skill, financial stability Ans: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Characteristics of a Great Founding Team Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

47. What is the recommended first step to determining who has the right skills for your founding team? a. review the resumes and successes of potential team members b. determine the top three to five business operations that will be required over the next3 years c. focus on building a balanced team that complements your personality d. focus on building a balanced team that complements your skillsetsAns: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Possess the Right Skills Difficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

48. To judge the extent to which someone has a big ego, what should you look for? a. determine how much of the conversation that person controls b. look for a tendency to say I instead of we when the person talks about team successes c. look for signs of humility when they talk about themselves d. look for nonverbal cues such as voice volume, high-end dressing, and personal possessions Ans: B Learning Objective: 14.5. Explain how networking can help to build the founding team.

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Cognitive Domain: Comprehension Answer Location: Leave Ego at the DoorDifficulty Level: Medium AACSB Standard: General skills area 49. What is Jenn Houser’s advice for aligning team goals and values? a. select a team that already shares the goals and values of the company b. invest several days with your founders hashing out how the partnership will workbefore you commit c. clearly describe your goals and values up front before selecting the team d. let your goals and values evolve as the company formsAns: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Share similar attitudes toward values, goals, and risk Difficulty Level: Medium AACSB Standard: General business and management skills areas 50. What type of relationship is most similar to the nature of the cofounders’ relationship? a. the emotional and financial commitment of marriage b. a strong peer-to-peer working relationship c. a sports team with specific roles and complementary skills d. a family setting with mutual support for all family members Ans: A Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Care deeply Difficulty Level: Medium AACSB Standard: General business and management skills areas 51. Lonny’s founding company is composed of young men with whom he attended beststudy284@gmail.com

college. How would you describe the team? a. homogeneous b. heterogeneous c. collegial d. standardized Ans: A Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Application Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Easy AACSB Standard: General business and management skills areas 52. Which of the following would best describe the term cognitive comprehensiveness?

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a. the team process of examining issues and formulating strategies that considersdifferent approaches, decision criteria, and courses of action b. the team process that encourages all members to contribute based on their cognitiveskills c. the team process that makes sure everyone feels that they have contributed to thedecision and have made their opinions clear d. the team process that encourages different perspectives so that everyone can seethe complete picture Ans: A Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Easy AACSB Standard: General business and management skills areas 53. Which of the following describes Patrick Lencioni’s opinion about team conflict? a. Team conflict is disruptive to productivity and should be avoided as much a possible. b. Disagreement may feel uncomfortable but can help clarify problems and solutions. c. Team conflict is unavoidable, so it is better to learn how to handle it when it arises. d. Team conflict is the result of heterogeneous teams. Ans: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Groupthink and healthy conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas

54. Which of the following would NOT be true of a homogeneous team compared to heterogeneous groups? a. members are more likely to feel included b. there are fewer misunderstandings because of the way things are communicated c. they may have less creativity d. they do not have conflicts due to common values and backgroundsAns: D beststudy284@gmail.com

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Medium AACSB Standard: General business and management skills areas

55. Which of the following would NOT be true of a heterogeneous team compared to homogeneous groups? a. there is a greater mix of characteristics that aid decision making b. the group’s set of possible solutions and ideas helps the team see things in differentways c. there is a higher level of cognitive comprehensiveness

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d. there is a higher degree of creativity Ans: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Medium AACSB Standard: General business and management skills areas

56. What is the value of the Myers-Briggs Type Indicator? a. It makes sure that you select the right personality type for your team. b. It allows people to have different rights and roles in a team forum. c. It gives team members insights into their own communication styles and the styles ofothers. d. It makes it possible to select the right balance of personalities. Ans: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and healthy conflict Difficulty Level: Easy AACSB Standard: General business and management skills areas 57. What is the role of the devil’s advocate? a. to interject conflict into the team b. to prevent the team from being too positive c. to ask the right questions and challenge assumptions d. to guide the team to the correct answer or solution to a problemAns: C Learning Objective: 14.5: Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and healthy conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas beststudy284@gmail.com

58. What is the downfall of the devil’s advocate? a. solutions from a team with a devil’s advocate rarely come to a conclusion b. solutions from a team with a devil’s advocate never produce superior outcomes c. people tend to eliminate the devil’s advocate because he or she makes them feel uncomfortable d. the devil’s advocate encourages people to take sides in team discussionsAns: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and healthy conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas

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59. At meetings, Peter is very direct with his statements. Because the group is familiarwith Peter’s Myers-Briggs scores, his directness does not cause conflicts. Why is the conflict avoided? a. People have become used to Peter’s direct style. b. People recognize his directness as a personality style and know that it is not personal. c. Others like hearing direct comments and opinions. d. They know that Peter is getting help with his directness. Ans: B Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and healthy conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas

60. Janell is always asking for the source of comments or research to back up assumptions made at team meetings. Ultimately, the team creates better solutionsbecause of this. What role is Janell playing as a team member? a. the team mediator b. the facilitator c. the devil’s advocate d. the dissenter Ans: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Analysis Answer Location: Groupthink and healthy conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas

61. Which of the following is NOT part of reading a room? a. determining where most of the activity is taking place b. determining which groups express body language that indicates your inclusion wouldbe beststudy284@gmail.com

welcomed c. identifying where the most influential person in the room is located d. noticing if the room is crowded or empty Ans: C Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Comprehension Answer Location: Networking events Difficulty Level: Medium AACSB Standard: General skills area 62. “Weak ties” in an individual’s network consist of all of the following except: a. potential investors b. people at trade shows and exhibitions c. family and friends

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d. banks Ans: C Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

63. According to the text, a combination of

is the best way of building a diverse

and productive network. a. social bonds, bridges, and linkages b. fellow entrepreneurs, business partners, and mentors c. family, friends, and acquaintances d. investors, employees, and business partnersAns: A Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

64. Acciording to the text, the first step to finding self-selected stakeholders is to: a. think about the people you already know. b. contact people in positions of power. c. network with individuals who have succeeded in similar markets. d. contact investors who you hope will contribute to your businessAns: A Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

65. The key to building a network is to: a. convince someone to do something that he or she may not ordinarily do. b. be able to ask for favors. c. get people to enroll in your vision due your enthusiasm or idea. d. line up potential employees, contractors, suppliers, and customers.Ans: C Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Knowledge Answer Location: Self-Selected Stakeholders Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 66. Which of the following describes Patrick Lencioni’s opinion about team conflict?

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a. Conflict happens, and it is best to let people vent. b. Some dysfunction is part of being a team. c. Commitment is not possible without conflict. d. People who disagree with one another make the best teams.Ans: C Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and Healthy Conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas

True/False

1. People today are more likely to interact with others to build their social capital due tomore time spent at the workplace and the use of online networks.

Ans: F Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. Strong ties to family and friends can be restrictive to the entrepreneur because theyare less likely to challenge our ideas.

Ans: T Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Research indicates that inauthenticity and immorality were feelings associated with beststudy284@gmail.com

professional networking, particularly among people of lower power.

Ans: T Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Comprehension Answer Location: Research at Work: The “Dirtiness” of Professional NetworkingDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. A good way of disengaging from a networking conversation is to look the person inthe eye, shake his or her hand, and say, “It has been great talking to you.”

Ans: T Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Application

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Answer Location: Networking events Difficulty Level: Medium AACSB Standard: General skills area 5. Quid pro quo should be avoided in networking as it may be perceived as manipulative.

Ans: F Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Application Answer Location: Networking events Difficulty Level: Easy AACSB Standard: General skills area

6. According to a study conducted by the Ethics Resource Centre (ERC), active social networkers were more likely than other workers to compromise the company with activities such as negative posts about the company, listing clients on the network, uploading personal pictures on a company network, or retaining copies of confidentialwork documents.

Ans: T Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Knowledge Answer Location: Entrepreneurship Meets Ethics: Ethics and Social Media in theWorkplace.

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 7. Research has found that most fast-growth ventures have been founded by sole entrepreneurs with strong financial backing Ans: F Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Networking to Build the Founding TeamDifficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

8. When working with a founding team, it is important to keep a “hands off” approach, keeping the lines of responsibility clear.

Ans: F Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Take a hands-on approach Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. The best way to read a room is to look where the highest ranking people in the roomare so you can get into that group.

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Ans: F Learning Objective: 14.3. Describe different ways of building networks.

Cognitive Domain: Application Answer Location: Networking Events Difficulty Level: Easy AACSB Standard: General skills area

10. You should be wary of connecting with competitors on social networking sites suchas Twitter or LinkedIn. Ans: F Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Knowledge Answer Location: Virtual Networking Difficulty Level: Easy AACSB Standard: General business and management skills areas

11. Studies have shown that a lack of diversity in homogeneous teams can stifle creativity and information processing.

Ans: T Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Medium AACSB Standard: General business and management skills areas

12. According to research, a heterogeneous group will have greater problem-solvingand creative options but have greater challenges in communications.

Ans: T Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Medium beststudy284@gmail.com

AACSB Standard: General business and management skills areas

13. According to the text, social capital is less tangible than physical and even humancapital because its value can be easily assessed and measured.

Ans: F Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. In the United States today, people are more likely to interact socially than they werein the past due to an increased prevalence of community networks.

Ans: F

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Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Comprehension Answer Location: The Power of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. According to the text, many of the most successful ventures are built on forging relationships at the university level.

Ans: T Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: Impression Management and Self-confidence Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

16. According to the text, the amount of possible referrals and leads one could obtain ina networking group of 20 to 40 people is almost incalculable.

Ans: T Learning Objective: 14.2. Demonstrate the value of networks for entrepreneurs.Cognitive Domain: Knowledge Answer Location: The Value of Networks Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 17. According to the text, teams should discourage someone from taking on the role of“devil’s advocate” in meetings to prevent the team from becoming too critical.

Ans: F Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Groupthink and Healthy Conflict Difficulty Level: Medium AACSB Standard: General business and management skills areas beststudy284@gmail.com

18. When working as a team, groupthink inhibits the team’s ability to test or challenge assumptions.

Ans: T Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Knowledge Answer Location: Groupthink and Healthy Conflict Difficulty Level: Easy AACSB Standard: General business and management skills areas

Essay

1. Identify four members of your social network and assess the type of classificationsthey would represent.

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Ans: Answers should include a description of each contact’s variety (bonds, bridges, and linkages) as well as the structural, cognitive, and relational level of these contacts.Learning Objective: 14.1. Explain the role of networks in building social capital.

Cognitive Domain: Comprehension Answer Location: The Power of NetworksDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

2. Two of your employees return from a conference. Price has a stack of business cardsand is delighted that he met so many people. Marie sheepishly says that she really onlymet four people.

She has set up a follow-up meeting with one of them. She said the others are not interested in your product at the moment. She discloses that she helped one business owner with a school for her daughter and shared a recipe for rhubarb pie with another. Discuss who may have done the better job of networking, and support your conclusion.

Ans: Answers should focus on the fact that networking is not a sale situation but is builton a complex matrix of types of relationships. Networks include bonds, bridges, and linkages. They are social networks of people willing to exchange information and build trusting relationships with one another. “Emotional bank accounts” can be “withdrawn” from in the future with referrals, support, and future connections.

Learning Objective: 14.1. Explain the role of networks in building social capital.Cognitive Domain: Analysis Answer Location: The Power of Networks Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

3. Chris develops his company plan alone. He is now ready to launch and is looking fora founding team. Since his business is in petrochemicals, he assumes that the best team will be from his former university classmates who studied the subject with him. Discuss the pros and cons of Chris’s assumptions.

Ans: The answer should address homogeneous versus heterogeneous teams. While a homogeneous team will have specific knowledge, other aspects of the company would benefit from a mix of knowledge and skills. People from the same university may sharesimilar beststudy284@gmail.com

perspectives, whereas people from other backgrounds might bring in diverse problem-solving skills and have different insights and perspectives.

