New Venture Creation
Chapter Exam Questions
Course Introduction
New Venture Creation explores the process of identifying, evaluating, and developing new business opportunities. This course provides students with practical tools and frameworks for conceptualizing innovative ideas, assessing market potential, assembling resources, and forming sustainable business models. Topics include opportunity recognition, feasibility analysis, business planning, funding strategies, and go-to-market execution. Through case studies, workshops, and developing their own business plans, students gain hands-on experience and critical insights into launching successful startups in dynamic environments.
Recommended Textbook
Entrepreneurship Successfully Launching New Ventures 5th Edition by Bruce R. Barringer
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Page 2
Chapter 1: Introduction to Entrepreneurship
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Sample Questions
Q1) Joseph Schumpeter argued that entrepreneurs develop new products and technologies that over time make current products and technologies obsolete, and this process, which he called creative destruction, is good because it stimulates economic activity.
A)True
B)False
Answer: True
Q2) The number one characteristic shared by successful entrepreneurs is ________.
A) a desire to achieve financial rewards
B) a passion for the business
C) a desire to employ other people
D) a desire to fulfill a lifetime dream
E) a desire to bring a revolutionary new product or service to market
Answer: B
Q3) According to reliable statistics, 9 out of 10 businesses fail in their first few years of existence.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Recognizing Opportunities and Generating Ideas
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Sample Questions
Q1) Which of the following is not one of the rules for a formal brainstorming session?
A) No criticism is allowed.
B) The session moves quickly.
C) Freewheeling is encouraged.
D) Leapfrogging is encouraged.
E) The session is used for decision making.
Answer: E
Q2) Many new businesses are successful by taking advantage of fads.
A)True
B)False
Answer: False
Q3) Which of the following is not an example of a social force?
A) Changes in interest rates
B) Increasing participation in social networks
C) Increasing diversity of the workplace
D) Aging of the population
E) Continual migration of people from small towns and rural areas to cities
Answer: A
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Chapter 3: Feasibility Analysis
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Sample Questions
Q1) Organizational feasibility analysis is conducted to determine whether a proposed business venture has sufficient management expertise, organizational competence, and resources to successfully launch its business.
A)True
B)False
Answer: True
Q2) The Savvy Entrepreneurial Firm feature in Chapter 3 focuses on Bill Gross, and how a company he was leading, Knowledge Adventure, made a 180-degree turn on the positioning of a product. According to the feature, Gross and his team made the change as a result of ________.
A) observing how customers acted when buying their product
B) studying industry trends
C) conducting Internet research
D) administering a concept test and a buying intentions survey
E) hiring consultants to provide them advice
Answer: A
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Chapter 4: Developing an Effective Business Model
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Sample Questions
Q1) Which of the following is not one of the four major categories in the Barringer/Ireland Business Model Template?
A) Operations
B) Resources
C) Channels
D) Core strategy
E) Financials
Q2) The first box in the Barringer/Ireland Business Model Template is ________.
A) product/market scope
B) revenue streams
C) business mission
D) target market
E) channels
Q3) A firm's ________ describe(s) the ways in which it makes money.
A) proceeds account
B) break-even analysis
C) revenue streams
D) cash flow
E) income statement
Q4) Describe the Barringer/Ireland Business Model Template and discuss its purpose.
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Chapter 5: Industry and Competitor Analysis
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Q1) There are four factors that determine the threat of new entrants: number and balance of competitors, degree of difference between products, growth rate of an industry, and level of fixed costs.
A)True
B)False
Q2) Generally, industries are more attractive when the threat of substitutes is
A) high
B) low
C) neutral (neither high or low)
D) high for manufacturing firms and low for service firms
E) high for service firms and low for manufacturing firms
Q3) Firms that pursue a multidomestic strategy use the same basic approach in all foreign markets.
A)True
B)False
Q4) An emerging industry is one that is characterized by a large number of firms of approximately equal size.
A)True
B)False
Page 7
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Chapter 6: Writing a Business Plan
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Sample Questions
Q1) The two primary audiences for a firm's business plan are a firm's employees and investors and other external stakeholders.
A)True
B)False
Q2) A business plan can usually be completed in one to three days.
A)True
B)False
Q3) The major revenue drivers, which are the ways a business earns money, should be first identified in "The Economics of the Business" section of the business plan.
A)True
B)False
Q4) Why is the "management team and company structure" section of the business plan often given disproportionate weight among investors?
Q5) What is an "executive summary?" Why is the executive summary often called the most important part of a business plan?
Q6) What is a business plan?
Q7) What are the two main reasons for writing a business plan?
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Chapter 7: Preparing the Proper Ethical and Legal Foundation
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Q1) An ethical dilemma is a situation that involves doing something that is beneficial to oneself or the organization, but may be unethical.
A)True
B)False
Q2) Most C corporations have two classes of stock- ________ and ________.
A) premium; normal
B) common; preferred
C) standard; substandard
D) regular; special
E) ordinary; distinct
Q3) Which form of business ownership is a particularly poor choice for an aggressive entrepreneurial firm?
A) C corporation
B) Sole proprietorship
C) Subchapter S corporation
D) Limited partnership
E) Limited liability corporation
Q4) Very few businesses require licenses and permits to operate.
A)True
B)False
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Chapter 8: Assessing a New Venture's Financial Strength and Viability
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Q1) The statement of cash flows is divided into three separate activities ________.
A) profitability activities, stability activities, and investing activities
B) stability activities, earning activities, and financing activities
C) operating activities, capital activities, and liquidity activities
D) spending activities, earning activities, and capital activities
E) operating activities, investing activities, and financing activities
Q2) Pro forma financial statements are projections for future periods based on forecasts and are typically completed for 2 to 3 years into the future.
