Chapter5

Question 2

Entrepreneurship

Answer 2

Strategic thinking and risk taking behaviour that results in new opportunities

Question 3

Entrepreneur

Answer 3

Risk taking individual who takes action to pursue opportunities others fail to recognize or view as problems or threats

Question 4

Characteristics of Entrepreneurs

Answer 4

• Internal Locus of Control - High Energy Level - High need for achievement - Tolerance for Ambiguity - Self Confidence - Passion and Action Oriented - Self relience and desier for independence - Flexibility

Question 5

Necessity-Based Entrepreneurship

Answer 5

Takes place because other employment options don’t exist

Question 6

Small Business

Answer 6

Has fewer than 100 employees, in independently owned and operated, and does not dominate its industry.

Question 7

Franchise

Answer 7

A form of business where one business owner sells to another the right to operate the same business in another location

Question 8

Family Business

Answer 8

Owned and controled by members of a family

Question 9

Family Business Feud

Answer 9

Family members have major desagreements over how the business should be run

Question 10

Succession Problem

Answer 10

Issue of who will run the Business when the current head leaves

Question 11

Succession Plan

Answer 11

Describes how the leadership transition and related financial matters will be handled

Question 12

Why Many Small Business Fail

Answer 12

• Lack of experience - Lack of Expertise - Lack of Stratergy and Stratergic leadership - Poor financial control - Growing too fast - Insufficient commitment - Ethical Failure

Question 13

First Mover Advantage

Answer 13

Comes from being first to exploit a niche or enter a market

Question 14

3 Stage of Entrepreneurial Firms

Answer 14

• Birth Stage - Breakthrough Stage - Maturity Stage

Question 15

Challange of Birth Stage

Answer 15

• Establishing the firm - Getting Customers - Finding the money

Question 16

Challanges of Breakthrough Stage

Answer 16

• Working on Finances - Becoming Profitable - Growing

Question 17

Challanges of the Maturity Stage

Answer 17

• Refining the strategy - Continuing Growth - Managing for success

Question 18

Business Plan

Answer 18

Discribes the direction for a new business and the financing needed to operate it

Question 19

Sole Proprietorship

Answer 19

A form of business where an individual pursues a profit

Question 20

Partnership

Answer 20

A form of business where two or more people agree to contribute resources to start and operate a business together

Question 21

Corporation

Answer 21

A lagal entity that exists separately from its owner

Question 22

Limited Liability Corporation

Answer 22

A hybrid business form combining adventages of the sole proprietorship, partnership, and corporation

Question 23

Debt Financing

Answer 23

Involves borrowing money that must be repaid over time, with interest

Question 24

Equity Financing

Answer 24

Involves exchanging ownership shares for outside investment monies

Question 25

Venture Capitalists

Answer 25

Make large investment in new ventures in return for an equity stake in the business

Question 26

Initial Public Offering (IPO)

Answer 26

Initial selling of shares of stock to the public at large

Question 27

Angel Investor

Answer 27

A wealthy individual willing to invest in a new venture in return for equity in a new venture