tb05

CHAPTER 5: ENTREPRENEURSHIP

Test Correlation Table Question Types/Level of Difficulty

LEARNING OBJECTIVES Easy Moderate Difficult

1. Explain the role of entrepreneurs and how external factors impact their ventures.

TF 9, 10, 13 1, 2, 3, 4, 5, 7, 8, 11, 12

6

MC 3, 6, 10 2, 4, 7, 8, 11, 12, 15 1, 5, 9, 13, 14

ES 2 1 —

2. Describe the personal attributes that contribute to entrepreneurs’ success.

TF 16, 18, 21 14, 17, 20, 22, 23, 26

15, 19, 24, 25

MC 21, 24, 30, 32, 45

17, 18, 19, 20, 26, 27, 29, 34, 35, 38,

41, 43, 46

16, 23, 25, 28, 31, 33, 36, 37, 39, 42

ES 6 — 3, 4, 5, 7

3. Outline the planning essentials for potential entrepreneurs.

TF 30, 33, 37, 43, 46

29, 31, 34, 38, 41, 44, 45, 47, 48, 49

27, 28, 32, 35, 36, 39, 40, 42

MC 51, 55, 56, 58, 61, 64, 65, 70,

77

47, 49, 50, 53, 54, 57, 59, 60, 62, 63, 66, 67, 69, 71, 74,

75, 76

48, 52, 68, 72, 73, 78

ES — 8 9

4. State the role of intrapreneurs and how organizations can foster intraprenuership.

TF 52, 53 50, 51, 54, 55, 56 57

MC 79, 81, 84, 86, 89

80, 83, 85 82, 87, 88

ES — 10, 11 —

110


True/False Questions

Learning Objective 1

1. Despite the number of women in business, the proportion of new business start-ups involving female entrepreneurs has declined in recent years.

ANSWER: F, Knowledge, Moderate, p. 127

2.

Rates of entrepreneurship ebb and flow with environmental conditions. Rapid technological change tends to stimulate entrepreneurship.

ANSWER: T, Knowledge, Moderate, pp. 127–128

3. Entrepreneurship has been rapidly increasing with the growth of business throughout the past century.

ANSWER: F, Knowledge, Moderate, pp. 127–128

4. Entrepreneurship may involve modifications on what other people are already doing rather than introducing something totally new.

ANSWER: T, Knowledge, Moderate, p. 127

5. An incubator organization applies to organizations that inhibit entrepreneurial activity.


6. A small-business owner is anyone who owns a major equity stake in a company with fewer than 100 employees.

ANSWER: F, Knowledge, Difficult, p. 128

7. Entrepreneurs succeed primarily because they invent new products or services.


8. Entrepreneurs and small-business owners are essentially the same.


9. Businesses with fewer than 500 employees now furnish most of the employment growth in America.

ANSWER: T, Knowledge, Easy, p. 129

10. American entrepreneurs have the additional burden of dealing with governmental restrictions applied by the SBA.

ANSWER: F, Knowledge, Easy, p. 128

111


11. Globalization has caused many entrepreneurs to seek exciting and untapped opportunities in socialistic or communistic countries.

ANSWER: F, Application, Moderate, p. 127

12. Entrepreneurial families tend to successfully pass on their businesses to multiple generations.


13. Successful family businesses have usually failed by the third generation of ownership.



14. When today’s most successful entrepreneurs were asked to explain why they started their own companies, a majority said that making money was the reason.


15. About 50 percent of the U.S. population is characterized by a predominant need to achieve.


16. High achievers set moderately difficult goals, take responsibility for achieving those goals, and want immediate feedback on their performance.


17. Entrepreneurial activity capitalizes on the sacrifices of other people.

ANSWER: F, Knowledge, Moderate, pp. 130–131

18. Entrepreneurs are born and not made.


19. A need for power is consistently strong in successful entrepreneurs.


20. A need for achievement, a desire for independence, and self-confidence are personal attributes of most successful entrepreneurs.


21. A key personal attribute of successful entrepreneurs is the ability to be self-sacrificing.

ANSWER: T, Knowledge, Easy, pp. 130–131

112


113


22. Njuguna Mwangi has always wanted to start her own company. Her friends and family are constantly telling her that she would be a great success because of her desire for excellence and her desire to succeed in competitive situations. Mwangi could be described as having a high need for achievement.