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Comprehension Answer Location: Homogeneous and heterogeneous teamsDifficulty Level: Medium AACSB Standard: General business and management skills areas 4. Jorge felt it was his role to point out flaws in his team’s plans and ideas. He was always polite, and the team had to admit that the group came up with better ideas thanthey originally had. However, they recently approached their manager with a request tohave Jorge removed from the team. What advice would you, as manager, give the group?

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Ans: The answer should focus on the benefits of having a devil’s advocate, someone who tests ideas against the goals and prevents groupthink while promoting healthy conflict. Advice in this situation is to make goals clear at the outset. It appears that theconflict is not destructive, so healthy conflict should be supported. However, researchdoes show that people find the devil’s advocate to be uncomfortable. Knowing this might help the group overcome their discomfort and see the advantages that Jorge brings.

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Analysis Answer Location: Groupthink and healthy conflict Difficulty Level: Hard AACSB Standard: General business and management skills areas

5. Two members of the founding team are interviewing candidates to be a third member. One of their questions is to see how an applicant responded to a problem he or she encountered in the past. The applicant responded with an answer that revealed agreat deal of industry knowledge.

Later, one of the interviewers noted to the other that his statements used “I” instead of “we.”

Interpret the founder’s concern in light of a startup’s needs.

Ans: Use of an “I” statement to reflect on an activity that takes a team effort can indicatean unwillingness to consider the current or future capabilities of the team. People with large egos are likely to dismiss the opinions of others, which may mean not recognizingwhen something doesn’t work or where there is a better idea.

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Application Answer Location: Leave ego at the door Difficulty Level: Medium AACSB Standard: General business and management skills areas

6. Francesca is building her founding team. She knows that fundraising will be importantover the next year and thus is looking for someone with strong fundraising skills. She hopes to be financially self-sufficient at the end of the year. Later, she hopes to be able to build a strong sales, marketing, and operations teams with representation across the nation. What strategy should Francesca use in building her team? beststudy284@gmail.com

Ans: The answer should consider the main purpose of a founding team: to build and grow the company and provide returns for themselves, employees, and investors. The answer should also discuss the nature of a founding team—including answering questions such as: how long is the person expected to be with the company as a founding team member? What other skills will be needed in the first 3 to 5 years which anew member of the founding team should have?

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Analysis Answer Location: Characteristics of a Great Founding Team Difficulty Level: Medium AACSB Standard: General business and management skills areas

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7. Allen doesn’t mind getting his hands dirty. As the co-owner of a small 10-person brewery, he is frequently seen scrubbing out containers, sweeping the floor, and ordering sandwiches for meetings. Recently, he was advised that he should not be doing these things, as doing so would lower his perceived image with the employees, who need to feel that he is in a special role.

Discuss what Allen’s response should be. Ans: The answer should address the need of an entrepreneur to do whatever it takes. “Getting the job done” is a large part of building a successful business. Startups run ontight overheads, and owners need to be smart about what money is spent on. Other answers might look beyond the activity to ask why Allen is doing the task. Does he believe he is the only one who can do this correctly? If so, ego may prevent the team from contributing in accordance with each member’s skills.

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Analysis Answer Location: Take a hands-on approach Difficulty Level: Hard AACSB Standard: General business and management skills areas

8. Erik and Janessa are considering a member for the founding team who has superior programming skills for their new software-related product. His successful programs are numerous and well known. They know that they want to expand to other products, and his experience would be valuable. In a networking discussion, the programmer stated that he was good at what he did and that working on Erik and Janessa’s software wouldbe “as good as any.”

Erik and Janessa felt that that was a sign that he was willing to be a founder. Discuss the advantages and disadvantages of adding him to the team.

Ans: While the new programmer would have the skills and experience, it is questionablewhether or not he has the character of a founding member. He seems to lack passion for the startup’s success and doesn’t seem to reflect a need to believe in the project he is working on. Passion and reasonable skills will outweigh experience and skills in a cofounding team.

Learning Objective: 14.5. Explain how networking can help to build the founding team.Cognitive Domain: Analysis Answer Location: Care deeply Difficulty Level: Medium AACSB Standard: General business and management skills areas beststudy284@gmail.com

9. Sue and Chris have just started a waste recycling company and would like to engagein virtual networking. Discuss some of the ways that Sue and Chris might start.

Ans: Answers may consider the advantages of LinkedIn and Twitter. Instagram might make sense if the product shows a better visual, such as making a cleaner solution to debris. LinkedIn groups such as Social Entrepreneur might make sense since the business may have a social good aspect to it. Women’s Network of Entrepreneurs mightbe another LinkedIn group.

Learning Objective: 14.4. Illustrate the benefits of virtual networking.Cognitive Domain: Analysis Answer Location: Virtual Networking Difficulty Level: Medium

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AACSB Standard: General business and management skills areas

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Chapter 15: Navigating Legal and IP IssuesTest Bank Multiple Choice

1. What two characteristics should a lawyer have when working with a startup? a. years of experience and willingness to work at reduced charges b. knowledge of laws across states and knowledge of the industry c. industry knowledge and a willingness to work with startups d. knowledge about all aspects of the business and laws across statesAns: C Learning Objective: 15.1. Discuss how legal considerations can add value toentrepreneurial ventures.

Cognitive Domain: Comprehension Answer Location: Legal Considerations Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. How does the author suggest that the Internet’s legal resources be used? a. to access low-cost legal forms and advice b. to identify the type of legal counsel you will need c. to seek advice from free legal services d. to find sample documents that match your industry, products, and servicesAns: B Learning Objective: 15.1. Discuss how legal considerations can add value toentrepreneurial ventures.

Cognitive Domain: Comprehension Answer Location: Legal Considerations Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 3. What is the greatest danger of following legal advice given on a lawyer’s site on the Internet? beststudy284@gmail.com

a. The advice may be given by a lawyer who does not have an official office. b. The advice may not be accurate or relevant to your type of business. c. The service is free and there is no paperwork to document the advice. d. Sample documents and forms will not be available.Ans: B Learning Objective: 15.1. Discuss how legal considerations can add value toentrepreneurial ventures.

Cognitive Domain: Comprehension Answer Location: Legal Considerations Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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4. What support service is offered by the U.S. Patent and Trademark Office? a. general advice to startup companies b. pro bono legal program c. small business grants d. tax preparation services Ans: B Learning Objective: 15.1. Discuss how legal considerations can add value toentrepreneurial ventures.

Cognitive Domain: Comprehension Answer Location: Legal Considerations Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Which of the following can be affected by the type of legal structure your companyhas? a. the authorities you need to notify, taxes, record-keeping, and decision process b. taxes and ability to sue the company c. taxes and marketability of your company d. taxes only Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Types of Legal Structures Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

6. What business entity refers to a business owner who has not formed a seperateentity to run the business? a. sole practitioner b. self-employed c. sole proprietorship d. nonentity small business beststudy284@gmail.com

Ans: C Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Sole Proprietorship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 7. What is the simplest and most inexpensive form of legal structure for startups? a. sole proprietorship b. general partnership c. C corporation d. S corporation

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Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Sole Proprietorship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. In an LLC, how are profits and losses reported? a. on individual tax returns b. on the corporation’s tax return c. on both the corporate and individual tax return d. on either the corporate or individual tax return Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Limited Liability Company (LLC) Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. In an S corporation, what is the maximum number of shareholders allowed? a. 12 b. 50 c. 75 d. 100 Ans: D Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: S Corporation Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

10. A C corporation has transferable ownership, which refers to the fact that: a. a C corporation can change its structure at any time after the first year. b. it can issue stock in exchange for capital and can pass on to new owners. c. it can adapt to more employees as the company grows. d. it can be owned by an unlimited number of shareholders. Ans: B Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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11. In a C corporation, who is liable for its actions? a. the corporation b. the shareholders c. the owner of the company d. the board of directors Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 12. A C corporation’s disadvantage is double taxation. This means that: a. the corporation is taxed on the profit it makes and the shareholders are taxed on thedividends b. the corporation pays taxes in April and October c. corporations are taxed more heavily than other corporate structures d. corporations pay taxes on the goods they purchase to create the product rather thanon the profits from the sale of the goods Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. Which of the following is NOT a way that a C corporation can minimize double taxation? a. use profits to fund the growth of the company b. pay out profits in the form of additional compensation to the owners beststudy284@gmail.com

c. reserve the reporting of taxed income into the next fiscal year d. not realize enough revenue to make a profitAns: C Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

14. Which of the following is NOT true of an LLC? a. profits and losses are reported on individual tax returns b. there is double taxation—on the corporation and on personal income

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c. LLCs have continuous existence d. there is potential tax sheltering from losses while personal assets are protected.Ans: B Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Limited Liability Company (LLC) Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

15. An LLP is best suited for what type of business? a. a business with more than two partners b. a sole owner who wants to guard against liability c. a professional practice, such as a legal or accounting group d. a company with less than 10 employees Ans: C Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Limited Partnership and Limited Liability Partnership (LP and LLP)Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

16. A limited partnership is made up of which of the following? a. general partners and limited partners b. general partners and shareholders c. general partners only d. limited partners only Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Limited Partnership and Limited Liability Partnership (LP and LLP)Difficulty beststudy284@gmail.com

Level: Medium AACSB Standard: General business and management knowledge areas 17. In a general partnership, which of the following is true? a. a general partner and a limited partner jointly manage the business b. two or more people manage and share in the profits and losses of the business c. two or more people manage the business under the direction of a board of directors d. taxes are paid on the corporation Ans: B Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: General Partnership

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Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

18. Which of the following conditions is applicable to all 501(c)(3) organizations? a. they must be classified as a church, educational, or charitable institution b. their earnings should be used to benefit the shareholders c. profit must be reinvested and used for the organization’s exempt purpose d. shareholder earnings are limited by the tax codeAns: C Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Not-for-Profit Entities Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

19. What government agency authorizes a C-corp? a. the state government. b. the federal government c. local county and city jurisdictions d. the federal courts Ans: A Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

20. What characteristic of a C corporation will make it possible to pass the corporationon to new owners after the original owners pass away? a. vesting beststudy284@gmail.com

b. the laws of inheritance c. transferable ownership d. stockholder rights Ans: C Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 21. The term vesting can best be described as which of the following? a. paying shares out to employees on a regular, usually annual basis

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b. imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company c. defining a particular time and range of duties the cofounders must contribute to thebusiness d. determining the investment that each cofounder must contribute to the start andgrowth of the business Ans: B Learning Objective: 15.3. Outline the most common legal errors made by startups.Cognitive Domain: Knowledge Answer Location: Legal Mistakes Made by Startups Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

22. If you want to seek immediate external funding, what type of organization would bethe best to form? a. not for profit b. benefit corporation c. S corporation d. C corporation Ans: D Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Legal Mistakes Made by Startups Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

23. Which of the following is NOT a characteristic of a benefit corporation? a. it is certified by the nonprofit B Lab b. it follows strict standards of social and environmental performance and accountability c. it must fulfill a social mission d. it is only available to C corporations Ans: D beststudy284@gmail.com

Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Benefit Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

24. Which of the following would be considered fair use of copyrighted material? a. a T-shirt company uses a famous clause from a song and places it on their T-shirts. b. a high school teacher copies a portion of a song sheet to explain the use of timingand syncopation c. a nonprofit organization sells copies of a copyrighted cookbook at a fundraiser d. a movie producer uses a popular song as background to one of her movie scenes

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Ans: B Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Copyright Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

25. Which of the following would be considered fair use of copyrighted material? a. A writer references a portion of a comedian’s script in a book in order to demonstratea key point. b. A writer copies a portion of a new book on chess in which he reveals the secrets inthe competitor’s book. He credits the original author. c. A songwriter puts the words of a poem to a musical score. d. A writer and biologist copy 30 diagrams from another textbook, citing the original author.

