Final Exam

Question 1

an enterprise subject to taxes on its reported profits; tax on corporate profits as well as any corporate distribution to owners

Answer 1

regular taxable corporation

Question 2

firms where all profits flow to the owners free of any prior taxation

Answer 2

flow-through entities

Question 3

a legal entity separate from its owners; a body of owners granted a charter to act as a separate entity distinct from its owners

Answer 3

corporation

Question 4

4 main types of flow through entities

Answer 4

sole proprietorship, partnership, s corporation, and LLC

Question 5

a firm owned by only one person and operated for his or her profit

Answer 5

sole proprietorship

Question 6

business association of two or more people or firms who agree to cooperate with one another to achieve mutually compatible goals that would be difficult for each to accomplish alone

Answer 6

partnership (general or limited)

Question 7

a firm with fewer than 50 employees operating as a sole proprietorship, a partnership, or a corporation owned by a few people

Answer 7

small business

Question 8

seeks to exploit a limited opportunity or market to provide the entrepreneurs with independence and a slow-growth build-up of the business

Answer 8

niche business

Question 9

a business corporation that aims to build an important new business and requires a significant initial investment to startup

Answer 9

high-growth business

Question 10

a business based upon a radical innovation that seeks to commercialize it to build a special kind of high growth business

Answer 10

radical innovation

Question 11

a corporation or a member association initiated to serve a social or charitable purpose

Answer 11

nonprofit organization

Question 12

a new venture started by an existing corporation for the purpose of initiating and building an important new business unit or organization, solely owned subsidiary, or . spinoff as a new public company

Answer 12

corporate new venture (CNV)

Question 13

a new venture that i snot owned or controlled by an established corporation

Answer 13

independent venture

Question 14

a person or team that acts to form a new venture in response to an opportunity to deliver social benefits while satisfying environmental and economic values

Answer 14

social entrepreneur

Question 15

the entrepreneurial process within the confines of an established corporation

Answer 15

intrapreneurship

Question 16

the act of introducing products that compete with a firm’s already existing product line

Answer 16

cannibalization

Question 17

an organization that is first established within an existing company and then sent off on its own

Answer 17

spin-off unit

Question 18

an s corporation is taxed as

Answer 18

a flow through entity

Question 19

a corporate new venture usually has _____ revenue growth

Answer 19

above average

Question 20

the point of every non profit is to produce

Answer 20

social wealth

Question 21

intrapreneurs have access to what

Answer 21

a team of entrepreneurial coworkers
the resources of an existing corporation
opportunities within the company

Question 22

common fears that act as barriers for entry for corporate entrepreneurs

Answer 22

fewer promotion opportunities within the existing corporation; failure of the corporate new venture; loss of status

Question 23

three things to establish conditions for corporate new ventures

Answer 23

increase the sources for innovation; establish a process for collecting and evaluation ideas; do not let traditional executives control the budget

Question 24

the valuable intangible property owned by persons or companies

Answer 24

intellectual property

Question 25

an intellectual asset protected by confidentiality, non disclosure and assignment of inventions agreements, as well as physical barriers such as safes and limited access

Answer 25

trade secret

Question 26

a grant by the US government to an inventor giving exclusive rights to an invention or process for 20 years

Answer 26

patent

Question 27

rights of exclusive use issued for the protection of new, useful, nonobvious, and adequately specified processes, machines, and manufacturing processes for a period of 20 years

Answer 27

utility patent

Question 28

grants of exclusive right of use for new, original, ornamental, and non obvious designs for articles of manufacture for a period of 14 years

Answer 28

design patent | ex. apple rounded edges of rectangle screen of iPad

Question 29

a grant of exclusive right of use for a term of 20 years for certain new varieties of plants that have been asexually reproduced

Answer 29

plant patent

Question 30

a type of utility patent that involves the classification of a process

Answer 30

business method patent | Amazon one click order process

Question 31

patent pending

Answer 31

provisional patent application (must file for the regular one within 12 months)

