Essentials of Entrepreneurship and Small Business Management
Chapter 1 The Foundations of Entrepreneurship
1. One of the most significant economic developments in recent business history relates to the ________.
A) growth of blue-chip corporations
B) development of Pacific Rim countries
C) entrepreneurial spirit
D) additional employment opportunities offered by government institutions
2. The recent number of job losses in large corporations compared to the jobs created by small business has
changed the perception of ________ for launching a new business.
A) prestige
B) risk
C) financing opportunities
D) short-term potential
3. The profile of an entrepreneur includes ________.
A) a desire for responsibility and moderate risk
B) confidence in the ability to succeed and determination
C) a high level of energy, a desire for immediate feedback and a future orientation
D) All the above
4. An entrepreneur is one who ________.
A) is willing to attempt to implement a business concept and then give up if it does not meet immediate
expectations
B) understands the process of developing an idea and does not need to understand what it means to bring that
idea to a viable business concept
C) knows that the concept they are about to develop will result in a profitable business
D) creates a new business concept for the purpose of achieving profit and growth by assembling the
necessary resources to capitalize on identified opportunities
5. All of the following are characteristics of the typical entrepreneur except ________.
A) confidence in his/her ability to succeed
B) value of money over achievement
C) desire for immediate feedback
D) a future orientation
6. Entrepreneurs are characterized by ________.
A) skill at organizing
B) desire for immediate feedback
C) high energy levels
D) All of the above
7. Entrepreneurs who repeatedly start businesses and grow to a sustainable size before striking out again are
known as ________ entrepreneurs.
A) opportunistic
B) persistent
C) serial
D) classic
8. Entrepreneurs typically possess ________.
A) the ability to easily access capital
B) a set of unique skills that is usually accompanied by advanced degrees in several areas
C) a high level of commitment, have a tolerance for ambiguity, are flexible and tenacious
D) specialized technical abilities
9. Entrepreneurs who start businesses because they cannot find work any other way are ________.
A) necessity entrepreneurs
B) serial entrepreneurs
C) opportunity entrepreneurs
D) corporate cast-offs
10. In addition to the opportunity to create their own destiny and enjoy what they do, entrepreneurs also
benefit from the ability to ________.
A) earn tremendous wealth without risk and uncertainty
B) make a difference in an area important to them and be recognized for those efforts
C) create wealth without providing true value
D) exploit the opportunities that the free enterprise system offers
11. ________ entrepreneurs are business builders who seek innovative solutions to some of society's most
vexing problems.
A) Social
B) Opportunistic
C) Serial
D) Necessity
12. Which of the following is a benefit of entrepreneurship?
A) The opportunity to gain control over your own destiny.
B) The opportunity to reach your full potential.
C) The opportunity to do what you enjoy.
D) All of the above
13. Potential drawbacks of entrepreneurship may include ________.
A) uncertainty of income, risk, long hours, and high stress
B) uncertainty of income, risk, easy hours, and frequent vacations
C) uncertainty of income, risk, long hours, and the immediate accumulation of wealth
D) certainty of income, risk, long hours, and high stress
14. Nearly ________ of entrepreneurs start their businesses between the ages of 20 and 44 and the number of
Americans in that age range currently is ________ .
A) one-half; 8.5 million
B) two-thirds; 85,000
C) three-fourths; 103 million
D) one-fourth; 85 million
15. Factors that feed the economic boom behind entrepreneurship include ________.
A) demographic and economic factors
B) technology and cloud computing
C) the shift to a service-based economy and international opportunities
D) All of the above
16. Which of the following is NOT one of the forces driving the entrepreneurial trend in our country?
A) Shift away from a service economy.
B) Independent lifestyle.
C) International opportunities.
D) E-commerce and the World Wide Web.
17. Which of the following technological forces is driving the entrepreneurial trend in our nation?
A) Cloud computing.
B) Mobile marketing.
C) The Internet.
D) All of the above
18. Entrepreneurs may find benefit from the Internet due to its potential ________.
A) if the organization is willing to invest millions of dollars in this effort
B) only if the entrepreneur has a high level of technical abilities
C) as a relatively low-cost solution to expand its revenue-generating abilities
D) to take all pressure off other attributes of the business venture
19. International opportunities are ________.
A) clearly out of reach for entrepreneurial businesses
B) now within the reach of entrepreneurial businesses and may present significant opportunities
C) highly limited for entrepreneurs
D) risky and do not merit serious consideration by the entrepreneur
20. Small companies that operate globally from their inception are referred to as ________.
A) micromultinationals
B) intrapreneurial ventures
C) global companies
D) international companies
21. Which of the following statements concerning small businesses and international markets is false?
A) Although terrorism and global recession have slowed the growth of international trade somewhat, global
opportunities for small businesses have a long-term positive outlook.
