Tutorial Question

ABDM 3313 Entrepreneurship

Tutorial 2

Chapter 1 Introduction to Entrepreneurship

1. According to the Global Entrepreneurship Monitor (GEM) 2007 study, the majority of people in high-income countries are drawn to entrepreneurship for the following reasons:

A) to take advantage of an attractive opportunity, to pursue independence, and to increase their incomes

B) lack of career prospects, government incentives, and to increase their incomes

C) lack of promotional opportunities in their jobs, to pursue independence, and government incentives

D) to pursue a personal interest, lack of promotional opportunities in their jobs, and to increase their incomes

E) to take advantage of an attractive opportunity, lack of career prospects, and government incentives

2. Starbucks is a firm that is proactive, innovative and risk-taking. From this description, we can most accurately conclude that Starbucks has a high level of:

A) inventive zeal

B) innovative intensity

C) entrepreneurial intensity

D) creative intensity

E) general zeal

3. Jim Brill is the founder of a company named Extreme Sports Supreme. The company makes products for extreme sports enthusiasts such as BMX bikers, hang gliders, parasailers, and surfers. Jim wants his company to pursue a high level of corporate entrepreneurship. To achieve that goal, Jim's firm should be:

A) innovative, risk averse, and take a "wait and see" posture

B) take a "wait and see" posture, innovative, and risk taking

C) proactive, not innovative, and risk taking

D) take a "wait and see" posture, not innovative, and risk averse

E) proactive, innovative, and risk taking

4. Google is an established firm that encourages and emphasizes entrepreneurial behavior throughout its various divisions. According to the textbook, Google practices:

A) commercial entrepreneurship

B) corporate entrepreneurship

C) deliberate entrepreneurship

D) business entrepreneurship

E) innovative entrepreneurship

5. The three primary reasons that people become entrepreneurs and start their own firms are to:

A) pursue their own ideas, realize financial rewards, and eliminate risk in their lives

B) do what they were "born" to do, be their own boss, and capture more of the spotlight

C) take big risks, be their own boss, and do what they were "born" to do

D) be their own boss, pursue their own ideas, and realize financial rewards

E) capture more of the spotlight, pursue their own ideas, and take big risks

6. According to the textbook, the number one reason that people become entrepreneurs is to:

A) realize financial rewards

B) reduce the risk in their lives

C) be their own boss

D) capture more of the spotlight

E) pursue their own ideas

7. According to the textbook, the four characteristics of successful entrepreneurs are:

A) passion for the business, is on the cutting edge of technological change, is very charismatic, and tenacity despite failure

B) is young and energetic, passion for the business, product/customer focus, and seeks recognition

C) passion for the business, tenacity despite failure, product/customer focus, and execution intelligence

D) is on the cutting edge of technological change, is forward thinking, tenacity despite failure, and product/customer focus

E) passion for the business, seeks recognition, is young and energetic, and execution intelligence

8. The number one characteristic shared by successful entrepreneurs is:

A) a charismatic personality

B) passion for the business

C) a desire to employ other people

D) a desire to fulfill a lifetime dream

E) being on the cutting edge of technological change

9. Which of the following is not one of the five common myths about entrepreneurs?

A) Entrepreneurs are networkers.

B) Entrepreneurs are moderate risk takers.

C) Entrepreneurs should be young and energetic.

D) Entrepreneurs love the spotlight.

E) Entrepreneurs are born not made.

Essay Question

1. What is entrepreneurship? What is the essence of entrepreneurial behavior?

2. Describe the three primary reasons that people become entrepreneurs and start their own firms.

3. Describe the four main characteristics of successful entrepreneurs.

Case study

Refer to textbook page 54

You Be the VC 1.1

Company : Pie Face

www.pieface.com.au

http://www.pieface.com.au/


Tutorial 3

Chapter 1 Introduction to Entrepreneurship

1. According to the textbook, entrepreneurs are ________ risk takers.

A) forceful

B) moderate

C) high

D) low

E) aggressive

2. Suppose you are a Small Business Development Center counselor and you're looking at the personality profiles of five potential entrepreneurs. Based on the profiles, which individual has the most desirable mix of personal characteristics to become a successful entrepreneur?

A) Candidate A: creative, decisive, moderate risk taker

B) Candidate B: seeks recognition, self-starter, strong work ethic

C) Candidate C: visionary, high risk taker, energetic

D) Candidate D: high risk taker, achievement motivated, is a networker

E) Candidate E: tolerant for ambiguity, seeks recognition, motivated primarily by money

3. According to the textbook, there are three types of startup firms:

A) lifestyle firms, general firms, and entrepreneurial firms

B) standard-of-living firms, statutory firms, and general firms

C) entrepreneurial firms, standard-of-living firms, and statutory firms

D) lifestyle firms, salary-substitute firms, and entrepreneurial firms

E) innovative firms, entrepreneurial firms, and standard firms

4. According to the textbook, there are three types of startup firms: entrepreneurial firms, lifestyle firms, and:

A) civil firms

B) salary-substitute firms

C) statutory firms

D) standard-of-living firms

E) innovative firms

5. Missouri Steak and Seafood is a restaurant that has been owned by Cameron Peterson for the past nine years. The restaurant offers a menu that is typical for steak and seafood restaurants, and affords Cameron a level of income that is similar that what he would earn in a conventional job. According to the textbook, Missouri Steak and Seafood is an example of a:

A) salary-substitute firm

B) entrepreneurial firm

C) standard-of-living firm

D) lifestyle firm

E) everyday-life firm

6. Tahoe Trips & Trails, a company mentioned in Chapter 1, leads multiday outdoor adventure trips for private groups and corporate clients to Lake Tahoe, Yosemite, Death Valley, and similar locations. The company was started by Hanna Sullivan, an individual that gave up a prestigious job with a private investment company because Tahoe Trips & Trails better accommodates her personal lifestyle. Tahoe Trips & Trails is an example of a ________ firm.