ANSWER: T, Application, Moderate, p. 129

23. Entrepreneurs are usually very creative thinkers who are not necessarily competent in their technical skills.


24. Stubbornness as a child predicts entrepreneurial failure due to lack of flexibility.

ANSWER: F, Application, Difficult, p. 135

25. A majority of all successful entrepreneurs act as their own CEOs, needing no help to manage their operations.


26. It is not possible to predict your likely success as an entrepreneur.



27. “An insufficient business plan is worse than no plan at all,” says Dave Ferkinhoff, Founder, Eastside Glass Company in Minnesota.


28. Successful entrepreneurs usually spend less time planning than unsuccessful entrepreneurs due to an ability to think quickly.


29. Entrepreneurs are people who are realistic in their business plans and not to exaggerate.


30. A business plan deals with the entrepreneur’s basic idea.


31. When buying a business, prospective entrepreneurs should ask, “Will the seller become a competitor?”


114


32. Barnes & Noble is America’s largest bookseller, also owning B. Dalton.

ANSWER: T, Knowledge, Difficult, p. 138

33. Due to technology and the Internet, proximity to suppliers is no longer an essential component of new venture business planning.


34. According to the text, McDonald’s, Domino’s Pizza, and Jiffy Lube are all franchises.


35. The entrepreneur's natural bias toward quick action tends to increase the probability of failure.


36. “Paralysis by analysis” is not part of the principle of affordable loss.


37. Funding through venture capital is an excellent way to raise money without the high returns on investment that bankers expect.


38. A venture capitalist is someone in an existing organization that turns new ideas into profitable realities.


39. Evelyn Estrada is starting her own business. At present, she is working to calculate a month-by-month projection of expected expenses for the first three years of the company. In other words, Estrada is developing a balance sheet.

ANSWER: F, Application, Difficult, p. 139

40. Generally, venture capitalists expect their investments to reap returns of 50 to 60 percent annually.


41. An “angel” is a private individual who invests directly in firms and receives an equity stake in return.


42. A business “angel” probably makes more stringent demands than a venture capitalist on the actions of an entrepreneur. less

115


ANSWER: F, Knowledge, Difficult, pp. 139–140

43. Now that Leonard Faulkner has received money from financial backers, he should continue furnishing his business plans to them in the future.


44. Small businesses create 31% of total American export sales.


45. During the past 10 years, export sales by small business have declined because of strong name-brand global competitors.


46. All family-owned businesses have a certain level of conflict that arises from their unique structure.


47. For most family businesses to succeed in the long run, they must first draw up a legal agreement on disposing of the business.


48. It is not a good idea to make jobs in family businesses too narrowly defined.


49. Entrepreneurs can make better decisions without the burden of answering to a board of directors, compared to their more structured competitors.



50. An intrapreneur is someone who starts a fast-growth business.


51. CNN and NBC have created environments that have encouraged intrapreneurial activity.


52. Matt Granger enjoys a reputation in his company for being someone who can successfully turn new ideas into profitable realities. Matt could be described as an intrapreneur.

ANSWER: T, Application, Easy, p. 143

53. Decision-making authority in an intrapreneurial organization is often moved all the way

116


down to first-line managers.


54. Intrapreneurship should stop short of inciting an all-out revolution in an organization’s practices.


55. Islands of intrapreneurial activity within an organization are often referred to as skunkworks.


56. “Corporate Entrepreneurship” is a contradiction in terms. Entrepreneurship is seldom if ever promoted in corporations because of its potential damage to the organizational structure.


57. Organizations that redirect themselves through innovation are fostering intrapreneurial activity.


Multiple Choice Questions

Preview1. According to the Preview reading, what did the owner of Carmin Industries learn about

entrepreneurship from the Marine Corps? a. Opportunities exist for the few, the proud. b. Depend upon yourself first.c. Don’t think twice about doing things that have not been done before.d. Imitation is the sincerest form of flattery.

ANSWER: C, Knowledge, Difficult, p. 126

2. Which of the following were not important supports to Carolyn Minerich in establishing Carmin Industries?a. professional advice from her husbandb. substantial loans from her parentsc. the Jacksonville Small Business Development Centerd. Compass Bank

ANSWER: B, Knowledge, Moderate, p. 126

117



Entrepreneurs and External Factors3. A(n) __________ is someone who manages resources in order to create something new

—a new business, a new product or service, or even a new market.a. stakeholderb. financial speculatorc. venture capitalistd. entrepreneur

ANSWER: D, Knowledge, Easy, p. 126

4. What differentiates highly successful entrepreneurs from less successful entrepreneurs?a. They offer a higher quality product or service.b. They make small modifications to what others are already doing.c. They are both innovator and decision maker.d. All of the above differentiate the successful entrepreneurs from the unsuccessful

ones.