B) Although the U.S. is an attractive market, approximately 95 percent of the world's population lives outside
its borders.
C) Because exporting is so complex and requires a company to have so many international experts on
staff, exporting is not feasible for small businesses.
D) Small companies comprise 97 percent of all businesses engaged in exporting, yet they account for only 30
percent of the nation's export sales.
22. Small companies that have expanded successfully into foreign markets tend to rely on all but which of the
following strategies?
A) Research foreign markets thoroughly.
B) Focus on many countries initially.
C) Utilize government resources designed to help small companies establish an international presence.
D) Forge alliances with local partners.
23. Entrepreneurial couples who work together as co-owners of their business are referred to as ________.
A) dual entrepreneurs
B) corporate dropouts
C) corporate cast-offs
D) copreneurs
24. Women in business still experience ________ as they attempt to break the "glass ceiling."
A) success
B) opportunities
C) discrimination
D) ease of navigation
25. The demographic attributes of successful entrepreneurs are ________.
A) limited to specific ages, genders, and ethnic backgrounds
B) uncertain and have not been fully studied or analyzed
C) are key predictors that determine how long the business will survive
D) highly diverse relating to age, gender, and ethnicity
26. "Copreneurs" are defined as ________.
A) entrepreneurs that work part-time
B) highly successful entrepreneurs with prior company experience and background
C) those entrepreneurs that will eventually combine their business with another venture
D) entrepreneurial couples that work together as co-owners of their business
27. Which of the following statements is not true regarding the diversity of entrepreneurs?
A) Minority-owned businesses have come a long way in the past decade, and their success rate is climbing.
B) Minority-owned businesses now account for approximately 22 percent of all businesses in the U.S.
C) Immigrants with more education and experience than those of the past are coming to the U.S. and
succeeding in entrepreneurial ventures.
D) The numbers of part-time and home-based entrepreneurs are rising.
28. Which of the following statements about women-owned businesses is false?
A) The businesses women start tend to be smaller than those men start.
B) Women own about 28 percent of all privately-held businesses in the U.S.
C) The number of women-owned businesses is growing slower than the national average.
D) Women-owned companies are far less likely to attract equity capital investments as those that men start.
29. Which of the following is not a characteristic of a successful working relationship between copreneurs?
A) A clear definition of one partner as "boss" and the other as "subordinate".
B) Compatible business and life goals.
C) Complementary business skills.
D) A clear division of roles and authority based on each partner's skills and abilities.
30. Which of the following is a characteristic of copreneurs?
A) Mutual respect
B) Complementary business skills
C) A clear division of roles and authority
D) All of the above
31. Melinda and John Perez, both corporate attorneys in New York City, have grown tired of their lengthy
daily commute, the stress of their jobs, and the overbearing policies of their employers. They have decided to
leave their six-figure jobs and together open a guide service in Wyoming. Melinda and John are examples of
________.
A) corporate castoffs and corporate dropouts
B) corporate dropouts and copreneurs
C) corporate castoffs and copreneurs
D) copreneurs and serial entrepreneurs
32. The nation's small businesses ________.
A) employ more than 49 percent of the nation's private sector workforce
B) create more jobs than do big businesses
C) account for 47 percent of business sales
D) All of the above
33. Small companies ________.
A) created fewer jobs than big companies in the last decade
B) are concentrated in the manufacturing and retail sectors
C) are the leaders in offering training and advancement opportunities to workers
D) account for approximately 10 percent of the nation's GDP and 25 percent of business sales
34. The majority of small companies are concentrated in the ________ and ________ industries.
A) manufacturing; retail
B) manufacturing; service
C) retail; service
D) wholesale; retail
35. The young, job-creating small companies are known as ________.
A) "assertive"
B) "antelopes"
C) "aggressive"
D) "gazelles"
36. One hallmark of successful entrepreneurs is the ability to ________.
A) be willing to gamble
B) fail intelligently
C) overlook past successes
D) repeat the same mistake
37. John has come to you for advice on starting a business venture. He wants to know the best way to gain the
experience he'll need. You suggest that he ________.
