Question 1

Which of the following is true about advantages for the entrepreneur when he or she forms an alliance or partnership with an established firm?

Accepted Answer

Forming an alliance or partnership with an established firm allows the entrepreneur to leverage the firm's existing resources, such as facilities and brand name, and potentially adopt their production functions, offering significant advantages.

Question 2

Which of the following does not relate to secrecy of an entrepreneur idea?

Accepted Answer

Monopoly refers to the ability of a business to control a market and exclude competitors, but it is not directly related to the secrecy of an entrepreneur's idea. The other options are all related to protecting or maintaining secrecy of the idea. Tacit knowledge refers to knowledge that is difficult to articulate or transfer to others, making it harder for competitors to replicate a product or service. Causal ambiguity refers to the idea that a competitor may not be able to determine the cause of a company's success or failure, making it more difficult to imitate their strategy. A trade secret is any confidential information that is valuable to a business and not generally known to the public.

Question 3

An entrepreneur starts a business but he doesn't know whether other companies producing a similar product will capture the market to the extent that there is very little left for his business. This is known as

Accepted Answer

Competitive uncertainty refers to uncertainty about the actions of competitors and whether they will capture a significant portion of the market. Technical uncertainty refers to uncertainty about the feasibility of developing a new technology, tacit knowledge refers to knowledge that is difficult to articulate, licensing uncertainty refers to uncertainty about whether a license will be granted, and franchising uncertainty refers to uncertainty about the success of a franchised business model.

Question 4

Which of the following is a reason why entrepreneurs use market mechanisms to exploit opportunity?

Accepted Answer

All of the above reasons are valid reasons why entrepreneurs use market mechanisms to exploit opportunity. Market mechanisms, such as competition and pricing, can accelerate the pace of exploitation by creating incentives for entrepreneurs to act quickly and efficiently. They can also minimize adverse selection by allowing entrepreneurs to gauge the potential success of their venture based on consumer demand. Additionally, market mechanisms can minimize shirking by employees by providing incentives for high performance and productivity. And finally, market mechanisms can help entrepreneurs escape defeat by competitors by creating opportunities for differentiation and innovation.

Question 5

Which of the following statements is not true when being the first mover or the first firm to serve customers in a market?

Accepted Answer

All of the statements are true. Being the first mover gives the entrepreneur advantage in terms of network externalities, customer loyalty, high switching costs and the ability to set market standards.

Question 6

Kathleen had developed and designed a new,innovative product which will allow hotels to more efficiently manage their room service orders. Before Kathleen informs the Hilton Suites of her new product,it is best that she take which of the following precautions?

Accepted Answer

All of the above precautions are necessary for Kathleen to take before informing the Hilton Suites of her new product. By placing a patent on the technology, Kathleen can protect her invention from being copied or stolen by competitors. A non-disclosure agreement will ensure that Hilton Suites does not reveal any trade secrets or sensitive information about the product to others. Being cautious about what product details to disclose will help Kathleen maintain control and protect her intellectual property. Finally, making sure no trade secrets are revealed before signing a contract will ensure that Kathleen's rights are protected and that she receives appropriate compensation for her innovation.

Question 7

Which of the following leads people to have doubt that an entrepreneur's new business idea is legitimate?

Accepted Answer

Investors may have less information about a product than the entrepreneur, which can lead to doubt. Additionally, statistics show that more small businesses fail than succeed, which can also cause hesitation. Finally, people generally have a bias against uncertainty and failure, which can create doubt in the legitimacy of a new business idea.

Question 8

Which of the following is least likely to be related to a hierarchical mode of market exploitation?

Accepted Answer

Adverse selection of potential employees is more related to information asymmetry in markets rather than a hierarchical mode of market exploitation. Hierarchical modes typically involve direct control or influence over operations, such as hold-up situations, knowledge sharing, or the use of tacit business ideas, rather than issues arising from asymmetric information before a transaction or contract, which is what adverse selection refers to.

Question 9

Assume that there is an idea that has a high chance to be turned into a successful product. However,the person with the idea cannot do everything that is necessary fast enough in order to not miss the opportunity window. Therefore,she contracts with different functional experts in order get the product to market in the opportunity window. This situation is known as

Accepted Answer

The situation described is about accelerating the pace to market, which involves contracting with experts to help bring the product to market faster. The other choices are not specific to this scenario.

