Exam 1 - Business Entrepreneurship
50 Questions at 2pts each for 100 points, plus 1 Bonus Question
1. According to entrepreneur Paul Hawken, good entrepreneurs are risk avoiders, not risk takers.
2. The Bureau of Labor Statistics projects that the U.S. small business sector will grow
faster than the large company sector over the next 15 years.
3. An entrepreneur is one who creates a new business in the face of risk and uncertainty,
for the purpose of achieving profit and growth by identifying opportunities, and assembles
the necessary resources to capitalize on those opportunities.
4. Which of the following is not a characteristic of the typical entrepreneur?
a. confidence, in their ability to succeed
b. value of money over achievement
c. desire for immediate feedback
d. a future orientation
5. Which sector dominates the U.S. economy today?
e. real estate and financial
6. The primary cause of small business failures is,
a. lack of capital
b. management incompetence
c. poor location
d. improper inventory control
7. The business plan has two essential functions: it helps the entrepreneur determine if the
business will succeed, and it helps recruit management talent to run the new company.
8. The wise entrepreneur will hire a professional to prepare his business plan for him.
9. ( _ ) is an entrepreneur's best insurance against launching a business destined to fail
or mismanaging a prtentially successful company.
a. Bankrolling the business with plenty of startup capital
b. Creating a solid business plan
c. Spending lots of money on marketing and advertising
d. Hiring a team of accountants and attorneys as advisors
10. The primary purpose of a business plan is to
a. attract lenders and investors.
b. enable an entrepreneur to take his or her company public.
c. guide a company by plotting a strategy for its success.
d. meet SEC and other legal requirements designed to protect lenders and investors.
11. ( _ ) define a company's overall direction and answer the fundamental question, "Why am I in business"?
d. Key performance factors
12. ( _ ) are short term, specific targets which are attainable, measurable, and controllable.
d. Standard operating procedures
13. The business strategy section of the business plan,
a. should be built around a "me too" strategy, one that imitates the products, sources, and images of already successful businesses.
b. should describe how the entrepreneur plans to satisfy the key success factors he has identified in the business.
c. should describe how the entrepreneur plans to achieve the mission, goals, and objectives he or she has established for their business venture
d. two of the above
e. all of the above
Questions 14 and 15 refer to the following information
Describing her company's revolutionary design for a bottle cap, Kyoto says. "It has a special
locking mechanism that you know is engaged when a red panel is showing through this little window
on top of the cap. If you want to keep unauthorized hands, for instance, those of children from
opening the bottle, you engage the locking mechanism. Unlike other childproof caps, however, this
design does not frustrate adults who might have arthritis and elderly people whose grip may not be
as strong as it once was." Removing the cap from the bottle in no time with just a few turns, Kyoto
says, "They can open the cap quite, easily by disengaging the locking mechanism this way... see?
You get the safety of a childproof cap without the problems most adults have getting them off."
14. The fact that with Kyoto's new cap "you get the safety of a childproof cap without the
problems most adults have getting them off" is a,
d. none of the above.
15. Which of the following would be considered a feature of Kyoto's new cap?
a. The special locking mechanism
b. The red panel showing through the little window on top of the cap signaling that the locking mechanism is engaged
c. The fact that you get the safety of a childproof cap without the problems most adults have getting them off
d. Two of the above
16. Which of the following questions should be in the marketing strategy section of the business plan addresses?
a. Who are my target customers?
b. How many potential customers are in my company's trading area?
c. What should be the basis for differentiating my business from its competitors in my customers' minds?
d. All of the above
17. To be effective, the small business manager should limit strategic analysis to only the two or
three most significant opportunities facing the firm.
18. "Improving the company's cash flow" is a good example of an effective objective.
19. Before an entrepreneur can build a successful strategy, they must establish a clear mission,
goals, and objectives in order to have appropriate targets at which to aim their strategy.
20. The focus strategy depends on creating value for the customer either by being the low cost
producer or by differentiating the product or service in a unique fashion, but doing it in a
narrow target segment.
21. ( _ ) involves developing a game plan to guide a company as it strives to accomplish
its mission, goals, and objectives to keep it on its desired course.
a. Competitive advantage
c. Strategic management
d. Market segmentation
22. The aggregation of factors that sets a company apart from its competitors and gives it a
unique position in the market is its,
a. mission statement
b. competitive advantage
c. competitive profile
d. strategic plan
23. The relationship between core competencies and competitive advantage is best described by which statement?
a. Strengthening a company's competitive advantage strengthens its core competencies.
b. A company's core competencies become the nucleus of its competitive advantage.
c. As a company's core competencies become stronger, its competitive advantage becomes weaker.
d. There is no relationship between core competencies and competitive advantage.