A) read a small business book
B) seek knowledge and experience in the field he wishes to enter
C) determine his weaknesses and return to school for a term or two
D) just jump in and learn as he goes
38. Most startup companies can expect to need ________ capital than they anticipate.
A) less
B) the same
C) more
D) within 10% of the
39. The primary cause of small business failures is ________.
A) the lack of capital
B) management mistakes
C) poor location
D) improper inventory control
40. Entrepreneurs tend to be overly ________ and commonly misjudge the ________ requirements of going
into business.
A) optimistic; personal
B) optimistic; financial
C) pessimistic; financial
D) optimistic; professional
41. The only people who ________ are those who never do anything or never attempt anything new.
A) succeed
B) prosper
C) profit
D) fail
42. Which of the following was not identified as one of the suggestions for small business success?
A) Develop a business plan as you grow your business.
B) Manage your financial resources and understand financial statements.
C) Know your business in depth.
D) Learn to manage people successfully.
43. Which of the following is/are true regarding business plans?
A) Provide a pathway to success.
B) Allow entrepreneurs to replace faulty assumptions with facts before making the decision to go into
business.
C) Create a benchmark against which entrepreneurs can measure actual company performance.
D) All of the above
44. Most entrepreneurs believe that ________ is what matters most, but ________ is the most important
financial resource for a small business owner.
A) cash; profit
B) profit; cash
C) profit; inventory
D) inventory; cash
45. Entrepreneurs can increase their chances for success if they ________.
A) know their business in depth and develop a solid business plan
B) manage their financial resources and understand financial statements
C) learn to manage people and keep in touch with how they react to stress and balance their health needs with
the needs of the business
D) All of the above
46. . Which one of the following actions by an entrepreneur is most likely to contribute to creative
destruction?
A) Development of a new product
B) Take-over of a competitor
C) Issuing shares
D) Reducing prices
47. Which of the following is NOT recognized as a misconception about entrepreneurship?
A) Successful entrepreneurship needs only a great idea.
B) Entrepreneurship is easy.
C) Entrepreneurship is found only is small businesses.
D) Entrepreneurial ventures and small businesses are different.
48. All of the following are characteristics of small businesses EXCEPT:
A) Small businesses are independently owned, operated, and financed.
B) Small businesses have fewer than 100 employees.
C) Small businesses emphasize new or innovative practices.
D) Small businesses have little impact on industry.
49. Which of the following is NOT on of the three areas in which the importance of entrepreneurship can be
shown?
A) Innovation
B) Number of new start-ups
C) Job creation and employment
D) bureaucracy
50. The creation of new firms is important because these new firms contribute to economic development
through benefits that include all of the following EXCEPT:
A) Product-process innovation
B) Increased tax revenues
C) Unemployment
D) Social betterment
Chapter 2 Ethics and Social Responsibility: Doing the Right Thing
1. Ethical behavior is doing what is .
A. "right"
B. "profitable"
C. "credible"
D. All of the above
2. The various groups and individuals who affect and are affected by a business are called
A. stockholders
B. stakeholders
C. owners
D. managers
3. Which of the following is not a stakeholder for an organization?
A. Creditors
B. Employees
C. Suppliers
D. All of the above are stakeholders.
4. is a branch of philosophy that studies and creates theories about the basic nature of right and wrong, duty,
obligation, and virtue.
A. Semantics
B. Ethics
C. Religion
D. History
5. responsibility is how an organization responds to the needs of the many elements in society.
A. Moral
B. Investor
C. Social
D. Ethical
6. consists of the fundamental moral values and behavioral standards that form the foundation for the people
of an organization as they make decisions and interact with
stakeholders.
A. Business ethics
B. Social obligation
C. Mission
D. Vision
7. ______is/are the narrowest level of ethical standars
A. The law
B. organizational policies and procedure
C. Social responsibility
D. The moral stance
8. The three parts of the triple bottom line are .
A. processes, profits, and people
B. profit, people, and planet
C. processes, profit, and predominance
D. profit, processes, and planet
9. ___sets behavioral boundaries for decision makers.
A. The strategic plan
B. Strategy
C. Ethics
D. The financial plan
10. sets behavioral boundaries for decision makers.
A. The strategic plan
B. Strategy
C. Social responsibility
D. The financial plan
11. In terms of a business's responsibility to the community, the goal of a business should be to become .
A. a neighbor of choice
B. highly profitable
C. the investment of choice to stockholders
D. the most popular to employees
12. ____may be the result of failing to realize that an ethical dilemma exists, or it may arise from a variety of
mental defense mechanisms.