ANSWER: D, Knowledge, Moderate, p. 127

5. Burton Snowboards is __________ HeadBlade because __________.a. different from; HeadBlade is a new productb. different from; Burton Snowboards was launched on the Internetc. similar to; both are sports relatedd. similar to; the entrepreneurs are from California

ANSWER: A, Application, Difficult, pp. 126–127

6. A niche market is __________.a. a high-tech marketb. an underserved marketc. characterized by high barriers to entryd. an area of limited opportunity

ANSWER: B, Knowledge, Easy, p. 126

7. Jake Burton succeeded with his snowboards by __________.a. introducing a completely new product lineb. teaming up with the most talented designersc. improving upon an existing designd. observing his own kids

ANSWER: C, Knowledge, Moderate, p. 126

118


8. Which of the following groups has not experienced an increase the number of entrepreneurs in recent years?a. womenb. minoritiesc. entrepreneurs in Europe and Asiad. All of these groups will realize increases.


9. Which of the following factors has not contributed to the rise of entrepreneurship?a. local chambers of commerceb. a soft economy that put many people out of work c. favorable tax rates for local businessesd. support services that assist growth

ANSWER: B, Knowledge, Difficult, p. 128

10. Organizations designed to accelerate the growth of entrepreneurial companies through an array of business support resources are referred to as business _______.a. clansb. networksc. matricesd. incubators


11. How does a business incubator support the development of new businesses?a. rents space to people wanting to start businessesb. serves businesses by offering administrative servicesc. provides moral supportd. All of the above support the development of new businesses.


12. Ingrid King is a wealthy businesswoman who wants to give something back to the people. She decides to form an organization that would renovate an old warehouse and subsidize the opening of small businesses. When a television news reporter publicized what she was doing, more than ten hopeful entrepreneurs applied for the subsidization. At present, more than fifteen successful businesses have received help from King. King’s organization could be described as a(n) __________.a. skunkwork b. organic organizationc. networkd. business incubator

ANSWER: D, Application, Moderate, p. 128

119


13. It has been found that _______ of family owned businesses survive to the third generation.a. 70%b. 40%c. 20%d. 5%


14. Marquita Sadler’s new business has been offered assistance through a business incubator. At the end of two or three years, which of the following outcomes is not expected for Marquita’s venture? a. business failureb. possible purchase by the incubator operatorsc. expansion within the incubatord. sufficient growth to move out of the incubator

ANSWER: B, Application, Difficult, p. 128

15. Kohler Company is an example of what type of business?a. plumbing company that went public after 25 yearsb. company that improved on the already-invented bathtubc. family-owned company that exclusively offers plumbing productsd. family-owned company that has diversified



Attributes of Successful Entrepreneurs

16. Today’s most successful entrepreneurs were recently asked to explain why they started their own companies. What statement below ranked as the number one reason these entrepreneurs started their own business?a. work for themselves and control their own lives b. to make money c. being laid off from their old jobd. not feeling rewarded in their old job

ANSWER: A, Knowledge, Difficult, p. 129

17. Which of the following is not cited as a frequent motivator for successful entrepreneurs?a. personal achievementb. being laid offc. balance of work and familyd. dislike of large organizations


120


18. The many studies of entrepreneurs that have been conducted over the years indicate that those who succeed have several characteristics in common. Which of the following is not one of the key characteristics?a. substantial financial backing b. desire to be independentc. willingness to make sacrificesd. need for achievement


19. Research has found that successful entrepreneurs possess a strong __________ which sets them apart from a majority of the population. a. need for achievementb. need for affiliationc. ability to tolerate high riskd. ability to make fast decisions

ANSWER: A, Knowledge, Moderate, p. 129

20. Personal attributes of successful entrepreneurs include all of the following except a __________.a. desire for independence b. need for achievement c. need for affiliation d. willingness to self-sacrifice


21. Key attributes needed to be a successful entrepreneur are __________.a. easy to learnb. only possessed by those who are born with themc. difficult to learn, but worth the effort to developd. none of the above