24. Skatell's, a small jewelry store with three locations, designs and manufactures much of its
own jewelry while its competitors (many of them large department stores) sell standard, "off the shelf'
jewelry. As a result, many customers see, Skatellís as the place to go for unique pieces of jewelry.
Skatell's reputation for selling unique and custom designed jewelry is a(n),
25. Refer to the previous question. Skatell's business strategy would best be described as
a. low cost
26. The relationship between a company's mission, goals, and objectives and its strategy is best
described by which of the following statements?
a. Developing a company's strategy lays the groundwork for creating its mission, goals, and objectives.
b. The mission, goals, and objectives spell out the ends the company wants to achieve, and the
strategy defines the means for reaching them.
c. Although managers must change a company's mission, goals, and objectives as competitive
conditions change, they should avoid adjusting the company's strategy to prevent the company
from losing its focus and momentum.
d. There is no real link between a companyís mission, goals, and objectives and its strategy.
27. Shere Vincente operates a travel service that specializes in arranging trips for women,
giving special attention to their needs and preferences from security and comfort to activities
and events designed to appeal to her target customers. Vincente is pursuing a ( _ ) strategy.
a. cost leadership
28. The foundation of every business is satisfying the customer.
29. By 2050, the largest minority group in the U.S. will be Hispanics.
30. Modem consumers are more concerned about health, nutrition, and the environment
than in the past, and they shop accordingly
31. Businesses currently marketing goods and services to the elderly will be forced to
reformulate their strategies in the near future as that market segment continues to shrink in size.
32. One of the primary objectives of market research is to identify a small company's target market
33. In relationship marketing, the level of customer involvement which a company makes its customers
an all encompassing part of its culture is "Customer Partnership"
34. Without a clear picture of its target market, a small company will try to reach almost
everyone and usually ends up appealing to almost no one.
35. Because 70 percent of the average company's Wes come from present: customers, few can afford
to alienate any customers.
36. It takes much less money and time to keep existing customers than it does to attract new ones.
37. When an employee in a business treats a customer poorly, that customer usually does not
complain; however, she does tell her "horror story" about that business to at least nine other people.
38. Sales start a customer relationship service turns it into a profitable one.
39. The owner of a small sandwich shop who opens a second location in a town 20 miles
away is using a market development strategy
40. Successful marketing requires a business owner to,
a. understand what her target customersí needs, demands, and wants before her competitor can
b. offer customer products and services that will satisfy their needs, demands, and wants.
c. provide customers with service, convenience, and value so that they will keep coming back.
d. all of the above.
41. A marketing plan should,
a. determine customer needs and wants through market research.
b. pinpoint specific target markets the company will serve.
c. analyze the firm's competitive advantages and build a marketing Strategy around them.
d. create a marketing mix that meets customer needs and wants.
e. all of the above
42. The first step in the market research process is to
a. collect data.
b. define the problem.
c. design the research,
d. determine the relevant information.
43. An individualized (one to one) marketing campaign requires business owners to
a. collect information on their customers, linking their identities to their transactions.
b. calculate the long term value of their customers so they know which ones are most desirable and most profitable.
c. practice "just in time marketing" by knowing what their customers' buying cycle is and time their marketing efforts to coincide with it.
d. all of the above
44. When managers and employees understand the central role of the customer and spend considerable
time talking to them and about them, a company is at which level of customer involvement?
a. Level 1 Customer Awareness
b. Level 2 Customer Sensitivity
c. Level 3 Customer Alignment
d. Level 4 Customer Partnership
45. The majority of customers who stop patronizing a particular store do so because
a. its prices are too high
b. its quality is too low
c. an indifferent employee treated them poorly
d. it failed to advertise enough
46. Attracting a new customer costs as much as keeping an existing one.
b. five times
d. three fourths
47. In the phase of the product life cycle, sales volume climbs, but profits peak and then
begin to fall as competitors enter the market.
b. growth and acceptance
c. maturity and competition
d. market saturation
e. product decline
48. What can a company do to achieve stellar customer service and satisfaction?
a. Listen to customers with the help of suggestion boxes, focus groups, surveys, and other tools.
b. Define what "superior service" means so that customers and employees know exactly what to expect and what to provide.
c. Hire friendly, courteous sales and service representatives.
d. Use technology to provide better customer service.
e. All of the above
49. Which of the following is not an element of the marketing mix?
e. None. All of the above are part of the marketing mix.
50. The product life cycle concept means that small businesses must
a. constantly be involved in product innovation.
b. trace demographic and psychographic trends carefully.
c. create both place and time utility if they are to survive.
d. use a market penetration strategy if they are to be successful.
Business key words: entrepreneurship, capital, business venture, business structure, management,
product and service, small business, investor, business plan, marketing, customers, business
objective, advertising and IPO, legal, market analysis, cash flow, liquidity, target audience,
market segment, positioning, advantages and disadvantages, market research, partnerships,
model, pricing, four Ps.