Deck 3: Getting Started

Question 1

The general environment is very narrow and includes the forces that directly impact a firm and its competitors.

Answer 1

False

Question 2

Many new businesses are formed as a result of the entrepreneur's previous work experience, through which he or she sees ways to improve or modify a product.

Answer 2

True

Question 3

Given their limited market scope and size, only three of Porter's five forces are relevant to small businesses.

Answer 3

False

Question 4

Developments in the technological segment of the general environment have created significant opportunities for many new and creative small businesses.

Question 5

The general environment is positive in its impact on the small firm and its performance.

Question 6

Serendipity is the faculty for making desirable discoveries by accident.

Question 7

Cabana Life, the company started by Melissa Marks Papock, is an example of a startup based on serendipity.

Question 8

Magazines and other periodicals are excellent sources of startup ideas.

Question 9

Starting or buying more than one business without merging their operations closely is a strategy known as differentiation-based.

Question 10

The general environment is more narrowly defined than the industry environment because it focuses on specific segments, such as those relating to the economy, sociocultural trends, and geopolitical developments.

Question 11

"Me, too" strategies are used by very few new ventures.

Question 12

Hobbies of retiring business executives can spawn startup ideas.

Question 13

The industry environment is made up of very broad factors that influence all-or at least most-businesses in a society.

Question 14

Serendipity is a term describing a new product idea resulting from deliberate search activities.

Question 15

Some possibilities for new startup ideas based on knowledge gleaned from a present or recent job are modifying an existing product, improving a service, or duplicating a business concept in a different location.

Question 16

Buyers, suppliers, substitute products, competitive rivalry, and new entrants all represent forces within an industry.

Question 17

Business guru Peter Drucker stated "Innovation is the specific instrument of entrepreneurship".

Question 18

The industry environment can best be defined as the combined forces that directly impact a given firms and its competitors.

Question 19

Business guru Peter Drucker believes entrepreneurs should consider no more than two or three sources of opportunity to avoid being sidetracked as they prepare to launch or grow their enterprises.

Question 20

Startups are more likely to be successful when the entrepreneur first evaluates his or her own capabilities and then looks for a new product or service idea, as opposed to beginning with a need in the marketplace and then relating those to personal capabilities.

Question 21

Following a cost-based strategy can give a small firm a competitive advantage.

Question 22

A fatal flaw is a circumstance or development that, in and of itself, could render a new business unsuccessful.

Question 23

evaluation of the general environment is appropriate only for large firms that have a corporate staff to manage the process.

Question 24

Market segmentation and niche marketing are similar in that they both utilize a top-down approach that breaks the market into smaller, more manageable sub-markets.

Question 25

SWOT analysis provides a concise overview of a firm's strategic situation.

Question 26

The bargaining power of suppliers is encouraging for small businesses attempting to enter an industry.

Question 27

A differentiation-based strategy usually does not lead to a competitive advantage in business.

Question 28

A cost-based strategy requires a firm to create and sustain differentiation in the marketplace.

Question 29

Research has shown that most entrepreneurs generate their business ideas by searching external sources of ideas.

Question 30

The general environment profiles a number of important trends, among which are economic trends including the rate of inflation, interest rates and even currency exchange rates, all of which promote or discourage business growth.

Question 31

Resources can be either tangible or intangible in nature.

Question 32

In practice, a SWOT analysis is usually based on a dynamic view of the firm and its situation.

Question 33

Small firms are pursuing a focus strategy if they adapt their efforts to concentrating on a specific niche within the market.

Question 34

Core competencies are those resources and capabilities that provide a firm with a competitive advantage over its rivals.

Question 35

A SWOT analysis encompasses both the inside-out and outside-in approaches in determining an overview of a venture's strategic situation.

Question 36

Change may be the most important source of opportunities for entrepreneurial firms.

Question 37

A feasibility analysis should be conducted only after completion of a business plan.

Question 38

In marketing terms, a focus strategy depends upon market segmentation.

Question 39

Peter Drucker identified _____ change-based sources of opportunity that entrepreneurs should consider as they prepare to launch or grow their enterprise.

A) 3
B) 5
C) 7
D) 9

Question 40

A firm that is able to create and sustain product and/or service differentiation will most likely be a successful performer in the marketplace.

Question 41

An example of a Type C startup idea is

A) a new microsponge technology allowing oils to be contained inside billions of microscopic sponges.
B) a baby stroller that pushes more easily and is more difficult to overturn than previous designs.
C) opening a new hamburger stand on the corner with no unique product differentiation.
D) using satellite dish technology to form a mobile satellite transmitter and receiver business.

