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MGT602 Quiz of August 02, 2010

1. Which of the following has not yet been empirically established as a distinguishing characteristic
of entrepreneurs?
 Locus of control
 Feeling about independence
 Need for achievement
 Risk taking P:22

Risk Taking

Risk taking seems a part of the entrepreneurial process. However, it has not yet been empirically
established whether risk-taking is a distinguishing characteristics of entrepreneurs.

2. __________ may also be considered if there are no other effective options for hiring new talents.
 Personnel agencies P:96
Personnel agencies may also be considered if there are no other effective options.
 Retired personnel
 Networking
 References
3. The longest lasting trade agreement with the objective of liberalizing trade by eliminating or
reducing tariffs, subsidies and quotas is:
 Free trade area – FTA
 European community – EC
 General agreement on tariffs and trade – GATT P:35
General Agreement on Tariffs and Trade (GATT)
GATT is a multilateral agreement with the objective of liberalizing trade by eliminating tariffs
and import quotas.
 The North American free trade agreement – NAFTA
4. Which one of the following is an important source of idea generation due to their familiarity with
the needs of market?
 Existing products and services
 Distribution channels
 Federal government
 Consumers
5. The long-term future of the new venture depends on the __________.
 Positive Cash flow
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 Employees loyalty
 Business ideas
 Economy
6. The decision to start a new business is taken when one perceives that forming a new business is:
 Possible
 Desirable
 Accurate
 Both a and b P:5
The decision to start a new company occurs when an individual perceives that forming a new
enterprise is both desirable and possible.
7. Army is one of the best examples of __________.
 Democracy
 Hypocrisy
 Autocracy
 Theocracy (I don’t Know)
8. The startups which rarely go public are called:
 Life style
 Foundation Company P:7

Foundation companies

A type of company formed from research and development that usually does not go public.

 Small company
 High potential venture
9. The difference between the value of a country’s imports and exports over time is called:
 Deficit exports
 Balance of payment P:29

Balance of Payments A country’s balance of payments affects the valuation of its currency.

 Balance of debt
10. Which one of the following is important for international business to avoid trade barriers?
 Entrepreneurial partnering
 Protectionist attitude P:35
 Free trade area
 None of the given options
11. Which of the following factor can create the managerial difficulties in the joint ventures between
foreign companies?
 Cultural differences P:103

Cultural differences can create managerial difficulties.

 Economic policies
 Public ignorance
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 Government taxes
12. Members of distribution channels are excellent sources for new ideas because:

 They are familiar with the needs of the market P#39

Distribution Channels

Members of distribution channels are also excellent sources for new ideas because they are

familiar with the needs of the market.

 They earn a handsome profit from new business

 They do not bother if entrepreneur bears a loss
 They have well-developed sales force
13. ________________ distribute profits to owners through dividends

Select correct option:

 Sole Proprietor
 General Partnership
 Limited Partnership
 Corporation P:71
• Corporations distribute profits through dividends to stockholders.
14. Which one of the factors should be considered while assessing the space for business?
 Access from roadways to facility
 Parking
 Delivery rates
 All of the given options
15. Which one of the following is a sound strategic option for an entrepreneur when synergy is
present?
 Merger P:34

Mergers are a sound strategic option for an entrepreneur when synergy is present.

 Joint venture
 Minority interest
 Majority interest
16. Which of the following grants the owner protection from anyone else making, using and selling
the identified innovation?
 Utility patent
 Design patent
 Plant patent
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 International patent
17. The entrepreneur’s_______________ depends on his perception of the opportunity.
 Commitment to opportunity
 Commitment of resources
 Control of resources
 Strategic orientation P:15

Strategic Orientation

The entrepreneur’s strategic orientation depends on his or her perception of the opportunity. This
orientation is most important when other opportunities have diminishing returns accompanied by rapid
changes in technology, consumer economies, social values or political rules.

18. Which one of the following method shows the term which is related to starting from scratch to a
bigger picture?
 Upward movement method
 Incremental method
 Downward movement method
 None of the above options
19. External forces directly affect all of the following EXCEPT:
 Market segmentation strategies
 Types of products/services offered
 Management structure of organization
 Choice of businesses to acquire or sell

External forces are

Economy Culture Technology Legal concerns All of the above external factors are generally
uncontrollable

 Economic forces
 Technological forces
 Competitive forces
20. Which of the following is NOT an advantage of the acquisition?
 Goodwill
 Skilled employees
 Favorable location
 Political instability P:104

Advantages of an Acquisition

1. Established business.

2. The acquired firm has an established image and track record.

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3. The entrepreneur would only need to continue the existing strategy to be successful

4. Location is already established.

5. Established marketing structure

6. An important factor that affects the value of a firm is its existing marketing channel sales structure.
With this structure already in place, the entrepreneur can concentrate on expanding to new target markets.

7. The total cost of acquiring a business could be lower than trying to buy a franchise.

8. Existing employees

9. The employees of an existing business can be important assets. They know the business and can help
the business continue. Employees already have established relationships with

customers, suppliers, and channel members.

