CHAPTER 1: ENTREPRENEURSHIP: EVOLUTIONARY DEVELOPMENTREVOLUTIONARY IMPACT
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1 CHAPTER 1: ENTREPRENEURSHIP: EVOLUTIONARY DEVELOPMENTREVOLUTIONARY IMPACT TRUE/FALSE 1 Entrepreneurs are aggressive atalysts for hange within the marketplae KEY: page 3 2 Entrepreneurs are not heroes in toay s marketplae KEY: page 3 3 Entrepreneurs are the major soure of innovation an job reation in any eonomy KEY: page 3 4 Entrepreneurship is more than mere reation of business KEY: page 3 5 Small enterprises are the most ommon form of establishment, regarless of the inustry KEY: page 3 6 During the past ten years, new business inorporations average 600,000 per year KEY: page 16 7 One of every 1000 aults partiipates in the founing of a new firm every year KEY: page 16 8 The entrepreneurial spirit is unique to Ameria an Western Europe KEY: page 17 9 A gazelle is a business establishment with at least 20 perent sales growth every year for five years KEY: page 18
2 10 Gazelles proue only one half the innovations per employee that larger firms o KEY: page New an smaller firms obtain more patents per sale than o larger firms KEY: page Gazelles proue 5 million jobs in the ownsizing years of the 1990's KEY: page Gazelles always operate in national or international markets KEY: page New an smaller firms are responsible for 95% of all raial innovations KEY: page Gazelles are almost always high teh KEY: page Gazelles on t always get VC funing KEY: page Women s share of self employment will still lag behin that of men by the en of 2005 KEY: page Three harateristis of an entrepreneur are personal initiative, management skills, an a esire for autonomy 19 Large firms rather than the entrepreneur are the aggressive atalyst for hange in the worl of business
3 20 The wor entrepreneur is erive from the Spanish wor entreprenre, meaning to unertake 21 There is no single efinition of an entrepreneur; however researh is proviing a sharper fous on the subjet 22 Reognition of entrepreneurs ates bak to the Frenh eonomist Rihar Cantillon 23 In the past entury, entrepreneurship has beome losely linke with soialism an regulate business 24 Entrepreneurs are the major soure of innovation an job reation in the eonomy KEY: page 3 25 Aoring to Robert C Ronstat, entrepreneurship is the proess of reating inremental wealth 26 Most entrepreneurs are inventors KEY: page 6 27 An entrepreneur oes not nee a lot of money or luk KEY: page 6 28 Prepare entrepreneurs who seize opportunities when they arise often appear to be luky KEY: page 6 29 Entrepreneurs are high risk takers
4 30 Entrepreneurs always start their business at a young age KEY: page 6 31 Charateristis of entrepreneurs annot be taught or learne 32 Entrepreneurs are born not mae 33 Entrepreneurs are oers not thinkers 34 Entrepreneurs must fit the profile KEY: page 6 35 Entrepreneurs are often very methoial people who plan their moves very arefully KEY: page 6 36 The orrior priniple states that entrepreneurs often get stuk on one iea KEY: page 7 37 Entrepreneurs are often known as alulate risk takers, as oppose to gamblers 38 The maro view inlues external proesses that are sometimes beyon the ontrol of the entrepreneur 39 The isplaement shool of thought fouses on group phenomena KEY: page 9 40 The strategi formulation shool of thought emphasizes the planning proess in suessful venture evelopment
5 KEY: page In the environmental shool of thought, legal issues surrouning the natural environment are primary KEY: page 9 42 The finanial/apital entrepreneurial shool of thought fouses on the potential profit of the business iea KEY: page 9 43 Politial, ultural, an eonomi isplaement are all part of the isplaement shool of entrepreneurial thought KEY: page 9 44 Great hef strategies fous on unique markets KEY: page Entrepreneurship involves an interisiplinary approah 46 The entrepreneurial events approah fouses on suh fators as initiative, organization, autonomy, an risk taking 47 The four major imensions onsiere in the multiimensional approah are the iniviual, the environment, the organization, an the proess MULTIPLE CHOICE 1 Entrepreneurs are best haraterize as: a aggressive atalysts for hange b goo managers har to get along with not fitting in to an orinary workplae