ANSWER: C, Knowledge, Easy, p. 131

22. What personal attribute did radio station entrepreneur Catherine Hughes show when she sold her rare pocket watch to help her business?a. desire for independenceb. self-sacrificec. self-confidenced. none of the above


121


23. Which of the following is not included in describing the entrepreneurial need for achievement?a. drive for excellenceb. desire for recognitionc. goal attainmentd. want immediate feedback


24. Personal attributes of the entrepreneur include all of the following except __________.a. self-sacrificeb. self-confidence c. independenced. creativity


25. Regarding the effects of family interactions on entrepreneurs, research suggests that entrepreneurs tend to have __________.a. many childrenb. high competition between family membersc. not been the first-born d. had self-employed parents

ANSWER: D, Knowledge, Difficult, p. 131

26. __________ brought out the entrepreneurial spirit of Adrian Lugo who founded LUGO Construction.a. Racismb. Povertyc. Criminal backgroundd. Lack of formal education


27. In the early days of Adrian Lugo’s construction career, he received the benefit of good __________.a. mentoringb. governmental support programsc. self-confidence levelsd. family support and encouragement


122


28. Daniel Driesenga’s strategy was to focus his Michigan-based engineering firm on __________.a. new products and servicesb. sales and marketing professionalismc. local needs of customersd. expanding the geographic scope


29. Mary Lloyd is a young woman who wants to own her own business. Part of the reason she believes that she would be successful is that she has always had a desire for excellence and succeeding in competitive situations. Mary has a __________.a. low self-esteemb. high need for achievement c. high need for powerd. low need for success

ANSWER: B, Application, Moderate, p. 129

30. A person’s desire either for excellence or to succeed in competitive situations is often referred to as a person’s _________.a. need for achievementb. superegoc. need for powerd. ego

ANSWER: A, Knowledge, Easy, p. 129

31. Research conducted by David McClelland and others indicates that a low percentage of the U.S. population is characterized by __________.a. self-sacrificeb. desire for independencec. need for achievementd. entrepreneurship


32. Entrepreneurs are consistently strong with respect to a need for __________.a. powerb. self-actualizationc. controld. achievement


123


33. Entrepreneurs with strong technical proficiency are aided by a ________ orientation.a. future b. bureaucraticc. desire to change societyd. short term, tactical

ANSWER: A, Application, Difficult, p. 132

34. Which of the following is false concerning the role of self-confidence in entrepreneurship?a. It has minimal affect on the entrepreneur.b. It enables the entrepreneur to be optimistic in representing the firm to employees and

customers alike.c. Because of the risks involved in running an entrepreneurial organization, having an

“upbeat” attitude is essential.d. All of the above are true statements.


35. Wayne Higgins has started his business and is putting in 13 hour days. When asked why he is working so hard, he replies that nothing worth having is free. This response suggests that Wayne has an attribute of ___________.a. a desire for independenceb. not wanting to work in large organizationsc. a need for power d. self-sacrifice


36. Carmen Anaya indicated on her entrepreneurial quotient questionnaire that her parents were first-generation U.S. citizens and that as a child she preferred to be alone. These factors would have a(n) __________ effect on her score. a. increaseb. reduction c. zerod. not applicable

ANSWER: C, Application, Difficult, p. 135

37. Fundamental to all managerial competencies is the __________.a. strategic action competencyb. teamwork competencyc. planning and administration competencyd. self-management competency


124


38. As a result of unanticipated hardships in the early phases of Driesenga & Associates business, the founder says today,a. “Never underestimate the power of the government to interfere in your business.”b. ”Most of our revenue comes from services we did not offer in the original business

plan.”c. ”Always treat your customers the way you would like to be treated.”d. “It’s not what you know but who you know.”


39. A study of CEOs who were winners of awards in the Ernst & Young LLP Entrepreneur of the Year Program revealed several leading strategic practices they have used to sustain rapid growth for their companies. Which of the following is not among those identified?a. Delivering products and services that are perceived as the highest quality to

expanding market segments.b. Generating new customers that expand revenue by about 30 percent annually.c. Formulating the strategic early in the life of the firm.d. Maintaining financial control of the firm.