10. More opportunity to be creative-More time can be spent assessing opportunities to

expand or strengthen the business.

2nd quiz

1. ________________ distribute profits to owners through dividends Sole Proprietor

 General Partnership
 Limited Partnership
 Corporation P:71

• Corporations distribute profits through dividends to stockholders.

2. In USA Public Limited Companies may have ______ Director/s

 1
 2
 3 (doubted)
 4
3. Which of the following is representing a single expense account?
 Depreciation
 Cash account
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 Wages & Salaries

 Utilities account
4. The chief motivational factor for _________________ entrepreneurs to leave jobs is the
frustration of not being allowed to perform at the level of which they are capable.
 Male
 Female P:27

Women tend to be more motivated by the need for achievement arising from job frustration.

 Young
 All of the given options
5. The difference between the value of a country’s imports and exports over time is called:
 Deficit exports
 Deficit imports
 Balance of payment P:29

Balance of Payments A country’s balance of payments affects the valuation of its currency.

 Balance of debt
6. The business plan should be prepared by:
 Entrepreneurs P:54

WHO SHOULD WRITE THE PLAN

The business plan should be prepared by the entrepreneur; however, he or she may consult many sources.
Lawyers, accountants, marketing consultants, and engineers are useful supplemental sources.

 Consultants
 Engineers
 Small business administration services
7. Front level managers have _______ Skill
 Conceptual
 Communicational
 Technical
 All of the above
8. Which one of the following is required to develop a good team for creating something new?
 Relationship with team members
 Open discussion P:20

Open discussion must be encouraged to develop a good team for creating something new. A successful
venture can be formed only when the team feels the freedom to disagree and to critique an idea.

 Non flexible behavior

 Discouragement of team member’s ideas
9. Which of the following contains all backup material that is not included in the text of business
plan?
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 History of entrepreneur
 Financial plan
 Appendix P:59

Appendix

The appendix contains any backup material not included in the text of the document.

 Bibliography
10. Being one’s own boss is a need of:
 Independence P:25

Need for independence.

Being one’s own boss-one of the strongest needs of an entrepreneur

 Achievement
 Affiliation
 Authority
11. Members of distribution channels are excellent sources for new ideas because:
 They are familiar with the needs of the market P:39

Distribution Channels

Members of distribution channels are also excellent sources for new ideas because they are familiar with
the needs of the market. Not only do channel members frequently have suggestions for new product, but
products.

 They earn a handsome profit from new business

 They do not bother if entrepreneur bears a loss
 They have well-developed sales force
12. Which of the following factors has allowed small companies to act like they are big ones?
 Economic development
 Technology P:21

Technology has allowed small companies to act like they are big ones. Large companies can use
technology to make them responsive and flexible

 Customers
13. A contract must be signed by:
 At least one party
 Both the parties
 Not necessary to sign
 By third party
14. Which one of the following options has NOT a total taxable entity?
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 Minor partner
 Limited partner P:87

The limited partners have limited liability but are not a taxable entity.

 General partner
 All of the given options
15. The product life cycle starts with which stage of product planning and development process?
 Test marketing stage
 Product development stage
 Commercialization stage
 Product planning and development process is a part of product life cycle

Product planning and development process

Generally divided into five major stages: idea stage, concept stage, product development stage, Test
marketing stage, test marketing stage, and commercialization stage

While,

Product life cycle

This cycle is generally divided into four major stages: product introduction, market growth, Market
maturity, and sales decline

16. If inventory is low and the firm cannot meet demand, what will be the effect on sales?
 Sales will be low
 Sales will be high
 No effect on sales
 None of the given options
17. The intersection of knowledge and a recognized social need to start a product development
process is called:
 Iterative synthesis P:7

Iterative synthesis

The intersection of knowledge and social need that starts the product development process

 Product-evolution process
 Ordinary innovation
 Situation analysis
18. The importance of intellectual property should be understood by entrepreneur even before:
 Hiring a manager
 Engaging an attorney P:46
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WHAT IS INTELLECTUAL PROPERTY?

 Intellectual property which includes patents, trademarks, copyrights, and trade secrets represent
Important assets of entrepreneur and should be understood even before engaging the
services of an attorney.
 Because entrepreneurs often don’t understand intellectual property, they can ignore steps that
should be taken to protect these assets.
 Developing a product
 Establishing new venture

19. Which of the following has not yet been empirically established as a distinguishing characteristic
of entrepreneurs?
 Locus of control
 Feeling about independence
 Need for achievement
 Risk taking P:22

Risk Taking

Risk taking seems a part of the entrepreneurial process. However, it has not yet been empirically
established whether risk-taking is a distinguishing characteristics of entrepreneurs.

20. __________ is not complete without describing the venture’s form of ownership.
 Marketing plan
 Financial plan
 Business plan
 Organizational plan P:58

Organizational Plan

The organizational plan section should describe the venture’s form of ownership. If the venture is a
corporation, this should include the number of shares authorized, share options, and names and addresses
of the directors and officers.