6 KEY: page 3 2 During the past ten years, there were approximately how many business inorporations per year? a 600,000 b 500, ,000 1 million KEY: page 16 3 Entrepreneurs will always be a a key fator in the stability of the small business setor b hinere by lak of funing the major soure of job reation an innovation in any eonomy a little quirky ANS: C KEY: page 17 4 Sine the new entury the US has ha an annual new firm birth rate of a 4-6 per 100 existing establishments per 100 existing establishments b per 100 existing establishments almost none KEY: page 17 5 In the evolutionary proess of eonomi growth, plays the ruial an inispensable role of proviing the soial glue that bins together both high-teh an Main Street ativities a entrepreneurship the Internet b supply an eman management KEY: page 20 6 Entrepreneurs an gazelles have been reite with making isproportionate ontributions to all but whih of the following
7 a innovation b job reation eonomi renewal unemployment ANS: D KEY: page 18 7 Whih of the following statements best esribes a gazelle? a a business with at least 20% growth every year b a business with no sales growth a business that has aquire numerous firms an inventor who turne business person KEY: page 18 8 Gazelles have been responsible for whih of the following: a some job growth 30 perent of all raial innovations b 55 perent of innovations most job turnover KEY: page 18 9 is the eonomi basis for all entrepreneurial ativity a Iniviuality Voooo eonomis b Capitalism Free enterprise ANS: D 10 The wor entrepreneur is erive from the Frenh entreprenre, whih is translate as a to apprehen to ompete b to unertake to enter an are ANS: C
8 11 The entrepreneur is one who a reams all ay b manages oversees manufaturing invents new prouts 12 Whih of the following harateristis is most important to an entrepreneur? a management skills frienliness b neatness having a nie offie 13 The stuy of entrepreneurship is a base on the fiel of management b base on the fiel of aounting base on the fiel of soiology interisiplinary ANS: D 14 Whih eonomist assoiate the risk bearing ativity in the eonomy with the entrepreneur? a Rihar Cantillon Peter F Druker b Robert C Ronstat Jean Baptiste Say 15 Whih is not one of the hief harateristis of an entrepreneur? a personal initiative risk taking b ability to onsoliate resoures esire for ontrol of people ANS: D 16 Whih is a key fator in suessful entrepreneurship?
9 a b ientifying the strengths of a venture setting up lear timetables minimizing problems through areful strategy formulation the prout itself ANS: C 17 Entrepreneurial traits inlue whih of the following? a salesmanship wealth b initiative eginess 18 Robert C Ronstat put together a summary efinition of entrepreneur that inlue whih of the following key phrases? a the aeptane of risk of failure b the ynami proess of reating inremental wealth take avantage of eonomi enowments a phenomenon that omes uner the wier aspet of leaership 19 In the present entury, whih of the following is entrepreneurship onsiere synonymous with: a free enterprise multimillion ollar enterprises b soialism partnership 20 Whih is a true statement about entrepreneurs? a Entrepreneurs are oers an thinkers b All you nee is money to be an entrepreneur
10 Ignorane is bliss for an entrepreneur Inheriting a business is the best way to beome an entrepreneur 21 Throughout the years, many myths have arisen about entrepreneurship as a result of? a a lak of researh about entrepreneurship a total isregar for the truth b a lak of interest in the fiel a estrutive attitue by government 22 The orrior priniple is best esribe by whih of the following statements? a If at first you on t suee, try, try, again b The right plae at the right time With every new venture launhe, new an unintene opportunities arise Luk happens when preparation meets opportunity KEY: page 7 23 Whih of the following traits is not that of an entrepreneur? a rive willingness to take risks b shyness human relations skills 24 Money is neessary but not suffiient for entrepreneurs to survive beause a Lak of preparation an planning an be a main soure of failure b The ups an owns of the eonomy etermine the entrepreneur s suess The iea is the soure of suess Money an being in the right plae at the right time spells suess