40. Which of the following was a strategic action employed by Daniel Driesenga who founded Driesenga & Associates?a. undercutting the prices of his competitorsb. focusing on customer servicec. seeking investors through the stock marketsd. investing in state-of-the art computer technology


41. Administering a plan for a new business is extremely difficult. In the start-up phase, which of the following is not considered a primary concern?a. developing a five-year strategic planb. putting the plan in writingc. surviving when funds are scarced. attracting top-notch employees


42. A study of entrepreneurs who had a history of success in the market revealed that a majority of the top management was organized in teams, with 67 percent of the teams ranging in size from three to six managers. However, not all of these successful entrepreneurs used teamwork. What percent of the entrepreneurs acted alone in their top management role?a. less than 5 percentb. 10 percentc. 20 percentd. slightly less than 50 percent


125


43. Most successful entrepreneurs __________ put their business plans in writing. The time horizon is relatively __________. As the time frame grows even longer, the plans tend to become more __________.a. do; short; generalb. do; long; specificc. do not; short; specificd. do not; long; general


44. What is the relationship of the original business plan to long-term goal achievement?a. You cannot be successful without a detailed business plan.b. The business plan is a hindrance to creativity.c. Modify the plan when flexibility is needed.d. all of the above


45. Entrepreneurs seem to be __________.a. unwilling to spend the saving of othersb. easily boredc. concerned about the opinions of other peopled. all of the above


46. Which of the following questions would typically not be asked in a survey predicting if you have “the right stuff” to succeed as an entrepreneur?a. Did you enjoy participating in group activities in school?b. Were you a stubborn child?c. Are you willing to take risks?d. All of the above are typical questions.



Planning Essentials for Entrepreneurs47. An outline of how an enterprise expects to turn ideas into reality is often referred to as a

__________.a. strategy b. tacticc. business pland. disclosure statement


126


48. Potential investors for a new automated car wash facility want the owners to generate a step-by-step outline of how the owners will transform the idea of a car wash into a reality. In other words, the investors want a __________.a. statement of cash flowsb. sources and uses of funds statementc. balance sheetd. business plan

ANSWER: D, Application, Difficult, p. 136

49. All of the following are found in a business plan except __________.a. milestone schedule componentb. executive summaryc. financial component d. article of incorporation


50. A(n) __________ is one of the primary components of a business plan.a. article of incorporation b. executive summary c. down paymentd. none of the above


51. Business opportunities are often implemented in all of the following ways except __________.a. start-upb. purchasec. franchised. All of the above are ways of classifying business opportunities.

ANSWER: D, Knowledge, Easy, pp. 136–138

52. Which of the following is not a potential disadvantage to buying an existing business?a. mismanagement b. undisclosed problemsc. restrictive agreementsd. high costs


127


53. As the sole employee of Career Transition, John Nogalski will need to determine his expected revenue, initial investment, and anticipated competition. Nogalski is an entrepreneur who is considering his __________ strategy.a. financial b. start-upc. profit and lossd. affordable loss


54. According to the text, which of the following is not one of the questions a person should ask when making a decision whether to start or buy a new business?a. Can I run the company at first as a home-based business?b. Can I continue working for someone else and put in time on my own business after

hours?c. Is there a way that I can begin the enterprise in stages or with a limited investment?d. To what extent can I keep the creation of the new business a secret from my current

employer?


55. A business owner who has purchased the right to market a product, while also receiving training and operational assistance is involved in a __________.a. business incubator b. pyramid schemec. franchised. umbrella organization


56. All of the following use franchises to market their products except:a. McDonald’s.b. Domino’s Pizza.c. Jiffy Lube.d. All of the above use franchises to market their products.


57. When deciding what type of business to own, people should do all of the following except:a. examine their competencies.b. buy a franchise first before starting their own business.c. determine their initial investment.d. Anticipate expected revenue.


128


58. Johnny Wong has entered into a contract to open a new McDonald’s restaurant in his town because he feels that there is an opportunity to make a lot of money. Johnny will own the business, but will have to meet strict guidelines set forth by McDonalds in order to use their name and sell their products. Wong has opened a(n) ____________.a. lifestyle ventureb. franchisec. incubator organizationd. none of the above

ANSWER: B, Application, Easy, p. 138

59. Latonya Taylor is interested in starting her own Home Health Care business. All of the following would be excellent sources of information for her except: a. the Internet.b. personal contacts.c. publication: Venturing.d. All would be excellent sources.


