Entrepreneurial Small Business, 5th Edition Test Bank

Chapter 02 Small Business Entrepreneurs: Characteristics and Competencies True / False Questions 1. The majority of new businesses are run by a solo entrepreneur. True False 2. One way entrepreneurs display passion is by being persistently focused on the business. True False 3. Opportunistic planners always plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. True False 4. Habit-based planners don’t plan, and they don’t even tend to react to changes in their environments. True False 5. Most businesses run by teams are not family related. True False 6. Like every person, every small business is unique. There is no way to predict how the company will progress in the growth process. True False 2-1 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7. The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. True False 8. Skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business are called opportunity competencies. True False 9. With over 8.3 million businesses owned by women, they account for a quarter of small business revenue nationally. True False 10. Workers are opting for early retirement as corporations merge, downsize, and reorganize. True False 11. Entrepreneurs get used to a do-it-yourself approach, which can be especially trying for second career entrepreneurs. True False 12. Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive. True False 13. One way to maximize communication in the succession process is to create a family council. True False 14. In family-owned businesses, the board of directors can only be comprised of family members. True False 2-2 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 15. Several models exist for the life cycle of the small business firm. Each divides the stages a bit differently. True False 16. The slowest growing sector of all U.S. businesses is women-owned businesses. True False 17. Access problems for women- and minority-owned small businesses crop up most often as discrimination in marketing. True False 18. For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. True False 19. About a third of the second career types who return to work decide to become self-employed. True False 20. One of the major issues identified for second career entrepreneurs is keeping personal finances out of the business. True False Multiple Choice Questions 2-3 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 21. This stage of the business life cycle occurs once the firm is established in its market. A. The success stage. B. The emergence stage. C. The existence stage. D. The resource maturity stage. 22. Which of the following statements concerning family businesses is correct? A. Family members often work in the business but may not sit on the council. B. Family businesses employ about 20 percent of America’s total workforce. C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms. D. Family businesses plan for succession using a critical-point plan. 23. Which of the following is one of the most common behaviors found in successful entrepreneurs? A. Preemption B. Frigidness C. Personalization D. Passion 24. Which of the following is best thought of as a type of learned optimism in successful entrepreneurs? A. Apathy B. Professionalization C. Perseverance D. Cognition 2-4 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 25. The majority of businesses run by teams are comprised of: A. five or more members. B. one member. C. three members. D. two members. 26. The problem behavior of trying the same action repeatedly without learning is called _____. A. perseveration B. prevention focus C. effectuation D. critical observation 27. Regulatory focus is a mix of two internal focuses, _____ focus and _____ focus. A. effectuation; comprehension B. comprehension; prevention C. effectuation; promotion D. promotion; prevention 28. About 400,000 new firms a year are started by teams, with about 320,000 started by: A. solo entrepreneurs. B. family teams. C. unrelated business associates. D. five or more team members. 2-5 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 29. When starting a business, more women choose ________ industries that tend to have lower average sales levels. A. construction B. financial C. technology D. service 30. Which of the following approaches yields better results in an established industry or a poor one? A. External focus B. Effectuation focus C. Prevention focus D. Promotion focus 31. Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries? A. Promotion focus B. External focus C. Effectuation focus D. Prevention focus 32. Which of the following was not listed as a time management technique in the textbook? A. 123 Prioritize B. Delegate C. Perseverance D. Strategize 2-6 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 33. Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n) _____. A. opportunistic planner B. habit-driven planner C. reactive planner D. comprehensive planner 34. Entrepreneurs who develop plans focused on the most important aspect of the business first are known as _____. A. critical-point planners B. opportunistic planners C. comprehensive planners D. reactive planners 35. Which among the following is a critical-point planner? A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance. B. Andrew looks at all aspects of the business, from launch to the complete working of it. C. Cathy looks for a good chance to achieve her goal and acts according to a routine. D. Joshua acts on what he has been doing and does not believe in planning. 2-7 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 36. Entrepreneurs who start with a goal instead of a plan and look for a chance to achieve it are known as _____. A. reactive planner B. critical-point planner C. comprehensive planner D. opportunistic planner 37. Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn’t the one related to their original goal. B. Individuals who develop long-range plans for all aspects of the business and act based on the plans they’ve developed. C. Individuals who plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. D. Individuals who are comfortable with planning and act based on the plans they have developed. 38. _____ are completely passive, waiting for cues from the environment to determine what actions to take. A. Opportunistic planners B. Critical-point planners C. Comprehensive planners D. Reactive planners 2-8 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 39. The successful entrepreneurial personality exhibits certain types of business-related expertise which the text condenses into five competencies. Which of the following statements is NOT true about these competencies? A. Research shows these competencies can be learned through training. B. The amount of expertise is what distinguishes the more successful from the less successful firms. C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry. D. Opportunity competencies are the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business. 40. When starting a business using entrepreneurial teams, which number of team members is the most common? A. Two team members B. Three team members C. Four team members D. Five or more team members 41. Which of the following characterizes a habit-based planner? A. They take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they’ve developed. B. They plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. C. They are completely passive and generally wait for cues from the environment to determine what actions to take. D. They don’t plan, and they don’t tend to react to changes in their environments. 2-9 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 42. Which of the following planners do best in terms of getting a start-up launched, keeping it going, and making a living from it? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Reactive planners 43. Which of the following kinds of planners generally tend do very poorly in business, even if they do manage to get their firms started? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Critical-point planners 44. The extent to which a firm meets or exceeds the standard business practices for its industry is known as _____. A. bootstrapping B. professionalization C. effectuation D. Perceived Organizational Support (POS) 45. A business action that has been widely adopted within an industry or occupation is known as _____. A. best business practice B. specialized business professionalization C. standard business practice D. expert professionalization 2-10 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 46. Which of the following refers the three levels of professionalization? A. Low, medium, and high B. Company, industry, and global C. Personal, team, and organizational D. Expert, specialized, and minimalized 47. Which of the following is not listed as a challenge for the late career entrepreneur? A. access to financial backing B. adjusting to the entrepreneurial life C. keeping personal finances out of the business D. reestablishing self-confidence 48. Expert business professionalization is a situation that occurs: A. when only the most critical aspect of business is met. B. when most aspects of the business meet or exceed the industry’s standards. C. when one or two aspects of the business are met. D. when none of the business can achieve the industry standard. 49. A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as _____. A. expert business professionalization B. specialized business professionalization C. minimized business professionalization D. maximized business professionalization 2-11 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 50. The key difference between a family council and a board of directors is that: A. the council is comprised of unrelated members while the board is comprised of family members. B. the board of directors maximizes communication while the council works on unique company problems. C. the council is to keep the family involved while the board is focused on running the business. D. the board can seek legal advice while the council gathers legal advice from the board. 51. Which of the following is true with regard to minimalized business professionalization? A. The entrepreneur does nearly everything in the simplest way possible. B. The entrepreneur is passionate about one or two of the key business functions. C. The entrepreneur meets or exceeds the industry’s standards. D. The entrepreneur brings the highest levels of trust among customers. 52. Competencies are defined as: A. forms of business-related expertise. B. forms of personal development model. C. different forms of self-assessment. D. different forms of personality theories. 