A) entrepreneurial

B) salary-substitute

C) standard-of-living

D) statutory

E) lifestyle

7. Entrepreneurial firms:

A) offer common products to customers and are not particularly innovative

B) bring new products and services to market, that are not particularly innovative

C) offer common products to customers, are not particularly innovative, and provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so

D) provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so

E) bring new products and services to market by creating and seizing opportunities

8. According to the textbook, entrepreneurship has historically had (a):

A) major impact on the economy and minor impact on society

B) minor impact on both the economy and society

C) major impact on society and minor impact on the economy

D) major impact on both the economy and society

E) no impact on either the economy or society

9. ________ is the process of creating something new, which is central to the entrepreneurial process.

A) Creative destruction

B) Modernism

C) Execution

D) Creativity

E) Innovation

10. Which of the following is the correct sequence for the four steps in the entrepreneurial process?

A) deciding to become an entrepreneur, developing successful business ideas, moving from an idea to an entrepreneurial firm, managing the growing entrepreneurial firm

B) developing successful business ideas, deciding to become an entrepreneur, moving from an idea to an entrepreneurial firm, managing and growing the entrepreneurial firm

C) developing successful business ideas, moving from an idea to an entrepreneurial firm, deciding to become an entrepreneur, managing and growing the entrepreneurial firm

D) deciding to become an entrepreneur, moving from an idea to an entrepreneurial firm, developing successful business ideas, managing and growing the entrepreneurial firm

E) deciding to become an entrepreneur, moving from an idea to an entrepreneurial firm, developing successful business ideas, managing and growing the entrepreneurial firm

11. Which of the following is not one of the four steps of the entrepreneurial process?

A) deciding to become an entrepreneur

B) determining how to seize the spotlight

C) developing successful business ideas

D) moving from an idea to an entrepreneurial firm

E) managing and growing the entrepreneurial firm

12. A ________ is a written document that describes all the aspects of a business venture in a concise manner.

A) business plan

B) business model

C) operations plan

D) corporate plan

E) contingency plan

13. A firm's ________ is a plan for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the value it creates

A) business plan

B) business model

C) tactical model

D) strategic plan

E) operations model

Essay Question

1. Identify the three types of start-up firms, and discuss how they differ. Provide examples of each type of firm.

Case study


You Be the VC 1.2

Company : Jott

www.jott.com.


Tutorial 4

Chapter 3 Forms of Business Entities, Regulations and Financial Support System

1. Which of the following is the most common form of business entities in Malaysia?

A. Private Limited Company ( Sendirian Berhad)

B. Public Limited Company

C. Foreign Owned Company

D. Unlimited Company

2. Hassan decides to resign his job on May 2009. He might want to build up his business after that. Since, he has 10 years working experience, he want to manage the business by him only. Which form of business suitable for him to register with Companies Commission of Malaysia (CCM)?

A. Private Company

B. Sole Proprietorship

C. Partnership

D. Entrepreneurship

3. Which form of business entities manage cannot exceed more than 20 members?

A. Limited Company by Guarantee

B. Limited Company by Share

C. Private Limited Company

D. Partnership

4. Which statement incorrect for sole proprietorship?

A. Simplest business structure.

B. Does not mean has to be small.

C. It may have any number of employees or grow to any level in sales revenue

D. The name of the business only can be the name of owner.

5. Which agreement must be form for partnership?

A. Contract Agreement

B. Letter Agreement

C. Letter offer

D. None of above

6. Which of the following is not a benefit for owner of partnership?

A. Enjoys a certain flexibility.

B. Easy to form and dissolve with minimum formalities

C. Nobody shares the rewards or profit except owner.

D. Liabilities unlimited.

7. Which is the disadvantage of partnership?

A. Risk of personal clashes among partners for private company.

B. Unlimited liabilities.

C. Responsibility and managing are divided equally among partners.

D. A lot of ideas, talents and skills

Essay Question

1. Explain the Characteristics of Proprietorship.

2. Discuss the advantages and disadvantages of sole proprietorship.

3. What are the components of Contract Agreement? And, why these very important for partnership?

4. Haslim want to build up his sole proprietorship of restaurant at KL. Where he should register?

5. What are the characteristic of partnership?


Tutorial 5

Chapter 3 Forms of Business Entities, Regulations and Financial Support System

1. Which of the following incorrect for Characteristic of Private Limited Company?

A. Control by one person.

B. Life span not dependent the death or resignation of member.

C. A company can take legal action or face legal action under its own name.

D. The liabilities are limited to the total shares contributed company’s capital among members.

2. All of the following consider as a terms or conditions for private limited company, except_________.

A. Number of members does not exceed 50 people.

B. It has specific authority to transfer ownership of members’ shares with the approval of Board of Directors

C. A company is allow to offer or sell any share to public

D. A company must use the word “Sdn. Bhd.” or “Sendirian Berhad” at the end of its name.

3. Which is the disadvantage of private limited company?

A. Liabilities are limited to the capital that they (company member)contributed.

B. Life span dependent on individual age or resignation

C. Greater potential for expansion.

D. Legally, the company is one business entity by itself.

4. Which of the following represent the advantage of private limited company?

A. Shares cannot be transacted through the share market.

B. Must pay the corporate tax

C. Yearly financial statement of company must be complete and regularly updated.

D. All shareholders are legally protected by law.

Essay Question

1. What is the procedure for register sole proprietorship and partnership?

2. What are the reasons for fail to register?

3. Discuss what is Memoradum of Association and Articles of Association.

4. What is the procedure for register private limited company?

5. Provide Five (5) financial support system of Malaysia.


Tutorial 6

Chapter 2 Recognizing Opportunities and Generating Ideas

1. A(n) ________ is a favorable set of circumstances that creates a need for a new product, service, or business.

A) idea

B) scheme

C) design

D) proposal

E) opportunity

2. According to the textbook, opportunities are:

A) tough to spot

B) easy to spot in the service sector but tough to spot in the manufacturing sector