Question 10

Dr.Vaughan discovered a secret recipe for barbeque sauce which everyone really liked. He began selling this in grocery stores. While others tried,no one can seem to master this sauce like Dr.Vaughan. What advantage does Dr.Vaughan have?

Accepted Answer

The answer of Dr.Vaughan discovered a secret recipe for barbeque...

Question 11

Which of the following is an entrepreneurial barrier to competition?

Accepted Answer

All of the options listed are considered entrepreneurial barriers to competition. Obtaining control of resources, obtaining a legal monopoly, establishing a reputation, and innovation can all make it difficult for new competitors to enter a market, thereby serving as barriers to competition.

Question 12

Beverly Stack,an independent agent for State Farm Insurance,held an annual bike rodeo in Edwardsville,IL,in which bike safety was taught to children. However,there are four other State Farm agents in this town who did not want to sacrifice their Saturday afternoon to help. Due to Beverly's success at the bike rodeo,twenty families switched to State Farm,but ten of those families went to the other four agents in town. Those four agents who received business due to Beverly's success are known as....

Accepted Answer

The other four State Farm agents benefited from Beverly's successful bike rodeo without contributing anything themselves, which makes them "free riders." This term refers to individuals or businesses that benefit from a collective effort without investing the same amount of resources or effort as others.

Question 13

An entrepreneur who is in direct control of all business components,marketing,production,finance,human resource,etc.is probably using which of the following types of business mode for exploiting opportunities?

Accepted Answer

A hierarchical business model is one where the entrepreneur is in direct control of all business components, including marketing, production, finance, human resources, etc. This type of business model is characterized by a centralized decision-making structure where the entrepreneur has the final say on all matters related to the business. This approach is particularly useful for small businesses that are just starting out and require close supervision and oversight to ensure that they are successful.

Question 14

Through advertisements and word of mouth,Xerox has established a mindset in which consumers believe Xerox is the best copier machine company in the United States. This mindset will keep customers from defecting to its competitors. To which type of competition barrier does this refer?

Accepted Answer

This refers to the reputation competition barrier, which is when a company establishes a positive image in the minds of consumers, making it difficult for them to switch to competitors.

Question 15

Which of the following are concerns for an entrepreneur during the pursuit of an opportunity?

Accepted Answer

All of the above are concerns for an entrepreneur during the pursuit of an opportunity. Technical uncertainty refers to uncertainty around product development and execution, competitive uncertainty refers to uncertainty around the competitive landscape and how the product or service will be received by consumers. Market uncertainty refers to uncertainty around whether there is a viable market for the product or service being offered, and information asymmetry refers to uncertainty around the availability and accuracy of critical information needed to make informed business decisions.

Question 16

A situation in which something has increasing value as more people use it is referred to as __________?

Accepted Answer

Network externalities occur when the value of a product or service increases as more people use it. A classic example is social media. The more users a platform has, the more valuable it becomes for each individual user.

Question 17

What term defines the following situation? An individual called up a possible vendor and explained in detail the scope and design of her new invention. However,when the entrepreneur didn't hear from the company in two weeks about getting this product to market,she called the company and it had already used her idea. It was being sold under the vendor's name.

Accepted Answer

The answer of What term defines the following situation? An...

Question 18

Constant improvement of the current product lines and always offering additional features that are better than competitors is known as which barrier to competition?

Accepted Answer

Constantly improving and adding better features than competitors is known as innovation. It helps to create a competitive advantage and acts as a barrier to competition by making it difficult for competitors to match the quality and features of the product. Control over key resources and obtaining a legal monopoly are other barriers to competition, but they are not applicable in this scenario. Feature contribution is not a commonly used term in the context of barriers to competition.

Question 19

An entrepreneur needs a comprehensive plan of action in order to achieve overall success. That is,the entrepreneur needs a

Accepted Answer

A strategy is a comprehensive plan of action that includes goals, objectives, and specific steps to achieve those goals. Without a solid strategy, an entrepreneur may struggle to succeed in their business venture. Bankruptcy, a license, and a monopoly may all be factors that impact the success of an entrepreneur, but they do not constitute a comprehensive plan of action. Therefore, choice C is the best answer.

Question 20

Which of the following is not a typical action for an entrepreneur to take?

Accepted Answer

The answer of Which of the following is not a...

Quiz 10: Strategy: Planning For Competitive Advantage