Question 32

an distinctive word, name, symbol, slogan, shape, sound, or logo a firm uses to designate its product

Answer 32

trademark (indefinite length)

Question 33

an exclusive right granted by the federal government to the owner to publish and sell literary, musical, and other artistic materials

Answer 33

copyright (life of the creator plus 70 years)

Question 34

occurs when a firm (the licensor) grants the right to produce its product, use its production processes, or use its brand name or trademark to another firm (the licensee); licensor collects a royalty fee

Answer 34

licensing

Question 35

a grant to another firm to make use of the rights of the licensor's intellectual property

Answer 35

license

Question 36

how can a trade secret be taken/used?

Answer 36

reverse engineering

Question 37

a license is defined in a

Answer 37

contract

Question 38

when one firm purchases another, the acquired company gives up its independence and the surviving firm assumes all assets and liabilities

Answer 38

acquisition

Question 39

three steps for acquiring a company

Answer 39

1. target identification and screening 2. bidding strategy 3. integration or transition to the acquirer

Question 40

the increased effectiveness and achievement produced as a result of the combined action of two or more firms

Answer 40

synergy

Question 41

3 valuation methods

Answer 41

book value, price-to-sales ratio, price-to-earnings ratio

Question 42

the net worth (equity) of the firm, calculated by total assets minus intangible assets (patents, goodwill), and liabilities

Answer 42

book value

Question 43

the combining of two companies (tend to involve much higher degree of cooperation and integration)

Answer 43

merger

Question 44

an industry characterized by just a few seller firms

Answer 44

oligopoly

Question 45

a merger between two firms that make and sell similar products in a similar market