A. Dishonesty
B. Criminal behavior
C. Irresponsibility
D. Moral blindness
13. The merely establishes the minimum standard of behavior.
A. mission
B. law
C. strategic plan
D. financial plan
14. The is the narrowest level of ethical standards.
A. mission
B. law
C. strategic plan
D. financial plan
15. Actions that are legal, however, may not be .
A. ethical
B. complex
C. profitable
D. doable
16. A strong determinant of moral behaviour is______.
A. profitability
B. financial success
C. training
D. short-term success
17. Companies really are not ethical or unethical:______ are.
A. goals
B. strategies
C. individual
D. departments
18. the driving force behind immoral management is___.
A. the law
B. culture
C. greed
D. education
19. According to the , one should "choose the option that offers the greatest good for the greatest number of
people."
A. television test
B. utilitarian principle
C. family test
D. golden rule
20. According to the , one should "treat other people the way you would like them to treat you."
A. television test
B. utilitarian principle
C. family test
D. golden rule
21. A company _ is a statement that defines the values underlying the entire company and its ethical
responsibilities to its stakeholders.
A. credo
B. annual report
C. vision
D. strategic plan
22. A is a written statement of the standards of behavior and ethical principles a company expects from its
employees.
A. company credo
B. company annual report
C. company vision
D. code of ethics
23. entrepreneurs are finding the resources to tackle challenging problems such as habitat destruction, AIDS,
hunger, and poverty.
A. Serial
B. Social
C. Most
D. All of the above
24. Which one of the following is not a simple way by which small businesses can be socially responsible?
A. Encourage reinventing
B. Support local fundraisers
C. Join in community service
D. Reduce energy usage
25. The three "R's" of socially responsible business are "reuse," "recycle," and " ."
A. reenergize
B. reinvent
C. reduce
D. retrofit
26. In 2020, members of different generations will be working side-by-side in the United States.
A. 2
B. 3
C. 4
D. 5
27. The United States is moving toward a "minority ."
A. tsunami
B. shortfall
C. majority
D. crevic
28. By , the majority of the workforce in the United States will be a member of a minority.
A. 2021
B. 2032
C. 2028
D. 2019
29. the __ population is the fastest-growing sector in the united states.
A. Asian
B. African American
C. Hispanic
D. Caucasian
30. Which of the following is not something that a samall business owner should do to manage a culturally
diverse workforce successfully?
A. Learn to recognize and correct other’s biases and stereotypes.
B. Avoid making invalid assumptions.
C. Concentrate on communication.
D. Continue to adjust your company to your workers.
31. percent of all drug abusers are employed.
A. Forty
B. Fifty
C. Sixty
D. Seventy
32. percent of the workforce says they have consumed alcohol during the workday at least once in the past
year.
A. Twenty-four
B. Sixty-seven
C. Fifty-seven
D. Forty-four
33. are company-provided benefits designed to help reduce workplace problems such as alcoholism, drug
addiction, gambling habits, and other conflicts and to deal with them when they arise.
A. Employee-assistance programs
B. Compensation
C. Healthcare benefits
D. All of the above
34. The most blatant and most potentially damaging form of harassment is quid pro quo.
A. organizational
B. corporate
C. sexual
D. employer
35. In , a superior conditions the granting of a benefit such as a promotion or raise on the receipt of sexual
favors from a subordinate.
A. pro tem
B. pro bono
C. quid pro quo
D. carpe diem
36. A environment usually requires a pattern of offensive sexual behavior rather than a single, isolated remark
or display.
A. hostile
B. benign
C. supportive
D. clandestine
37. Which of the following is not an example of what creates a hostile work environment?
A. Dispensing assignments based on merit.
B. Making sexual comments to other employees.
C. Displaying sexually suggestive pictures or posters.
D. All of the above
38. cannot monitor personal email accounts.
A. Spouses
B. Employers
C. Trade associations
D. Colleagues
39. One of the most important group of stakeholders that a business must satisfy is its .
A. customers
B. employees
C. investors
D. banks
40. Which of the following is a consumer right per the Consumer Bill of Rights?
A. Right to Sanity
B. Right to Know
C. Right to Profit
D. Right to Return
41. Earning a profit may be a company's responsibility.
A. first
B. only
C. singular
D. last
42. Earning a profit may not be a company's responsibility.
A. first
B. only
C. singular
D. last
43. A recent survey finds that percent of consumers expect companies to operate responsibly regarding social
and environmental issues.
