Self Test Chapter 6

Self Test Chapter 6 True/False Indicate whether the statement is true or false. _T_ 1. The entrepreneurial motivations of individuals relate to the entrepreneur, the environment, and the venture. _T_ 2. Many entrepreneurs do not understand the marketing life cycle of a new product. _F_ 3. Most entrepreneurs are objective when they evaluate their new idea. _F_ 4. With a nonroutine venture, the initial innovation will maintain the company’s competitive advantage without new technology. _T_ 5. In a lifestyle venture, independence, autonomy, and control are the primary driving forces. _F_ 6. The decision of an entrepreneur to ignore the market is a safe one if he or she is sure that the idea will be a success. _T_ 7. Only a small percentage of new ventures succeed. _T_ 8. Two important factors classified as managerial that could be a cause for failure include human resource problems and the concept of the team approach. _T_ 9. “Intensity of competition” changes the dominance of problem areas. _T_ 10. The maverick entrepreneur who avoids reaching out and finding help is a myth of the past. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. It is reported that _____ new firms have emerged in the United States every year since the mid-1990s. a. 600,000 b. 100,000 c. 22,000 d. 230,000 ____ 2. Researchers have described a “fully developed new firm” with a number of characteristics, including: a. full-time commitment b. formal financial support c. minimal hiring d. a and b both apply ____ 3. Many entrepreneurs lack _____ for their new venture. a. innovation b. intelligence c. objectivity d. both a and b ____ 4. When a customer sees a product that is superior to its competitors, ______ becomes less important. a. size b. color c. quantity d. price ____ 5. A common pitfall in selecting a new venture is a. poor financial understanding.

b. proper objective evaluation. c. real insight into the market. d. none of the above. ____ 6. Many entrepreneurs lack a. knowledge of their product. b. venture uniqueness. c. drive. d. the willingness to put in long hours. ____ 7. Name the pitfall described by the statement, “ Engineers and technically trained people are particularly prone to falling in love with an idea for a product or service.” a. inadequate understanding of technical requirements b. lack of venture uniqueness c. no real insight into the market d. lack of objective evaluation ____ 8. Poor financial understanding is characterized by which of the following? a. failure to anticipate technical difficulties b. inadequate understanding of costs and funding requirements c. failure to realize the life cycle of a product d. lack of product differentiation ____ 9. A new venture must go through _____ phases. a. five b. two c. three d. seven ____ 10. Three specific phases that a new venture goes through are a. prestart-up, start-up, poststart-up. b. start-up, poststart-up, evaluation. c. beginning start-up, start-up, ending start-up. d. prestart-up, start-up, evaluation. ____ 11. The amount of capital required to start a new venture _____ . a. can vary considerably depending upon the industry b. is generally the same for all start-ups c. is never available d. will always be small ____ 12. Using the failure prediction model discussed in the chapter, the risk of failure can be reduced by: a. using less debt as initial financing and generating revenue in the initial stages. b. using more debt as initial financing and generating less revenue in the initial stages. c. using more revenue to enhance more debt in the initial stage. d. all of the above. ____ 13. Which of the following is a major reason for the failure of a new venture? a. inadequate market knowledge b. good product performance c. opening in the wrong location

Self Test Chapter 6 Answer Section TRUE/FALSE 1. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 2. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 3. ANS: F PTS: 1 NAT: AACSB Analytic | Environmental Influence 4. ANS: F PTS: 1 NAT: AACSB Analytic | Environmental Influence 5. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 6. ANS: F PTS: 1 NAT: AACSB Analytic | Environmental Influence 7. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 8. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 9. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence 10. ANS: T PTS: 1 NAT: AACSB Analytic | Environmental Influence MULTIPLE CHOICE 1. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 2. ANS: D PTS: 1 NAT: AACSB Analytic | Environmental Influence 3. ANS: C PTS: 1 NAT: AACSB Analytic | Environmental Influence 4. ANS: D PTS: 1 NAT: AACSB Analytic | Environmental Influence 5. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 6. ANS: B PTS: 1 NAT: AACSB Analytic | Environmental Influence 7. ANS: D PTS: 1 NAT: AACSB Analytic | Environmental Influence 8. ANS: B PTS: 1 NAT: AACSB Analytic | Environmental Influence 9. ANS: C PTS: 1 NAT: AACSB Analytic | Environmental Influence 10. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 11. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 12. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 13. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 14. ANS: B PTS: 1 NAT: AACSB Analytic | Environmental Influence 15. ANS: C PTS: 1 NAT: AACSB Analytic | Environmental Influence 16. ANS: D PTS: 1 NAT: AACSB Analytic | Environmental Influence 17. ANS: C PTS: 1 NAT: AACSB Analytic | Environmental Influence 18. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence 19. ANS: C PTS: 1 NAT: AACSB Analytic | Environmental Influence 20. ANS: A PTS: 1 NAT: AACSB Analytic | Environmental Influence