53. Getting the business organized and registered is an example of _____ competency. A. opportunity B. resource C. industry-specific D. boundary 2-12 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 54. The competency suggested by _____ relates to the organizational and business processes of a firm. A. intention B. resource C. exchange D. boundary 55. This stage of the business life cycle is characterized by a stable level of sales and profits over several years. The functional areas, the market, and the products or services are all being dealt with consistently and efficiently. A. The success stage. B. The existence stage. C. The resource maturity stage. D. The takeoff stage. 56. Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as _____. A. key business functions B. competencies C. business accreditations D. business-related expertise 2-13 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 57. Certain businesses demand higher safety related rules. For example, window cleaners that specialize in high-rise buildings have certain rules and safety protocols. These specific rules would comprise the _____. A. specialized business professionalization B. infant-industry argument C. industry-specific knowledge D. key business functions 58. The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as _____. A. basic business competencies B. resource competencies C. opportunity competencies D. determination competencies 59. Which of the following stages of the business life cycle do most small business never go through? A. The takeoff stage. B. The emergence stage. C. The existence stage. D. The entrepreneur stage. 2-14 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 60. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s basic business competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having prior knowledge of the house-painting business 61. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following provides industry-specific knowledge to martin? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having worked in a house-painting company before starting his own business 2-15 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 62. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s resource competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business’s office in his garage D. Martin having prior knowledge of the house-painting business 63. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s opportunity competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business’s office in his garage D. Martin deciding to set up his own business after quitting his previous job 2-16 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 64. Which of the following deals with the actual process of exploiting an opportunity for profit? A. Resource B. Exchange C. Intention D. Boundary 65. Which of the following relates to the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business? A. Determination competencies B. Basic business competencies C. Resource competencies D. Opportunity competencies 66. Which of the following comprises a family business? A. A firm in which two or more families own a stake in a company but with no authority for daily management B. A firm in which no family members are involved in the management of the business C. A firm in which two or more families are involved in the occasional management of the business D. A firm in which one family owns a majority stake 67. Which of the following is a major economic force, employing 58 percent of America’s total workforce? A. Public companies B. Government enterprises C. Family businesses D. International assignments 2-17 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 68. Which of the following is true as an advantage of businesses run by a group of tight-knit family members? A. Succession issues don’t crop up in family-owned businesses. B. Role conflicts never happen in family owned businesses. C. Board of members are not used in family-owned businesses. D. Communication-based integration is most effective in family-owned business. 69. Which of the following challenges is typical to family businesses? A. Motivation and nepotism B. Role conflict and succession C. Succession and finances D. Leadership and finances 70. Which of the following best describes the problem that arises when people have multiple responsibilities and each makes different demands on them? A. Role conflict B. Succession issues C. Strategizing challenges D. Leadership constraints 71. Which of the following is the most effective approach for avoiding role conflict? A. Keep family issues out of the family business B. Keep separate rules for family members and employees C. Have constant role reversals D. Have decisions narrowed down for family members based on family necessities 2-18 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 72. Which of the following problems is closely related to role conflict? A. Resource shortage B. Lack of skills C. Shortage of time D. Perseverance 73. The organizing process to help make the most efficient use of the day is known as _____. A. promotion focus B. competence C. certification D. time management 74. Only _____ of family-owned businesses survive beyond the first generation. A. three-quarters B. one-half C. one-fourth D. one-third 75. ____ refers to the process of intergenerational transfer of business. A. Role conflict B. Succession C. Certification D. Access 2-19 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 76. Which of the following statements is true about a family council? A. It helps to maximize communication in the succession process of family businesses. B. Its main function is complete the key business activities of a family business. C. It includes family members with immediate interests in the business and a significant number of non-family members. D. It is not a good forum for grappling with issues like role expectations, commitment, and personal responsibility. 77. Which of the following organizations tracks experts in family business? A. Association for Family Business Foundations B. Association for Small Business Entrepreneurs C. Family Business Management Institute D. Family Firm Institute 78. Which of the following statements about entrepreneurial teams is true? A. Most entrepreneurial teams are family related. B. The majority of new businesses have an entrepreneurial team of a minimum five co-owners. C. The trend is toward even more businesses being developed by a solo entrepreneur. D. Only 10 percent of teams are spouses or life partners working together. 79. Which of the following is true with regard to women in small businesses? A. Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. C. Women prefer less-risky firms, which also tend to be firms with lower returns. D. Women prefer more high-tech firms, as well as firms where technology is central to the business than men. 2-20 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 80. Qualification for _____ requires certification as a business owned and operated by a woman or a minority. A. set-asides B. codicils C. product liability insurance D. professional liability insurance 81. Which of the following is true with regard to minorities in small businesses? A. Minority-owned firms have not grown much in recent years and are a slow growing sector. B. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs. C. There is a phenomenal decline in the number of minority entrepreneurs despite the growth of racial and ethnic groups within the U.S. population. D. Minority entrepreneurs do not face the challenge of access anymore. 82. The two fastest growing minority groups that represent the largest segments of minority business owners are: A. Hispanics and African Americans. B. Hispanics and Pacific Islanders. C. Asians and African Americans. D. Asians and Pacific Islanders. 83. The challenge of _____ refers to when woman or minority-owned businesses are simply excluded from the opportunities offered to firms owned by white males. A. consistency B. access C. flexibility D. mutuality 2-21 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 84. Identify the simplest form of discrimination with regard to women and minority entrepreneurs within the U.S. population. A. Certification B. Role conflict C. Access D. Collusion 85. Access problems for women- and minority-owned small businesses crop up most often as: A. differences in labeling. B. discrimination in financing. C. problems involved in business contacts. D. the presence and absence of certain skills. 86. Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like, are known as _____. A. collective investment scheme B. cooperative fund C. certified items D. set-asides 87. An examination based acknowledgement that the firm is owned and operated as specified is known as _____. A. performance analysis B. certification C. multi source assessment D. homologation 2-22 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 88. Which of the following statements about certification with regard to women- or minority-owned small business is true? A. Most corporate certification programs require a business to be in operation at least five years. B. Certification is for every women or minority-owned small business. C. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies. D. For corporations, certification is handled by organizations that are affiliated with the government or big business. 89. _____ entrepreneurs are people who begin their business after having retired or resigned from work in corporations at or after the age of 50. A. Occasional B. Helical C. Second career D. Veteran 90. Which of the following is an example of a second career entrepreneur? A. Cynthia, a 24-year-old, starting a consultancy business after graduating from college. B. Mark, a 30-year-old, starting a new business venture in stock trading after the failure of his previous business in real estate. C. Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. D. Timothy, a 62-year-old, joining a real estate agency as a sales representative, after being retied for 4 years. 2-23 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 91. Which of the following is one of the prime challenges faced by most second career entrepreneurs? A. Keeping personal finances out of the business B. Avoiding overconfidence C. Lacking resources D. Deciding whether to return to work Essay Questions 92. Define the five Ps of entrepreneurial behavior. 93. Name and briefly explain the stages of the entrepreneurial life cycle. Why is it important to understand this cycle? 2-24 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 94. What is the difference between key business functions and industry-specific knowledge? 95. Outline methods or techniques for time management. 96. Discuss the challenge of succession faced by family businesses. 2-25 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 97. What are the challenges faced by team entrepreneurs? 98. Describe the challenges faced by women and minorities in small businesses. 99. Compare determination competencies to opportunity competencies. 2-26 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 100.Who are referred to as the second career entrepreneurs? 101.Explain the challenges faced by second career entrepreneurs? 