C) easy to spot in the manufacturing sector but tough to spot in the service sector

D) easy to spot

E) neither easy nor tough to spot

3. An opportunity has four essential qualities:

A) attractive, timely, durable, and anchored in a product, service, or business that creates or adds value for its buyer or end user

B) practical, opportune, appropriate, and anchored in a product, service, or business that is efficient and effective

C) realistic, striking, timely, and anchored in a product, service, or business that is timely

D) attention-getting, attractive, timely, and anchored in a product, service, or business that creates or adds value for its buyer or end user

E) attractive, durable, resilient, and opportune

4. The term "window of opportunity," as discussed in Chapter 2, describes the time period in which a firm can:

A) obtain funding or financing

B) hire new employees

C) obtain patent protection for a new product

D) realistically enter a new market

E) get government approval for a regulated product or service

5. Which of the following is correct regarding opportunities and ideas?

A) An opportunity and an idea are essentially the same thing.

B) An idea almost always meets the criteria of an opportunity.

C) An opportunity is a thought, an impression, or a notion.

D) An idea is a favorable set of circumstances that creates a need for a new product, service, or business.

E) It's important to discern whether a particular idea meets the tests of an opportunity.

6. A(n) ________ is a thought, impression, or notion. A(n) ________ is a favorable set of circumstances that creates the need for a new product, service, or business.

A) scheme, notion

B) opportunity, idea

C) idea, design

D) idea, opportunity

E) notion, scheme

7. The three ways to identify an opportunity include:

A) observing trends, solving a problem, and finding gaps in the marketplace

B) studying industry trade journals, talking to consumers, and solving a problem

C) observing trends, conducting brainstorming sessions, and studying industry trade journals

D) observing trends, talking to consumers, and finding gaps in the marketplace

E) reading books, solving a problem, and findings gaps in the marketplace

8. Economic forces impact the opportunities available to entrepreneurs. Which of the following alternatives reflects a set of economic forces that would be of interest to entrepreneurs?

A) level of disposable income, new uses of old technologies, and new laws and regulations

B) new technologies, consumer spending patterns, and new laws

C) level of disposable income, consumer spending patterns, and level of interest rates

D) social and cultural trends, level of interest rates, and what people think is "in"

E) new changes in political areas, new laws, and level of disposable income

9. Which of the following is not an example of a social force?

A) changes in interest rates

B) increased interest in healthy foods

C) retirement of baby boomers

D) increased diversity of the workforce

E) increased interest in green products

10.The aging of the U.S. population has resulted in several new firms that have been founded to help older Americans stay in their homes longer, as an alternative to assisted living or moving into nursing homes. The aging of the U.S. population is an important ________ that is creating opportunities in many areas for entrepreneurial firms.

A) economic force

B) regulatory force

C) legal force

D) technological advances

E) social force

11. The increasing number of spas opening in the United States is attributed to a jump in the number of people trying to deal more effectively with mental health and wellness issues. The increased emphasis on mental health and wellness in the United States is an important:

A) political trend

B) economic trend

C) legal trend

D) social trend

E) technological advances

12. Hulu.com allows people to watch television shows and movies on the Internet. Hulu.com's business opportunity was made possible by ________ that enhanced the ability of television shows and movies to be uploaded to the Internet and played by anyone with a suitable computer and an Internet connection.

A) social forces

B) technological advances

C) legal changes

D) regulatory changes

E) economic forces

13. If a new firm was launched to help other firms comply with The Patriot Act, that opportunity was created by:

A) changes in economic forces

B) demographic changes

C) changes in social forces

D) changes in technological forces

E) political actions and regulatory changes

14. GreatCall is a company that was started to produce cell phones for older people. Many cell phones are too complicated and the buttons are too small for older people to effectively use. Which of the following approaches to identifying an opportunity was most likely the impetus for GreatCall?

A) observing trends

B) studying industry reports

C) solving a problem

D) talking to consumers

E) finding gaps in the marketplace

Essay Question

1. Describe the difference between an idea and an opportunity. Why is the distinction important?

2. Describe the three separate ways that entrepreneurs identify new business, product, and service opportunities?


Tutorial 7

Chapter 2 Recognizing Opportunities and Generating Ideas

1. The process of perceiving the possibility of a profitable new business, product or service idea is referred to as:

A) inspired detection

B) creative recognition

C) idea confirmation

D) opportunity recognition

E) inspired discovery

2. Which of the following statements is incorrect regarding the personal characteristics of entrepreneurs?

A) Some people think that entrepreneurs have a "sixth sense" that allows them to see opportunities that others miss.

B) The extent and depth of an individual's social network affects opportunity recognition.

C) Several studies show that prior experience in an industry actually blinds an entrepreneur to the recognition of new opportunities in the same industry.

D) Creativity is the process of generating novel or useful ideas.

E) The corridor principle states that once an entrepreneur starts a firm, he or she begins a journey down a path where "corridors" leading to new venture opportunities become apparent.

