Question 1

_____ entrepreneurship is one way for people, including women and minorities who have hit the "glass ceiling" in their careers or are otherwise cut off from other employment choices, to strike out on their own and gain economic independence.

Accepted Answer

Necessity-based entrepreneurship refers to individuals starting their own businesses out of the need for income and employment opportunities, as opposed to a desire for entrepreneurship. This is often the case for individuals who face barriers to traditional employment, such as women and minorities who have hit the "glass ceiling" in their careers.

Question 2

A(n) _____ necessarily has 500 or fewer employees, is independently owned and operated, and does not dominate its industry.

Accepted Answer

According to the Small Business Administration (SBA), a small business is defined as having fewer than 500 employees, being independently owned and operated, and not dominating its industry.

Question 3

Entrepreneurs:

Accepted Answer

Entrepreneurs thrive on performance feedback as they are constantly looking for ways to improve and grow their businesses. They are able to use feedback to make adjustments and pivot when necessary to succeed.

Question 4

Which of the following is true of entrepreneurs?

Accepted Answer

Entrepreneurs are known to have a high need for achievement, which drives them to set and attain challenging goals, take risks, and overcome obstacles to succeed. This drive for achievement is a key characteristic that sets entrepreneurs apart from others.

Question 5

Lean startups:

Accepted Answer

Lean startups aim to keep operations as simple as possible in order to reduce waste, save time and money, and accelerate the development process. This allows them to quickly test and refine their product or service while staying agile and adaptable.

Question 6

Which of the following is true about a franchise?

Accepted Answer

A franchise is a business model in which a franchisor grants a franchisee the right to use its brand name, products, and services. For this right, the franchisee pays the franchisor either a specified share of income or a flat fee. The franchisor provides support and guidance to the franchisee, but the franchisee is responsible for the day-to-day operations of the business. Option A is incorrect because franchises are a common way for people to get involved in entrepreneurship. Option B is incorrect because the franchise runs under the franchisor's name and guidance. Option D is incorrect because while franchises do aim to contain costs, they are not limited to using open-source software, and they can actually grow quite large. Option E is incorrect because it describes consignment, not franchising.

Question 7

A _____ is a business in which the owner of a business sells to another the right to operate the same business in another location.

Accepted Answer

A franchise is a business model where a franchisor grants the right to operate its business model and sell its products or services under the franchisor's brand name to a franchisee. The franchisee pays an initial fee and ongoing royalties to the franchisor.

Question 8

A business model is a:

Accepted Answer

A business model is a plan for how a company will make money by generating revenues that are greater than costs. It outlines how the company will create value for its customers, how it will deliver that value in an efficient and cost-effective manner, and how it will generate revenue from those customers to sustain and grow the business.

Question 9

Which of the following is true about serial entrepreneurs?

Accepted Answer

Serial entrepreneurs are individuals who start and run multiple businesses, often moving from one interest and opportunity to the next. They have a unique ability to identify opportunities, build teams, and take calculated risks, which sets them apart from other entrepreneurs. Unlike option A, being a serial entrepreneur is a learned behavior, not something one is inherently born with. Option B refers to intrapreneurs, who innovate within an established company, and option E refers to investment bankers or brokers who help companies go public. While serial entrepreneurs may make investments in new ventures, it is not their primary role, making option C incorrect.

Question 10

Yvette has recently lost her job and has not been able to find employment elsewhere. She has to support her children, and take care of her mortgage. She realizes a niche for chemical-free house cleaning services. Eventually she opens her own house cleaning service. This is an example of _____.

Accepted Answer

This is an example of necessity-based entrepreneurship, as Yvette started her business out of the need to support her family after losing her job and not finding other employment opportunities.

Question 11

Nadia is unemployment and is unable to pay her bills. She realizes she loves baking and soon opens up her own bakeshop with the help of a friend. Which of the following is true about Nadia?

Accepted Answer

Nadia started her own bakeshop out of necessity because she was unemployed and unable to pay her bills. She is therefore a necessity-based entrepreneur, which refers to individuals who start their own businesses because they have no other viable employment options.

Question 12

Nailah had to quit her job to run her mother's bookstore when her mother passed away. The store was earning good profits and so she decided to open a new branch in another state. What kind of a business does Nailah own?

Accepted Answer

Nailah owns a family business as she had to take over her mother's bookstore after her mother passed away.

Question 13

Social entrepreneurs:

Accepted Answer

Social entrepreneurs are individuals who start enterprises with the mission of creating positive social change in underserved or marginalized communities. They take risks to address challenging social problems with innovative solutions.

Question 14

Barbara, a florist, realized the need for easily accessible organic compost in her neighborhood. Her neighborhood consists mainly of senior citizens who are unable to procure their own gardening supplies. She quickly established "We Compost," a non-profit organization that delivers compost to each household in her neighborhood. This is an example of _____.

Accepted Answer

This is an example of social entrepreneurship because Barbara identified a social need and established a non-profit organization to address it.

Question 15

A(n) _____ is a new and temporary venture that is trying to discover a profitable business model for future success.

Accepted Answer

A startup is a new and temporary venture that is trying to discover a profitable business model for future success. This is different from a family business, which is typically passed down from generation to generation, and intrapreneurship, which refers to entrepreneurial activities within an existing organization. Business incubators are organizations that support the development of startups, but they are not the same as startups themselves. Acquisition refers to the process of one company buying another, which is not the same as starting a new venture from scratch.

Question 16

A(n) _____ refers to the issue of who will run the business when the current head leaves.

Accepted Answer

The term that specifically refers to the issue of who will run the business when the current head leaves is succession problem. While the other options may also be related to family business dynamics, they do not specifically address the issue of who will take over as leader of the business.

Question 17

_____ takes place because other employment options don't exist.

Accepted Answer

Necessity-based entrepreneurship occurs when individuals start their own businesses because they have no other employment options. They may lack the skills, experience or education to obtain traditional employment, live in areas with few job opportunities, or face discrimination or other barriers to employment.

Question 18

In family businesses, _____ refers to the problem that arises when members of the family have major disagreements over how the business should be run.

Accepted Answer

A family business feud refers to major disagreements among family members over how the business should be run. This can lead to conflicts, power struggles, and even the downfall of the business if not resolved properly.

Question 19

New small business startups often fail because of:

Accepted Answer

Lack of business expertise is a common reason why small business startups fail. Without understanding the operations, financial management, marketing, and other key aspects of running a business, entrepreneurs may make critical mistakes that can ultimately lead to failure.

Question 20

Which of the following scenarios demonstrates an entrepreneur who has a tolerance for ambiguity?

Accepted Answer

Karl's decision to expand his private firm overseas despite the risk of facing cultural differences shows a tolerance for ambiguity as there is a high level of uncertainty involved in expanding into unknown territories with different cultures, legal systems, and business practices. Karl is willing to take on this risk and accept ambiguity in order to grow his business.

Quiz 6: Entrepreneurship and New Ventures