11 KEY: page 6 25 Whih of the following is not a ommon myth about entrepreneurs? a Entrepreneurs are aaemi an soial misfits b Entrepreneurs are oers, not thinkers Entrepreneurs toay are onsiere heroes All you nee is money to be an entrepreneur ANS: C 26 Whih statement is not true? a Luk happens when preparation meets opportunity b Entrepreneurs o not hol up in toay s ompetitive market Failure ue to lak of proper finaning often is an iniator of other problems It takes more than just money to be a suessful entrepreneur 27 Most entrepreneurs shoul be ategorize as a inventors b innovators luky wealthy KEY: page 6 28 Whih of the following statements is true? a Entrepreneurship is the ability to reate an buil a vision from pratially nothing b Entrepreneurship is pure luk Entrepreneurship is simply obtaining finaning an starting a business Entrepreneurship has nothing to o with reating inremental wealth
12 29 Whih of the following eonomists wrote about entrepreneurship an its impat on eonomi evelopment? a Rihar Dailey Paul Samuelson b Joseph Shumpeter Robert MConnell 30 In our present entury, entrepreneurship has beome synonymous or losely linke with: a failure multimillion ollar enterprises b soialism an monopolies free enterprise an apitalism ANS: D 31 Mihael Gerber has written a book title, The E-Myth, where he ontens: a the entire fiel of stuy in entrepreneurship is a myth b there is no suh thing as entrepreneurship toay s business owners are not true entrepreneurs everyboy in business is an entrepreneur ANS: C KEY: page 7 32 Mihael Gerber s book The E-Myth explains the failure of most small businesses is ue to: a owners being more tehniians rather than entrepreneurs b owners being more managerial rather than tehnial owners being more entrepreneurial rather than managerial owners being more ustomers rather than business people
13 TOP: page 7 33 Entrepreneurs always a start their business at a young age b quit shool an evote themselves to being an entrepreneur use reit ars to start their own businesses generate ieas an plan for their implementation ANS: D 34 When referring to luk an an entrepreneur, whih of the following statements in an appropriate aage? a always wait for luk to happen b luk happens when preparation meets opportunity luk happens to everyone luk is the key to entrepreneurship KEY: page 6 35 The statement, with every new venture launhe, new an unintene opportunities often arise, woul be assoiate with: a the entrepreneurial priniple the orrior priniple b the opportunity priniple the ilbert priniple ANS: C KEY: page 7 36 Entrepreneurs themselves pereive the onept of risk in whih of the following ways: a alulate risk taking istorte risk taking b gambling risk soial risk
14 37 In the stuy of ontemporary entrepreneurship, one onept reours: a no one unerstans the fiel there is no theoretial base b folklore ominates the stuies entrepreneurship is interisiplinary ANS: D 38 The maro view of entrepreneurship presents fators exhibiting a strong a internal lous of ontrol environmental lous of ontrol b external lous of ontrol ontemporary lous of ontrol 39 Entrepreneurs are more aurately epite by whih of the following: a entrepreneurs are gamblers b entrepreneurs are extreme risk takers entrepreneurs are alulate risk takers entrepreneurs often on t want to know how muh risk is involve ANS: C 40 3M s Post-it note is an example of the a theory of elining return b orrior priniple theory of inreasing return risk versus rewar priniple KEY: page 7 41 Whih of the following shools of thought is not a miro view shool of thought? a the entrepreneurial trait shool of the isplaement shool of thought thought b the venture opportunity shool of the inherite business shool of thought thought
15 ANS: C KEY: page The maro view an be broken own into whih three areas? a the environmental, finanial, an isplaement b the finanial/apital, strategi, an opportunity the isplaement, trait, an finanial the entrepreneurial trait, opportunity, an strategi 43 The isplaement shool of thought an be ivie into whih three groups? a politial, ultural, environmental environmental, finanial, an eonomi b ultural, environmental, an finanial eonomi, ultural, an politial ANS: D KEY: page 9 44 The miro view is ivie into whih three theories? a the entrepreneurial, finanial, isplaement b the venture opportunity theory, entrepreneurial, strategi the strategi, environmental, an opportunity the environmental, finanial, an isplaement KEY: page Whih of the following is not a form of isplaement in the isplaement shool of thought? a politial eonomial b raial ultural KEY: page 9 46 Whih of the following oes not apply to the strategi formulation shool of thought?