3. An individual who identifies a business idea on his or her own is referred to as a:

A) separate entrepreneur

B) functional entrepreneur

C) lone entrepreneur

D) individual entrepreneur

E) solo entrepreneur

4. A network entrepreneur is an individual who identifies his or her business idea:

A) on their own

B) through the assistance of a paid consultant

C) through social contacts

D) with one or more partners

E) through a business incubator program

5. A solo entrepreneur is an individual who identified his or her business idea ________. A network entrepreneur is an individual who identified his or her business idea ________.

A) through social contacts, on their own

B) through a business incubator program, through social contacts

C) on their own, through social contacts

D) through the assistance of a paid consultant, through social contacts

E) with one or more partners, on their own

6. ________ are characterized by frequent interactions that form between coworkers, friends, and spouses.

A) Balanced relationships

B) Weak-tie relationships

C) Lateral-tie relationships

D) Moderate-tie relationships

E) Strong-tie relationships

7. Most of Karen's ideas come from interacting with coworkers, friends, her spouse, her parents, and other people that share the same beliefs that she does. Karen is getting most of her ideas through ________ relationships.

A) weak-tie relationships

B) social-tie relationships

C) strong-tie relationships

D) multiple-tie relationships

E) vertical-tie relationships

8. Alex has a number of casual acquaintances that he interacts with infrequently. The relationships that Alex has with these people are referred to as: ________.

A) strong-tie relationships

B) moderate-tie relationships

C) lateral-tie relationships

D) weak-tie relationships

E) multiple-tie relationships

9. According to research in this area, it is more likely that an entrepreneur will get a new business idea through a ________ relationship than the alternatives.

A) weak-tie

B) moderate-tie

C) vertical-tie

D) lateral-tie

E) strong-tie

10. ________ is the process of generating a novel or useful idea.

A) Innovation

B) Imagining

C) Creativity

D) Visualization

E) Envisioning

11. Which of the following represents the correct order of the five stages of the creative process?

A) preparation, incubation, elaboration, insight, evaluation

B) insight, preparation, incubation, elaboration, insight

C) preparation, incubation, insight, evaluation, elaboration

D) incubation, evaluation, insight, preparation, elaboration

E) incubation, preparation, evaluation, elaboration, insight

12. Marie is a very creative person. Often, when trying to generate a novel or useful idea, she spends several days "mulling over" the idea, which is her way of thinking it through, at both the conscious and unconscious level. The stage of the creative process that Marie is in while she is mulling over an idea is referred to as:

A) preparation

B) insight

C) evaluation

D) elaboration

E) incubation

13. In the five-stage creative process, the flash of recognition, or what is sometimes referred to as the "eureka" experience, occurs in the:

A) insight stage

B) preparation stage

C) incubation stage

D) elaboration stage

E) evaluation stage

14. ________ is (are) used to generate a number of ideas quickly.

A) Insight groups

B) Competitive intelligence gatherings

C) Examination groups

D) Survey groups

E) Brainstorming

15. 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

16. The number one rule for a brainstorming sessions is:

A) no criticism is allowed

B) no freewheeling is allowed

C) no leapfrogging is allowed

D) no more than 10 people are allowed to participate

E) no wild or unrealistic ideas are allowed

17. An example of a valuable library resources is IBISWorld, which is a:

A) business publication

B) academic journal

C) Census Bureau publication

D) trade journal

E) database of industry-related information

18. To make sure that its customers are satisfied and to probe for new product ideas, Intuit routinely sends employees to the facilities of their customers. This technique for generating new business ideas is called:

A) brainstorming

B) day-in-the-life research

C) focus group

D) survey

E) customer advisory board

19. Which of the following selections is an example of how to discourage creativity at the individual level?

A) Protect people who make honest mistakes and are willing to learn from them.

B) Speculate, be open, and build on others' ideas.

C) Punish mistakes or failed ideas.

D) Deal with employees as equals to show that status isn't very important.

E) Listen attentively in order to acknowledge and provide early support to ideas.

Essay Question

1. Describe the difference between strong-tie and weak-tie relationships. Is it more likely that an entrepreneur will get new ideas through strong-tie or weak-tie relationships?

2. Describe how brainstorming can help facilitate the generation of ideas, and outline the four rules for conducting a brainstorming session.


Tutorial 8

Chapter 4 Writing a Business Plan

1. Trevor Combs is thinking about launching a small business consulting company. To get advice on how to proceed, he stopped by his local Small Business Administration (SBA) office. The SBA advisor told Trevor that one of the first things he needs to do is to sit down and write a 25 to 35 page narrative that describes what his new business plans to accomplish and how it plans to accomplish it. The SBA advisor is telling Trevor to write a:

A) tactical plan

B) marketing plan

C) operations plan

D) business plan

E) competitive plan

2. Which of the following is the main purpose for writing a business plan?

A) The plan helps the company develop a "road map" to follow.

B) The plan introduces potential investors and other stakeholders to the business opportunity.

C) Both A and B are equally important.

D) Neither A nor B captures the true purpose of a business plan.

E) Reason A is the most important for experienced entrepreneurs and reason B is the most important for inexperienced entrepreneur.

3. According to the textbook, a business plan is best described as a:

A) narrative description of a new business

B) contract

C) budget

D) agreement

E) marketing initiative

4. A business plan is important for two reasons: it forces the founding team to systematically think through every aspect of their new venture and:

A) it is a budget

B) it is a public relations document that can be used to promote the firm

C) it is a contract that is signed by the founders of the firm

D) it is a financial analysis

E) it communicates the merits of a new venture to outsiders, such as investors and bankers

5. Which of the following statement is incorrect about business plans?

A) Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture.