60. Entrepreneurs often make a conscious determination of the level of resources they are willing to commit to a venture. This is known as __________.a. strategic resourcingb. the principle of affordable lossc. paralysis by analysisd. an informal business plan


61. Which of the following is not one of the issues to consider in buying an existing business?a. competition from the previous ownerb. goodwillc. initial investmentd. All of the above are issues.


62. According to the text, entrepreneurs have a tendency to __________ their income and __________ their costs.a. focus on; ignore b. hide; inflate c. overestimate; underestimated. ignore; lose control of


129


63. A new venture should identify anticipated costs of opening the business, and project, month by month, the expenses that reasonably can be expected for the first one to three years. This is usually done in the ___________.a. partnership agreementb. new-venture plan c. profit and loss statementd. prospectus


64. Entrepreneurs can seek funding from all of the following sources except:a. venture capitalists.b. financial institutions.c. family and friends.d. All of the following are good sources of funds.


65. A __________ is a private individual who invests directly in firms and receives an equity stake in return.a. venture capitalistsb. strategistc. business angeld. co-operative


66. Thurston Steinbock is a venture capitalist. When he provides funds to a company, he can expect to __________.a. wait a number of years for a return on his investmentb. receive federal loan guaranteesc. sell the business at a profitd. take an active role in management


67. Jerrod Walker is opening a new business and is currently calculating the expenses that can be expected for each month during the next two years. Walker is developing the __________.a. balance sheet b. stockholder’s reportc. cash flow statement d. new-venture plan


130


68. Several considerations are involved in choosing between domestic and global start-ups. Which of the following is not a consideration?a. Are the best human resources dispersed among various countries?b. Would foreign financing be more suitable?c. What would make me the most money in the short run so that I can expand in the

long run?d. Do target customers require a venture to be international?

ANSWER: C, Knowledge, Difficult, pp. 140–141

69. A popular global start-up strategy that now accounts for 31% of foreign sales by American companies is __________. a. e-commerceb. exportingc. franchisingd. countertrade


70. Karen Langley worked in a family business that was characterized by back-stabbing and accusations of stealing that ultimately caused a __________.a. family feudb. cross firec. resignationd. all of the above


71. The top recommendation for increasing the likelihood of a successful family business is to __________.a. draw up a legal agreement on disposing of the businessb. select a board of directors made up of family members to protect family interestsc. settle conflicts as they come upd. decide who is responsible for what activity

ANSWER: C, Knowledge, Moderate, pp. 141–142

72. Hiring criteria policies established by a family business for employing other family members should be most concerned with the __________ of the person.a. conflict potentialb. competencec. commitmentd. emotional maturity


131


73. The development of a legal agreement to govern a family business should address all of the following issues except __________.a. specific job descriptions of family membersb. policies for determining salaries, bonuses, and dividendsc. creating a succession pland. contingencies for disposing of the business


74. Decisions in a family business must strike a balance between two categories of criteria. These two categories are referred to as __________ criteria and __________ criteria.a. emotional; realistic b. formulation; implementationc. planning; equityd. economic; family obligation


75. A board of directors is particularly useful for the family business in its ability to __________.a. help secure outside sources of moneyb. furnish unbiased advicec. force the resignation of “problem” family membersd. audit financial statements in a way that is publicly acceptable


76. As a family business owner, an outside board of directors can help you do all of the following except __________.a. evaluate your relationship with your bankerb. select the best possible job applicantsc. strategic planning on a long-term basisd. make specific recommendations on large investments


77. Dennis Gertmenian, who founded Ready Pac Produce, was so busy with the daily production of his operations that he neglected __________. a. other key family membersb. environmental concernsc. long-term planningd. the outside world

ANSWER: C, Knowledge, Easy, pp. 142 – 143

132


78. Ready Pac’s board of directors was able to advise the business owner that his plan to build a new processing plant in Soledad, CA should be __________. a. pursued before interest rates changed b. thrown into the trash canc. a buy, rather than build strategyd. none of the above

ANSWER: C, Knowledge, Difficult, p. 142–143


The Role of Intrapreneurs

79. Someone in an organization who turns new ideas into profitable realities is known as a(n) __________.a. research and development specialistb. entrapreneurc. intrapreneurd. none of the above


80. To be a successful intrapreneur, a person must possess an attribute of __________.a. financial savvy b. diplomacyc. a focus on tactical issues d. eccentricity


81. All of the following are attributes of successful intrapreneurs except:a. having a dream.b. ability to lead teams.c. well-developed strategic action competency.d. All of the above are attributes of intrapreneurs.