16 a unique people b unique plaes unique markets unique prouts 47 Water well strategies refer to: a unique resoures b unique prouts unique markets unique prouts 48 Mountain gap strategies refer to: a unique resoures b unique loations KEY: page 12 KEY: page 12 unique resoures unique markets ANS: D KEY: page The Entrepreneurial Assessment Approah stresse that assessments must be mae in regar to the entrepreneur, the venture, an the environment a qualitatively an quantitatively a an b b strategially an ethially finanially ANS: C KEY: page The proess approah to entrepreneurship seeks to a explain the proess of obtaining patents b moel the various fators that haraterize the entrepreneurial proess explain intrapreneurship explain the proess of obtaining venture apital
17 KEY: page 12 ESSAY 1 Desribe entrepreneurs an entrepreneurship in toay s marketplae ANS: Entrepreneurs are iniviuals who reognize opportunities where others see haos, or onfusion They are aggressive atalysts for hange within the marketplae They have been ompare to Olympi athletes hallenging themselves to break new barriers, to long istane runners ealing with the agony of the miles, to symphony orhestra onutors who balane the ifferent skills an souns into a ohesive whole, or to top-gun pilots who ontinually push the envelope of spee an aring Whatever the passion, beause they all fit in some way, entrepreneurs are the heroes of toay s marketplae They start an reate jobs at a breathtaking pae Entrepreneurship is an integrate onept that permeates an iniviual s business in an innovative manner It is this perspetive that has revolutionize the way business is onute at every level an in every ountry The revolution has begun in an eonomi sense, an the entrepreneurial perspetive is the ominant fore 2 How ominant have new an small ventures been in the eonomy? ANS: The past eae has emonstrate the powerful emergene of entrepreneurial ativity in the Unite States Many statistis illustrate this fat For example, uring the past ten years new business inorporations average 600,000 per year Although many of these inorporations may have been sole proprietorships or partnerships previously, it still emonstrates venture ativity, whether it was through start-ups, expansion, or evelopment Let s examine some of the latest tabulate numbers Smaller firms onstitute more than 90 perent of the entire business population Grante, this figure epens on the efinition of the term small; however, the Internal Revenue Servie (IRS) reports that 21 million businesses exist base on business tax returns Figure 11 was evelope by the National Feeration of Inepenent Business (NFIB) in orer to emonstrate the breakown Approximately 12 million businesses have owners whose prinipal oupation is owning an operating them Approximately 7 million (out of 12 million) have owners who work for themselves with employing anyone else Of the 5 million remaining firms only 15,000 employ 500 or more people KEY: page 17 3 Define a gazelle an isuss some of the impat that gazelles have on the eonomy ANS:
18 New an smaller firms reate the most jobs in the US eonomy The fats speak for themselves The vast majority of these job-reating ompanies are fast-growing businesses Davi Birh of Cognetis, In has name these firms gazelles A gazelle, by Birh s efinition, is a business establishment with at least 20 perent sales growth every year for five years starting with a base of at least $100,000 Despite the ontinual ownsizing in major orporations, the gazelles proue 5 million jobs an brought the net employment growth to 42 million jobs Gazelles are leaers in innovation, as shown by the following: New an smaller firms have been responsible for 55 perent of the innovation in 362 ifferent inustries an 95 perent of all raial innovations Gazelles proue twie as many prout innovations per employee as o larger firms New an smaller firms obtain more patients per sales ollar than o larger firms KEY: page 18 SHORT ANSWER 1 Name an esribe four of the ten major myths of management ANS: One of the myths of management says that entrepreneurs are