B) For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

C) A business plan is typically 25 to 35 pages long.

D) A large percentage of entrepreneurs do not write business plans for their new ventures.

E) The business plan should be written while the feasibility analysis is being completed.

6. The document that does the best job of introducing potential investors and other stakeholders with the business opportunity the firm is pursuing and how it plans to pursue it is the:

A) business plan

B) feasibility analysis

C) opportunity analysis

D) industry analysis

E) marketing plan

7. There are two primary audiences for a business plan:

A) a firm's employees and officials with the SEC

B) a firm's customers and its competitors

C) investors and other external stakeholders and public relations firms

D) officials with the SEC and public relations firms

E) a firm's employees and investors and other external stakeholders

8. There are two primary audiences for a business plan: a firm's employees and:

A) officials with the SEC

B) investors and other external stakeholders

C) a firm's competitors

D) a firm's customers

E) public relations firms

9. Which of the following is not an individual, group or institution that normally reads a company's business plan?

A) board of directors

B) potential alliance partners and major customers

C) state and local government officials

D) key recruits for jobs with the new firm

E) rank-and-file employees

Essay Question

1. What is a business plan?

2. What are the two main reasons for writing a business plan.


Tutorial 9


1. Which of the following is not a recommended guideline for writing a business plan?

A) To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.

B) A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.

C) For most plans, 25 to 35 pages is sufficient.

D) A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan.

E) Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan.

2. Which of the following is not one of the "red flags" listed in the textbook that raises questions about one of more aspects of a company's business plan?

A) founders with none of their own money at risk

B) defining the market size too narrowly

C) a poorly cited plan

D) sloppiness in any area

E) overly aggressive financials

3. Which of the following is one of the "red flags" listed in the textbook that raises questions about one or more aspects of a company's business plan?

A) It takes several days or weeks to complete.

B) Founders that have their own money at risk.

C) overly aggressive financials

D) It is less than 50 pages long.

E) It is directed towards both an external and an internal audience.

4. Which of the following statements is incorrect regarding business plans?

A) A firm's business plan is typically the first aspect of a proposed venture that will be seen by an investor.

B) To make the best impression, a business plan should follow an unconventional structure, so it will stand out.

C) A business plan has both an external and an internal audience.

D) A company's business plan is typically written by its founders.

E) Potential investors are typically keenly interest in a company's business plan.

5. There are three types of business plans:

A) functional business plan, full business plan, feasibility plan

B) summary business plan, contingency plan, full business plan

C) functional business plan, contingency plan, full business plan

D) opportunity plan, feasibility plan, full business plan

E) summary business plan, full business plan, operational business plan

6. Cindy Kramer is in the very early stages of putting together a business startup, and is thinking about writing a business plan to request funds to conduct a feasibility analysis and write a more complete business plan. What type of business plan should Cindy write at this point?

A) full business plan

B) tactical business plan

C) summary business plan

D) operational business plan

E) strategic business plan

7. A ________, which is typically 25 to 35 pages long, works best for new ventures who are at the point where they need funding or financing.

A) tactical business plan

B) deliberate business plan

C) summary business plan

D) full business plan

E) operational business plan

8. A(n) ________, which is intended to be a blueprint for a company's operations, is 40-100 pages long and is meant primarily for an internal audience.

A) operational business plan

B) full business plan

C) deliberate business plan

D) summary business plan

E) tactical business plan

9. Pam Andrews has decided to write a business plan that is intended to be read primarily by her staff, which will present a blueprint for her company's entire operation and will provide guidance to operational managers. Pam should write an:

A) operational business plan

B) tactical business plan

C) deliberate business plan

D) summary business plan

E) functional business plan

10. Match the business plan with its appropriate length:

A) operational business plan, 10-15 pages

B) full business plan, 25-35 pages

C) summary business plan, 25-35 pages

D) full business plan, 40 to 100 pages

E) operational business plan, 25-35 pages

11. Match the business plan with its appropriate emphasis:

A) summary business plan, works best for companies who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations

B) operational business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea

C) full business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in the idea

D) summary business plan, is meant primarily for an internal audience; works best as a tool for creating a blueprint for a company's operations and providing guidance to operational managers

E) summary business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea

Essay Question

1. Experienced entrepreneurs often refer to business plans as "living, breathing documents." What is meant by this characterization of business plans?


Tutorial 10


1. The ________ is a short overview of the entire business plan.

A) administrative review

B) executive summary

C) managerial review

D) founder's introduction

E) synopsis

2. Which of the following statements is incorrect regarding the executive summary of a business plan?

A) It is a short overview of the entire business plan.

B) In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing.

C) It is arguably the most important section of the business plan.

D) It should not exceed two single-spaced pages.

E) The executive summary is the first thing that should be written in preparing a business plan.

3. Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Karen send the investor:

A) marketing plan

B) executive summary

C) elevator pitch

D) company description

E) operations plan

4. According to the textbook, the ________ is arguably the most important section of a business plan.

A) appendix

B) industry analysis

C) operations plan

D) financial plan

E) executive summary

5. A company's mission statement should be placed in the ________ section of its business plan.

A) marketing plan

B) management team and company structure

C) company description

D) market analysis

E) industry analysis

6. A(n) ________ describes why a company exists and what it aspires to become.

A) tactical statement

B) values statement

C) mission statement

D) operations statement

E) strategic statement

7. A ________, in a business plan context, is a noteworthy event in the past or future development of a business.

A) aspiration

B) intention

C) signpost

D) milestone

E) target

8. The Partnering for Success feature in Chapter 4 focuses on the types of partnerships that are common in business plans. According to the feature, businesses often make partnering an essential part of their business plans because they:

A) want to obtain a key customer

B) want to increase their visibility

C) want to reduce risk

D) what to appear legitimate

E) have limited resources

9. Which of the following statements is incorrect regarding the industry analysis portion of a firm's business plan?

A) It is important to focus simultaneously on a business's industry and its target market.

