Download Lecture Notes on Starting a New Business | BUS 231 and more Assignments Introduction to Business Management in PDF only on Docsity!
CHAPTER 3
STARTING A NEW BUSINESS
TRUE/FALSE
3.1 Innovation is a necessary part of entrepreneurship. Answer: F 3.2 The history of the facsimile technology demonstrates that innovation alone does not lead to commercial success. Answer: F 3.3 The most commonly cited source of ideas for starting a new business in the Inc. survey was brainstorming. Answer: F 3.4 The Inc. survey showed the importance of working in the industry as in influence on the businesses people start. Answer: T 3.5 The inside-out approach to searching for opportunities to start a business is called idea generation. Answer: T 3.6 The inside-out approach to searching for opportunities to start a business is called opportunity recognition. Answer: F 3.7 One requirement of the opportunity recognition approach is environmental scanning. Answer: T 3.8 Serendipity is defined as the faculty of making happy chance finds. Answer: T
3.9 Mass marketing is taking over from the traditional market segmentation approach in most successful businesses. Answer: F 3.10 One of the barriers to entering an industry is switching costs. Answer: T 3.11 One of the difficulties of starting a business by introducing an entirely new product to the market is the predictably low demand. Answer: F 3.12 Lower production cost is the advantage most small firms bring into market competition. Answer: F 3.13 The great majority of businesses are started as sole proprietorships. Answer: T MULTIPLE CHOICE 3.14 Which of the following is not one of the primary ways by which people go into business for themselves? a. Buying an existing business b. Buying a franchise c. Starting an independent business d. Taking over part a business spun off by a large company as its downsizes Answer: d 3.15 Which of the following are questions that should be explored as a business start is planned? a. What product or service will be provided? b. Why will our prospective customers buy from our business? c. How will we go about our task? d. all of the above Answer: d 3.16 The failure of Federal Express to develop its ZapMail initiative is an example of a. technology innovation not succeeding in the marketplace.
d. entrepreneurship leading to innovation. e. none of the above. Answer: e 3.22 According to a survey conducted by Inc. magazine the source of ideas for new businesses is a. economics classes taken in college in nearly half of the cases. b. business experience in nearly half (43 percent) of the cases. c. almost always the result of a sudden inspiration of unknown origin. b. impossible to determine. c. none of the above. Answer: b 3.23 People who start a business because they saw someone else trying it and figured I could do better a. show a confidence level enjoyed by many entrepreneurs. b. feel their abilities and perseverance will give them the edge to succeed. c. often are dissatisfied with what is currently on the market. d. all of the above. e. none of the above. Answer: d 3.24 Sometimes entrepreneurs base their idea for a new business on an unfilled niche in the consumer market; this approach a. is used in about 1 in 10 cases. b. depends heavily on brainstorming. c. is the basis for virtually all business starts today. d. all of the above. e. none of the above. Answer: a 3.25 One of the idea sources in the Inc. survey of sources of ideas for business starts was “ Brainstorm, can’t really explain it” ; how significant was it? a. Not very, only about 5 percent cited it. b. It was very significant, well over half of the respondents gave it as their answer. c. It was not included as a response category. d. It was far more significant for female respondents than for males. Answer: a 3.26 Which of the following is a possible limitation of the Inc. survey of sources of
ideas for business starts? a. There is a gender bias. b. There is a racial bias. c. The people surveyed were members of the Inc. 500 , and therefore not representative of most small business owners. d. All of the above e. None of the above Answer: c 3.27 Despite its limitations the Inc. survey of sources of ideas for business starts allows us to draw which of the following general conclusions? a. Past experience is the most important source of ideas. b. Women are far more creative than men in developing ideas for new businesses. c. Men are far more creative than women in developing ideas for new businesses. d. There is no discernible difference in the creativity of men relative to that of women. e. None of the above Answer: a 3.28 Entrepreneurs who use idea generation to determine what business to go into are using which approach? a. Inside-out b. Programmed logic c. Intuitive-rational nexus d. None of the above Answer: a 3.29 At its most basic level, the idea generation approach toward developing a business idea a. has an inside-out orientation. b. involves identifying the entrepreneur’s most promising skill. c. includes generating ideas as to how the entrepreneur’s skills might be shaped into the foundation of a business. d. all of the above. e. none of the above. Answer: d 3.30 The advice If you build a better mousetrap, the world will beat a path to your door a. reflects the inside-out approach
3.35 Newspapers, business periodicals, trade journals, and government publications are a. examples of sources of information on economic opportunities. b. all being made obsolete by electronic media. c. too biased in their reporting to be of much use. d. all of the above. e. none of the above. Answer: a 3.36 With regard to news sources of economic developments that will provide economic opportunities, entrepreneurs a. stick to traditional sources. b. rely heavily on government documents. c. have gone electronic. d. do their planning in cyberspace. e. none of the above. Answer: e 3.37 The following is an example of serendipity: a. finding a $20 bill on the sidewalk. b. being the winner of a jackpot drawing. c. barely making it to the airport gate on time and being greeted with the news that your seat has been upgraded to first class. d. taking over a business rather unexpectedly. e. all of the above. Answer: e 3.38 If a manager loses her job and then is offered and signs an agreement to operate as an independent contractor for her former employer her business start was based on a. the opportunity recognition approach. b. the idea generation approach. c. serendipity. d. none of the above. Answer: c 3.39 The source of business ideas has many forms including a. self-appraisal in the hope of finding something upon which to base a business. b. a systematic search of the environment for opportunities. c. being in the right place at the right time. d. all of the above. e. none of the above.
Answer: d 3.40 The relationship between firms and new markets is a. new firms must establish new markets. b. new firms usually establish new markets. c. new firms seldom establish new markets. d. new firms never establish new markets. Answer: c 3.41 The issue of why a new business is needed can be defined by a. customer needs and corporate history. b. customer history and corporate needs. c. competitor needs and customer capabilities. d. customer needs and competitor capabilities. e. none of the above. Answer: d 3.42 The approach to marketing that recognizes that no business can serve every customer in the market is called a. market segmentation. b. market serialization. c. customer referendum. d. customer referencing. e. none of the above. Answer: a 3.43 Commonly used methods of _______are demographic, benefit, geographic, and socioeconomic. a. market mapping b. market pointing c. customer devolution d. customer evolution e. none of the above Answer: e 3.44 The breakfast cereal market is an example of one which a. can be segmented in a variety of ways. b. consists of a homogeneous group of buyers. c. is under attack from foreign producers. d. all of the above. Answer: a
3.50 A new firm that introduces a product that had not been previously available to a market a. faces no direct competition. b. can have splendid opportunities. c. may receive an unexpected response. e. all of the above. Answer: e