2-27 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 02 Small Business Entrepreneurs: Characteristics and Competencies Answer Key True / False Questions 1. The majority of new businesses are run by a solo entrepreneur. FALSE The majority of new businesses have a team of two or more co-owners, and the trend is toward even more businesses being developed by teams of entrepreneurs. AACSB: Analytical Thinking AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 1 Easy Topic: Entrepreneurial Teams 2. One way entrepreneurs display passion is by being persistently focused on the business. TRUE Passion is displayed in three ways: (1) by looking at the challenges of the business in a creative way, (2) by being persistently focused on the business, and (3) by being absorbed by the tasks and concerns of the business. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-28 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 3. Opportunistic planners always plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. FALSE Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn’t the one related to their original goal, they act on it, so it is very short term in orientation. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 4. Habit-based planners don’t plan, and they don’t even tend to react to changes in their environments. TRUE Habit-based planners do not really plan at all because their actions are dictated by their routines. They do today what they did yesterday. They don’t plan, and they don’t even tend to react to changes in their environments. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-29 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 5. Most businesses run by teams are not family related. FALSE In fact 53 percent of teams are spouses or life partners working together with another 18 percent having different arrangements of family members working together. Only 15 percent of teams are composed of unrelated business associates. AACSB: Analytical Thinking AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 1 Easy Topic: Entrepreneurial Teams 6. Like every person, every small business is unique. There is no way to predict how the company will progress in the growth process. FALSE Like every person, every small business is unique. But just as we all go through childhood and adolescence on the way to adulthood, so do entrepreneurs’ small businesses. There is a lot of predictability in this growth process, and knowing the developmental stages of the business life cycle can help you better understand your business. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 1 Easy Topic: The Entrepreneurial Life Cycle 2-30 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 7. The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. FALSE The competency suggested by boundary in BRIE theory relates to the organizational and business processes of a firm called basic business competency. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 8. Skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business are called opportunity competencies. TRUE Exchange deals with the actual process of exploiting the opportunity for profit—which is a fancy way of saying “making sales.” The competencies that make this work are called opportunity competencies, which include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 2-31 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 9. With over 8.3 million businesses owned by women, they account for a quarter of small business revenue nationally. FALSE Although in 2012, there were 8.3 million businesses owned by women, women-owned firms accounted for only 4 percent of small business revenue nationally. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 10. Workers are opting for early retirement as corporations merge, downsize, and reorganize. TRUE Firms are offering attractive retirement packages to encourage employees to voluntarily leave the organization. Workers are opting to accept generous offers to retire early. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs 2-32 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 11. Entrepreneurs get used to a do-it-yourself approach, which can be especially trying for second career entrepreneurs. TRUE All entrepreneurs get used to a do-it-yourself approach, and this is a challenge for everyone, but it can be especially trying for second career entrepreneurs. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs 12. Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive. TRUE Succession plans deal with the people who will take over, what roles they will fill, and what supports (such as training, outside assistance, voting power, resources control) they will receive. Problems arise when there are no successors available within the family. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-33 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 13. One way to maximize communication in the succession process is to create a family council. TRUE One way to maximize communication in the succession process is to create a family council. A family council includes family members with immediate interests in the business (spouse, sisters and brothers, older children, etc.). The focus of council meetings is the business-family relationship. The meetings can also be a good forum for grappling with issues like role expectations, commitment, and personal responsibility. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 14. In family-owned businesses, the board of directors can only be comprised of family members. FALSE The key difference between a family council and a board of directors is that the function of the family council is to keep the family involved while the board is focused on running the business. The board includes significant nonfamily membership. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-34 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 15. Several models exist for the life cycle of the small business firm. Each divides the stages a bit differently. TRUE All models have the same general ideas. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 1 Easy Topic: The Entrepreneurial Life Cycle 16. The slowest growing sector of all U.S. businesses is women-owned businesses. FALSE Women-owned businesses are one of the fastest growing sectors of all U.S. businesses. Between 1997 and 2012, the number of private businesses with at least 51 percent female ownership increased by 54 percent, while the rate for firms overall was 37 percent. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 2-35 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 17. Access problems for women- and minority-owned small businesses crop up most often as discrimination in marketing. FALSE Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing. This means that they may not be given the same access to funds or contracting opportunities that white male-owned firms are given. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 18. For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. TRUE For corporations, certification is handled by organizations that are not affiliated with the government or big business, such as the National Minority Supply and Diversity Council or the Women’s Business Enterprise National Council. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 2-36 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 19. About a third of the second career types who return to work decide to become self-employed. TRUE About a third of the second career types who return to work decide to become self-employed. Those who do face three challenges—adjusting to the entrepreneurial life, reestablishing selfconfidence, and keeping personal finances out of the business. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs 20. One of the major issues identified for second career entrepreneurs is keeping personal finances out of the business. TRUE A problem for second career entrepreneurs is keeping personal finances out of the business. Often when individuals are laid off or given early retirement, they can receive lump-sum financial settlements. Frequently, people intending to become second career entrepreneurs plan to use a substantial portion of these funds to start the new business. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs Multiple Choice Questions 2-37 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 21. This stage of the business life cycle occurs once the firm is established in its market. A. The success stage. B. The emergence stage. C. The existence stage. D. The resource maturity stage. The success stage occurs once the firm is established in its market. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 1 Easy Topic: The Entrepreneurial Life Cycle 22. Which of the following statements concerning family businesses is correct? A. Family members often work in the business but may not sit on the council. B. Family businesses employ about 20 percent of America’s total workforce. C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms. D. Family businesses plan for succession using a critical-point plan. Most CEOs of family firms average a 17 year tenure as opposed to just 8 years for CEOs in other businesses. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 2-38 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 23. Which of the following is one of the most common behaviors found in successful entrepreneurs? A. Preemption B. Frigidness C. Personalization D. Passion There are five aspects of behavior that most successful entrepreneurs display. These are not the only possible behaviors that you could consider, but they are behaviors that have been shown in the research to relate to success among entrepreneurs. The five behaviors include passion, perseverance, promotion/prevention focus, planning style, and professionalization. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 24. Which of the following is best thought of as a type of learned optimism in successful entrepreneurs? A. Apathy B. Professionalization C. Perseverance D. Cognition Perseverance is best thought of as a type of learned optimism, the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. 2-39 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 25. The majority of businesses run by teams are comprised of: A. five or more members. B. one member. C. three members. D. two members. Thirty-eight percent of team run businesses are owned by two team members. AACSB: Analytical Thinking AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 1 Easy Topic: Entrepreneurial Teams 26. The problem behavior of trying the same action repeatedly without learning is called _____. A. perseveration B. prevention focus C. effectuation D. critical observation The danger is to keep trying the same action repeatedly without learning. That is a problem behavior called perseveration. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-40 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 27. Regulatory focus is a mix of two internal focuses, _____ focus and _____ focus. A. effectuation; comprehension B. comprehension; prevention C. effectuation; promotion D. promotion; prevention Most of us have some mix of two internal focuses (also called our regulatory focus), a promotion focus intent on maximizing gains, which gives us a bias toward pursuing opportunities likely to lead to those gains, and a prevention focus intent on minimizing losses, with a bias toward inaction or protective action. Being a successful entrepreneur involves balancing the two focuses. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 28. About 400,000 new firms a year are started by teams, with about 320,000 started by: A. solo entrepreneurs. B. family teams. C. unrelated business associates. D. five or more team members. About 400,000 new firms a year are started by teams, with about 320,000 started by family teams. AACSB: Analytical Thinking AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 1 Easy Topic: Entrepreneurial Teams 2-41 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 29. When starting a business, more women choose ________ industries that tend to have lower average sales levels. A. construction B. financial C. technology D. service More women choose service industries that tend to have lower average sales levels, while there are more men in construction, financial, and technology industries, which have higher average sales levels. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 30. Which of the following approaches yields better results in an established industry or a poor one? A. External focus B. Effectuation focus C. Prevention focus D. Promotion focus In an established industry or a poor one, a prevention focus can work well, while a promotion focus can yield better results in richer, dynamic, uncertain environments or industries. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy 2-42 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Topic: The Five Ps of Entrepreneurial Behavior 31. Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries? A. Promotion focus B. External focus C. Effectuation focus D. Prevention focus In an established industry or a poor one, a prevention focus can work well, while a promotion focus can yield better results in richer, dynamic, uncertain environments or industries. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 32. Which of the following was not listed as a time management technique in the textbook? A. 123 Prioritize B. Delegate C. Perseverance D. Strategize Basic time management techniques from the text include: List, 123 Prioritize, Delegate, Repeat, and Strategize. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-43 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 33. Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n) _____. A. opportunistic planner B. habit-driven planner C. reactive planner D. comprehensive planner Comprehensive planners take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they’ve developed. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Apply Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 34. Entrepreneurs who develop plans focused on the most important aspect of the business first are known as _____. A. critical-point planners B. opportunistic planners C. comprehensive planners D. reactive planners Critical-point planners plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. It is not a very long-term approach to planning. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. 2-44 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 35. Which among the following is a critical-point planner? A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance. B. Andrew looks at all aspects of the business, from launch to the complete working of it. C. Cathy looks for a good chance to achieve her goal and acts according to a routine. D. Joshua acts on what he has been doing and does not believe in planning. Critical-point planners plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. It is not a very long-term approach to planning. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 36. Entrepreneurs who start with a goal instead of a plan and look for a chance to achieve it are known as _____. A. reactive planner B. critical-point planner C. comprehensive planner D. opportunistic planner Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn’t the one related to their original goal, they act on it, so it is very short term in orientation. AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2-45 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 37. Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn’t the one related to their original goal. B. Individuals who develop long-range plans for all aspects of the business and act based on the plans they’ve developed. C. Individuals who plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. D. Individuals who are comfortable with planning and act based on the plans they have developed. Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn’t the one related to their original goal, they act on it, so it is very short term in orientation. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 2-46 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 38. _____ are completely passive, waiting for cues from the environment to determine what actions to take. A. Opportunistic planners B. Critical-point planners C. Comprehensive planners D. Reactive planners Reactive planners are completely passive, waiting for cues from the environment to determine what actions to take. Their focus is entirely short term, and there is little in the way of goals driving their efforts. They can make the most of a situation because there is no other plan competing for their attention. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-47 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 39. The successful entrepreneurial personality exhibits certain types of business-related expertise which the text condenses into five competencies. Which of the following statements is NOT true about these competencies? A. Research shows these competencies can be learned through training. B. The amount of expertise is what distinguishes the more successful from the less successful firms. C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry. D. Opportunity competencies are the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business. Intentions reflects your determination to start your business and make it a success. These determination-driven skills can be called determination competencies. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 2 Medium Topic: Entrepreneurial Operational Competencies 40. When starting a business using entrepreneurial teams, which number of team members is the most common? A. Two team members B. Three team members C. Four team members D. Five or more team members Thirty-eight percent of entrepreneurial teams are comprised of two team members. Seven percent are comprised of three team members, four percent have four team members and three percent are comprised of five or more team members. AACSB: Analytical Thinking AACSB: Teamwork 2-48 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 1 Easy Topic: Entrepreneurial Teams 41. Which of the following characterizes a habit-based planner? A. They take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they’ve developed. B. They plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. C. They are completely passive and generally wait for cues from the environment to determine what actions to take. D. They don’t plan, and they don’t tend to react to changes in their environments. Habit-based planners do not really plan at all because their actions are dictated by their routines. They do today what they did yesterday. They don’t plan, and they don’t even tend to react to changes in their environments. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-49 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 42. Which of the following planners do best in terms of getting a start-up launched, keeping it going, and making a living from it? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Reactive planners Simply put, results from small business owners in countries around the world have shown that in terms of getting a start-up launched, keeping it going, and making a living from it, comprehensive planners do the best, followed by critical point planners, and opportunistic planning types. Reactive and habit planners generally do very poorly in business, even if they manage to get their firms started. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-50 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 43. Which of the following kinds of planners generally tend do very poorly in business, even if they do manage to get their firms started? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Critical-point planners Simply put, results from small business owners in countries around the world have shown that in terms of getting a start-up launched, keeping it going, and making a living from it, comprehensive planners do the best, followed by critical point planners, and opportunistic planning types. Reactive and habit planners generally do very poorly in business, even if they manage to get their firms started. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 44. The extent to which a firm meets or exceeds the standard business practices for its industry is known as _____. A. bootstrapping B. professionalization C. effectuation D. Perceived Organizational Support (POS) The extent to which a firm meets or exceeds the standard business practices for its industry is known professionalization. One hallmark of successful entrepreneurs is that they usually do at least one thing much better than average. That average is called a standard business practice and every industry has them. Doing that level or better is what professionalization is all about. AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2-51 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 45. A business action that has been widely adopted within an industry or occupation is known as _____. A. best business practice B. specialized business professionalization C. standard business practice D. expert professionalization One hallmark of successful entrepreneurs is that they usually do at least one thing much better than average. That average is called a standard business practice and every industry has them. Doing that level or better is what professionalization is all about. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-52 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 46. Which of the following refers the three levels of professionalization? A. Low, medium, and high B. Company, industry, and global C. Personal, team, and organizational D. Expert, specialized, and minimalized There are three levels of professionalization: expert professionalization when most aspects of the business meet or exceed the industry’s standards, specialized when one or two aspects of the business are at this level, or minimalized when none of the business can achieve the industry standard. