Business 165 Fall, 2009 Test Chapters 1-3 Name___________________________________ MULTIPLE CHOICE.

Choose the one alternative that best completes the statement or answers the question. 1) An entrepreneur is one who: 1) _______ A) is willing to attempt to implement a business concept and then give up if it does not meet immediate expectations. B) understands the process of developing an idea and does not need to understand what it means to bring that idea to a viable business concept. C) creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities. D) knows that the concept they are about to develop will result a profitable business. 2) Entrepreneurs are characterized by: 2) _______ A) high energy levels. B) desire for immediate feedback. C) skill at organizing. D) All of the above 3) In addition to the opportunity to create their own destiny and enjoy what they do, entrepreneurs also benefit from the ability to: 3) _______ A) make a difference in an area important to them and be recognized for those efforts. B) create wealth without providing true value. C) exploit the opportunities that the free enterprise system offers. D) earn tremendous wealth without risk and uncertainty. 4) Potential drawbacks of entrepreneurship may include: 4) _______ A)

uncertainty of income, risk, long hours, and high stress. B) certainty of income, risk, long hours, and high stress. C) uncertainty of income, risk, long hours, and the immediate accumulation of wealth. D) uncertainty of income, risk, easy hours, and frequent vacations. 5) "Copreneurs" represent one of the fastest growing business sectors and are defined as: 5) _______ A) entrepreneurs that work part-time. B) highly successful entrepreneurs with prior company experience and background. C) entrepreneurial couples that work together as co-owners of their business. D) those entrepreneurs that will eventually combine their business with another venture.

6) The nation's small businesses: 6) _______ A) create more jobs than do big businesses. B) account for 47 percent of business sales. C) employ more than 51 percent of the nation's private sector workforce. D) All of the above 7) Small companies: 7) _______ A) are the leaders in offering training and advancement opportunities to workers. B) are concentrated in the manufacturing and retail sectors. C) created fewer jobs than big companies in the last decade. D) account for approximately 10 percent of the nation's GDP and 25 percent of business sales. 8) In terms of innovation and research, small businesses: 8) _______ A) have created such important innovations as air conditioning, FM radio, the laser, the automatic transmission, and the personal computer. B) contribute 20 percent more innovations per employee than large companies. C) create four times the innovations per research and development dollar than medium-sized firms and 24 times the innovations per research and development dollar than large companies. D) All of the above 9) John has come to you for advice on starting a business venture. He wants to know the best way to gain the experience he'll need. You suggest that he: 9) _______ A) just jump in and learn as he goes. B) determine his weaknesses and return to school for a term or two. C) read a small business book. D)

seek experience in the field he wishes to enter by working for another firm. 10) The primary cause of small business failures is: 10) ______ poor location. B) the lack of capital. C) improper inventory control. D) management mistakes. 11) Entrepreneurs tend to be overly ________ and commonly misjudge the ________ requirements of going into business. 11) ______ A) optimistic; financial B) pessimistic; financial C) optimistic; personal D) optimistic; professional 12) According to management expert Peter Drucker, startup companies can expect to outgrow their capital bases each time sales increase: 12) ______ 5 to 10 percent. B) 70 to 80 percent. 40 to 50 percent. D) 20 to 30 percent. C) A) A)

13) One hallmark of successful entrepreneurs is the ability to: 13) ______ A) be willing to gamble. B) repeat the same mistake. C) overlook past successes. D) fail intelligently. 14) Most entrepreneurs believe that ________ is what matters most, but ________ is the most important financial resource for a small business owner. 14) ______ profit; cash B) inventory; cash cash; profit D) profit; inventory 15) Entrepreneurs can increase their chances for success if they: 15) ______ A) learn to manage people and keep in touch with how they react to stress and balance their health needs with the needs of the business. B) manage their financial resources and understand financial statements. C) know their business in depth and develop a solid business plan. D) All of the above 16) The ability to develop new ideas and to discover new ways of looking at problems and opportunities is called: 16) C) A)

______ A) entrepreneurship. B) innovation. C) creative thinking. D) creativity. 17) The ability to apply creative solutions to problems and opportunities to enhance or to enrich people's lives is called: 17) ______ creativity. A) B) innovation. C) creative thinking. D) entrepreneurship. 18) An entrepreneurial "secret" for creating value in the marketplace is: 18) ______ A) applying lessons learned from history. B) applying creativity and innovation to solve problems. C) learning by doing. D) creating new products and services. 19) A(n) ________ is a preconceived idea of what the world is, what it should be like, and how it should operate. 19) ______ entrepreneur A) B) innovation

C) paradigm D) profitable vision 20) Which hemisphere of the brain processes information in a step-by-step fashion? 20) ______ Left hemisphere A) B) Intuitive hemisphere C) Right hemisphere D) Lateral hemisphere 21) Which hemisphere of the brain processes information all at once and by relying heavily on images? 21) ______ A) Right hemisphere B) Vertical hemisphere C) Left hemisphere D) Logical hemisphere

22) All of the following represent barriers to creativity that entrepreneurs impose upon themselves except: 22) ______ A) searching for more than one answer. B) being too practical. C) focusing on being too logical. D) blindly following rules. 23) Joseph Schumpeter wrote that entrepreneurs perform the vital function of: 23) ______ A) creative destruction. B) revolutionizing current patterns of production. C) challenging accepted ways of doing things. D) All of the above 24) Entrepreneurs can stimulate their own creativity and encourage it among workers by: 24) ______ A) expecting and tolerating failure. B) not taking chances. C) limiting rewards. D) avoiding problems. 25) Employees must be given the tools and resources they need to be creative. One of the most valuable resources is: 25) ______ money. B) providing challenges. C) rules and guidelines. A)