Question 42

A technological trend is characterized by which of the following?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks
B) Congress passes legislation that increases the tax rates on corporations
C) A new computer chip is announced which will allow for miniaturization of many electronic devices
D) The E.U. announces an increase in tariffs on all agricultural goods

Question 43

Which one of the following change factors was not identified by Peter Drucker as a source of business opportunity?

A) the unexpected
B) the innoccuous
C) the incongruous
D) demographics

Question 44

According to a study by the National Federation of Independent Business Foundation, the most common source of new product ideas for small business startups is

A) prior work experience.
B) personal interests and hobbies.
C) a chance happening.
D) existing records of a business.

Question 45

Lease Trader.com, a website that Sergio Stiberman founded after discovering how expensive it was to end a car lease early is an example of

A) recognizing a hot trend and riding the wave
B) combining two businesses into one to create a market opening
C) beginning with a problem in mind
D) considering ways to adapt a product or service to meet customer needs in a different way

Question 46

The following are change-based sources of opportunity identified by Peter Drucker except

A) process needs
B) structural change
C) new knowledge
D) the unwavering

Question 47

An example of an idea for a new startup from a hobby is

A) a coin collector, who bought and sold coins for years to build a personal collection, deciding to become a coin dealer.
B) a furniture salesperson seeing the possibility of opening a new furniture store in a different area of the city.
C) a sharpshooter, who shot holes in a pair of her boyfriend's jeans during an argument, hearing him get complimented on the way they look.
D) a purposeful exploration to find a new idea.

Question 48

An example of an idea for a new startup from an accidental discovery is

A) a coin collector, who bought and sold coins for years to build a personal collection, deciding to become a coin dealer.
B) a furniture salesperson seeing the possibility of opening a new furniture store in a different area of the city.
C) a sharpshooter, who shot holes in a pair of her boyfriend's jeans during an argument, hearing him get complimented on the way they look.
D) a purposeful exploration to find a new idea.

Question 49

An economic trend is characterized by which of the following?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks
B) Congress passes legislation that increases the tax rate on corporations
C) A new computer chip is announced which will allow for miniaturization of many electronic devices
D) The E.U. declares an increase in tariffs on all agricultural goods

Question 50

The quote "Good artists borrow; great artists steal" is attributed to

A) no one knows for sure
B) Pablo Picasso
C) T. S. Eliot
D) Salvadore Dali

Question 51

Trade between the United States and Mexico has increased since the enactment of the North American Free Trade Agreement. This factor is related to the ____ element of the general environment.

A) technological
B) global
C) ecological
D) sociocultural

Question 52

According to a study by the National Federation of Independent Business Foundation, new product ideas for small business startups originate from all of the following except

A) prior work experience.
B) personal interests and hobbies.
C) a chance happening.
D) existing records of a business.

Question 53

What type of idea accounts for the largest number of startups?

A) A technically new process
B) Performing an old function in a new and improved way
C) Using prior work experience as a basis for starting a new business
D) Providing customers with a product or service absent in their market but available elsewhere

Question 54

A political/legal trend is characterized by which of the following?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks
B) Congress passes legislation that increases the tax rates on corporations
C) A new computer chip is announced which will allow for miniaturization of many electronic devices
D) The E.U. declares an increase in tariffs on all agricultural goods

Question 55

Different types of small business ownership opportunities include all of the following except

A) startups.
B) bailouts.
C) family businesses.
D) franchises.

Question 56

As described in the textbook, a Type C idea involves

A) a technically new process.
B) performing an old function in a new and improved way.
C) using prior work experience as a basis for starting a new business.
D) providing customers with a product or service absent in their market but available elsewhere.

Question 57

An example of a Type B startup idea is

A) a new microsponge technology allowing oils to be contained inside billions of microscopic sponges.
B) a baby stroller that pushes more easily and is more difficult to overturn than previous designs.
C) opening a new hamburger stand on the corner with no unique product differentiation.
D) a new mail-order business selling a foreign-produced item never sold domestically before.

Question 58

As described in the textbook, a Type B idea involves

A) a technically new process.
B) performing an old function in a new and improved way.
C) using prior work experience as a basis for starting a new business.
D) providing customers with a product or service absent in their market but available elsewhere.

Question 59

As described in the textbook, a Type A idea involves

A) a technically new process.
B) performing an old function in a new and improved way.
C) using prior work experience as a basis for starting a new business.
D) providing customers with a product or service absent in their market but available elsewhere.

Question 60

Which of the following is a recognized segment of the general environment?

A) The industry segment
B) The global segment
C) The information segment
D) The human factors segment

Question 61

Which type of strategy requires a firm to be the lowest-cost producer within the market?