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 47. Which of the following is not listed as a challenge for the late career entrepreneur? A. access to financial backing B. adjusting to the entrepreneurial life C. keeping personal finances out of the business D. reestablishing self-confidence Retirees who start a business face three major challenges – adjusting to the entrepreneurial life, reestablishing self-confidence, and keeping personal finances out of the business. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs 2-53 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 48. Expert business professionalization is a situation that occurs: A. when only the most critical aspect of business is met. B. when most aspects of the business meet or exceed the industry’s standards. C. when one or two aspects of the business are met. D. when none of the business can achieve the industry standard. There are three levels of professionalization: expert professionalization when most aspects of the business meet or exceed the industry’s standards, specialized when one or two aspects of the business are at this level, or minimalized when none of the business can achieve the industry standard. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-54 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 49. A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as _____. A. expert business professionalization B. specialized business professionalization C. minimized business professionalization D. maximized business professionalization A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as specialized business professionalization. There are three levels of professionalization: expert professionalization when most aspects of the business meet or exceed the industry’s standards, specialized when one or two aspects of the business are at this level, or minimalized when none of the business can achieve the industry standard. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-55 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 50. The key difference between a family council and a board of directors is that: A. the council is comprised of unrelated members while the board is comprised of family members. B. the board of directors maximizes communication while the council works on unique company problems. C. the council is to keep the family involved while the board is focused on running the business. D. the board can seek legal advice while the council gathers legal advice from the board. The key difference between a family council and a board of directors is that the function of the family council is to keep the family involved while the board is focused on running the business. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 51. Which of the following is true with regard to minimalized business professionalization? A. The entrepreneur does nearly everything in the simplest way possible. B. The entrepreneur is passionate about one or two of the key business functions. C. The entrepreneur meets or exceeds the industry’s standards. D. The entrepreneur brings the highest levels of trust among customers. A situation that occurs when the entrepreneur does nearly everything in the simplest way possible is known as minimalized business professionalization. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium 2-56 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Topic: The Five Ps of Entrepreneurial Behavior 52. Competencies are defined as: A. forms of business-related expertise. B. forms of personal development model. C. different forms of self-assessment. D. different forms of personality theories. All the entrepreneurial personality types aspects depend on hard work, but there are other specific types of business-related expertise—called competencies—that appear repeatedly in successful entrepreneurs around the world. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 53. Getting the business organized and registered is an example of _____ competency. A. opportunity B. resource C. industry-specific D. boundary The competency suggested by boundary relates to the organizational and business processes of a firm. This type of expertise can be called basic business competency. There are certain fundamental activities that all businesses must perform, which are called the key business functions, and include sales, operations (also called production), accounting, finance, and human resources. Getting organized and registered—which creates the boundary—is an example of an operations activity. AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2-57 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 54. The competency suggested by _____ relates to the organizational and business processes of a firm. A. intention B. resource C. exchange D. boundary The competency suggested by boundary relates to the organizational and business processes of a firm. This type of expertise can be called basic business competency. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 55. This stage of the business life cycle is characterized by a stable level of sales and profits over several years. The functional areas, the market, and the products or services are all being dealt with consistently and efficiently. A. The success stage. B. The existence stage. C. The resource maturity stage. D. The takeoff stage. These statements describe the resource maturity stage of the business life cycle. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember 2-58 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 1 Easy Topic: The Entrepreneurial Life Cycle 56. Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as _____. A. key business functions B. competencies C. business accreditations D. business-related expertise Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as key business functions. These are certain fundamental activities that all businesses must perform. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 2-59 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 57. Certain businesses demand higher safety related rules. For example, window cleaners that specialize in high-rise buildings have certain rules and safety protocols. These specific rules would comprise the _____. A. specialized business professionalization B. infant-industry argument C. industry-specific knowledge D. key business functions Activities, knowledge, and skills specific to businesses in a particular industry is known as industry-specific knowledge. A restaurant really is different from a mechanic’s shop or a computer store or a portrait studio. Each requires you to understand a particular industry and market, and each requires a very particular kind of skill. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 2 Medium Topic: Entrepreneurial Operational Competencies 2-60 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 58. The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as _____. A. basic business competencies B. resource competencies C. opportunity competencies D. determination competencies The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as resource competencies. Resources lead to specific resource competencies. For even the smallest part-time business, the entrepreneur needs to find or gain access to resources such as time, information, financing, space for the business, raw materials, and a variety of people (advisers, suppliers, service providers, customers). AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 59. Which of the following stages of the business life cycle do most small business never go through? A. The takeoff stage. B. The emergence stage. C. The existence stage. D. The entrepreneur stage. Most small businesses never go through the takeoff stage, and for those that do, the takeoff path often moves them into the high-growth firm model and away from small business. AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2-61 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Blooms: Remember Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 1 Easy Topic: The Entrepreneurial Life Cycle 60. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s basic business competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having prior knowledge of the house-painting business The competency suggested by boundary relates to the organizational and business processes of a firm. This type of expertise can be called basic business competency. There are certain fundamental activities that all businesses must perform, which are called the key business functions, and include sales, operations (also called production), accounting, finance, and human resources. Getting organized and registered—which creates the boundary—is an example of an operations activity. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 3 Hard Topic: Entrepreneurial Operational Competencies 2-62 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 61. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following provides industry-specific knowledge to martin? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having worked in a house-painting company before starting his own business Activities, knowledge, and skills specific to businesses in a particular industry are known as industry-specific knowledge. Some of these skills focus on knowing your new business and its context. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 3 Hard Topic: Entrepreneurial Operational Competencies 2-63 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 62. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s resource competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business’s office in his garage D. Martin having prior knowledge of the house-painting business Resources lead to specific resource competencies. For even the smallest part-time business, the entrepreneur needs to find or gain access to resources such as time, information, financing, space for the business, raw materials, and a variety of people. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 3 Hard Topic: Entrepreneurial Operational Competencies 2-64 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 63. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town’s reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin’s opportunity competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business’s office in his garage D. Martin deciding to set up his own business after quitting his previous job Exchange deals with the actual process of exploiting the opportunity for profit—which is a fancy way of saying “making sales.” The competencies that make this work are called opportunity competencies, which include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Analyze Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 3 Hard Topic: Entrepreneurial Operational Competencies 2-65 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 64. Which of the following deals with the actual process of exploiting an opportunity for profit? A. Resource B. Exchange C. Intention D. Boundary Exchange deals with the actual process of exploiting the opportunity for profit—which is a fancy way of saying “making sales.” AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 65. Which of the following relates to the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business? A. Determination competencies B. Basic business competencies C. Resource competencies D. Opportunity competencies Opportunity competencies include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 1 Easy Topic: Entrepreneurial Operational Competencies 2-66 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 66. Which of the following comprises a family business? A. A firm in which two or more families own a stake in a company but with no authority for daily management B. A firm in which no family members are involved in the management of the business C. A firm in which two or more families are involved in the occasional management of the business D. A firm in which one family owns a majority stake Defined as firms with a majority family ownership and direct daily family involvement, family business is a major economic force, employing 58 percent of America’s total workforce. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 67. Which of the following is a major economic force, employing 58 percent of America’s total workforce? A. Public companies B. Government enterprises C. Family businesses D. International assignments Defined as firms with a majority family ownership and direct daily family involvement, family business is a major economic force, employing 58 percent of America’s total workforce. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-67 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 68. Which of the following is true as an advantage of businesses run by a group of tight-knit family members? A. Succession issues don’t crop up in family-owned businesses. B. Role conflicts never happen in family owned businesses. C. Board of members are not used in family-owned businesses. D. Communication-based integration is most effective in family-owned business. Small, family-owned businesses have many advantages. If the business is managed at the top by a group of tight-knit family members, communication-based integration can be more effective, and decision making can be easier and quicker. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 69. Which of the following challenges is typical to family businesses? A. Motivation and nepotism B. Role conflict and succession C. Succession and finances D. Leadership and finances There are two challenges typical to family businesses—role conflict and succession. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-68 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 70. Which of the following best describes the problem that arises when people have multiple responsibilities and each makes different demands on them? A. Role conflict B. Succession issues C. Strategizing challenges D. Leadership constraints Role conflict describes the kind of problem that arises when people have multiple responsibilities, such as parent and boss, and each makes different demands on them. Role conflict is at its worst when people fail to recognize it. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 71. Which of the following is the most effective approach for avoiding role conflict? A. Keep family issues out of the family business B. Keep separate rules for family members and employees C. Have constant role reversals D. Have decisions narrowed down for family members based on family necessities For family business, the most effective approach for avoiding role conflict is to keep family issues out of the family business. Whenever possible, try and make decisions based on business necessities. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 2-69 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 72. Which of the following problems is closely related to role conflict? A. Resource shortage B. Lack of skills C. Shortage of time D. Perseverance Role conflict breeds another unending problem—the shortage of time. Entrepreneurs are among the most rushed people in the workforce. Part of this comes from the responsibilities of ownership. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 73. The organizing process to help make the most efficient use of the day is known as _____. A. promotion focus B. competence C. certification D. time management The organizing process to help make the most efficient use of the day is known as time management. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-70 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 74. Only _____ of family-owned businesses survive beyond the first generation. A. three-quarters B. one-half C. one-fourth D. one-third Thirty-nine percent of U.S. family-owned businesses are expected to face the retirement or semiretirement of their CEO within the next five years. This statistic grows in importance if you factor in the idea that only one-third of family-owned businesses survive beyond the first generation. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 75. ____ refers to the process of intergenerational transfer of business. A. Role conflict B. Succession C. Certification D. Access When the current owners are ready to think about what follows them, we get into succession— the process of intergenerational transfer of a business. Often the lack of a clear succession plan is the death knell for those family firms facing their first intergenerational transition. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 2-71 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 76. Which of the following statements is true about a family council? A. It helps to maximize communication in the succession process of family businesses. B. Its main function is complete the key business activities of a family business. C. It includes family members with immediate interests in the business and a significant number of non-family members. D. It is not a good forum for grappling with issues like role expectations, commitment, and personal responsibility. One way to maximize communication in the succession process is to create a family council. A family council includes family members with immediate interests in the business (spouse, sisters and brothers, older children, etc.). The focus of council meetings is the business-family relationship. The meetings can also be a good forum for grappling with issues like role expectations, commitment, and personal responsibility. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 77. Which of the following organizations tracks experts in family business? A. Association for Family Business Foundations B. Association for Small Business Entrepreneurs C. Family Business Management Institute D. Family Firm Institute For family councils and boards of advisers, it is often helpful to get professional advice at the start, and then continue on your own. One organization that tracks experts in family business is the Family Firm Institute. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember 2-72 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 1 Easy Topic: Family Businesses 78. Which of the following statements about entrepreneurial teams is true? A. Most entrepreneurial teams are family related. B. The majority of new businesses have an entrepreneurial team of a minimum five coowners. C. The trend is toward even more businesses being developed by a solo entrepreneur. D. Only 10 percent of teams are spouses or life partners working together. While the classic image of the entrepreneurial small business would involve the image of the solo entrepreneur, the modern reality is different. The majority of new businesses have a team of two or more co-owners, and the trend is toward even more businesses being developed by teams of entrepreneurs. Most teams are family related. In fact 53 percent of teams are spouses or life partners working together. AACSB: Analytical Thinking AACSB: Teamwork Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 2 Medium Topic: Entrepreneurial Teams 2-73 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 79. Which of the following is true with regard to women in small businesses? A. Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. C. Women prefer less-risky firms, which also tend to be firms with lower returns. D. Women prefer more high-tech firms, as well as firms where technology is central to the business than men. The entrepreneurs’ goals in starting the business might also play a role. For example men more often mention making money as a motivation, while women more often mention having flexibility for personal and family life. The overall growth strategies also differ, with more women choosing single-person lifestyle firms over the small business forms that employ others. Along these strategy lines, women prefer less-risky firms, which also tend to be the firms with lower returns. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 2 Medium Topic: Women and Minorities in Small Business 80. Qualification for _____ requires certification as a business owned and operated by a woman or a minority. A. set-asides B. codicils C. product liability insurance D. professional liability insurance Qualification for set-asides requires certification as a business owned and operated by a woman or a minority (or both). AACSB: Analytical Thinking AACSB: Diversity 2-74 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 81. Which of the following is true with regard to minorities in small businesses? A. Minority-owned firms have not grown much in recent years and are a slow growing sector. B. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs. C. There is a phenomenal decline in the number of minority entrepreneurs despite the growth of racial and ethnic groups within the U.S. population. D. Minority entrepreneurs do not face the challenge of access anymore. Several reasons account for the phenomenal growth in the number of minority entrepreneurs. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs by offering information, advice, and funding access. Another explanation lies in the growth of racial and ethnic groups within the U.S. population, a trend that is expected to continue. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 2 Medium Topic: Women and Minorities in Small Business 2-75 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 82. The two fastest growing minority groups that represent the largest segments of minority business owners are: A. Hispanics and African Americans. B. Hispanics and Pacific Islanders. C. Asians and African Americans. D. Asians and Pacific Islanders. The two fastest growing minority groups (Hispanics and African Americans) represent the largest segments of minority business owners. Hispanics represent 46 percent of all ethnic business owners, Asians 25 percent, and African Americans 24 percent. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 83. The challenge of _____ refers to when woman or minority-owned businesses are simply excluded from the opportunities offered to firms owned by white males. A. consistency B. access C. flexibility D. mutuality Despite the growth in the number of women and minority entrepreneurs, both groups still face the challenge of access. Access refers to the simplest form of discrimination—often women- or minority-owned firms are simply excluded from the opportunities offered to firms owned by white males. This can result from the way that networks built from interpersonal relations in business exclude women and minorities. AACSB: Analytical Thinking AACSB: Diversity 2-76 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 84. Identify the simplest form of discrimination with regard to women and minority entrepreneurs within the U.S. population. A. Certification B. Role conflict C. Access D. Collusion Despite the growth in the number of women and minority entrepreneurs, both groups still face the challenge of access. Access refers to the simplest form of discrimination—often women- or minority-owned firms are simply excluded from the opportunities offered to firms owned by white males. This can result from the way that networks built from interpersonal relations in business exclude women and minorities. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 2-77 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 85. Access problems for women- and minority-owned small businesses crop up most often as: A. differences in labeling. B. discrimination in financing. C. problems involved in business contacts. D. the presence and absence of certain skills. Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 86. Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like, are known as _____. A. collective investment scheme B. cooperative fund C. certified items D. set-asides There are two solutions for access-based challenges. One solution is institutional, when minority and women-owned small businesses pursue dedicated contracting funds, known as set-asides, among big companies and government agencies. The good news is that governments at all levels have special contracting opportunities for small businesses that are owned and operated by minorities or women. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember 2-78 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 87. An examination based acknowledgement that the firm is owned and operated as specified is known as _____. A. performance analysis B. certification C. multi source assessment D. homologation An examination based acknowledgement that the firm is owned and operated as specified is known as certification. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies which can be leveraged to gain access to other sectors of business. AACSB: Analytical Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 1 Easy Topic: Women and Minorities in Small Business 2-79 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 88. Which of the following statements about certification with regard to women- or minority-owned small business is true? A. Most corporate certification programs require a business to be in operation at least five years. B. Certification is for every women or minority-owned small business. C. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies. D. For corporations, certification is handled by organizations that are affiliated with the government or big business. Certification is not for every women- or minority-owned small business. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies which can be leveraged to gain access to other sectors of business. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 2 Medium Topic: Women and Minorities in Small Business 89. _____ entrepreneurs are people who begin their business after having retired or resigned from work in corporations at or after the age of 50. A. Occasional B. Helical C. Second career D. Veteran Second career entrepreneurs are people who begin their businesses after having retired or resigned from work. AACSB: Analytical Thinking 2-80 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs 90. Which of the following is an example of a second career entrepreneur? A. Cynthia, a 24-year-old, starting a consultancy business after graduating from college. B. Mark, a 30-year-old, starting a new business venture in stock trading after the failure of his previous business in real estate. C. Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. D. Timothy, a 62-year-old, joining a real estate agency as a sales representative, after being retied for 4 years. Second career entrepreneurs are people who begin their businesses after having retired or resigned from work. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 2 Medium Topic: Second Career Entrepreneurs 2-81 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 91. Which of the following is one of the prime challenges faced by most second career entrepreneurs? A. Keeping personal finances out of the business B. Avoiding overconfidence C. Lacking resources D. Deciding whether to return to work A problem for second career entrepreneurs is keeping personal finances out of the business. Often when individuals are laid off or given early retirement, they can receive lump-sum financial settlements. Frequently, people intending to become late career entrepreneurs plan to use a substantial portion of these funds to start the new business. They fail to carefully consider how they will invest the money in the business, and how it will be used. Taking the easy way out can often mean late career entrepreneurs underprepare for the rigors of business, and they are risking their retirement nest egg. AACSB: Analytical Thinking AACSB: Diversity Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 1 Easy Topic: Second Career Entrepreneurs Essay Questions 2-82 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 92. Define the five Ps of entrepreneurial behavior. There are five aspects of behavior that most successful entrepreneurs display. The five behaviors include passion, perseverance, promotion/prevention focus, planning style and professionalization: Passion is an intense positive feeling the entrepreneur has toward the business or even the idea behind the business. It comes from being actively involved in moving the business forward. Perseverance is best thought of as a type of learned optimism, the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known. Most of us have some mix of two internal focuses (also called our regulatory focus), a promotion focus intent on maximizing gains, which gives us a bias toward pursuing opportunities likely to lead to those gains, and a prevention focus intent on minimizing losses, with a bias toward inaction or protective action. There is more than one way to plan. In fact, there are five ways. These include different types of planners like comprehensive planners, critical-point planners, opportunistic planners, reactive planners, and habit-based planners. The extent to which a firm meets or exceeds the standard business practices for its industry is known as professionalization. One hallmark of successful entrepreneurs is that they usually do at least one thing much better than average. AACSB: Analytical Thinking AACSB: Communication Blooms: Remember Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 1 Easy Topic: The Five Ps of Entrepreneurial Behavior 2-83 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 93. Name and briefly explain the stages of the entrepreneurial life cycle. Why is it important to understand this cycle? Like every person, every small business is unique. But just as we all go through childhood and adolescence on the way to adulthood, so do entrepreneurs’ small businesses. There is a lot of predictability in this growth process, and knowing the developmental stages of the business life cycle can help you better understand your business and your career as a small business owner. For most small businesses the usual sequence of stages is emergence, existence, survival, success, and resource maturity. Emergence is the stage in which a person thinks about and takes actions toward starting a firm. Getting from entrepreneurial thinking to entrepreneurial action is the challenge of the emergence stage. Existence is defined by having the business in operation, but not yet stable in terms of markets, operations, or finances. Existence if the second riskiest period after emergence. The reason risk is so high is that many business owners lack the key information or experiences they need in marketing, production, and management. The problems of mastering these three areas form what are called the liabilities of newness. The solution comes from getting expertise as quickly as possible. The success stage occurs once the firm is established in its market. Success stage firms show consistently growing financial performance, usually with slowly rising sales. Firms at this stage develop the information, skills, and most importantly the routines to grow the business’s profits. These extra profits are slack resources. The resource maturity stage will follow the success stage for most firms. This stage is characterized by a stable level of sales and profits over several years. At this stage, the functional areas, the market, and the products or services are all being dealt with consistently and efficiently. The challenge of maturity is to avoid complacency. The life cycle model is predictable within some broad terms. Knowing the stages of the life cycle and where your firm is among those stages can serve as a powerful reminder of the kinds of issues for which you need to watch. AACSB: Analytical Thinking AACSB: Communication Blooms: Understand Learning Objective: 02-03 Recognize the stages of development entrepreneurs and their firms go through. Level of Difficulty: 2 Medium Topic: The Entrepreneurial Life Cycle 2-84 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 94. What is the difference between key business functions and industry-specific knowledge? There are certain fundamental activities that all businesses must perform, which are called the key business functions, and include sales, operations (also called production), accounting, finance, and human resources. Getting organized and registered—which creates the boundary—is an example of an operations activity. There is also industry-specific knowledge. A restaurant really is different from a mechanic’s shop or a computer store or a portrait studio. Each requires you to understand a particular industry and market, and each requires a very particular kind of skill. AACSB: Analytical Thinking AACSB: Communication Blooms: Understand Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 2 Medium Topic: Entrepreneurial Operational Competencies 2-85 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 95. Outline methods or techniques