Answer 45

horizontal merger

Question 46

the merger of two firms at different places on the value chain

Answer 46

vertical merger

Question 47

5 different types of mergers and acquisitions

Answer 47

``` overcapacity reduction geographic extension (rollup) product or market extension technology acquisition industry convergence ```

Question 48

4 roles of the integration manager

Answer 48

1. inject speed into the process 2. create a new structure 3. make social connections 4. build success

Question 49

common motivation for merger and acquisitions

Answer 49

to enter new markets

Question 50

the integration of markets, nation states, and technologies enabling people and companies to offer and sell their products in any country in the world

Answer 50

globalization

Question 51

a growth strategy focusing all efforts locally since that is the venture's pathway to a competitive advantage

Answer 51

local or regional strategy

Question 52

a growth strategy that calls for a presence in more than one nation as resources permit (separate product and marketing strategy)

Answer 52

multidomestic strategy

Question 53

a growth strategy resting on a flow of product offerings created in any one of the countries of operation and transferred between countries

Answer 53

transnational strategy

Question 54

a growth strategy that aims to create value by transferring products and capabilities from the home market to other nations using export or licensing arrangements

Answer 54

international strategy

Question 55

a growth strategy that emphasizes worldwide creation of new products, sales, and marketing

Answer 55

global strategy

Question 56

the four globalization strategies

Answer 56

multidomestic, transnational, international, and global

Question 57

5 forms of entry into international markets

Answer 57

exporting, licensing, franchising, joint venture, and wholly owned subsidiary

Question 58

3 components of cultural intelligence

Answer 58

cognitive, physical, and emotional

Question 59

metanational company

Answer 59

a company that possesses 3 core capabilities 1. being the first to identify and capture new knowledge emerging all over the world 2. mobilizing this globally scattered knowledge to out-innovate competitors 3. turning this innovation into value by producing, marketing, and delivering efficiently on a global scale

Question 60

the difference between a merger and acquisition is the degree of

Answer 60

control

Question 61

the amount of funds available to support a firm's normal operations such as unexpected or out-of-the-ordinary, one-time-only expenses; current assets minus current liabilities

Answer 61

working capital

Question 62

5 factors that lead to different perceptions of investors and entrepreneurs

Answer 62

1. uncertainty of projected outcomes 2. asymmetrical information 3. assigning a value to intangible intellectual property 4. dynamics of the industry and the financial marketplace 5. entrepreneur's wealth is concentrated in venture while investors have diversified portfolios

Question 63

investors make capital investments in opportunities for

Answer 63

future cash returns

Question 64

the right to purchase an asset at some future date and at a predetermined price

Answer 64

option

Question 65

the right to invest in (or purchase) a real asset (such as the start up firm or shares) at a future date

Answer 65

real option

Question 66

the present value of the future cash flow of a venture discounted at an appropriate rate

Answer 66

net present value NPV

Question 67

the first funds used to launch a new firm

Answer 67

seed capital

Question 68

four stages of growth

Answer 68

founding stage, seed stage, growth stage, harvest stage

Question 69

the investment by a person in ownership through purchase of the stock of the firm (stockholders have a claim on assets and earnings and it represents ownership)

Answer 69

equity capital

Question 70

money that a business has borrowed and must repay in a specified time with interest (no ownership)

Answer 70

debt capital

Question 71

wealthy individuals, usually experience entrepreneurs, who invest in business startups in exchange for equity in the new venture

Answer 71

angels

Question 72

professional managers of investment funds

Answer 72

venture capitalists

Question 73

3 sources of equity capital

Answer 73

angels (individuals), VC firms, and corporations

Question 74

launching a startup with modest funds from the entrepreneurial team, friends, and family

Answer 74

bootstrap financing

Question 75

the joining together of a collection of individuals-the "crowd"- each of whom contributes a small amount to help fund a business

Answer 75

crowdfunding

Question 76

a type of bond that the investor can convert to stock in the new venture or cash of equal value at an agreed upon price

Answer 76

convertible note

Question 77

a type of financing that is invested in new and emerging ventures . by a professional investment company called a venture capital firm

Answer 77

venture capital

Question 78

four investment stages

Answer 78

1. seed or startup stage 2. development stage (series A) 3. growth stage (series B or C) 4. competitive or maturity stage (IPO)

Question 79

the success of crowdfunding depends on

Answer 79

the entrepreneur's social network and the quality of product

Question 80

an initiative by a corporation to invest in either young firms outside the corporation or units formerly part of the corporation

Answer 80

corporate venture capital

Question 81

the methodology by which an investor assigns monetary value to a new venture

Answer 81

valuation process

Question 82

the rate at which future earnings or cash flows is discounted because of the time value of money

Answer 82

discount rate

Question 83

uses the projected sales, profit, and cash flow in a target year (N) and the projected earning growth rate (g) for 5 years after year N to calculate the value of the firm

Answer 83

new venture valuation rule

Question 84

the ration of the price of a stock to the company's earnings

Answer 84

PE ratio

Question 85

the valuation accorded an enterprise before investment by VCs and other investors

Answer 85

pre-money value (PREMV)

Question 86

the valuation accorded an enterprise after investment by VCs and other investors

Answer 86

post-money value (POSMV)

Question 87

cash in minus cash out on a monthly basis

Answer 87

burn rate

Question 88

3 reasons to issue an IPO

Answer 88

raise new capital, liquidity, image or brand

Question 89

gathering and verifying facts and data provided in a business plan before making a commitment to the terms of an investment deal

Answer 89

due diligence

Question 90

a decision-making process among interdependent parties who do not share identical preferences

Answer 90

negotiation

Question 91

a summary of the principal conditions for a proposed investment by a VC firm in a company

Answer 91

term sheet

Question 92

a long term option to acquire additional common shares, usually at a nominal price

Answer 92

warrant

Question 93

stock with preferences or claims on dividends and assets before common stock owners

Answer 93

preferred stock

Question 94

10/20/30 rule of pitches

Answer 94

10 slides, 20 minutes, minimum of 30 pt font text