A) 63
B) 77
C) 85
D) 91
44. Ethical issues
A) seldom involve legal issues.
B) are questions of right and wrong.
C) are always clearly defined.
D) often resolve themselves.
45. A small computer retailer makes every effort to satisfy customer needs both before and after the sale.
However, this retailer regards social problems as being beyond the scope of his business. This firm's
management has recognized
A) some degree of social responsibility in its commitment to customers.
B) the existence of social responsibilities but having failed to do anything about them.
C) ethical obligations to customers but not social responsibilities.
D) social responsibility as the domain of big business.
46. While unethical practices do exist, it is good that the great majority of small firms strive to achieve the
highest standards of ____ in their quest for profits.
A) integrity
B) relativism
C) synchronous behavior
D) congruity
47. Milton Friedman argues that businesses
A) should avoid social responsibility whenever it is possible to do so.
B) should be required to use their resources meet their social responsibilities.
C) can only earn profits if they do so in a socially responsible manner.
D) are justified in being socially responsible only if doing so increases the firm’s value.
48. Because a firm has considerable discretion in reporting performance results, financial reports can
sometimes be _____ without technically being illegal.
A) inaccurate
B) misleading
C) unreliable
D) bellicose
49. After issues related to customers and competitors, the second most common category of ethical issues that
challenge small businesses is concerned with
A) the treatment of employees.
B) international relations.
C) public relations.
D) harmful production processes.
50. An example of an employee acting unethically towards his or her employer is:
A) Taking a vacation
B) Taking unjustified sick leave
C) Working overtime
D) Taking a 15 minute break
51. The term for when an employee steals money from a firm is
A) cheating.
B) fraud.
C) embezzlement.
D) promotion.
52. An ethical business not only treats customers and employees honestly, but also acts as a good citizen in
the community. These broader obligations of citizenship are called
A) community commitment.
B) philanthropy.
C) environmentalism.
D) social responsibilities.
53. Entrepreneurs should think carefully about their community commitments because “doing good” may add
to a small company’s
A) bottom line.
B) financial burden.
C) payroll.
D) local profile.
54. Entrepreneurs must reconcile their social obligations with _____.
A) their family commitments.
B) their personal schedule.
C) the need to earn profits.
D) their religious beliefs.
55. Many types of socially responsible actions can be consistent with a firm’s long-term profit resulting in
some degree of _____ being earned by such behavior.
A) money
B) respect
C) goodwill
D) management expertise
56. A band who fails to record the cash they collected for admission to their shows could be charged with
what illegal practice?
A) cash diversion
B) tax evasion
C) skimming
D) payroll tax avoidance
57. A person understating income or claiming personal expenses as business expenses is guilty of _____.
A) bait and switch
B) skimming
C) scaling
D) relativism
58. Skimming is an unethical business practice involving
A) failure to report all income on tax returns.
B) employees taking cash from the cash register.
C) sales associates offering gifts and inducements to purchasers.
D) managers of competing firms agreeing to charge high prices.
59. Entrepreneurs often come up short on their tax commitments because of a single-minded focus on their
product or service and/or _____.
A) casual accounting systems
B) low-cost accounting software
C) incompetent in-house accountant
D) cash-basis accounting systems
60. A digital ID tag that is electronically sent to the customer's computer when other requested materials are
downloaded from a Web site is known as
A) a cookie.
B) a saucer.
C) an inverted collector.
D) a contact signature.
61. An eBay retailer selling counterfeit Gucci and Louis Vuitton handbags is in violation of laws related to
A) Internet fraud.
B) intellectual property.
C) bait-and-switch marketing.
D) ethical imperialism.
62. The saying “When in Rome, do as the Romans do” reflects a philosophy of _____.
A) ethical insensitivity
B) ethical elitism
C) ethical imperialism
D) ethical relativism
63. A U.S. manager is upset with the company’s overseas representative for paying a small “access fee” to a
local customs official to ensure the expedited release of a customer order. The manager’s belief such
payments are wrong reflects a sense of _____.
A) cultural insensitivity
B) ethical elitism
C) ethical imperialism
D) cultural integrity
64. The application of U.S. standards to ethical issues that are clouded by cultural differences abroad is
sometimes categorized as _____.
A) overly idealistic.
B) ethical imperialism.
C) USA arrogance.
D) situation ethics.
65. The price of integrity is high, but the potential payoff is incalculable because it is impossible to compute
A) the price of a clear conscience.
B) the cost of environmental destruction.
C) the value of ethical imperialism.