for time management. The organizing process to help make the most efficient use of the day is known as time management. There are a collection of techniques for time management, which can help meet the challenges of schedule overload. Consider these basic methods: List—Whether you use a pad of paper, a specialized form like a Franklin Planner, a PDA, or Microsoft Outlook’s Task function, the key to staying on top of your responsibilities is to list them as soon as you get them. Then as you finish them, you can enjoy crossing them off the list. 123 Prioritize—As you look at your list, prioritize your tasks based on their importance to your business and their due date. The most important tasks due soonest get a priority of 1. Tasks with lesser importance or a longer time to completion get ranked 2, and your “back burner” concerns get ranked 3. If there are tasks (of any level) that can be lumped together, so much the better. How do you decide importance? If the task will not help your business or family, it is probably not a priority 1 task. Delegate—Look at your task list and see which tasks you can get others to do for you (for free or at a price). When you’re overloaded, getting more people on the job for you is a powerful way to get more done. Repeat—Take a few minutes every day to repeat the above steps. It will save you time later. Strategize—Once a week, take a few minutes to look at the things you didn’t do this week and check if you are overlooking something which could be important to your business, family, or yourself, but is getting overlooked in the short run. Entrepreneurs are notorious for overlooking their health and cheating themselves and their businesses out of time to think about the big picture and their firm’s future. Ten minutes a week spent this way can make a world of difference. AACSB: Analytical Thinking AACSB: Communication Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 2-86 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 96. Discuss the challenge of succession faced by family businesses. When the current owners are ready to think about who follows them, it involves thinking about succession—the process of intergenerational transfer of a business. Often the lack of a clear succession plan is the death knell for those family firms facing their first intergenerational transition. If the founder dies, becomes seriously ill, or is incapacitated before he or she can groom a successor, the new family leader may be suddenly thrust into the role before coming up to speed on vital company information and developing needed skills. Also, in the absence of a succession plan, private and public dissension among various factions of the family becomes more likely, negatively affecting operations within the firm, and may eventually cause the business to fail. Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive. Problems arise when there are no successors available within the family. Only a very small number of all entrepreneurs were able to rely on family members to take over. Sometimes none of the children have an interest in the family business. The opposite problem arises in situations when several family members believe they should take over the top spot and vie for the position to the detriment of both family and business. The owners of a family business tend to be especially passionate about their enterprise, because they have a huge economic incentive to pay very close attention. AACSB: Analytical Thinking AACSB: Communication Blooms: Understand Learning Objective: 02-05 Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 2-87 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 97. What are the challenges faced by team entrepreneurs? While the classic image of the entrepreneurial small business would involve the image of the solo entrepreneur, the modern reality is different. The majority of new businesses have a team of two or more co-owners, and the trend is toward even more businesses being developed by teams of entrepreneurs. When putting a team together it is important to work out key issues ahead of time. For example, team members might be putting different amounts of money or time into the business, but might be expecting identical returns, which creates an equity problem. A team can also face conflict over idea ownership, shared goals and how to make decisions, especially when the team is evenly split on choices. AACSB: Communication AACSB: Teamwork Blooms: Understand Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams. Level of Difficulty: 2 Medium Topic: Entrepreneurial Teams 2-88 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 98. Describe the challenges faced by women and minorities in small businesses. Women-owned businesses are one of the fastest growing sectors of all U.S. businesses. Between 1997 and 2012, the number of private businesses with at least 51 percent female ownership increased by 54 percent, while the rate for firms overall was 37 percent. Representing approximately 22 percent of all U.S. businesses, the number of minority-owned firms has likewise grown explosively in recent years. Despite the growth in the number of women and minority entrepreneurs, both groups still face the challenge of access. Access refers to the simplest form of discrimination—often women- or minority-owned firms are simply excluded from the opportunities offered to firms owned by white males. This can result from the way that networks built from interpersonal relations in business exclude women and minorities. When business relationships build from shared hobbies, sports, or even college ties, social situations that are all male or largely white outside of work can lead to unintegrated business networks. Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing. This means that they may not be given the same access to funds or contracting opportunities that white male-owned firms are given. AACSB: Communication AACSB: Diversity Blooms: Understand Learning Objective: 02-06 Identify the challenges women and minority business owners face. Level of Difficulty: 2 Medium Topic: Women and Minorities in Small Business 2-89 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 99. Compare determination competencies to opportunity competencies. Intention reflects your determination to start your business and make it a success. These determination-driven skills can be called determination competencies. Exchange deals with the actual process of exploiting an opportunity for profit. The competencies that make this work are called opportunity competencies. Determination competencies are demonstrated by focusing on your business over other choices and being ready to find out about and do what it takes to pursue opportunities that will help get the business going. Opportunity competencies include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy. Determination competencies are essential to deciding if a business is feasible for you. Opportunity competencies often make life and work easier and strategic planning protect those opportunities. Research shows that people can learn what they need to know to have adequate levels of expertise in all five competency areas. AACSB: Analytical Thinking AACSB: Communication Blooms: Understand Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 2 Medium Topic: Entrepreneurial Operational Competencies 2-90 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 100. Who are referred to as the second career entrepreneurs? A special group of entrepreneurs are called second career entrepreneurs—people who begin their businesses after having retired or resigned from work. As increasing numbers of corporations merge, downsize, reorganize, and/or close altogether, many firms are offering attractive retirement packages to encourage employees to voluntarily leave the organization. Workers are opting to accept generous offers to retire early (between ages 50 and 64). People’s decisions of whether to return to work depend on their individual level of wealth (retirement income and savings), their health, and their work experience, as well as general economic conditions. About a third of the retirees who return to work decide to become selfemployed. AACSB: Communication AACSB: Diversity Blooms: Understand Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. Level of Difficulty: 2 Medium Topic: Second Career Entrepreneurs 2-91 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 101. Explain the challenges faced by second career entrepreneurs? About a third of retirees who return to work decide to become self-employed. There are three main challenges for such entrepreneurs—adjusting to the entrepreneurial life, reestablishing self-confidence, and keeping personal finances out of the business. Working for others for most of their life, second career entrepreneurs are likely to have gotten used to having many of the daily chores of running a business done for them. Even for former managers, the mechanics of getting the location cleaned or the payroll checks written may have been things they could take for granted. As entrepreneurs, they have to do these things themselves or arrange to have them done. All entrepreneurs get used to a do-it-yourself approach, and this is a challenge for everyone, but it can be especially trying for late career entrepreneurs, who may have hoped that life would get easier rather than harder later in their careers. The second challenge comes from a loss of confidence. The stigma attached to older workers’ departure from their former job can make a tremendous difference in their level of confidence. Being given early retirement can be seen as a company’s effort to replace expensive (if capable) older talent with junior people who work for less. But being laid off or downsized suggests that the person was expendable at best. The difference in labeling makes a difference in the late career entrepreneur’s self-confidence. The third problem is keeping personal finances out of the business. Often when individuals are laid off or given early retirement, they can receive lump-sum financial settlements. Frequently, people intending to become second career entrepreneurs plan to use a substantial portion of these funds to start the new business. Sometimes this happens because second career entrepreneurs see their personal funds as “easy money.” Many people who take the easy money are also taking the easy way out. They fail to carefully consider how they will invest the money in the business, and how it will be used. Taking the easy way out can often mean late career entrepreneurs are underprepared for the rigors of business, and they are risking their retirement nest egg. AACSB: Communication AACSB: Diversity Blooms: Understand Learning Objective: 02-07 Describe the situation of people who become second career entrepreneurs. 2-92 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Level of Difficulty: 2 Medium Topic: Second Career Entrepreneurs 2-93 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.