B) Industry structure refers to how concentrated or fragmented an industry is.

C) Most industries have 6 to 10 key success factors that should be reported in the industry analysis.

D) Industry trends should be discussed, which include both environmental and business trends.

E) The industry trends portion of the industry analysis is arguably the most important section.

10. The ________ section of a business plan breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal to.

A) competitive analysis

B) current status

C) market analysis

D) marketing plan

E) operations plan

11. A competitor analysis should be included in the ________ section of a business plan.

A) market analysis

B) industry analysis


D) management team and company structure

E) operations plan

12. Which of the following statements is incorrect regarding the marketing plan section of a business plan?

A) The marketing plan focuses on how the business will market and sell its product or service.

B) The two most important items to include in a marketing plan are (1) overall marketing strategy and (2) the nuts and bolts of marketing a firm's product in terms of product, price, promotion, and place.

C) The best way to describe a company's marketing plan is to begin by talking about its competitors.

D) A firm's marketing strategy refers to its overall approach for marketing its products and services.

E) A firm's overall approach to marketing typically boils down to how it positions itself in its market and how it differentiates itself from its competitors.

13. According to the textbook, many investors and others who read business plans look first at the executive summary and then go directly to the ________ section of the business plan to make their preliminary assessment.

A) management team and company structure

B) product (or service) design and development plan

C) industry analysis

D) marketing plan

E) operations plan

14. What section of the business plan deals with the day-to-day operations of a company?

A) financial plan

B) marketing plan

C) operations plan

D) industry analysis

E) executive summary

15. A(n) ________ is a graphic representation of how authority and responsibility are distributed within a company.

A) organizational chart

B) personnel chart

C) human resources chart

D) administrative chart

E) directional chart

16. The facilities and equipment that a business needs should be described in the ________ section of its business plan.

A) marketing plan

B) management team and company structure


D) market analysis

E) operations plan

17. The ________ section of the business plan outlines how your business will be run and how your product or service will be produced.

A) operations plan

B) company description

C) management team and company structure

D) marketing plan

E) market analysis

18. A computer-generated image of an invention that displays the invention as a 3D model that can be viewed from all sides and rotated 360 degrees is called a:

A) virtual prototype

B) concept visualization

C) abstract prototype

D) virtual design

E) usability test

19. A prototype is:

A) a form of opportunity recognition

B) a tool for evaluating the industry a new firm plans to enter

C) a financial model

D) the first physical depiction of a new product

E) a tool for evaluating the organizational prowess of a new firm

20. The document that lays out specifically how much money a firm needs, where the money will come from, and what the money will be used for is referred to as a:

A) sources and uses of funds statement

B) assumptions sheet

C) pro forma financial statement

D) credit and debit statement

E) capital and operational budgeting statement

21. Katherine Payne was reading the business plan for New Venture Fitness Drinks, and noticed that prior to its financial statements, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the statements and the assumptions used to generate them. This explanation is called a(n):

A) estimate sheet

B) hypothesis sheet

C) assumptions sheet

D) forecast sheet

E) forecast hypothesis

22. According to the textbook, the ________ are the heart of the financial section of a business plan.

A) financial ratios

B) pro forma financial statements

C) budgets

D) sources and uses of funds statements

E) break-even analyses

Essay Question

1. What is an "executive summary?" Why is the executive summary often called the most important part of a business plan?


Tutorial 11


1. Most business plan writers interpret or make sense of a firm's historical and/or pro form financial statements through:

A) ratio analysis

B) assumptions analysis

C) scenario analysis

D) proportion analysis

E) relative analysis

2. According to the textbook the first rule in making an oral presentation is to:

A) follow instructions

B) be creative

C) emphasize all the positive aspects of a business venture

D) appear confident

E) do something out of the ordinary

3. According to the textbook, in the first meeting investors typically focus on:

A) legal and tax issues and whether a real opportunity exists

B) whether the new venture is properly structured and whether a real opportunity exists

C) whether a real opportunity exists and whether the management team has the skills and experience to pull off the venture

D) the new venture's marketing plans and the whether the new venture has intellectual property that can be patented

E) industry and competitor analysis and whether the management team has the skills and experience to pull off the venture

4. According to the textbook, in the first meeting investors typically focus on whether the management team has the skills and experience to pull off the venture and:

A) whether the new venture is properly structured

B) whether the new venture has intellectual property

C) legal and tax issues

D) whether a real opportunity exists

E) industry and competitor analysis

Essay Question

1. Why is the "management team and company structure" section of the business plan often given disproportionate weight among investors?

that one management team is better prepared to execute their idea than the others.

Case study


You Be the VC 4.1

Company : WIN Detergent

www.windetergent.com.


Tutorial 12

Chapter 15 Franchising

1. Which of the following statements is incorrect regarding franchising?

A) Franchising is growing in popularity in the U.S.

B) There are some instances in which franchising is not appropriate.

C) New technologies are often introduced through franchise systems.

D) Franchising, by its very nature, involves the sharing of knowledge between a franchisor and a franchisee.

E) The failure rate for franchise systems is relatively high.

2. ________ is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for an initial franchise fee and an ongoing royalty.