Ans: A Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Copyright Difficulty Level: Hard AACSB Standard: General business and management knowledge areas

26. Any word, name, symbol, or device used in business to identify and promote aproduct is called a

.

a. trademark b. copyright c. brand d. patent Ans: A Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Knowledge Answer Location: Copyright beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 27. Unless otherwise defined, who owns the product idea when an employer hosts a “hackathon” where participants share their ideas? a. the employee who generated it b. all the employees who brainstormed and contributed to the idea c. the company hosting it d. the team that presents the product ideaAns: C Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Comprehension Answer Location: Intellectual Property Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

28. An employee for a beverage company combines the ingredients used in creating themix.

Later he is fired from the company and decides to sell the same mix under a new label to a competing company. What concept might be represented in this action? a. a copyright violation b. a trade secret, provided a nondisclosure was signed by the employee c. a trade secret, regardless of the lack of a nondisclosure agreement d. No violation. Secrets are secrets only until they are known. Ans: B Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Trade Secret Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

29. An employee has been developing a company product for the last 3 years when hedecides to leave the company. That product is a glue that remains tacky for hours, enabling certain types of artwork to be performed. After he leaves the company, the employee joins another company and finalizes the glue development for his new company. Who is likely to own the rights of the intellectual property involved in the formulation of the glue? a. The employee; he invented it. b. The original company who paid for the product to be developed. c. The new company because the product was released while the employee worked forthem. d. The glue cannot be considered intellectual property. Ans: B Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Trade Secret Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

30. Gary is fascinated by a new device that uses a GPS-like tracker to help owners locate their pets. He purchases the product, disassembles it, and uses it as a pattern fora similar device. The new device uses a less expensive casing, but otherwise has duplicated the technology. What legal concept may be represented in this action? a. a copyright violation b. a trademark violation c. a patent violation d. a fair use violation Ans: C Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application

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Answer Location: Patent Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

31. What should an entrepreneur do if he or she worked on a product with a former employer and wants to market the product as his or her own? a. market it before the former employer does b. consult an IP attorney to review employee contracts and applicable laws c. keep all documentation proving that you are the inventor d. market the product in another country Ans: B Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Intellectual Property Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. How much does IP theft cost the United States in lost revenue every year? a. $3 million b. $100 million c. $3 billion d. $300 billion Ans: D Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Knowledge Answer Location: Global IP Theft Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 33. IP protection doesn’t always work. What contributes to this failure? a. laws protecting the company’s rights may not be recognized in other countries b. there are too many patents on record, making it difficult to monitor them beststudy284@gmail.com

c. companies fail to renew their patents after the expiration date d. the product or service has evolved after the original protection was filedAns: A Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Comprehension Answer Location: Global IP Theft Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

34. Which of the following best describes a patent troll? a. an individual or firm constantly being sued for patent infringement b. an individual who illegally sells patents to companies c. an individual or firm that owns a patent but has never produced the product d. an individual or firm that knowingly infringes on patents in order to produce a profit

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Ans: C Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Knowledge Answer Location: Research at Work: Patent Trolls Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

35. What step might be taken if some disclosure of your product is necessary in order toobtain funding, obtain raw materials, or otherwise developthe product? a. mark all prototypes and designs with the company name b. file for a patent under your personal name instead of the company c. file for a provisional patent d. change the nature of the product after you have disclosed itAns: C Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Publicly Disclosing Your Innovation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

36. After filing for a provisional patent, how long do you have before developing the ideainto a working prototype? a. 1 year b. 2 years c. 3 years d. 4 years Ans: A Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Publicly Disclosing Your Innovation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

37. Failure to assign ownership occurs in which of the following situations? a. when someone makes significant contributions to a product design without a formal agreement of who owns the idea b. only when someone makes a significant contribution and is not paid for the contribution c. only when someone makes a significant contribution and is paid for the contribution d. when someone fails to place the company name on the patentAns: A Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure to Assign Ownership Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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38. Which of the following indicates that an employee is eligible to work in the United States? a. Declaration of U.S. Citizenship b. I-9 c. W-4 d. Form 940 Ans: B Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Employee Forms Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

39. Which of the following forms will let the employer know how much money to withhold from paychecks for federal taxes? a. I-9 b. T-140 c. W-4 d. Form 940 Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Employee Forms Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

40. Which of the following forms will be needed to indicate federal unemployment taxthat will be used should the employee lose his or her job? a. Form 940 b. W-2 c. I-9 beststudy284@gmail.com

d. W-4 Ans: A Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Employee Forms Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

41. What number of employees must a company have before they are required toprovide family and medical leave and sick leave? a. any size company b. a company with over 10 employees c. a company with 15 employees or more d. a company with over 50 employees

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Ans: D Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Benefits Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

42. Which of the following would be a disadvantage of hiring a contractor? a. you would not be able to have the contractor arrive at a certain time or perform thejob in a certain way b. the contractor would not be required to perform the job to the same level as an employee c. the contractor could be terminated if he or she did not fulfill their contracts d. the contractor generally would have less of a personal commitment to doing the jobwell Ans: A Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

43. Which of the following might support a claim that the person you hired as a contractor might be classified as an employee? a. the contractor provides similar services to other clients b. the contractor is free to set his or her own hours c. the employer pays for the travel expense incurred by the contractor d. the contractor supplies his or her own tools Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

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AACSB Standard: General business and management knowledge areas

44. Which of the following might support a claim that the person you hired as a contractor might be classified as an employee? a. the person was not eligible for vacation b. the person subcontracted the work at some time during the relationship c. the person was included in company training to help him or her perform the job d. the person paid his or her taxes separatelyAns: C Learning Objective: 15.7: Explain the legal requirements of hiring employees.

Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

45. Which of the following is true when compensating employees with company equity? a. the equity to be issued will be considered salary and not subject to securities laws b. the equity will be considered a gift since no cash was issued c. the shares may be considered a taxable item d. the shares cannot be tied to performanceAns: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Compensation in the form of equityDifficulty Level: Medium AACSB Standard: General business and management knowledge areas

46. In the case of FedEx where contractor/drivers sued for overtime pay and benefits, what was the primary reason why the courts ruled that they had been misclassified andwere, in fact, employees? a. the contractors paid for their own uniforms b. the company controlled the activities of the drivers c. the contractors owned their own trucks d. the contractors worked for FedEx for a long period of timeAns: B Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

47. Hiring an unpaid intern is considered illegal if: a. the employer provides a minimum wage and overtime pay. b. the internship is solely for the benefit of the intern’s education. c. the employer benefits from the arrangement. beststudy284@gmail.com

d. the intern receives academic credit from an educational institution.Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Unpaid Internships Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

48. Candy-corp hires a summer intern to work in the candy shop during the summer. The intern works 20 hours a week and earns course credit for a course he is taking toward his culinary degree. He is learning a great deal, and at the same time, the company is benefiting from the intern because they did not need to schedule their regular employees full time and they are not paying the intern. What is the legal liabilitythis company is incurring?

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a. The summer intern is learning store operations that may not be related to his academic program. b. The intern is performing actual work and not just observing. c. The intern is benefiting the company by replacing duties which could be provided bypaid employees. d. The intern is working too many hours.

Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Unpaid internships Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

49. What legal structure determines minimum wage and overtime pay? a. Civil Liberties Act b. the hiring company’s salary administration policy c. Fair Labor Standards Act d. Minimum Wage Act Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Unpaid internships Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

50. Legal clinics are an excellent resource for entrepreneurs. Which of the followingwould offer the best advice? a. second- and third-year law students associated with a leading university b. a local SCORE organization c. a group of local entrepreneurs in the same industry d. a lawyer who works for your former employer Ans: A beststudy284@gmail.com

Learning Objective: 15.1. Discuss how legal considerations can add value toentrepreneurial ventures.

Cognitive Domain: Comprehension Answer Location: Legal Considerations Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

51. How long does a federally registered trademark last before it must be renewed? a. It is a lifelong registration. b. 100 years c. 10 years d. 25 years Ans: C Learning Objective: LO 15.4. Define IP and how it affects entrepreneurs.

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Cognitive Domain: Knowledge Answer Location: Trademark (and service mark) Difficulty Level: Easy AACSB Standard: General business and management knowledge areas:

52. Tom has been a lead salesman for a brokerage house but recently got a betterposition at a competing house. Prior to leaving, Tom copied the customer list and contact information from his company. What may be infringed by this action? a. the company’s patent b. trade secrets c. copyrights d. No principles were violated since he contributed to the call list in the first place.Ans: B Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Trade secret Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

53. What cannot be protected as intellectual property? a. artistic expression b. a trademark c. an idea d. an invention Ans: C Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Patent Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

54. How long does a patent generally last? a. 2 years beststudy284@gmail.com

b. 10 years c. 20 years d. 50 years Ans: C Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Patent Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

55. Which of the following countries is most likely to violate IP rights? a. England b. Germany

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c. China d. Australia Ans: C Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Patent Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

56. What significant change is taking place in China that may help reduce IP theft? a. China has signed international agreements with the World Trade Center. b. More people in China are applying for patents to protect their own inventions. c. China is changing the labeling on all products exported from China. d. China is growing its economic base.

Ans: B Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Application Answer Location: Global IP Theft Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 57. What is indicated by China’s announcement that they will be using a “designed inChina” rather than “made in China” label on innovations? a. They are protecting their brands with the label. b. China is rebranding its image of lower quality products. c. China is investing in their own ideas, which may mean less IP theft. d. They understand the value of a good tagline and are implementing it.Ans: C Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Comprehension Answer Location: Global IP Theft Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

58. Which of the following is true about filing for a patent? a. Patents are based on a “first to file” basis. b. Patents are based on a “first to invent” basis. c. Patents can be shared if multiple people invent the same product. d. Patents are awarded to the best design should multiple people file at the same time. Ans: A Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Comprehension Answer Location: Publicly Disclosing Your Innovation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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59. How long does a company have to register a newly hired employee with your state directory? a. within 2 months of the hire date b. within 5 days of the hire date c. within 20 days of the hire date d. at any time before filing state taxes Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.

Cognitive Domain: Knowledge Answer Location: Employer Identification Number Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

60. With which of the following agencies must you register to pay state unemployment compensation tax? a. the federal Department of Labor b. the labor department of your state c. the franchise tax board d. the state tax board Ans: B Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Unemployment and Workers’ Compensation Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

61. Why does the employer fill out an IRS form 940 every year? a. to report income taxes withheld from employee wages b. to report federal unemployment tax c. to report the number of employees from their company who have filed for unemployment d. to report the number of employees who filed a workers’ compensation claimAns: B beststudy284@gmail.com

Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Employee forms Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

62. Which of the following must be paid for by the employer in all states? a. Medicare b. medical leave c. paid sick days d. life insurance Ans: A Learning Objective: 15.7. Explain the legal requirements of hiring employees.

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Cognitive Domain: Knowledge Answer Location: Benefits Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

63. Who should be consulted before setting up an employee benefits program? a. your HR manager b. an accountant experienced with employee benefits c. the company lawyer d. the provider, such as the insurance company or retirement fund companyAns: B Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Benefits Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

64. In order to know what posters need to be placed in your office, which of the following would be a good source? a. unions active in your industry b. state unemployment agencies c. the Department of Labor d. U.S. Publications Office Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Workplace posters Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

65. Which of the following would NOT be placed in an employee handbook? a. company benefits b. attendance policy beststudy284@gmail.com

c. smoking bans d. promotion timelines Ans: D Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: The Employee Handbook Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

66. Which of the following would NOT be a good reason to hire a contractor? a. the job requirements are short in duration b. it is a policy of the company to hire only contractors to perform the job c. the job is not usually performed by regular employees

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d. the contractor has knowledge that is not normally part of the company’s skillsetAns: B Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

67. A delivery service hires independent contractors as drivers to deliver products that are ordered online. The company requires that the delivery service be available from 8am to 5pm Monday through Friday and display the company logo on their shirt and automobile (in the form of a magnetic sign). Procedures for logging the package and thenumber of attempts for delivery are defined by the company. What issues may be of concern in this situation? a. The employer has not outlined provisions for overtime. b. The employer may not be paying vacation time to the contractors. c. The employer may have misclassified the employee because they are controlling thework hours, operations, and appearance of the contractor. d. None, as the employer and delivery service have signed an independent contractor agreement.