D) time. 26) Hiring a diverse workforce: 26) ______ A) brings in people from different backgrounds, with different cultural experiences, hobbies, and interests. B) allows for different ideas and varying methods of problem solving. C) helps in enhancing organizational creativity. D) All of the above 27) Which stage of the creative process involves viewing the similarities and differences in the information collected? 27) ______ Verification B) Transformation Illumination D) Incubation 28) ________ thinking is the ability to see similarities and ________ thinking is the ability to see differences among various data and events. 28) ______ A) Convergent; transformational B) Divergent; convergent C) Convergent; divergent D) None of the above 29) During the incubation phase of the creative process, the entrepreneur might do all of the following EXCEPT which one to let ideas "marinate" in his mind? 29) C) A)

______ A) Relax and play regularly. B) Do something totally unrelated for awhile. C) Don't allow one's self to daydream. D) Work on the problem or opportunity in a different environment. 30) Steps in the patent process include: 30) ______ A) documenting and verifying the date the idea was first conceived. B) establishing whether it is a novelty. C) searching existing patents. D) All of the above 31) Any distinctive word, phrase, symbol, name, or logo a firm uses to distinguish itself or its products is called a: 31) ______ trademark. B) patent. service mark. D) copyright. 32) A ________ is an exclusive right that protects the creators of original works such as literary, dramatic, musical, and artistic works. 32) ______ copyright B) patent service mark C) A) C) A)

D) trademark 33) ________ 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. 33) ______ A) Strategic management B) Market segmentation C) Mission D) Competitive advantage 34) The aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market superior to its competition is its: 34) ______ A) competitive profile. B) strategic plan. C) mission statement. D) competitive advantage. 35) ________ are a unique set of capabilities that a company develops in key operational areas such as service, innovation, and othersthat allow it to potentially vault past its competitors. 35) ______ A) Mission statements B) Key success factors C) Core competencies D)

Opportunities 36) The relationship between core competencies and competitive advantage is best described by which statement? 36) ______ A) Strengthening a company's competitive advantage strengthens its core competencies. B) As a company's core competencies become stronger, its competitive advantage becomes weaker. C) A company's core competencies become the nucleus of its competitive advantage. D) There is no relationship between core competencies and competitive advantage. 37) A small company's mission statement: 37) ______ A) defines what the company is, why it exists, and its reason for being. B) gives the business and everyone in it a sense of direction. C) establishes its purpose in writing. D) All of the above 38) ________ are positive internal factors that contribute toward accomplishing the company's mission, goals, and objectives, while ________ are negative internal factors that inhibit the accomplishment of a firm's mission, goals, and objectives. 38) ______ A) Threats; opportunities B) Strengths; weaknesses C) Opportunities; threats D) Weaknesses; strengths 39) Kevin Abt noticed that people were cooking meals in their homes less often but wanted to avoid the hassle of going out to eat. They wanted to "eat in" without cooking. Abt launched a company, Takeout Taxi, that delivers restaurant-prepared food to his customers' homes and businesses. Takeout Taxi is the result of a(n):

39) ______ opportunity. A) B) strength. threat. C) D) weakness. 40) Maria Sanchez is the owner of the Main Street Caf and a new restaurant opens a few blocks away. From Maria's perspective, this new restaurant constitutes a(n): 40) ______ weakness. A) B) opportunity. threat. C) D) strength. 41) Every business is characterized by a set of controllable variables that determines the relative success (or lack of it) of market participants called: 41) ______ A) distinctive competencies. B) key success factors. C) competitive edge. D) opportunities and threats. 42) The relationship between a company's mission, goals, and objectives and its strategy is best described by which of the following statements? 42)

______

A) The mission, goals, and objectives spell out the ends the company wants to achieve, and the strategy defines the means for reaching them. B) Developing a company's strategy lays the groundwork for creating its mission, goals, and objectives. 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 company's mission, goals, and objectives and its strategy. 43) The focal point of any company's strategy, whatever it may be, should be: 43) ______ its customers. A)

B) its product or service. C) its competition. D) its strengths and weaknesses.

For the questions below, consider the following competitive profile matrix: Key Success Competitor 2 Factors Quality Service Convenience On-Time Delivery Location TOTAL 44) Weight .35 .20 .15 .20 .10 1.00 Rating 4 4 2 2 3 Your Business Weighted Score .70 .40 .60 .80 .10 2.60 Rating 1 2 1 2 2 Competitor 1 Weighted Score .35 .40 .15 .40 .20 1.50

Weighted Score Rating 1.40 2 .80 2 .30 4 .40 4 .30 1 3.20

Which of the following statements is true? 44) ______ A) Your company's most serious weakness is its poor quality. B) The most important of the key success factors is location. C) Overall, Competitor 2 is the strongest of these three companies. D) Your company's most vulnerable point against these two competitors is in the area of on-time delivery. 45) Which company has the strongest competitive position? 45) ______ Your company Competitor 2 Competitor 1 A) B) C)

D) Impossible to tell from the information given 46) A cost-leadership strategy works well when: 46) ______ A) competing firms sell the same commodity products. B) buyers are sensitive to price changes. C) a company can reap savings from economies of scale. D) All of the above 47) A company that offers superior product quality, extra customer service, and fast delivery times is pursuing a: 47) ______ A) differentiation strategy. B) strategic alliance. C) concentration strategy. D)

cost-leadership strategy. 48) Rather than attempting to serve the total market, the small firm pursuing a ________ strategy specializes in serving a specific target segment. 48) ______ focus B) differentiation cost-leadership D) head-to-head C) A)

49/50: Name Peter Druckers 3 Forms of Entrepreneurial Strategy. 1. _________________________________________________________________________ 2. _________________________________________________________________________ 3. _________________________________________________________________________