D) the profit margin on good deeds.
66. Karl Eller reports in his book, Integrity Is All You’ve Got, which of the following characterizes
entrepreneurial businesses with integrity?
A) The entrepreneur with integrity gives the company a competitive edge.
B) The management of these companies understand the bottom line so that is still their singular focus.
C) For the most part, founders with integrity are stressed to balance growing the business and following their
principles.
D) A solid financial performance needs to be achieved so that customers will know about the company’s
integrity.
67. Members of a community will react _____ to a business they trust.
A) negatively
B) positively
C) indifferently
D) indecisively
68. Perhaps the greatest benefit of integrity in business is the _____ it generates.
A) trust
B) profit
C) reputation
D) sales
69. The ethical influence of a leader of a small business is
A) relatively minor.
B) overpowered by profit concerns of stockholders.
C) less important than the views of others within the firm.
D) more pronounced than that of a leader of a large corporation.
70. In a small business, the most important key to ethical performance is
A) a code of ethics.
B) the personal integrity of the founder or owner.
C) a training program based on the code of ethics.
D) the amount of legislation affecting the organization.
71. The most important influence on ethics in a small business is
A) the accountant or bookkeeper who keeps honest financial records.
B) the salesperson who quotes a fair price to customers.
C) the founder or owner whose values are put into practice.
D) the existence of a written code of ethics.
72. A code of ethics becomes increasingly appropriate and necessary as a small business
A) expands its credit sales and acquires more customers who buy on credit.
B) begins to market products in other countries.
C) grows larger, with a consequent lessening of the owner's personal influence.
D) increases borrowing to the extent that one-third of its assets are financed by borrowing.
73. In drawing up a code of ethics, a small business owner should adopt a code
A) provided by the Ethics Resource Center of Washington, D.C.
B) that outlines ethical principles and gives examples.
C) that outlines ethical principles but avoids examples.
D) suggested by the Better Business Bureau.
74. In order to make an ethical decision, the key to problem definition is to
A) go with the obvious solution.
B) look at the surface of the problem.
C) find the most cost effective solution.
D) identify the root of the problem.
75. The most widely recommended principle for ethical behavior is to do what
A) is best for yourself.
B) will yield the most profits.
C) you would want others to do for you.
D) will reduce product prices.
76. Environmentalism poses the greatest threat to small
A) medical waste disposal businesses.
B) drugstores.
C) movie theaters.
D) auto repair shops.
77. An example of an industry especially vulnerable to efforts to protect the environment is the _____
industry.
A) glass manufacturing
B) military construction
C) restaurants
D) asbestos removal
78. An example of a small business that actually benefits from the growing interest in environmentalism
would be
A) a fast-lube and oil change center.
B) a producer of ethanol from farm waste.
C) a self-service car wash.
D) an asbestos removal service.
79. A baker looking for new retail space has returned from a seminar on environmentalism and wishes to act
responsibly in this area. Which action will best accomplish this purpose?
A) Looking into leasing a LEED certified space
B) Reducing product prices
C) Eliminating undesirable processing odors
D) Increasing service to customers
80. U.S. Government assistance is available to lead the entrepreneur in compliance with environmental law
through the
A) Small Business Administration.
B) Department of Energy.
C) Department of Commerce.
D) Interior Department.
81. An ethical business not only treats customers and employees honestly, but also acts as a good citizen in
the community. These broader obligations of citizenship are called
A) community commitment.
B) philanthropy.
C) environmentalism.
D) social responsibilities.
Chapter 3: Inside the Entrepreneurial Mind: From Ideas to Reality
1. An entrepreneurial “secret” for creating value in the marketplace is:
a. applying creativity and innovation to solve problems.
b. creating new products and services.
c. learning by doing.
d. applying lessons learned from history.
2. The ability to develop new ideas and to discover new ways of looking at problems and opportunities is
called:
a. entrepreneurship.
b. innovation.
c. creativity.
d. creative thinking.
3. The ability to apply creative solutions to problems and opportunities to enhance or to enrich people’s
lives is called:
a. entrepreneurship.
b. innovation.
c. creativity.
d. creative thinking.
4. Harvard’s Ted Levitt says that creativity is new things, and innovation is
new things.
a. thinking; doing
b. doing; thinking
c. seeing; doing
d. thinking; applying
5. Creativity often involves creating something from nothing. However, it is more likely to result in:
a. elaborating on the present.
b. putting old things together in new ways.
c. taking something away to create something simpler or better.
d. all of the above.