Ans: C Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Hiring a Contractor or an Employee?

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

68. According to the International Trade Union Confederation (ITUC), which of the following countries scores highest for equality at work? a. Uruguay b. China c. Egypt d. Columbia Ans: A beststudy284@gmail.com

Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Equal Employment Opportunity Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

True/False

1. In a sole proprietorship, you are personally responsible for problems such as injurieson the job or loans taken out on behalf of the business.

Ans: T

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Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Sole ProprietorshipsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

2. A limited liability partnership protects the owners from liability, and taxes are paid bythe corporation.

Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Limited Partnership and Limited Liability Partnership (LP and LLP)Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. Choosing the wrong business structure can lead to incurring higher taxes than necessary.

Ans: T Learning Objective: 15.3. Outline the most common legal errors made by startups.Cognitive Domain: Knowledge Answer Location: Legal Mistakes Made by Startups Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Regardless of the type of entity, a business partner can always maintain his or her own shares in the company, even when they leave the company, provided they were one of the company’s founders.

Ans: F Learning Objective: 15.3. Outline the most common legal errors made by startups.Cognitive Domain: Comprehension beststudy284@gmail.com

Answer Location: Legal Mistakes Made by Startups Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 5. Once a product is protected by a patent in the United States, the product will be protected from counterfeit by other countries due to international trade agreements.Ans: F Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Comprehension Answer Location: Global IP Theft Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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6. One way that a company can protect its product is by licensing its innovation to a large organization with protection already in place. This inventor then receives royalties.Ans: T Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Failure to Protect Product and Processes Difficulty Level: MediumAACSB Standard: General business and management knowledge areas 7. Even if an inventor makes significant improvements to another company’s existingproduct (e.g., changing the way the product is used and solving a problem with the original product), the improved product is still the intellectual property of the original company.

Ans: F Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Comprehension Answer Location: Inability to Determine Originality Difficulty Level: MediumAACSB Standard: General business and management knowledge areas.

8. A company with fewer than 50 employees does not have to offer family leave, medical leave, or health insurance.

Ans: T Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Benefits Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. A company must have an EIN before hiring employeesAns: T Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Employer Identification Number Difficulty Level: Easy AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

10. Companies with less than 10 employees are not required to post federal and statenotices informing employees of their rights under labor laws.

Ans: F Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Knowledge Answer Location: Workplace posters Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

11. Every jurisdiction and industry requires a legal filing to set up a business as a sole proprietorship.

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Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Sole Proprietorship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. As a sole proprietorship, the owner is held personally liable for any problems the business incurs.

Ans: T Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Knowledge Answer Location: Sole Proprietorship Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. Fair use is a clearly defined area in U.S. law with absolute rules and boundaries.Ans: F Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Knowledge Answer Location: Copyright Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. A sole proprietorship is rarely the correct choice of legal structure for startups.Ans: T Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: Sole Proprietorship Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

15. In a general partnership, if one partner is responsible for running the company intothe ground, the other partner is not considered liable.

Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: General Partnership Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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16. In a C corporation, the shareholders, not the corporation, are legally liable for a company’s actions.

Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

17. Both the C-corp and the S-corp have to deal with double taxation, as there are twolevels of tax to pay for both types of legal structures.

Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: S Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

18. A disadvantage of a C corporation is that it cannot survive after the demise of itsowners.

Ans: F Learning Objective: 15.2. Explain the most common types of legal structures availableto startups.

Cognitive Domain: Comprehension Answer Location: C Corporation Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

Essay beststudy284@gmail.com

1. Bob and Karin founded a luxury health spa located near a natural hot springs. They each owned 30% of the company, with the remaining 40% owned by other shareholders. There were many expenses in the first few years, but by year 4, the company was doing well and had a large base of steady customers. Both Bob and Karinwork long hours at the spa and work at marketing and operational tasks. Last week, Bob had an offer from a New York entity to build a luxury spa in Upstate New York and was offered a huge salary. Bob is going to take the offer. Discuss the legal protections that could keep Karin from assuming all the work while Bob continues to gain benefit of the company’s growth.

Ans: The answer should recognize that a vesting clause would impose equity forfeituresif a cofounder did not stay with the company.

Learning Objective: 15.3. Outline the most common legal errors made by startups.Cognitive Domain: Application

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Answer Location: Legal Mistakes Made by Start-ups Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. Protecting intellectual property is of growing concern to today’s modern entrepreneur.Briefly describe why this is so.

Ans: The answer should acknowledge some of the following: 

The uniqueness of the idea is something that investors look for.



If the IP is owned by the startup, investors will be more confident about investing.



IP protection prevents competitors from trying to copy your products and services.



IP is embedded into many software, music, or intellectual products and services.



It is difficult to describe and thus requires expert advice.



Many people may work on developing the service or product (employees, contractors) and feel the product is theirs.

Learning Objective: 15.4. Define IP and how it affects entrepreneurs.Cognitive Domain: Application Answer Location: Intellectual property Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

3. You have just developed a voice recognition system that will also translate the spoken language into other languages. You are based in the United States but would like to sell the product in Europe and parts of South America. Describe what steps youmight take to protect your product.

Ans: Answers should address the need to make sure that the name and brand can be used in the country in which you intend to sell the product, the need to register for localIP ownership within each country, extend U.S. registrations to foreign countries, seek counsel that can represent your interests abroad.

Learning Objective: 15.5. Assess the global impact of IP theft.

Cognitive Domain: Application beststudy284@gmail.com

Answer Location: Global IP Theft Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

4. Darcy created a solution that prevents mildew on rosebushes using all-natural products. The product works systemically, being placed around the plant, and is introduced via the root system. While working on the product, Darcy frequently talks about the product with her boyfriend who helped her with the mixing and testing, made suggestions, and talked to her about techniques his grandfather used. Darcy obtained apatent for the product prior to putting it on the market. A year later, the couple broke up and the former boyfriend created a product with the same formula and marketed it under his own name, claiming that he owned the formula based on codevelopment. Discuss why the former boyfriend may or may not be correct.

Ans: Answers should address ownership when there is no assignment of ownership. IfDarcy failed to make a formal agreement about who controlled and owned the formula,

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the boyfriend can be an owner due to the fact that he made valuable contributions to theinvestment.

Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Application Answer Location: Failure to Assign Ownership Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Steve works for a cement company as an IT contractor. The company does not ask Steve to sign a nondisclosure agreement, but Steve has full access to the company databases and documents. Steve also attends meetings during which a new, fast-dryingand injectable product is openly discussed. A year later, Steve reveals the formula to a competitive company and is scheduled to receive royalties. Discuss the legal and ethical issues involved in this action.

Ans: The answer should acknowledge that the company failed to protect the product and no nondisclosure agreement was signed. However, the issue of ethics is broaderthan the law.

Learning Objective: 15.6. Describe the common IP traps experienced by entrepreneurs.Cognitive Domain: Analysis Answer Location: Entrepreneurship Meets Ethics: Navigating Legal and IntellectualProperty Issues Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. A construction company is rapidly hiring employees to work on the construction site. The job will require people to occasionally lift up to 50 lbs. The job provides training to use equipment such as forklifts and tractors. The job also mentions that duties include putting up safety signs, directing traffic, taking measurements, and filling out paperwork.The company has placed an advertisement in the local paper that reads, “Looking for young men between 21 and 33 years of age to work for AJK Construction. Training will be provided. Ex-military and college students encouraged to apply. Start your career now and earn a salary of $26 an hour!” Discuss the ethics and legal issues raised in thisjob posting.

Ans: The answer should discuss both age and gender discrimination in the way the ad is worded. It might also discuss if the weightlifting restriction is necessary given the tasks described and how this might discourage qualified workers. The answer should distinguish real job requirements versus making assumptions about who might possessthose requirements. beststudy284@gmail.com

Learning Objective: 15.7. Explain the legal requirements of hiring employees.

Cognitive Domain: Analysis Answer Location: Equal Employment Opportunity Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. A new business owner is setting up a business and will be opening in 3 months. While she is recruiting for full-time employees, she hires a temporary worker. The

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worker is only helping out a few days a week and doing odd jobs such as being on the premises when the owner is away, stocking office supplies, and helping arrange office furniture. At the end of the week, the business owner pays the worker the agreed-upon fee of $200. What issues might affect the business?

Ans: The answer should indicate that the business owner needs to have an EIN. The worker should have the protections of an employee. Other considerations might include workers’ compensation, and to comply with IRS regulations, the employer should withhold part of the employee’s income for employment taxes. Other withholdings may include state taxes, depending on the state. The employee should complete a W-4 formand an I-9 form, verifying the employee’s eligibility to work in the United States.

Learning Objective: 15.7. Explain the legal requirements of hiring employees.

Cognitive Domain: Comprehension Answer Location: Hiring Employees Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. Bob is a massage therapist working for a company with three employees. After a year, he asks to take a vacation only to find out that vacations are not offered by the company. Bob argues that he is due 2 weeks of vacation based on customary vacationsreceived elsewhere. Discuss the legal, practical, and ethical issues.

Ans: Answers should address the employment agreement. The company is not requiredto provide vacation. However, from a practical perspective, Bob is likely to go elsewhereto obtain those benefits. One may question the ethical situation since Bob seems to have been surprised by the information.

Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Comprehension Answer Location: Benefits Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Collin obtains a position as a stock clerk where he must stock and distribute office supplies to a group of 250 employees. In his job, he uses a pull cart, ladder, and occasionally must use beststudy284@gmail.com

small hand tools in order to assemble small furniture and officeequipment. Discuss safety precautions the employer must take.

Ans: The area of work should be inspected for safety hazards and employees should betrained in basic safety, such as the use of ladders and handling of tools. Any applicable safety records should be kept and accidents should be reported. Relevant emergency actions associated with chemical use should be readily available as well as the suppliesto carry them out (for example, eye wash solution around chemicals). Medical treatment and rehabilitation services should be available for employees injured on the job.

Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Application Answer Location: Safety Measures Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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10. Terry does not want her employees to be on their cell phones during work hours. She requires them to have their cell phones on mute and to remove themselves fromthe office for emergency phone calls. She believes that this is necessary in order to ensure the safety of the workplace, where machinery is in use and distractions may cause accidents. Describe the steps Terry should take in enforcing this policy.

Ans: Answers may include addressing the policy in the Employee Handbook and addressing cell phone usage in safety training. Enforcement, though not specifically identified in the reading, is also important as employees should be informed/reminded ofpolicies and the rationale behind them.

Learning Objective: 15.7. Explain the legal requirements of hiring employees.Cognitive Domain: Application Answer Location: The Employee Handbook Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Chapter 16: Marketing and Pitching Your Idea Test Bank Multiple Choice

1. The primary goal of the business pitch is which of the following? a. to have people immediately purchase your product or service b. to finalize your audience’s commitment to funding your product or service c. to start a discussion that may lead to a favorable outcome d. all of these Ans: C Learning Objective: 16.1. Discuss the role of marketing an pitching in entrepreneuship Cognitive Domain: Knowledge Answer Location: The Role of Marketing and Pitching in EntrepreneurshipDifficulty Level: Easy AACSB Standard: General skill areas, written and oral communication 2. Which of the following is included in the traditional marketing mix framework? a. mindset b. ideation c. market research d. product Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. The traditional marketing mix is made up of these four main elements, known as the4Ps: a. People, Prospect, Presence, Pitch beststudy284@gmail.com

b. Process, Presentation, Perception, Profit c. Product, Price, Promotion, Place d. Package, Passion, Perspective, PersonalityAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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4. Pricing is based on the amount the customer is expected to pay for the product, its perceived value, and the degree to which the price can be raised or lowered dependingon: a. market demand and competitor pricing. b. manufacturing costs and location. c. marketing campaigns and customer freedback. d. wholesaler disounts and retail markup.

Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 5. Karen’s company manufactures high-end design cookware. Karen has signed with alocal kitchenware store to give free cooking lessons during which she will use her cookware. This is an example of which of the following marketing elements? a. distribution b. promotion c. product d. place Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 6. Karen’s company manufactures high-end design cookware. Karen will be selling her product at a chain grocery story during the month of December and will be paying for a center aisle display near the front entry of the store. This is an example of which of the marketing mix? beststudy284@gmail.com

a. distribution b. promotion c. product d. place Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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7. Karen’s company manufactures high-end design cookware. The handles of the cookware remain cool when used on a stovetop and have slip-on covers for the handlesto be used for removing the product from the oven. This demonstrates what element in the marketing mix? a. promotion b. service c. customer orientation d. product Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

8. John is starting a sole proprietorship in which he will install home stereo systems.John decides to test a paid Google Ad so that the name of his company will gain recognition.

This is an example of what marketing mix element? a. product b. promotion c. place d. advertising Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

9. Stephen has opened a BBQ restaurant that he hopes will be seen as a sports bar. Which of the following best describes an example of a need for positioning? beststudy284@gmail.com

a. Stephen receives a complaint from a customer about the lack of heat in the BBQsauce. b. Stephen notices several Facebook postings that describe his restaurant as “a goodfamily restaurant” and “a perfect end to a day of shopping.” c. Stephen notices several Facebook postings that describe his restaurant as good buta bit pricey. d. Stephen notices that many calls are coming in asking for directions to his location. Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas

10. Stephen is preparing his pitch for a bank representative that will be considering him for a business loan. He lists the resumes and credentials of chefs who are working in the restaurant’s kitchen. This is an example of what marketing principle (from the 7 Ps)? a. positioning b. promotion c. people d. packaging Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

11. The process of creating a name, term, design, symbol, or any other feature thatidentifies a product or service and differentiates it from others is known as: a. marketing b. positioning c. packaging d. branding Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

12. A brand strategy can best be described by which of the following? beststudy284@gmail.com

a. the logo and labeling on the product or service b. the plan to market the product c. the plan to communicate the brand messages to the target audience d. the plan that organizes, controls, and legally protects the brandAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: Branding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

13. When marketers use the S.A.V.E. approach, the focus would likely be which of the following?

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a. a greater focus on solutions and providing information b. cost reduction c. a need for an updated, technology-oriented approach to marketing d. an emphasis on place, price, and promotionAns: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. Research conducted by Harvard Business School found that the traditional 4 Psmodel: a. helps businesses promote themselves as important sources of information andproblem solving. b. is narrow and outdated. c. is highly relevant in a modern business environment. d. under-emphasizes product technology and quality. Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

15. S.A.V.E. advocates marketing a product based on features. a. its price advantage b. how it meets customer needs c. its basic functions d. its novelty beststudy284@gmail.com

, rather than emphasizingits

Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas 16. According to the S.A.V.E. framework, customers are drawn to a. value more than to price b. price more than to value c. both price and value in equal measure d. only price

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.

Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

17. According to the S.A.V.E. framework, which of the following helps to build a relationship of familiarity and trust before a purchase is even made? a. advertising b. access c. promotion d. education Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

18. Entrepreneurial marketing is distinct from traditional marketing in which of the following ways? a. the focus is on interacting with the customers b. the focus is on marketing with the lowest possible media c. the focus is on a hierarchy of customers, starting with a circle of family and friends d. relies on low-cost brochures, handouts, and business cardsAns: A Learning Objective: 16.3. Compare entrepreneurial marketing with traditional marketing.Cognitive Domain: Comprehension Answer Location: Traditional Marketing Versus Entrepreneurial Marketing Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas 19. Nike’s “Just Do It” statement is an example of which of the following? a. a brand b. a campaign c. a logo d. a tagline Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: Branding Difficulty Level: Medium

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AACSB Standard: General business and management knowledge areas 20. Nike’s “swoosh,” found on all of its products, is an example of which of the following? a. a brand b. a campaign c. a logo d. a tagline Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: Branding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 21. Bea’s Donut shop was asked to sponsor a political group’s event, during which her product would be on display. Bea refused because Bea’s Donut shop is based on an image of a family with a tagline of “a taste of friends and family.” What is Bea’s concernin refusing this marketing opportunity? a. managing her brand b. the cost of the event c. the use of her logo d. the use of her tagline Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: Branding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

22. Entrepreneurs need to market themselves as well as their product due to which ofthe following? a. Entrepreneurs tend to be unknown and have no name or brand recognition. b. The product or service is new, so selling yourself enhances the product pitch. c. Investors will invest in you first and want to see that there is a long-term relationship. d. People will buy your product only if they like you since sales tend to be one-on-one.Ans: C Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing Yourself Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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23. Which of the following best describes the amount of time you have to make an impression during a pitch session? a. People will allow you at least a minute before deciding if they want to hear more. b. People will listen to your entire pitch before forming an opinion. c. You will have between 7 and 20 seconds to create a good impression. d. You will have one tenth of a second.

Ans: C Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing Yourself Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

24. What percentage of communication is nonverbal?a.

25% b. 45% c. 47% d. 93% Ans: D Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing Yourself Difficulty Level: Easy AACSB Standard: General skills area

25. Of the following, what component of communication is most effective in communicating your message? a. the words spoken b. facial expressions c. body movements d. had gestures Ans: B beststudy284@gmail.com

Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing Yourself Difficulty Level: Easy AACSB Standard: General skills area 26. What does the author mean by the nonvisual dimension? a. nonverbal gestures used by the speaker to communicate b. the communication aids, such as presentation slides and handouts c. the signs of encouragement that we give people we are presenting to d. consideration to different sensory learning styles the audience may haveAns: D Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge

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Answer Location: Marketing Yourself Difficulty Level: Easy AACSB Standard: General skills area

27. What is the best description of a pitch deck? a. the introductory statements that grab the audience’s attention, placed at the start ofthe pitch b. a brief presentation, usually 10–12 slides, that provides a quick overview of your idea c. the detailed backup information that will give all the details of your idea d. the handout summary that you give to your audienceAns: B Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Art of Pitching Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

28. Describing how a service stands out from its competitors would be what aspect ofthe marketing mix? a. product b. price c. promotion d. place Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 29. When asking “Is this service something that is suitable for my target audience,” an entrepreneur is interested in what aspect of the marketing mix? beststudy284@gmail.com

a. product b. price c. promotion d. place Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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30. Which of the following did the authors suggest as a strategy for monitoring the appropriate price for your product? a. testing the effect of price changes on demand for the product b. lowering the price as sales drop c. adjusting the price relative to the increase or decrease of the cost of goods toproduce it d. examining competitor prices Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

31. Which of the following components of a food truck business demonstrates the element of “place” from the Marketing Mix? a. Ensuring the price is comparable to local eateries b. Offering a cuisine not available from othe restaurants in the region c. Posting the menu online d. Parking and selling food in a busy downtown areaAns: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

32. Why would an entrepreneur be constantly tweaking the marketing mix? a. to adjust to a competitive and ever-changing market b. to adjust for improvements in the product or service beststudy284@gmail.com

c. to take advantage of new ways of marketing, especially the Internet d. to make sure that you are still on track with your original planAns: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 33. What would be the best description of the term packaging? a. the use of the logo and brand name on the product packaging b. making sure that the form of delivery will prevent damage to the product c. the process of exploring all visual elements of the product and service appearance

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d. presenting the service in clearly labeled and attractive packagesAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 34. Bea’s Donuts requires that all people working in her store wear a light blue polo shirt showing the logo of her company. Requiring this shirt is part of what aspect of marketing? a. service b. packaging c. employee engagement d. positioning Ans: B Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

35. What name is given to the process of creating a name, design, symbol, and otherfeatures that identify and differentiate your product? a. positioning b. promoting c. branding d. product design Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge beststudy284@gmail.com

Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

36. How do the authors suggest that the brand message be delivered? a. by stating the company purpose on all packages b. by consistently using the product tagline c. by advertising and social networking d. by channeling it through advertising, distribution, and packagingAns: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

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Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

37. The first and most important aspect of a brand is which of the following: a. the name of the company, product, or service b. the company logo c. the company tagline d. the product quality Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

38. Al Ries suggested that using one word as the product or company would create astronger brand. What was the reasoning behind this suggestion? a. It would be easier for consumers to remember. b. It would leave it to the consumer to fill in the blank. c. It would force the product to represent one singular goal. d. It would encourage linkage between the company and its service. Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

39. A logo should: beststudy284@gmail.com

a. state the purpose of the product or service b. be easily remembered c. create an emotional connection with the customer d. be associated with the product, not the companyAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

40. In considering access, what is the focus?

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a. the exact location where your product can be purchased b. a variety of places or ways that the product can be purchased c. the path from hearing about the product to the actual purchase d. the ease of getting information about your product or serviceAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Reframing the 4 PsDifficulty Level: Medium AACSB Standard: General business and management knowledge areas 41. What is meant by entrepreneurial marketing? a. any marketing conducted by an entrepreneur b. lower cost, inexpensive marketing c. a set of processes based on new and unconventional marketing practices d. marketing conducted by people who do not have a traditional marketing job title orrole Ans: C Learning Objective: 16.3. Compare entrepreneurial marketing with traditional marketing.Cognitive Domain: Knowledge Answer Location: Traditional Marketing Versus Entrepreneurial Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

42. Which of the following best distinguishes entrepreneurial marketing from traditional marketing? a. the marketing message is delivered as a dialogue b. the marketing message is delivered as an elevator pitch c. the marketing message is delivered as a pitch d. the marketing message is delivered through nontraditional mediaAns: A Learning Objective: 16.3. Compare entrepreneurial marketing with traditional marketing.Cognitive beststudy284@gmail.com

Domain: Knowledge Answer Location: Traditional Marketing Versus Entrepreneurial Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

43. What enables people to find you online via Google or other online browsers? a. blogs and social media b. word-of-mouth advertising c. search engine optimization d. AdWords Ans: C Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge

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Answer Location: Your Website Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

44. Google search ratings can be increased by which of the following? a. links to social media pages that are also calculated in the ratings b. the quality of posts onto the website c. paying for Google ads d. building an attractive website Ans: A Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge Answer Location: Your Website Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

45. What percentage of communication is achieved through actual words? a. 7% b. 20% c. 36% d. 44% Ans: A Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing yourself Difficulty Level: Easy AACSB Standard: General skills area 46. What is a call to action? a. the action you would like your audience to take after you finish your presentation b. an emotional plea to rally around your product c. a request for help beststudy284@gmail.com

d. the “go” signal indicating that the deal has been madeAns: A Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Art of Pitching Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

47. Paying people to post positive social media messages about a new product without disclosing their financial incentive would be considered: a. a faster way to raise social media rankings b. an ethical oversight c. a necessity for faster market presence d. a professional way of quickly building your social network

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Ans: B Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Comprehension Answer Location: Entrepreneurship Meets Ethics: Social Media and MarketingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

48. According to a 2010 Trust Barometer study, what percentage of viewers see socialmedia friends as credible sources of brand information? a. 60% b. 45% c. 25% d. 10% Ans: C Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: Entrepreneurship Meets Ethics: Social Media and MarketingDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

49. Asking questions as part of the pitch, rather than making statements, results inwhich of the following outcomes? a. It helps the entrepreneur to identify problems with his or her product. b. It encourage others to respond, or at least think more deeply about the answer. c. It obscures the message by not answering questions customers need to know before purchasing a product. d. It creates tension between entrepreneur and customer by giving the impression thatthe entrepreneur is withholding information.