82. Which of the following is not an example of intrapreneurship?a. Art Fry’s invention of Post-it Notes at 3M.b. Janice Bryant Howroyd’s ACT*1 Personnel Services.c. Lou Dobb’s creation of CNNFN.d. Philip Estridge’s development of the PC at IBM.

ANSWER: B, Application, Difficult, p. 143

133


83. For intrapreneurs to be successful, they must build a team that supports the new idea. One of the keys to success in team building is to __________.a. use grand metaphors b. encourage competitive conflictc. rely on monetary incentives d. avoid win–lose conflicts


84. Sabrina Wright works for Zoom Industries. Wright’s manager likes the work that Wright does, believes she has vision, an ability to build and lead teams, and persistence. Wright would probably make a good __________.a. intrapreneur b. charismatic leaderc. district manager d. salesperson

ANSWER: A, Application, Easy, p. 143–144

85. When fostering intrapreneurial activity, there should be a(n) __________.a. commitment from the firm’s senior managementb. threat of punishment for wasting company resourcesc. extensive pool of cash to support operations in case new ideas faild. matrix design


86. Top managers in firms fostering intrapreneurship need to __________.a. provide incentives and rewards for risk takingb. provide a flexible organizational designc. show commitment for intrapreneurial activitiesd. all of the above


87. Islands of intrapreneurial activity within an organization are often referred to as __________.a. skunkworks b. technodesc. playzonesd. chopshops


134


88. Managers who are trying to stimulate intrapreneurial activity in organizations must meet all of the following challenges except __________.a. allowing intrapreneurial activities to flourish as a part of the organization’s normal

day-to-day operationsb. generating ideas that result in products that the organization can marketc. tying rewards to performance of the actual intrapreneurial unitsd. All of the challenges above must be met by managers.


89. Russell Bradley is the executive vice president for a large electronics firm. Over time, Bradley has come to realize that his firm’s push to create new products has led to the creation of small islands of intrapreneurial activity. These islands are also known as __________.a. brainstorming teams b. magic shopsc. skunkworks d. serial entrepreneurs

ANSWER: C, Application, Easy, p. 144

Essay Questions


1. Explain what entrepreneurs do and describe how the environment supports their activities.

Entrepreneurs are people who create new business activity in the economy. If they do so by starting a new company, entrepreneurs are also small-business owners. Other entrepreneurs create new business activity within large organizations. Often the reasons that entrepreneurs give for starting their own companies are to be their own bosses and have more control over their lives. When they start their companies, the goal of many entrepreneurs is the business to grow slowly. When their companies grow rapidly for a sustained period of time, however, they are considered to be more successful. Rapid technological change, low interest rates, and high immigration rates all stimulate entrepreneurial activity. Local conditions that meet the needs of entrepreneurs—such as a good labor force and easy networking—also can stimulate entrepreneurial activity.

Moderate, pp. 126–129

135



2. Describe the personal characteristics that contribute to entrepreneurs’ success.

Personal characteristics of entrepreneurs include the need for achievement, desire for independence, self-confidence, and willingness to make personal sacrifices. These characteristics often are developed early in life and seem to be shaped greatly by the family environment. Having a parent who was an entrepreneur and being involved in entrepreneurial activities increase the likelihood that a child will become an entrepreneur. Entrepreneurs usually are technically proficient in areas related to their businesses. Managerial competencies are as important for entrepreneurs as they are for other managers. Strategic action, planning and administration, teamwork, and communication competencies seem to be especially important for entrepreneurs.

Difficult, pp. 129–131

3. No one can predict whether an entrepreneur will be successful in business, but there are characteristics that entrepreneurs have in common. Northwestern Mutual Life Insurance Company’s quiz highlighted in the Self-Management Competency “Your Entrepreneurial Quotient,” identifies several characteristic of entrepreneurs. What are five of these characteristics?

