Chapter 8: Entrepreneurial Strategy

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Small businesses and entrepreneurial firms create the majority of new jobs in the US economy
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True
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Most small businesses in the US are in retail trade and construction industries.
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False
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Opportunity recognition is the process of identifying, selecting, and developing entrepreneurial opportunities
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True
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Opportunity recognition involves two phases of activity: discovery and evaluation
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True
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The evaluation phase of opportunity recognition includes the “Aha!” experience that often leads to new venture development
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False
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The majority of entrepreneurial start-ups are financed with personal savings and the contributions of family and friends
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True
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The majority of entrepreneurial firms are started with financing from venture capitalists and banks
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False
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Angel investors are private individuals who provide equity investments for seed capital during the early stages of a new venture
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True
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As investors, venture capitalists rarely provide any help or services to entrepreneurial firms other than financing
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False
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Venture capital funding for entrepreneurial ventures is usually available only after the start-up has become a going concern and established track record
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True
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Venture capital is a form of public equity financing used to help young firms grow rapidly
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False
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To obtain venture capital financing, business founders often have to give up some ownership and control of their business
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True
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Venture capitalists and angel investors regard the management team as the most important asset of an entrepreneurial venture
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True
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Because of the Small Business Administration and government regulations, small businesses are rarely allowed to bid on government contracts
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False
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An entry wedge is a type of entrepreneurial strategy firms can use to enter into business
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True
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Founders using a pioneering new entry strategy look for opportunities to capitalize on proven market successes
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False
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Adaptive new entry involves offering a radical new product or highly innovative service
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False
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Rather than fighting over existing customers, firms pursing a “blue ocean” strategy seek opportunities in uncontested markets
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True
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“Blue ocean” strategies rarely provide sustainable advantages because they are easily imitated
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False
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Because new ventures are typically small, they usually don’t have high economies of scale relative to competitors
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True
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Entrepreneurial firms are often in a strong position to use combination strategies because they have the flexibility to approach situations uniquely
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True
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Entrepreneurial competitive dynamics refers to a cycle of actions and responses between firms competing for the same customers
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True
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Entrepreneurial new entry is often perceived as a competitive threat because most market needs are being met, either directly or indirectly, by an existing firm
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True
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Market commonality is the extent to which rivals draw from the same types of resources
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False
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When attacked, older and larger firms tend to respond more quickly but their responses are often more predictable
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False
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Cutting prices or increasing marketing efforts are examples of tactical competitive actions
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True
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In the context of competitive dynamics, tactical actions involve major commitment of distinctive and specific resources to strategic initiatives
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False
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Refinements or extensions of existing strategies are often referred to as tactical actions
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True
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Forbearance is a particularly aggressive type of competitive attack
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False
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Co-opetition, where competitors work together behind the scenes, is a form of illegal tacit collusion
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False
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For an entrepreneurial start-up to be successful, three ingredients are critical. What are they?
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1. Viable opportunity 2. Available resources 3. Qualified and motivated founding team
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Which of the following is a common source of new business opportunities?
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(A. Current or past work experiences B. Suggestions by family or friends C. Chance event) D. ALL OF THESE
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The process of identifying, selecting, and developing new venture opportunities is known as
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opportunity recognition
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Generally speaking, the opportunity recognition process consists of two phases of activity. They are
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discovery and evaluation
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Which of the following is NOT one of the characteristics of an entrepreneurial opportunity?
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affordable
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When an opportunity is attractive long enough for it to be successfully developed and deployed, it is said to be
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durable
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Which of the following terms is used to refer to opportunities that are practical and physically possible?
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achievable
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Financing for entrepreneurial start-ups includes which of the following?
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All of these
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Which of the following sources of entrepreneurial financing are available to ventures that have already started to conduct business and generate sales?
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All of these
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The majority of entrepreneurial start-ups are financed with
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personal savings and the contributions of family and friends
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Private individuals who provide seed capital to young ventures are known as
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angels
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All of the following statements about venture capital are true EXCEPT
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venture capital is a form of public equity financing
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Based on statistics reported in the text, which of the following statements is FALSE?
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Ninety percent of the companies financed with venture capital funds fail
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According to the text, new ventures launched by entrepreneurial teams are more likely to be successful than ventures launched by
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“lone wolf” entrepreneurs
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Which of the following types of resources contribute to the success of entrepreneurial firms?
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All of these
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__________ provide(s) a key avenue for growth for many young and small firms through partnering to obtain resources and/or expand into new markets
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Strategic alliances
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The US Small Business Administration supports small business through all of the following EXCEPT
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investing venture capital
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Which of the following is NOT one of the three characteristics of entrepreneurial leadership mentions by the text?
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Clarifying job responsibilities
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Why is vision such an important element of entrepreneurial leadership?
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Because the entrepreneur has to envision realities that do not yet exist
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Which of the following is NOT a common new entry strategy according to the text?
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proactive new entry
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Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as
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imitative new entry
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Which of the following is NOT a key element of blue ocean strategy?
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Highlight incremental improvements to capture market share

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