6. Entrepreneurship is a constant process that relies on:
a. creativity, innovation, and profit.
b. the ability to win over the consumer.
c. creativity, innovation, and application in the marketplace.
d. intellectual property rights.
7. When developing creative solutions to modern problems, entrepreneurs must:
a. go beyond merely using whatever has worked in the past.
b. limit the creative process to only profitable ventures.
c. remember what has worked in the past.
d. pay attention to limiting factors.
8. A(n) is a preconceived idea of what the world is, what it should be like, and how it should operate.
a. innovation
b. entrepreneur
c. paradigm
d. profitable vision
9. Research shows that anyone can learn to be creative. The problem is:
a. many organizations fail to foster an environment that encourages creativity.
b. most people never tap into their pools of innate creativity.
c. most people have never been taught to be creative.
d. all of the above.
10. Research into the operation of the human brain shows that each hemisphere of the brain:
a. develops symmetrically.
b. controls similar functions.
c. does not dominate the other hemisphere.
d. processes information differently.
11. The left brain is guided by:
a. kaleidoscopic, lateral thinking.
b. linear, vertical thinking.
c. asymmetrical thinking.
d. intuitive thinking.
12. The right brain is guided by:
a. kaleidoscopic, lateral thinking.
b. linear, vertical thinking.
c. asymmetrical thinking.
d. logical thinking.
13. Which hemisphere of the brain is responsible for language, logic, and symbols?
a. Right hemisphere
b. Left hemisphere
c. Lateral hemisphere
d. Intuitive hemisphere
14. Which hemisphere of the brain is responsible for the body’s emotional, intuitive, and spatial
functions?
a. Right hemisphere
b. Left hemisphere
c. Vertical hemisphere
d. Logical hemisphere
15. Which hemisphere of the brain processes information in a step-by-step fashion?
a. Right hemisphere
b. Left hemisphere
c. Lateral hemisphere
d. Intuitive hemisphere
16. Which hemisphere of the brain processes information all at once and by relying heavily on images?
a. Right hemisphere
b. Left hemisphere
c. Vertical hemisphere
d. Logical hemisphere
17. vertical thinking is narrowly focused and systematic, proceeding in a highly logical fashion from one
point to the next.
a. Left-brained
b. Right-brained
c. Unconventional
d. Intuitive
18. lateral thinking is somewhat unconventional and unstructured.
a. Left-brained
b. Right-brained
c. Systematic
d. Logical
19. In his book A Whack on the Side of the Head, Roger von Oech views a “playful attitude” as:
a. frivolous.
b. fundamental to creative thinking.
c. a mental block.
d. limiting individual creativity.
20. All of the following represent barriers to creativity that entrepreneurs impose upon themselves
except:
a. focusing on being too logical.
b. being too practical.
c. blindly following rules.
d. searching for more than one answer.
21. Roger von Oech believes that blindly following rules leads to:
a. order, which stimulates creativity.
b. a clearer vision and business venture.
c. new ways of doing things.
d. a mental block towards creativity.
22. Joseph Schumpeter wrote that entrepreneurs perform the vital function of:
a. challenging accepted ways of doing things.
b. creative destruction.
c. revolutionizing current patterns of production.
d. All of the above
23. Entrepreneurs can stimulate their own creativity and encourage it among workers by:
a. expecting and tolerating failure.
b. avoiding problems.
c. limiting rewards.
d. not taking chances.
24. Which of the following is not one of the ways entrepreneurs can stimulate their own creativity and
encourage it among their workers?
a. Provide creativity training
b. Encourage curiosity
c. View challenges as problems
d. Develop a corporate culture that both fosters and rewards creativity
25. Employees must be given the tools and resources they need to be creative. One of the most valuable
resources is:
a. providing challenges.
b. rules and guidelines.
c. time.
d. money.
26. Hiring a diverse workforce:
a. helps in enhancing organizational creativity.
b. allows for different ideas and varying methods of problem solving.
c. brings in people from different backgrounds, with different cultural experiences, hobbies, and interests.
d. All of the above
27. All of the following are enhancements to individual creativity except:
a. keeping a journal to record thoughts and ideas.
b. limiting your reading sources.
c. taking time off.
d. allowing yourself to be creative.