born, not mae This myth implies that entrepreneurs annot be taught how to be suessful It says that they must be born with ertain traits, suh as aggressiveness, initiative, rive, an skill in human relations However, reent reognition of entrepreneurship as a isipline is helping to ispel this myth Another myth is the all you nee is money myth, whih says businesses fail beause of inaequate finaning Atually, poor finaning usually iniates other problems suh as managerial inompetene, poor investments, an poor planning A thir myth says that entrepreneurs are either inventors or innovators While many inventors an innovators are entrepreneurs, many entrepreneurs exel at other profit-seeking ativities A final myth is that all you nee is luk Luk happens when preparation meets opportunity means that being prepare for situations an lea to suess when the time is right 2 List an ategorize the shools of entrepreneurial thought ANS:
19 The shools of entrepreneurial thought an be groupe into two major heaings, maro an miro The maro view of entrepreneurship presents a broa array of fators These inlue external fators, whih sometimes annot be ontrolle In the maro view, the environmental shool of thought eals with external fators that affet the possible lifestyle of the entrepreneur Also uner maro, the finanial/apital shool looks for see an growth apital to evelop the entrepreneur The isplaement shool is the final maro view It hols that the group affets or eliminates ertain fators that projet the iniviual into an entrepreneurial venture The miro view examines fators speifi to entrepreneurship an part of the internal lous of ontrol The entrepreneurial trait shool says that suessful entrepreneurs usually exhibit similar harateristis The venture opportunity shool fouses on opportunities in iretions other than where the entrepreneur is presently heae The final shool, the strategi formulation shool, emphasizes the planning proess in suessful venture evelopment 3 Trae the evolution of entrepreneurship, list the men who wrote about it, an esribe its impat on eonomi evelopment ANS: Entrepreneurship was first reognize by Rihar Cantillon in eighteenth-entury Frane He esribe an entrepreneur as someone who bears the risks of business During the same time perio, the Inustrial Revolution was taking form in Englan, an the entrepreneur was seen taking risks an transforming resoures into prouts Entrepreneurship has long been assoiate with eonomi evelopment Many efinitions of entrepreneurship prior to 1950 ame from eonomists suh as Cantillon, Jean Baptiste Say (1803), an Joseph Shumpeter (1934) In the twentieth entury, entrepreneurship has been assoiate with free enterprise an apitalism Entrepreneurs generally are seen as people who provie reative an innovative ieas for businesses an help them grow an beome profitable Now, entrepreneurship is regare as pioneer ship on the frontier of business 4 Provie a omprehensive efinition of entrepreneurship ANS: Entrepreneurship is the ynami proess of reating inremental wealth This wealth is reate by iniviuals who assume the major risks in terms of equity, time, an/or areer ommitment of proviing value for some prout or servie The prout or servie itself may or may not be new or unique but value must somehow be infuse by the entrepreneur by seuring an alloating the neessary skills an resoures OR
20 Entrepreneurship is ability to reate an buil a vision from pratially nothing: funamentally it is a human, reative at It is the appliation of energy to initiating an builing an enterprise or organization, rather than just wathing or analyzing This vision requires a willingness to take alulate risks both personal an finanial an then to o everything possible to reue the hanes of failure Entrepreneurship also inlues the ability to buil an entrepreneurial or venture team to omplement your own skills an talents It is the knak for sensing an opportunity where others see haos, ontraition, an onfusion It is possessing the know-how to fin, marshal, an ontrol resoures (often owne by others)
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