A) Price-based
B) Marketing-based
C) Efficiency-based
D) Cost-based

Question 62

Generally speaking, a strategy is

A) an action plan that guides resource investments.
B) a formal statement of what the firm intends to do.
C) an expanded description of the firm's mission statement.
D) most effective when it is designed to reflect the tactics that are common within an industry.

Question 63

A global trend is characterized by which of the following?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks
B) Congress passes legislation that increases the tax rates on corporations
C) A new computer chip is announced that will allow for miniaturization of many electronic devices
D) The E.U. declares an increase in tariffs on all agricultural goods

Question 64

Observations about the external environment and organizational potentials can be brought together by means of

A) an alignment strategy.
B) the in-and-out assessment.
C) a SWOT analysis.
D) common sense critique.

Question 65

According to Peter Drucker, the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth is

A) creativity.
B) innovation.
C) capital spending.
D) collaborating with competitors.

Question 66

Containers Etc. manufactures household containers. In contrast to traditional market designs, all of Containers Etc.'s products are microwaveable and child-proof and come in an assortment of 35 colors. Accordingly, Containers Etc. is pursuing a _____ strategy.

A) product-based
B) differentiation-based
C) concept-based
D) efficiency-based

Question 67

Which of the following is one of the factors that determines the nature and degree of competition in an industry, as identified by Michael Porter in his book Competitive Advantage?

A) The interest of small businesses
B) Bargaining power of competitors
C) Threat of substitute products or services
D) The macroeconomy

Question 68

An increase in the rivalry among existing competitors in a target market

A) increases both the attractiveness and the profitability of the target market.
B) decreases both the attractiveness and the profitability of the target market.
C) decreases the attractiveness and increases the profitability of the target market.
D) increases the attractiveness and decreases the profitability of the target market.

Question 69

Which of the following is one of the seven sources of opportunities in the environment recognized by Peter Drucker?

A) The unbelievable
B) The undeniable
C) The incongruous
D) The new

Question 70

Marketplace Farms is a regional cooperative of apple and orange growers. In order to compete against larger regional growers, Marketplace Farms relies on low-cost migrant workers instead of machines and inexpensive packaging processes. (That is, it uses individual hand-packaging instead of assembly lines.) Marketplace Farms is relying on a

A) price-based strategy.
B) marketing-based strategy.
C) efficiency-based strategy.
D) cost-based strategy.

Question 71

A differentiation-based strategy requires that a firm

A) be the lowest-cost provider in an industry.
B) emphasize the uniqueness of its product or services.
C) achieve the highest resource efficiency in an industry.
D) be the lowest-priced competitor in an industry.

Question 72

Based on William A. Sahlman's suggestions, which of the following is a question about competitors that should be answered by the business plan?

A) Are there ways to co-opt potential or actual competitors by forming alliances?
B) How easily can new competitors enter the industry?
C) Do small businesses have special advantages when competing in the industry?
D) What is the average size of competitors?

Question 73

Substitute products

A) reduce the attractiveness and profitability of an industry
B) represent those items manufactured by direct rivals within an industry.
C) are usually cheaper than the products they can replace.
D) are always a serious threat to rivals in an industry.

Question 74

A(n) _____ exists when multiple resources are integrated and then deployed to the firm's advantage.

A) networked resource
B) common intangible
C) capability
D) industry edge

Question 75

The two broad strategies for building a competitive advantage are the _____ strategies.

A) cost-based and differentiation-based
B) price-advantage and cost-advantage
C) marketing-advantage and price-advantage
D) focus-advantage and marketing-advantage

Question 76

In analyzing the industry environment of the particular field into which Charles was about to enter in business, he found that there existed a fierce rivalry between the competitors that were currently in the business. This would offset the desirability of entering the industry in which of the following ways?

A) negatively
B) positively
C) no effect
D) cannot be determined

Question 77

An increase in the bargaining power of suppliers

A) increases both the attractiveness and the profitability of the target market.
B) decreases both the attractiveness and the profitability of the target market.
C) decreases the attractiveness and increases the profitability of the target market.
D) increases the attractiveness and decreases the profitability of the target market.

Question 78

A SWOT analysis can be described best as

A) a means of assessing the firm's industry situation.
B) an assessment of the internal strengths and weakness of the firm.
C) a dynamic analysis of the firm's current situation.
D) a concise overview of the firm's strategic situation.

Question 79

Resources are best described as

A) those basic inputs that a firm uses to conduct its business.
B) only those features that are visible and easy to quantify.
C) the firm's lending capacity.
D) capabilities that can be exploited.

Question 80

All of the following are specified by Michael Porter as factors that determine the nature and degree of competition in an industry except

A) threat of new competitors.
B) rivalry among existing competitors.
C) industry cost/price structure.
D) bargaining power of buyers and/or suppliers.