Ans: B Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Comprehension Answer Location: The Question Approach beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 50. What pitch approach challenges you to capture the essence of your idea within a140 character limit? a. the Twitter approach b. the storytelling approach c. the quick sell approach d. the elevator pitch Ans: A Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Twitter Approach Difficulty Level: Easy

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AACSB Standard: General skills area

51. The idea of using a short amount of time (less than one minute) to explain why your business is exciting and unique is commonly known as: a. the fast pitch b. the quick sell c. the elevator pitch d. the sales pitch Ans: C Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: Pitch Approaches Difficulty Level: Easy AACSB Standard: General skills area

52. What type of pitch follows a narrative structure that can be summed up in the following sentences?

1. Once upon a time, . . .

2. Every day, . . .

3. One day, . . .

4. Because of that, . . .

5. Because of that, . . .

6. Until finally, . . . a. the Pixar Pitch b. the Disney Pitch c. the fairytale pitch d. the narrative pitch Ans: A Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Storytelling Approach Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General skills area

53. How many times do the authors recommend practicing a pitch in front of friends, family, or other entrepreneurs? a. 1–2 time b. 3–4 times c. 5–7 times d. at least 10 times Ans: D Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Twitter Approach Difficulty Level: Medium AACSB Standard: General skills area

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54. A framework that helps define the brand and differentiate it from the competition iscalled: a. the branding mix b. the sales mix c. the product mix d. the marketing mix Ans: D Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General skills area

55. Anything tangible or intangible (such as a service) offered by a company is: a. the feature set b. the benefits c. the product d. the promotion Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

56. The act of clearly presenting and describing a product or service to others is called: a. the proposal b. the pitch c. the launch d. the delivery beststudy284@gmail.com

Ans: B Learning Objective: 16.1. Discuss the role of marketing and pitching in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Role of Marketing and Pitching in EntrepreneurshipDifficulty Level: Easy AACSB Standard: General skills area

57. The activities that involve all the ways in which companies tell their customers abouttheir offering is known as: a. the branding b. the positioning c. the promotion

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d. the pitch Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

58. According to the text, what term best describes the location where the product isactually distributed to the target market? a. the place b. the distributor c. the address d. the site Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

59. According to the chapter, what describes the process of creating a name, term,design, symbol, or any other feature that identifies a product or service and differentiates it from others? a. branding b. manufacturing c. brainstorming d. development Ans: A Learning Objective: 16.2. Explain the principles of marketing and how they apply to new beststudy284@gmail.com

ventures.

Cognitive Domain: Comprehension Answer Location: Branding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

60. A low-budget strategy that focuses on personally interacting with a target group by promoting products and services through surprise or other unconventional means is called: a. cross-platform marketing b. guerrilla marketing c. agile marketing d. ambush marketing Ans: B

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Learning Objective: 16.3. Compare entrepreneurial marketing with traditional marketing.Cognitive Domain: Knowledge Answer Location: Guerrilla Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 61. The Eat My Words® SMILE and SCRATCH Test™ were devised in order to test: a. a company’s promotional materials b. the user experience of a company’s line of products c. the effectiveness of company or product name d. the effectiveness of a company’s product pitchAns: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 62. Coca-Cola’s “the happiness machine”—a vending machine that gives out seeminglyendless cans of Coca-Cola, plus surprise gifts such as bunches of flowers, balloon animals, pizzas, and giant sandwiches—is an example of: a. entrepreneurial marketing b. traditional marketing c. guerrilla marketing d. transactional marketing Ans: C Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: Guerrilla MarketingDifficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General business and management knowledge areas

63. According to the text, what is the primary method software company Atlassian employs to generate sales? a. The company’s support team provides customers with helpful information and shows them how to use their products, thereby building relationships that can lead to future business. b. The company sends out salespeople to knock on doors and convince other companies to buy from them. c. The company uses guerrilla marketing techniques focused on fun, creative interactions with their target audience. d. The company invests in large marketing campaigns for TV and radio.Ans: A

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Learning Objective: LO 16.4 Assess the value of social media for marketingopportunities.

Cognitive Domain: Knowledge Answer Location: Creating Content That Drives Sales Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

64. According to studies, what percentage of angels are more likely to invest in a business if they perceive trustworthiness? a. 10% b. 25% c. 50% d. 75% Ans: A Learning Objective: 16.6. Describe the pitch process and diff erent types of pitches.Cognitive Domain: Knowledge Answer Location: Research at Work: Pitching Trustworthiness Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

65. In pitching his new product, an entrepreneur describes the life of a customer beforeand after using his product. The entrepreneur is using what approach to pitching? a. emotional appeal b. building rapport c. storytelling d. engagement Ans: C Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Comprehension Answer Location: The Storytelling Approach Difficulty Level: Medium AACSB Standard: General business and management knowledge areas beststudy284@gmail.com

True/False

1. In a pitch, it is a good idea to use the 4 Ps framework. Using the framework will organize your review of the product and make sure your pitch is complete.

Ans: T Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

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2. Some people expand the 4 Ps to include people and owner personality. Ans: F Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

3. Because of the nature of guerrilla marketing, its use is limited to entrepreneurs andsmall businesses.

Ans: F Learning Objective: 16.3. Compare entrepreneurial marketing with traditional marketing.Cognitive Domain: Knowledge Answer Location: Guerilla Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

4. The social media site LinkedIn is most noted as a social networking rather than professional site.

Ans: F Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge Answer Location: Marketing Through Social Media Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

5. Companies with blogs get 55% more web traffic and 126% higher sales lead growththan those that don’t.

Ans: T Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge Answer Location: Table 16.3: Popular Forms of Social Media beststudy284@gmail.com

Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 6. Comments on social media can be measured by categorizing the types of commentsand following changes in the number of comments falling into any category.

Ans: T Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Comprehension Answer Location: Getting the Most From Social Media Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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7. Because websites often have a “contact us” area with a dialogue box that allows users to post a question, it is recommended that websites omit telephone numbers. Ans: F Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Comprehension Answer Location: Your Website Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

8. One of the advantages of blogging is that other bloggers will share your contentthrough their own social networks.

Ans: T Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge Answer Location: Creating Content That Drives Sales Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

9. Social media is best used to inspire, entertain, and build trust. It is less effective fordirect sales.

Ans: T Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Knowledge Answer Location: Creating Content that Drives Sales Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

10. Generally speaking, having people collaborate on your ideas, asking them to give feedback and criticism, is a powerful way of getting buy-in.

Ans: T Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Comprehension Answer Location: The Storytelling Approach beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: General skills area 11. Rather than making an audience immediately fall in love with an idea, the purposeof the pitch is to create a discussion that will lead to a favorable outcome.

Ans: T Learning Objective: 16.1. Discuss the role of marketing and pitching in entrepreneurship.

Cognitive Domain: Knowledge Answer Location: The Role of Marketing and Pitching in EntrepreneurshipDifficulty Level: Easy AACSB Standard: General business and management knowledge areas

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12. The marketing mix consists of the variety of products that a business is offering.Ans: F Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

13. Once developed, the marketing mix remains stable over time. Ans: F Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: The Basic Principles of Marketing Difficulty Level: Easy AACSB Standard: General business and management knowledge areas

14. A brand strategy is a short-term plan to develop a successful brand. Ans: F Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Knowledge Answer Location: Branding Difficulty Level: Easy AACSB Standard: General business and management knowledge areas 15. According to the authors, the two main parts to the “perfect pitch” are the contentand the communication.

Ans: T Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Art of Pitching Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: General skills area

16. The authors recommend never leaving a presentation with a request.Ans: F Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Art of Pitching Difficulty Level: Easy AACSB Standard: General skills area

17. The drawback of the Twitter approach is that a product can only be pitched viaTwitter.

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Ans: F Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Knowledge Answer Location: The Twitter Approach Difficulty Level: Easy AACSB Standard: General skills area

18. Research shows that ten-second first impressions are as powerful as impressions built over a period of months.

Ans: T Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Knowledge Answer Location: Marketing Yourself Difficulty Level: Easy AACSB Standard: General skills area

Essay

1. Suppose you were making a pitch to people in your local community and were askingthem to loan you $5,000 to fund your startup. How would you prepare your presentation to be pitch ready?

Ans: Answers may vary but should include elements of product, price, promotion, and placement. Elements may include: 

the use of a pitch deck



recognition of customer need



how the product differs from competitors



identification of the target market



suitability for the target market



how the product will be promoted



competitive pricing and perceived value



how customers will find out about the product

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

personal appearance and nonverbal communication

Learning Objective: 16.1. Discuss the role of marketing and pitching in entrepreneurship.

Cognitive Domain: Application Answer Location: The Role of Marketing and Pitching in EntrepreneurshipDifficulty Level: Medium AACSB Standard: General business and management knowledge areas 2. What areas of evidence might be presented to indicate that your new service for ashared car cooperative has a perceived customer value?

Ans: Answers will vary. The student should indicate a plan to justify the demand interms of: 

how it solves a social or personal problem



cost benefits

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

ease of use



other competitive products and their success or failures



ability to address real or perceived problems in the solution

Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 3. In presenting a plan for your new service for a shared car cooperative, what elementsof promotion might be considered?

Ans: Answers will vary but should include elements of: 

online advertising



social networking



direct mail



press releases



free aspects of promotion



any creative way of getting the word out

Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Application Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas 4. Develop a tagline appropriate for your new shared ownership car cooperative. Explain why the tagline will support your brand image and fulfill a promise to your customers.

Ans: Answers will vary. Answers should consider the perceived customer need, customer value, and evidence that the tagline tells the customer what to expect from thecompany.

Learning Objective: 16.2. Explain the principles of marketing and how they apply to new beststudy284@gmail.com

ventures.

Cognitive Domain: Application Answer Location: Branding Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

5. Discuss why it may be important for an entrepreneur to focus on the solution of a consumer problem rather than on a description of the product.

Ans: Answers should identify at least two of the three following reasons: 

Ability to engage the stakeholder



Avoid the tendency to get caught up with product features



Emphasize customer needs

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Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: Reframing the 4 Ps Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

6. Discuss what should be considered when setting the price for your product.Ans: Potential answers will address the following: 

expected costs



perceived value



degree of flexibility in pricing, depending on environmental changes



competitor pricing



appropriateness of price for the target market

Learning Objective: 16.2. Explain the principles of marketing and how they apply to new ventures.

Cognitive Domain: Comprehension Answer Location: The Basic Principles of Marketing Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

7. Shawne gave a well-prepared PowerPoint presentation on her new spray-and-dry mop. The slides gave bullet-type descriptions of the product features and mechanical engineering. The verbal description was perfect, but the audience had trouble understanding what the product looked like and how it worked. Shawne had describedthe product yesterday to a group of engineers who understood the product perfectly. What principle of communication may have helped Shawne?

Ans: The answers will vary. The question pertains to the nonvisual dimensions of communication. Students should recognize that people have different learning styles.To improve her communication, Shawne should mention the following: 

Different learning styles

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

Tactile learning—the ability to touch



Visual displays—pictures of the product



Kinesthetics—the ability to interact with the product and try it out

Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Analysis Answer Location: How to Make a Good First Impression Difficulty Level: Hard AACSB Standard: General skills area 8. Use the Pixar approach to storytelling to create a storytelling approach to a new chopping board with a replaceable protective film that makes daily sanitation a thing ofthe past.

Ans: The story should use the Pixar approach: 

Once upon a time, . . .



Every day, . . .

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

One day, . . .



Because of that, . . .



Because of that, . . .



Until finally, . . .

Learning Objective: 16.6. Describe the pitch process and different types of pitches.Cognitive Domain: Application Answer Location: The storytelling approach Difficulty Level: Hard AACSB Standard: General business and management knowledge areas; general skillsarea 9. Assume that you have started a landscaping company and have developed the basics of a company website. Describe what you would consider in using your site tocreate sales.