A) Licensing

B) Joint Venturing

C) Contracting

D) Subcontracting

E) Franchising

3. Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for:

A) an initial franchise fee and an ongoing royalty

B) an initial franchise fee

C) an equity position in the new business

D) an ongoing royalty

E) an initial franchise fee and an equity position in the new business

4. There are two distinctly different types of franchise systems:

A) product trademark franchise, business arrangement franchise

B) product plus franchise, business format franchise

C) business design franchise, product improvement franchise

D) product extension franchise, business design franchise

E) product trademark franchise, business format franchise

5. A ________ franchise is an arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name.

A) product and trademark

B) product extension

C) business format

D) production plus

E) business design

6. Katherine Collins has been a Chrysler dealer for the past 20 years. Katherine owns a:

A) business format franchise

B) product and trademark franchise

C) business design franchise

D) product plus franchise

E) product and business format franchise

7. Clark Jensen recently opened a Planet Smoothie franchise. So far, he is very satisfied with Planet Smoothie because in exchange for an initial franchise fee and an ongoing royalty payment, Planet Smoothie has provided Clark a formula for doing business along with training, advertising, and other forms of assistance. Clark purchased a ________ franchise.

A) business extension

B) formula driven

C) sales extension

D) business format

E) product and trademark

8. Which of the following statements is incorrect regarding product and trademark franchises?

A) Rather than obtaining a royalty or franchise fee, the product and trademark franchisor obtains the majority of its income from selling its products to its dealers or distributors at a markup.

B) General Motors establishes product trademark rather than business format franchises.

C) Product trademark franchises are by far more popular than business format franchises.

D) Product and trademark franchisees are typically permitted to operate in a fairly autonomous manner.

E) A product trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

9. Which of the following statements is incorrect regarding business format franchises?

A) Arby's sells business format franchises.

B) A business format franchises can be very rigid and demanding.

C) Automotive services and convenience stores are well-known examples of business format franchises.

D) In a business format franchise, the franchisor provides a formula for doing business to the franchisee along with training and other forms of support.

E) The business format franchisor obtains the majority of its income from selling its products to its dealers at a markup.

10. A(n) ________ involves the sale of a single franchise for a specific location.

A) individual franchise agreement

B) one-of-a-kind franchise agreement

C) pinpoint franchise agreement

D) specific franchise agreement

E) precise franchise agreement

11. Phil Atkinson recently entered into an agreement with Quizno's Subs to open seven Quizno's Subs franchises. According to the agreement that Phil entered into, he has the right to open up to six Quizno's Subs franchises within the city limits of Stillwater, Oklahoma. Phil has entered into an:

A) individual franchise agreement

B) area franchise agreement

C) locality franchise agreement

D) district franchise agreement

E) neighborhood franchise agreement

12. The people who buy franchises from master franchises are typically called:

A) minor franchisees

B) secondary franchisees

C) mini-franchisees

D) subordinate franchisees

E) subfranchisees

13. A master franchisee, in addition to having the right to open and operate a specific number of locations in a particular area, also has the right to:

A) stop making royalty payments if its sales decline

B) sell products made by companies other than the franchisor

C) offer and sell the franchise to other people in its area

D) use its own operating manuals to run its franchise outlets

E) stop making royalty payments if it is losing money

14. An individual who owns and operates more than one outlet of the same franchisor, whether through an area or a master franchise agreement, is referred to as a:

A) multifaceted franchisee

B) super franchisee

C) various-unit franchisee

D) compound franchisee

E) multiple-unit franchisee

15. The Partnering for Success feature in Chapter 15 focuses on how franchise organizations can boost their sales while at the same time reduce their expenses. The technique that the feature recommends to achieve these dual objectives is:

A) strategic alliances

B) joint ventures

C) outsourcing

D) licensing

E) cobranding

16. Franchising is appropriate when:

A) a firm's business methods are not polished, it has a desire to grow, and it is trying to commercialize a technology product

B) a firm has a strong trademark, a desire to grow, and a well-designed business method

C) a firm is trying to commercialize a technology product, it is well-funded, and it has a desire to grow

D) a firm has a weak trademark, it is well-funded, and it has a desire to grow

E) a firm has a desire to grow, it has a well-designed business method, and it is well funded

Essay Question

1. What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

Case study


Partnering for Success

Boosting Sales and Reducing Expenses Through Co-branding


Tutorial 13


1. According to our textbook, which of the following is not a quality to look for in prospective franchisees?

A) individual, rather than team-oriented

B) ability to follow instructions

C) experience in the industry in which the franchisee operates

D) ability to operate with minimal supervision

E) adequate financial resources and a good credit history

2. According to a concept called ________ theory, it is more effective for the units of a growing chain to be run by franchises than by managers, because managers are usually paid a salary, and may not be as committed to the success of their individual units as franchisees, who are in effect the owners of the units they manage.

A) agency

B) stimulus

C) control

D) leadership

E) motivation

3. According to the textbook, from the franchisor's point of view, the primary disadvantage of franchising is that:

A) it is not legal in 11 states

B) an organization allows others to profit from its trademark and business method

C) franchise organizations consistently makes less money than alternative forms of business ownership

D) it typically takes longer to grow an organization via franchising than company-owned stores

E) the franchisees, rather than the franchisor, typically makes most of money

4. Because franchisees put their personal capital at risk, they are highly motivated to make their franchise outlets successful. According to the textbook, this advantage of franchising a business is referred to as:

A) franchisee owner-incentive

B) franchisee impulse

C) agency theory

D) institutional theory

E) franchisee motivation

5. Which of the following was not identified in the textbook as one of the disadvantages of franchising a business?

A) loss of control

B) friction with franchisees

C) franchisee motivation

D) differences in required business skills

E) legal expenses

6. According to the textbook, which of the following is not a cost that is typically associated with buying a franchise?

A) intellectual capital fees

B) capital requirements

C) continuing royalty payment

D) advertising fees

E) initial franchise fee

7. Which of the following statement is not correct regarding the costs associated with purchasing a franchise?

A) The franchisee typically pays a royalty based on a percentage of weekly or monthly net income.