28. Which of the following is not an enhancement to individual creativity?
a. Listening to other people
b. Recognizing the creative power of mistakes
c. Keeping a toy box in your office
d. Working without breaks until the project is complete or the problem is solved
29. Which stage of the creative process includes on-the-job training?
a. Implementation
b. Preparation
c. Illumination
d. Verification
30. Which stage of the creative process requires one to develop a solid understanding of the problem or
decision?
a. Investigation
b. Preparation
c. Illumination
d. Verification
31. Which stage of the creative process involves viewing the similarities and differences in the
information collected?
a. Transformation
b. Incubation
c. Illumination
d. Verification
32. The ability to see the similarities and the connections among various data and events is called:
a. convergent thinking.
b. divergent thinking.
c. transformational thinking.
d. illumination.
33. The ability to see the differences among various data and events is called:
a. convergent thinking.
b. divergent thinking.
c. transformational thinking.
d. illumination.
34. thinking is the ability to see similarities and thinking is the ability to see differences among various data
and events.
a. Divergent; convergent
b. Convergent; divergent
c. Convergent; transformational
d. None of the above
35. During the incubation phase of the creative process, the entrepreneur might do all of the following
EXCEPT which one to let ideas “marinate” in his mind?
a. Do something totally unrelated for awhile
b. Relax and play regularly
c. Work on the problem or opportunity in a different environment
d. Don’t allow one's self to daydream
36. At which stage of the creative process does a spontaneous breakthrough occur, allowing all of the
previous stages to come together to produce the “Eureka factor” or the “light bulb goes on”?
a. Implementation
b. Preparation
c. Illumination
d. Verification
37. “Verification” refers to:
a. validating the idea as accurate and useful.
b. possibly conducting experiments, running simulations, test marketing a product or service.
c. possibly asking questions such as “will it work?” and “is it really a better solution?”
d. all of the above.
38. The focus of this step in the creative process is to transform the idea into reality.
a. Implementation
b. Preparation
c. Illumination
d. Verification
39. is a process in which a small group of people interacts to produce a large quantity of imaginative
ideas.
a. Groupthink
b. Mind-mapping
c. Brainstorming
d. Prototyping
40. Effective brainstorming involves all of the following except:
a. a small group of people.
b. an open uninhibited environment.
c. an effective method to evaluate ideas.
d. very little structure.
41. is a graphical technique that encourages thinking on both sides of the brain, visually displays the
various relationships among the ideas, and improves the ability to view a problem from many sides.
a. Brainstorming
b. Mind-mapping
c. Prototyping
d. Groupthink
42. Mind-mapping is a useful tool for jump-starting creativity. It includes all of the following except:
a. sketching a picture to symbolize the problem or area of focus in the center of a sheet of paper.
b. writing down every idea that comes into your mind, connecting each idea to the central picture.
c. allowing your mind to rest for a few minutes before integrating the ideas.
d. forcing creativity when ideas start to trickle.
43. The “theory of inventive problem solving” is a left-brained, scientific, systematic process based
on innovative patents and is referred to as:
a. JIT.
b. RP.
c. TQM.
d. TRIZ.
44. The premise behind is that transforming an idea into an actual model will lead to improvements in its
design.
a. rapid prototyping
b. mind-mapping
c. brainstorming
d. inventions
45. The three principles (three Rs) of rapid prototyping are:
a. develop a rough model, rapidly, and for the right price.
b. develop a complete model, rapidly, and for the right problem.
c. develop a rough model, rapidly, and for the right problem.
d. develop a right model, roughly, for the right price.
46. Steps in the patent process include:
a. establishing whether it is a novelty.
b. documenting and verifying the date the idea was first conceived.
c. searching existing patents.
d. all of the above.
47. To which governmental office must applications for patents be submitted?
a. The U.S. Patent and Trademark Office
b. The individual State Offices of Patent Development
c. The Federal Trade Commission
d. The Securities and Exchange Commission
48. Any distinctive word, phrase, symbol, name, or logo a firm uses to distinguish itself or its products is
called a:
a. trademark.
b. patent.
c. copyright.
d. service mark.
49. A is an exclusive right that protects the creators of original works such as literary, dramatic, musical,
and artistic works.
a. trademark
b. patent
c. copyright
d. service mark
50. Copyrights protect the creator of original works such as:
a. software, choreography, and motion pictures.
b. symbols, names, and designs.
c. text and verbiage of any kind.
d. slogans and designs.
51. Which of the following questions should you consider before entering a lawsuit to protect intellectual
property?
a. Can you afford the loss of time, money, and privacy the lawsuit will bring?
b. Can the opponent afford to pay if you win?
c. Do you expect to get enough from the suit to pay for the costs of hiring an attorney?
d. All of the above