1. Significant numbers of entrepreneurs are children of first-generation U.S. citizens2. Successful entrepreneurs were not, as a rule, top achievers in school3. Entrepreneurs were not enthusiastic about participating in group activities in school4. As youngsters, entrepreneurs often preferred to be alone5. Entrepreneurs started a business enterprise during childhood or ran for elected office6. Stubbornness as a child seems to translate into determination to do things one’s own

way7. Willingness to take risks8. Entrepreneurs pursue different paths, despite the opinion of others 9. A motivation for starting their own enterprise is changing the daily routine10. They are willing to work “as long as it takes” with little or no sleep to finish a job11. They complete a project successfully and immediately start another12. Willingness to use their savings to start a business13. Willingness to borrow from others14. Immediately starting another business, even if the first business failed15. Discipline to put long-term and short-term goals in writing16. Ability to handle cash flow17. Entrepreneurial personalities are easily bored18. Entrepreneurs are optimistic19. Entrepreneurs pursue different paths, despite the opinion of others

Difficult, p. 135

136


4. Describe how Adrian Lugo used his self-management competency to become successful in the construction industry.

Adrian Lugo, a Vietnam veteran, encountered racism while being a college student and then later in his teaching profession. One of his instructors even implied that as a Hispanic and Native American, he was genetically unsuited to become a teacher. Lugo graduated cum laude. He loved teaching but experienced almost constant attacks on his character in ways that were racially motivated. Summer work in construction paid better and gave him the idea to become his own boss.

Lugo vowed that he would always treat his own employees with respect, as well as insisting on good treatment for himself and his customers. The quality of his work was high and he effectively addressed issues of meeting deadlines in order to build a successful business that has earned a Navy contract.


5. What are four of the personal attributes of an entrepreneur?

1. A need for achievement2. Desire for independence3. Capacity for self-sacrifice4. Self-confident5. Technically proficient in areas related to their business

Easy, pp. 129–132

6. Explain how entrepreneurs develop and recognize how managerial competencies contribute to their success.

Personal attributes that characterize entrepreneurs include the need for achievement, desire for independence, self-confidence, and willingness to make personal sacrifices. These attributes often are developed early in life and seem to be shaped greatly by the family environment. Having a parent who was an entrepreneur and being involved in entrepreneurial activities increase the likelihood that a child will become an entrepreneur. Among the attributes that characterize successful entrepreneurs are need for achievement, a desire for independence, self-confidence, and a capacity for self-sacrifice. Entrepreneurs usually are technically proficient in areas related to their businesses.

Managerial competencies are as important for entrepreneurs as they are for other managers. Strategic action, planning and administration, teamwork, and communication competencies seem to be especially important for entrepreneurs. Although some entrepreneurs seem to have been born with these attributes, many develop the attributes over a period of time. The development of new ways of thinking can spur motivation to succeed.


137



7. Give three of the steps that families should follow when starting a family business.

a. Settle conflicts as they come upb. Decide who is responsible for whatc. Decide whether the business will employ other family members and, if so, what hiring criteria will be usedd. Establish a board of advisers composed of outsiders, if possiblee. Develop a legal agreement to deal with succession, divestiture, and compensation


8. Describe three of the factors that favor a global start-up.

a. Human resources that are dispersed among various countriesb. Foreign sources of financingc. Customers located in several countriesd. Competitors from other countries directly affecting your marketse. Necessity of selling worldwide in order to generate sufficient revenuef. Local products that must be changed significantly in order to go into foreign markets



9. What are the organizational characteristics that encourage intrapreneurship?

Intrapreneurship involves turning ideas into marketable products and services. Fostering intrapreneurship and successfully marketing new ventures require a commitment by management, flexible organizational structures, competent and talented intrapreneurs, incentives and rewards for risk taking, and appropriate control systems. To encourage innovation and prevent formal rules and procedures from interfering with the development of new ideas, large organizations often set up skunkworks teams. Their activities are less formalized, and they usually have unique subcultures.


10. Top management can foster an intrapreneurial culture by eliminating obstacles and providing incentives for intrapreneurship. Organizations that redirect themselves through innovation have certain characteristics. Name four of the six characteristics companies that foster intrapreneurial activity exhibit.

a. Commitment from senior managementb. Flexible organization designc. Autonomy of the venture teamd. Competent and talented people who exhibit entrepreneurial behaviors and attitudese. Incentives and rewards for risk takingf. An appropriately designed control system

138


Moderate, p. 144

139

tb05

Documents

female entrepreneurs

american entrepreneurs

potential entrepreneurs

successful entrepreneurs

growth of business

difficult goals

successful family businesses

rates of entrepreneurship