B) Capital costs vary by franchisor, but may include the cost of buying land and building a building.

C) Additional fees may be charged for activities such as training staff, providing management expertise when needed, and providing computer assistance.

D) Franchisees are often required to pay into a national or regional advertising fund.

E) The initial franchise fee varies, depending on the franchisor.

8. Franchisors are required by law to disclose all their costs in a document called the:

A) Fairness in Franchising Certificate

B) Consistent Franchise Offering Code

C) Standardized Franchise Code

D) Franchise Disclosure Document

E) Franchise Code of Conduct

9. In the majority of cases, a franchisee pays the franchisor a royalty based on:

A) a predetermined fixed weekly or monthly amount

B) weekly or monthly net income

C) the size of the franchise outlet

D) weekly or monthly gross income

E) the age of the franchise outlet

10. Which of the following statement is incorrect regarding the franchisor-franchisee relationship?

A) A franchisee may be charged a fee for additional training.

B) Some franchisors require a new franchisee to pay a "grand opening" fee.

C) Franchisees are often required to pay into a national or regional advertising fund.

D) Weekly or monthly royalty fees are usually around 2% of net income.

E) Franchisees may have to pay a monthly royalty even if the business is losing money.

11. There are two primary advantages to buying a franchise over other forms of business ownership. First, franchising provides an entrepreneur the ability to own a business using tested and refined business methods, and second:

A) franchising is almost a sure way of making a profit

B) a franchise agreement is typically easy to exit if expectations aren't met

C) franchisors typically encourage creativity on the part of franchisees

D) the franchisor typically provides training, technical expertise, and other forms of support

E) franchise organizations are consistently more profitable than non- franchise organizations in the same industry

12. According to the textbook, the main disadvantage of buying a franchise is:

A) franchise organizations typically grow slower than non-franchise organizations in the same industry

B) franchisors typically provide poor levels of support

C) the cost involved

D) the service sector of the U.S. economy is waning in importance

E) franchising is waning in its popularity

Essay Question

1. What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

2. How can a person tell if franchising is right for them?

Case study


You Be the VC 15.1

Company : Clean Air Lawn Care

www.cleanairlawncare.com.


Tutorial 14


1. Which of the following is not an advantage of buying a franchise?

A) a proven product or service within an established system

B) franchisor ongoing support

C) availability of financing

D) potential for business growth

E) duration and nature of the commitment

2. Which of the following is not a disadvantage of buying a franchise?

A) cost of the franchise

B) duration and nature of the commitment

C) restrictions on creativity

D) availability of financing

E) potential for failure

3. 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 Licensing Code

E) franchise circular

4. While franchise agreements vary, each agreement typically contains two sections:

A) the statutory agreement and the purchase agreement

B) the franchise agreement and the buy agreement

C) the buy agreement and the membership agreement

D) the procurement agreement and the statutory agreement

E) the purchase agreement and the franchise agreement

5. While franchise agreements vary, each agreement typically contains the franchise agreement and:

A) the legal agreement

B) the procurement agreement

C) the purchase agreement

D) the sell agreement

E) the conversion agreement

6. According to a recent FTC report, instances of problems between franchisors and their franchisees tend to be:

A) prevalent practices

B) isolated occurrences

C) there have been no reported problems between franchisors and their franchisees

D) prevalent practices for product and trademark franchise systems and isolated occurrences for business format franchise systems

E) isolated occurrences for product and trademark franchise systems and prevalent practices for business format franchise systems

7. International opportunities for franchising are becoming:

A) less prevalent

B) neither more nor less prevalent

C) more prevalent for product and trademark franchise systems and less prevalent for business format franchise systems

D) more prevalent

E) less prevalent for product and trademark franchise systems and more prevalent for business format franchise systems

8. Kim Baker just purchased the rights to develop multiple Curves International franchises in Australia. Kim just purchased a:

A) concurrent franchise arrangement

B) indirect franchise arrangement

C) lateral franchise arrangement

D) direct franchise arrangement

E) subordinate franchise arrangement

9. In the context of international franchising, under a ________ franchise arrangement, the U.S. firm grants the rights to an individual or company (the master franchisee) to develop one or more franchise businesses and to license others to develop one or more franchise businesses within the country.

A) master

B) direct

C) subordinate

D) concurrent

E) multinational

10. Which of the following statements is incorrect regarding the future of franchising?

A) Franchise organizations represent a large and growing segment of the retail and service sectors of U.S. businesses.

B) The future of franchising appears to be dim.

C) More and more college graduates are choosing careers in industries that are heavily dominated by franchising.

D) According to the International Franchise Association, franchising represents about $880 billion in annual retail sales in the United States.

E) The International Franchise Association estimates that franchise organizations provide jobs for more than 11 million Americans.

Essay Question

1. List and explain three of the common misconceptions about franchising.

Case study


You Be the VC 15.2

Company : ZENhome

www.zenhomecleaning.com.

Tutorial Question

Documents

consumer spending

tahoe trips

franchise

overly aggressive

regional advertising

business incubator

realize financial

initial franchise