Ans: Answers will vary, but should consider four to five of the following: 

Create engaging content: examples of content that is meaningful and informative



Make the site easy to navigate



Decluttered site with easy-read content



Minimal use of videos



Ability to use the site with smartphones



How the site will encourage contacts and company availability



Link to an online community: blogs, tweets, engaging in online conversations



Pictures and images of people using the product or service



Ability to track the effectiveness of page landings and navigation



Use of keywords and tags

Learning Objective: 16.4. Assess the value of social media for marketing opportunities.Cognitive Domain: Analysis Answer Location: Creating Content That Drives Sales Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

10. What elements would you consider in preparing a presentation that makes a good impression? beststudy284@gmail.com

Ans: a. Preparing a pitch deck b. Practicing to make sure nonverbal communication is considered c. Opportunities to engage the audience, obtain feedback, and show you are coachable d. Identify potential areas of common interest in order to build rapport e. General appearance, grooming f. General politeness, handshake, business match with audience Learning Objective: 16.5. Practice how to make a good impression during your pitch.Cognitive Domain: Analysis Answer Location: Marketing Yourself Difficulty Level: Medium AACSB Standard: General business and management knowledge areas

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Appendix A: Financial Statements and Projections for Startups Test Bank

Multiple Choice

1. The three essential financial statements include all of the following EXCEPT

.

a. balance sheet b. cash flow statement c. entrepreneurs scorecard d. income statement Ans: C Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge Answer Location: Three Essential Financial Statements Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets 2. Vivienne wants to produce a report that measures her financial performance on a monthly basis. She wants to see selling- and expense-related activities that result in profit or loss over a period of time. She is interested in producing which of the followingstatements? a. backlog statement b. revenue statement c. entrepreneurs scorecard d. income statement Ans: D Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Three Essential Financial Statements beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

3. Arya wants to produce a financial report that shows the amounts the company owes,what it owns, and include her shareholder stake at a particular date in time. She wants to produce a(n) . a. balance sheet b. bookings order c. accounts receivable sheet d. income statement Ans: A

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Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

4. Karter is very busy and wants to produce a financial report that details the inflows and outflows of cash for his company over the last month. He is interested in producing a(n) . a. shareholders statement b. cash flow statement c. entrepreneurs scorecard d. accrued expenses report Ans: B Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

5. The financial statement that subtracts cost of goods sold from revenue to arrive atgross profit is a(n)

.

a. balance sheet b. cash flow statement c. entrepreneurs scorecard d. income statement Ans: D Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets beststudy284@gmail.com

6. The backlog report is

.

a. the amount of money that the company owes vendors b. the amount of money due to a company from its customers c. the orders that have been received but not delivered to the customer d. the orders that have been delivered to the customer but not yet receivedAns: C Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge

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Answer Location: Three Essential Financial Statements Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

7. Operating expenses include which of the following? a. cost of goods sold b. liabilities, deferred expenses, and assets c. sales expense and administrative and general expenses d. amortization and interest expense Ans: C Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge Answer Location: Three Essential Financial Statements Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

8. Earnings before interest, taxes, depreciation, and amortization is the same as . a. EBT b. EBIT c. EBITDA d. EBID AAns: C Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge Answer Location: Three Essential Financial Statements Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

9. The balance sheet shows

.

a. what the business owns and what the business owes b. only net worth beststudy284@gmail.com

c. current expenses d. shareholder deferred revenue Ans: A Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge Answer Location: Three Essential Financial Statements Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

10.

are assets converted into cash within a year.

a. Cash flow assets

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b. Current assets c. Intangible assets d. Deferred assets Ans: B Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Knowledge Answer Location: The Balance Sheet Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

11.

is the amount that customers owe to a company after receipt of item(s)

purchased. a. Accounts payable b. Accounts receivable c. Accounts deferred d. Accounts accrued Ans: B Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Knowledge Answer Location: The Balance Sheet Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

12. When a company has long-term investments, it means they

.

a. have cash, stocks, bonds, and real estate that has been on their books longer thanone year b. should be selling them soon so they can become short-term profit c. have more cash than they need and they are wasting it on long-term investments d. are going for a bank loan Ans: A Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Other Types of AssetsDifficulty beststudy284@gmail.com

Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

13. Kurt has a 5-year bank loan with his business. The principle that is scheduled to bepaid in the first 12 months is considered a. a loss b. a long-term liability c. a short-term portion of long term debt d. operational cash flows Ans: C

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.

Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Liabilities and Shareholder EquityDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

14. Shareholders equity includes two main components:

.

a. retained earnings and capital stock b. long-term investments and retained earnings c. intangible assets and capital stock d. retained earnings and fixed assets Ans: A Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Knowledge Answer Location: Liabilities and Shareholder EquityDifficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

15. A linkage between the financial statements includes which of the following? a. net income from the balance sheet is entered into the income statement b. net income from the income statement is entered into the retained earnings in thebalance sheet c. assets have to equal liabilities d. cash is the total expenses on the income reportAns: B Learning Objective: A.3. Clarify the relationship between the three financial statements.Cognitive Domain: Comprehension Answer Location: Linkages Between the Three Financial StatementsDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

16. Jimi is very interested in managing his cash. You mentioned this course to him andtold him beststudy284@gmail.com

about

, which is the number of days a company’s cash is tied up in the

production and sales process. a. the income statement b. Cash Convention Report c. cash conversion cycle d. adding depreciation and amortization to net income Ans: C Learning Objective: A.3. Clarify the relationship between the three financial statements.Cognitive Domain: Comprehension Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

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17. Janis went to her accountant and learned about DSO, defined as

.

a. measuring the number of days it takes to collect on accounts receivable b. measuring the average number of days it takes to sell the entire inventory of a company c. measuring the number of days it takes you to pay your bills d. equaling DOI + DSO - DPO Ans: A Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Comprehension Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

18. Arabella went to her accountant and learned about DOI, defined as

.

a. measuring the number of days it takes to collect on accounts receivable b. measuring the average number of days it takes to sell the entire inventory of a company c. measuring the number of days it takes you to pay your bills d. equaling DOI + DSO - DPO Ans: B Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Comprehension Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

19. Jax went to his accountant and learned about cash conversion cycle, defined as thatwhich . a. measures the number of days it takes to collect on accounts receivable b. measures the average number of days it takes to sell the entire inventory of a company beststudy284@gmail.com

c. measures the number of days it takes you to pay your bills d. equals DOI + DSO - DPO Ans: D Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Comprehension Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

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20. The pro forma financial statement should include at least three scenarios of your financial forecast—an income statement, the balance sheet, and

.

a. the cash outflow statement b. capitol stock c. the cash flow statement d. accrued expenses Ans: C Learning Objective: A.5. Discuss how to build a pro forma financial statement.Cognitive Domain: Comprehension Answer Location: Building Pro Forma Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting and markets

21. Norah is interested in developing her purchasing policy. She wants to make a policyfor which of the following? a. the price and timing of raw materials, and other goods and services necessary tobuild, sell, and support products b. how pricing will be determined for her products and services c. the level of compensation and benefits for each type of position in the business d. the process and timing in which obligations to pay for products and services sold willbe billed and collected Ans: A Learning Objective: A.6. Explain how to apply assumptions when building pro formastatements.

Cognitive Domain: Application Answer Location: Building Assumptions: Operating Policies and Other Key AssumptionsDifficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

22. Norah is interested in developing her pricing policy. She wants to make a policy forwhich of the following? a. the price and timing of raw materials, and other goods and services necessary tobuild, sell, and support products beststudy284@gmail.com

b. how pricing will be determined for her products and services c. the level of compensation and benefits for each type of position in the business d. the process and timing in which obligations to pay for products and services sold willbe billed and collected Ans: B Learning Objective: A.6. Explain how to apply assumptions when building pro formastatements.

Cognitive Domain: Application Answer Location: Building Assumptions: Operating Policies and Other Key AssumptionsDifficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

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23. Norah is interested in developing her compensation policy. She wants to make apolicy for which of the following? a. the price and timing of raw materials, and other goods and services necessary tobuild, sell, and support products b. how pricing will be determined for her products and services c. the level of compensation and benefits for each type of position in the business d. the process and timing in which obligations to pay for products and services sold willbe billed and collected Ans: C Learning Objective: A.6. Explain how to apply assumptions when building pro formastatements.

Cognitive Domain: Application Answer Location: Building Assumptions: Operating Policies and Other Key AssumptionsDifficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

24. Norah is interested in developing her credit policy. She wants to make a policy forwhich of the following? a. the price and timing of raw materials, and other goods and services necessary tobuild, sell, and support products b. how pricing will be determined for her products and services c. the level of compensation and benefits for each type of position in the business d. the process and timing in which obligations to pay for products and services sold willbe billed and collected Ans: D Learning Objective: A.6. Explain how to apply assumptions when building pro formastatements.

Cognitive Domain: Application Answer Location: Building Assumptions: Operating Policies and Other Key AssumptionsDifficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting and markets

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True/False

1. Presenting carefully thought-out financial projections to investors is an exercise in lowering perceived risk in both you as an entrepreneur and your idea.

Ans: T Learning Objective: A.1. Explain the purpose of financial projections for startups.Cognitive Domain: Comprehension Answer Location: Financial Projections for Startups Difficulty Level: Easy AACSB Standard: Financial theories, analysis, reporting, and markets

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2. Shari discussed her income statement with you and described her report as reportingwhat the company owes, what it owns, and her shareholder stake at the last day of the prior month. This statement is an income statement.

Ans: F Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets 3. Bill’s business has sales of $100,000, inventory of $20,000, cost of goods sold of $31,000, and general and administrative expenses of $45,000. Bill’s gross profit is $69,000.

Ans: T Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Comprehension Answer Location: The Income Statement Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets 4. Bill’s business has sales of $100,000, inventory of $20,000, cost of goods sold of $31,000, and general and administrative expenses of $45,000. Bill’s operating profit is $4,000.

Ans: F Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: The Income Statement Difficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets 5. Bill’s business has sales of $100,000, inventory of $20,000, cost of goods sold of $31,000, and general and administrative expenses of $45,000. Bill’s gross profit is beststudy284@gmail.com

$80,000.

Ans: F Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: The Income Statement Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

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6. Sandy’s balance sheet is partially completed. However, she has total assets of $120,000 and total stockholder’s equity of $15,000. Her liabilities should total $105,000.Ans: T Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: The Balance Sheet Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets 7. Sandy’s balance sheet shows assets of $120,000, liabilities of $100,000 and stockholder’s equity of $25,000. Her balance sheet is in balance.

Ans: F Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: The Balance Sheet Difficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

8. Currents assets are cash and other assets such as inventory, accounts payable, andprepaid expenses that can be converted into cash within a year.

Ans: F Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: The Balance Sheet Difficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

9. Goodwill is the price paid for an asset in excess of its book value. This usually occurswhen a company acquires another business.

Ans: T Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Other Types of Assets beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

Essay

1. Compare and contrast the Income Statement and the Statement of Cash Flows.

Ans: The income statement takes sales (or revenue) and subtracts cost of goods sold toget gross margin, then subtracts operating expenses, non-operating (interest

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income/expense, gains on sale of assets, etc.) and taxes to get to net income. The Statement of Cash Flows takes the income statement (prepared on accrual accounting)and converts it to a cash basis statement. Then the information is reported in three categories: operating, financing, and investing.

Another purpose of the cash flow statements is to analyze the changes in the cash account, starting with the beginning balance and ending with the ending balance.

Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Analysis Answer Location: Three Essential Financial Statements Difficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

2. Compare and contrast the Balance Sheet and the Statement of Cash Flows.

Ans: The balance sheet lists the assets (things you own), liabilities (things you owe), and stockholder’s equity. The cash flow statement takes the asset account cash and analyzes it converting the income statement to cash basis. This analysis begins with the beginning balance of cash, adds the cash inflows, and subtracts the cash outflows (fromthe statement of cash flows) to arrive at the ending balance of cash.

Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Analysis Answer Location: Three Essential Financial Statements Difficulty Level: Hard AACSB Standard: Financial theories, analysis, reporting, and markets

3. Provide the line by line format of an income statement.Ans:

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Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

4. Provide the line by line format of a balance sheet.Ans:

Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

5. List five examples of cash inflows.

Ans: Cash inflows Cash sales Customer receiptsFixed asset beststudy284@gmail.com

sales Interest on bank balances Government grants Bank loans Share capital investment

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Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

6. List five examples of cash outflows.

Ans: Cash outflows Payments to suppliers Payments of wages and salaries Payments for fixed assets Tax made on profits Interest on bank loans and overdrafts Payment of dividends to shareholders Repayment of loans Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

7. Provide the line by line format of the Statement of Cash Flows. Ans:

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Learning Objective: A.2. Describe financial statements as an essential part of financialprojections.

Cognitive Domain: Application Answer Location: Three Essential Financial Statements Difficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

8. Describe DSO. Ans: DSO is a measure of the number of days that it takes to collect on accounts receivable.

Remember, if you do business in cash, then your DSO is zero, but if you sellon credit, then this will be a positive number. DSO is calculated using the following equation: DSO = Average Accounts Receivable/Revenue per day Average Accounts Receivable = (Beginning Accounts Receivable + Ending AccountsReceivable)/2 Revenue per day = Revenue/365 Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Application Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

9. Describe DOI. Ans: DOI is a measure of the average number of days it takes to sell the entireinventory of a company. DOI is calculated using the following equation: DOI = (Average Inventory)/COGS per day Average Inventory = (Beginning inventory + Ending inventory)/2COGS per day = COGS/356 Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Application Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

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10. Describe how you calculate CCC, Cash Conversion Cycle.

Ans: To calculate CCC, you need to include several items from the financial statements:Income statement: revenue and COGS Balance sheet Beginning and ending inventory Beginning and ending accounts receivable Beginning and ending accounts payable Note that for balance sheet items, because they capture a snapshot in time, you want toaverage over the period of time that you are investigating. So if you are looking at one

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year, then you need to look at the ending period for the current year and the sameending period for the previous year.

CCC = DSO = DOI – DPO Learning Objective: A.4. Describe the journey of cash through the cash conversioncycle.

Cognitive Domain: Application Answer Location: The Journey of Cash: The Cash Conversion CycleDifficulty Level: Medium AACSB Standard: Financial theories, analysis, reporting, and markets

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Appendix B: The Pitch Deck Test Bank

Multiple Choice

1. What is a pitch deck? a. a marketing tool to get information b. another term for elevator speech c. a way to articulate the purpose of the venture, who is served by the venture, how theventure will be successful, and who will execute the plan d. a group of PowerPoint slides Ans: C Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

2. Sasha, in developing her pitch deck, stated her idea. This means she

.

a. articulated the purpose of the venture b. identified those served by the idea c. identified the resources required d. described the team Ans: A Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

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3. Sasha, in developing her pitch deck, went into detail about the market she wouldserve and the demographics. She

.

a. articulated the purpose of the venture b. identified those served by the idea c. identified the resources required d. described the team Ans: B Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium

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AACSB Standard: Integrating knowledge across fields

4. Sasha, in developing her pitch deck, described the need for funding, how much shewould need, what she would spend the funds on, and other resources needed. She . a. articulated the purpose of the venture b. identified those served by the idea c. identified the resources required d. described the team Ans: C Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields 5. Sasha, in developing her pitch deck, went into great detail about her “executive” team, identifying each person and the strengths they bring to the project. She a. articulated the purpose of the venture b. identified those served by the idea c. identified the resources required d. described the team Ans: D Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

6. Lyla is developing her pitch deck slides. She should include which of the following inher title slide? a. the name of the company, logo, and Lyla’s name and contact information beststudy284@gmail.com

.

b. Lyla’s name, the name of the company, and the company description and purpose c. the name of the company, the company logo, Lyla’s name and contact information,and the problem your company is addressing d. title slides are unnecessary Ans: A Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Knowledge Answer Location: Slide #1: Title Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

7. The company purpose and description should

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.

a. be included in the pitch deck, perhaps even as early as slide #2 b. be private, as competition might take the opportunity away c. be included in slide #1 and should be the main focus of your pitch deck d. be spoken, not in the pitch deck Ans: A Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension Answer Location: Slide #2: Company Purpose/DescriptionDifficulty Level: Medium AACSB Standard: Integrating knowledge across fields

8. Mila is considering adding a description of the problem she is currently solving. Sheshould . a. not include it, as competition might take the opportunity away b. include it in the pitch deck, perhaps even as early as slide #3 c. introduce it in the beginning of a meeting with possible investors, not include it in thepitch deck d. describe it out loud, not put it in the slide deck Ans: B Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension Answer Location: Slide #3: The Problem/Need Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

9. Stefan is considering adding his value proposition to communicate that he can solvethe customers’ problem or fulfill their need in a unique way. He should a. describe it out loud, not put it in the slide deck b. not include it, as competition might take the opportunity away c. put it in a separate document from the pitch deck d. include it in the pitch deck, perhaps even as early as slide #4Ans: D Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive beststudy284@gmail.com

.

Domain: Comprehension Answer Location: Slide #4: The Solution Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields 10. Bentley is considering adding reasons as to “why now.” He should a. include it in the pitch deck, perhaps even as early as slide #5 b. not include it, as competition might take the opportunity away c. put it in slide #1 d. describe it out loud, not put it in the slide deck Ans: A Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension

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.

Answer Location: Slide #5: Why Now? Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

11. Janet has a handle on the market opportunity. She is considering adding informationon TAM (total available market), SAM (serviceable available market), and SOM (share of market) into the pitch deck. She should

.

a. not include it, as competition might take the opportunity away b. include it in the pitch deck, around slide #6 c. describe it out loud, not put it in the slide deck d. put it in slide #1 Ans: B Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension Answer Location: Slide #6: Market Opportunity Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

12. Jax spent months interacting with his potential customers, finding out who they areand how to reach them. He wants to discuss this experience in his pitch. He should . a. include it in the pitch deck, around slide #7 b. not include it, as competition might take the opportunity away c. include it in the pitch deck, in slide #1 d. describe it out loud, not put it in the slide deck Ans: A Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension Answer Location: Slide #7: Getting Customers Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields beststudy284@gmail.com

13. Luther has done a lot of work getting his venture off the ground, and he wants to tellpeople what has been accomplished already. This is called

.

a. blowing your own horn b. an accomplishment statement c. a completed project report d. traction Ans: D Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Knowledge Answer Location: Slide #9: Traction Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields 14. Call to Action is a very important slide and concept to discuss.

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a. This message will change depending on your audience. b. The call will always be about closing the sale of your products and/or services. c. The call will always be about volunteering for the cause. d. The Call to Action has no place in the pitch deck.

Ans: A Learning Objective: B.2. Explain the content of pitch deck slides.Cognitive Domain: Comprehension Answer Location: Slide #12: Call to Action Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

15. The time after your pitch deck presentation should be used for

.

a. questions and answers b. presenting other business ideas you have c. giving participation gifts d. you should leave once you have finished your pitch deck presentationAns: A Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Comprehension Answer Location: The Question and Answer Period Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

True/False

1. A pitch deck is important for Martin to develop for his new business venture. He needs to answer the following question in his pitch deck: “What is the problem or need?”Ans: T Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy beststudy284@gmail.com

AACSB Standard: Integrating knowledge across fields 2. Ryker is developing his pitch deck and is having trouble with wording his answer to “How will you solve the problem or meet the need in a unique way?” Ryker should skipthis question.

Ans: F Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

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3. Paisley wants to add to her pitch deck information about her customers and detailsabout the number of potential customers available in her market. She should include this information in her pitch deck.

Ans: T Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

4. Maci, after conducting research, has information about the size and extent of the market for her product now and in the future. She should include this in her pitch deck.Ans: T Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

5. Maddox has worked hard on determining how he will reach, acquire, and keep his customers. This is something he should include in his pitch deck.

Ans: T Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

6. Paisley is cautious about sharing too much information with people about her new venture and considers her competition and how she differentiates from them as private and confidential. Gael tells her to not share this information with others. Gael gives goodadvice.

Ans: F beststudy284@gmail.com

Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields

7. One of the hardest areas to get a handle on may be that of sales and projectingsales.

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Ans: T Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

8. New ventures should skip the revenue/expense modeling step of pitch deck development.

Ans: F Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Easy AACSB Standard: Integrating knowledge across fields 9. A call to action is to be used by sales people and may not be appropriate for executives, managers, or business owners.

Ans: F Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors.

Cognitive Domain: Comprehension Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

Essay

1. Discuss the nature and purpose of using pitch decks.

Ans: Pitch decks are effective ways to communicate your message, consistently, withconfidence and professionalism.

Learning Objective: B.1. Describe the pitch deck and its importance to potentialinvestors. beststudy284@gmail.com

Cognitive Domain: Application Answer Location: Overview of the Pitch Deck Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

2. For pitches in front of investors, or application to incubators, or pitch competitions,what questions should you expect to be asked about your team?

Ans: Team Questions: 

Why is the team capable of executing this plan?



How do you divide up responsibilities among the team?

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

What is the equity split among team members?



How are decisions made among the team?



Who is the boss?



Who came up with the original idea?



Who else do you need to add to your team in the short term?



What obstacles have you faced and how did you overcome them?



Are you open to changing your idea?

Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Analysis Answer Location: The Question and Answer Period Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields 3. For pitches in front of investors, or application to incubators, or pitch competitions,what questions should you expect to be asked about your product and customers? Ans: Product/Customer Questions: 

What makes customers try your product/service?



What is the technology behind your product?



How does your product work in more detail?



What are the risks?



What is the next step in your product evolution?



Where do most of your customers come from today?



How many customers do you have today?



Who is going to be your first paying customer?



How are you understanding customer needs?



How do you really know people want this?

Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Analysis Answer Location: The Question and Answer Period beststudy284@gmail.com

Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields 4. For pitches in front of investors, or application to incubators, or pitch competitions,what questions should you expect to be asked about your competitors?

Ans: Competition Questions: 

What competitor do you fear the most?



Are the barriers to entry high or low? In other words, is it easy for competitors toenter the same market?



How much money have your competitors made?



Why do you think you are unique among your competitors?



Can the competition do what you are doing if they want to?



Why hasn’t this already been done?

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Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Analysis Answer Location: The Question and Answer Period Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

5. For pitches in front of investors, or application to incubators, or pitch competitions,what questions should you expect to be asked about your financial status?

Ans: Financial Questions: 

How did you calculate your market size?



What are the assumptions behind your revenue projections?



Are your numbers comparable to those of your competitors?



What happens if you don’t achieve your projected revenue?



If I invest, what exactly are you going to do with the cash, and what impact will it have on your business?



What is the typical cycle between making initial customer contact and closing thesale?



How much does it cost to acquire one customer?

Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Analysis Answer Location: The Question and Answer Period Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

6. For pitches in front of investors, or application to incubators, or pitch competitions, what questions should you expect to be asked about your growth and growth potential?Ans: Growth Questions: 

If your startup succeeds, what additional areas might you be able to expand into?



Are there other applications for your product/service/technology?



How are you defining success?

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

How big do you want to grow?



What is a likely exit strategy for this business?



What competition do you fear most?



Where do your growth projections come from?



How are you and your team dividing responsibilities?



How are decisions made among the team?

Learning Objective: B.3. Anticipate and prepare for the types of questions that may beasked during the question and answer period.

Cognitive Domain: Analysis Answer Location: The Question and Answer Period Difficulty Level: Medium AACSB Standard: Integrating knowledge across fields

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