A)True
B)False
Q3) What is ratio analysis? Why is it important?
Q4) Which of the following was not identified as one of the four main financial objectives of a firm?
A) Stability
B) Efficiency
C) Timeliness
D) Liquidity
E) Profitability
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Q5) Describe the difference between historical and pro forma financial statements.
Chapter 9: Building a New-Venture Team
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Q1) Which of the following statements is untrue regarding founding teams?
A) The members of heterogeneous teams are diverse in terms of their abilities and experiences.
B) The members of homogenous teams are very similar in terms of their abilities and experiences.
C) Teams that have worked together before have an edge.
D) Studies show that more than one individual starts 50 to 70 percent of all new firms.
E) It is generally believed that new ventures started by an individual have an advantage over new ventures started by a team.
Q2) Similar to a board of directors, an advisory board possesses legal responsibility for the firm.
A)True
B)False
Q3) The fact that a corporation has a board of directors precludes it from having a board of advisors.
A)True
B)False
Q4) What is a skills profile and what is it used for?
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Chapter 10: Getting Financing or Funding
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Sample Questions
Q1) Venture capital involves getting a loan or selling corporate bonds.
A)True
B)False
Q2) Historically, commercial banks ________.
A) have been a good source of funds for startup firms
B) have not funded startup firms at all
C) have been a good source of funds for manufacturing firm startups but not for service firm startups
D) have been a good source of funds for service firm startups but not for manufacturing firm startups
E) have not been a good source of funds for startup firms
Q3) Why do most firms need funding? Provide a brief explanation of each reason.
Q4) The three reasons that most firms need to raise money during their early life are cash flow challenges, capital investments, and lengthy product development cycles.
A)True
B)False
Q5) What is a business angel? Describe the prototypical business angel. How much money do business angels typically invest in a single company?
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Chapter 11: Unique Marketing Issues
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Sample Questions
Q1) Which of the following statements is incorrect regarding the process of building a company's brand, particularly for young firms?
A) A firm's name, logo, Web site design, and even its letterhead are part of its brand.
B) One of the keys to effective branding is to create a strong personality for a firm.
C) Some companies monitor the integrity of their brands through brand management.
D) Startups must build a brand from scratch, which starts with selecting the company's name.
E) Most experts recommend a heavy reliance on advertising in building a firm's brand.
Q2) Many startups emphasize advertising over public relations primarily because it's cheaper and helps build the firm's credibility.
A)True
B)False
Q3) A firm's marketing mix is the assortment of products and services that it sells. A)True
B)False
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13
Chapter 12: The Importance of Intellectual Property
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Q1) Certification marks are similar to ordinary trademarks, but they are used to identify the services or intangible activities of a business rather than a business's physical product.
A)True
B)False
Q2) The first patent, which was granted for a process of making potash, an ingredient in fertilizer, was signed by ________.
A) John Adams
B) Thomas Jefferson
C) Abraham Lincoln
D) Theodore Roosevelt
E) George Washington
Q3) Which of the following is an example of intellectual property?
A) DripCatch's cash reserves
B) The computer that you use
C) Nike's swoosh logo
D) United's fleet of planes
E) Google's headquarters in Mountain View, California
Q4) What is a trademark? Why are trademarks important?
Q5) Identify and briefly describe the three types of patents.
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Chapter 13: Preparing for and Evaluating the Challenges of Growth
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Q1) The Savvy Entrepreneurial Firm feature in Chapter 13 focuses on Salesforce.com, a company that pioneered the idea of software as a service (SaaS). The main point of the case is that rather than remaining a niche product, Salesforce.com's product, which is an online software platform for salespeople, has ________ and appeals to mainstream customers.
A) crossed the divide
B) jumped the divide
C) leaped the technology curve
D) crossed the chasm
E) crossed the valley
Q2) According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that ________.
A) solve a significant problem or have a major impact on their customers' productivity or lives
B) are cost leaders and promote themselves aggressively
C) have a major impact on their customers' lives and sell high quality products
D) take advantage of environmental trends and are cost leaders
E) solve a significant problem or sell high quality products
Q3) What is the organizational life cycle and why is it important?
Page 15
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Chapter 14: Strategies for Firm Growth
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Q1) Describe the internal growth strategy of new product development. Why is it a competitive necessity in some industries that entrepreneurial firms focus on this form of growth?
Q2) The Savvy Entrepreneurial Firm feature in Chapter 14 focuses on SwitchFlops, a company that produces sandals with interchangeable straps. The primary takeaway from the feature is that savvy growth-minded startups ________.
A) utilize both internal and external growth strategies
B) emphasize internal rather than external growth strategies
C) emphasize international growth strategies from their inception
D) configure their products and services in ways that have built-in growth potential
E) compete on the basis of quality rather than price
Q3) Which of the following is an advantage of growth by means of external growth strategies?
A) Gaining access to new products and markets
B) Increased business complexity
C) Clash of corporate cultures
D) Antitrust implications
E) Loss of organizational flexibility
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Chapter 15: Franchising
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Q1) The document that consummates the sale of a franchise is called the ________.
A) franchise disclosure document
B) franchise agreement
C) license agreement
D) uniform franchise contract
E) franchise circular
Q2) An individual who is team oriented and has experience in the industry in which the franchise competes is a good candidate to be a franchisee.
A)True
B)False
Q3) Business format franchises typically allow franchisees substantial flexibility in how they run their individual franchise units.
A)True
B)False
Q4) An advantage of franchising, from the franchisors point of view, is that franchising helps a venture grow because the franchisees provide the majority of the capital.
A)True
B)False
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Page 17