Entrepreneurship Robert Hisrich 11th Edition- Test Bank

 

To Purchase this Complete Test Bank with Answers Click the link Below

 

https://tbzuiqe.com/product/entrepreneurship-robert-hisrich-11th-edition-test-bank/

 

If face any problem or Further information contact us At tbzuiqe@gmail.com

 

 

 

Sample Test

Entrepreneurship, 11e (Hisrich)

Chapter 3   Generating and Exploiting New Entries

 

1) An entrepreneurial strategy has three key stages—the generation of a new entry opportunity, the exploitation of a new entry opportunity, and a feedback loop back to the first stage.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

2) A highly skilled workforce represents an important resource, but the impact of this resource on performance is reduced when it is combined with an organizational culture that enhances communication, teamwork, and innovativeness.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

3) A new entry can be either offering a new product to a new market or creating a new organization.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

4) Newness of a new entry is always an advantage.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

 

 

5) An entrepreneurial strategy is the set of decisions, actions, and reactions that protect the firm from new entrants.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

6) The long-run performance of a firm is dependent upon the ability to generate and exploit numerous new entries.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

7) In order to be the basis for a firm’s superior performance, a bundle of resources must be valuable, rare, and imitable.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

8) The purpose of a franchise is to protect the owner of a unique technology from people imitating that technology.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

9) Knowledge is the basis of the entrepreneurial resource.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

 

 

10) Experience is idiosyncratic—unique to the life of the individual.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

11) The knowledge needed to generate innovation cannot be easily learned from a textbook.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

12) The entrepreneur’s market knowledge is deeper than the knowledge that could be gained through market research.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

13) Technological knowledge refers to the entrepreneur’s possession of information, technology, know-how, and skills that provide insight into a market and its customers.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

14) Market research, such as surveys, has limited effectiveness because it is often difficult for customers to articulate the underlying problems they have with a product or service.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

 

 

15) The period of time when the environment is favorable for entrepreneurs to exploit a particular new entry is called the window of opportunity.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

16) The longer the entrepreneur takes to research a new entry, the less accurate customer demand estimates are.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

17) When the window of opportunity is open, the environment is unfavorable for entrepreneurs to exploit a new product or enter a new market with an existing product.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

18) An error of omission occurs from the decision not to act of a new entry opportunity when in hindsight they should have.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

19) An error of commission occurs from the decision not to act on a new entry opportunity.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

 

 

20) The assessment of a new entry attractiveness is less about whether this opportunity “really” exists or not and more about whether the entrepreneur believes he or she can make it work.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

21) The decision to exploit or not to exploit a new entry opportunity depends on whether the entrepreneur has sufficient information, and on whether the window of opportunity is still open.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

22) First movers can monitor changes in the market that might be difficult or impossible to detect for those firms not participating in the market.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

23) If there is a poor fit between its resources and the external environment, then the firm will not enjoy superior performance.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

24) Key success factors are the requirements that any firm must meet to successfully compete in a particular industry.

 

Answer:TRUE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

25) Emerging industries are industries that have been around for years but are just starting to experience explosive growth.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

26) Environmental changes are highly unlikely in emerging industries.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

27) By overestimating demand, the entrepreneur will suffer the costs of undercapacity.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

28) Entrepreneurs that delay entry have the advantage of more information about market demand.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

29) Technological uncertainty is eliminated by a superior technology.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

30) Adaptations necessary to meet changes in market demand are difficult because an organization resists change.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

31) Customers always embrace change in products and services.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

32) To overcome customer uncertainty, the venture should educate customer through demonstration and documentation on how to use the product.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

33) The late mover is able to operate in the industry for a grace period under conditions of limited competition.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

34) Building customers’ switching costs decreases barriers to entry for other firms.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

35) Competition within an industry always has a negative effect on industry growth.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

36) A narrow scope strategy offers a small product range to a small number of customer groups.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

37) Using a broad scope strategy helps to reduce the risk of market uncertainty.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

38) A narrow scope strategy is better than a broad scope strategy in an environment high in uncertainty.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

39) If a company has a superior product, customers will always be willing to pay a higher price for higher value.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

40) A narrow scope strategy reduces the risks associated with competition.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

41) Imitation of other products increases the risk of downside loss associated with new entry.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

42) Franchising is an example of a new entry strategy that increases the risk of downside loss for the franchisees.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

43) A “me-too” strategy consists of copying products that already exist and attempting to build an advantage through minor variations.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

44) The three major risk reduction strategies discussed in the text are narrow scope, broad scope and imitation.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

45) Lack of informal communication systems is one of the assets of newness.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

46) A new entry includes all of the following except:

1.   A) offering a new product to a new market

2.   B) offering an established product to an new market

3.   C) creating a new brand name for your company

4.   D) creating a new organization

 

Answer:  C

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

47) The set of decisions, actions, and reactions that first generate, and then exploit over time, a new entry is:

1.   A) entrepreneurial financing.

2.   B) entrepreneurial strategy.

3.   C) bootstrapping.

4.   D) informal organization.

 

Answer:  B

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

48) Which of the following is not one of the three key stages of an entrepreneurial strategy?

1.   A) The generation of a new entry opportunity

2.   B) Risk reduction strategies

3.   C) A feedback loop

4.   D) The exploitation of a new entry opportunity

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

 

 

49) The basic building blocks to a firm, or the inputs into the production process, are:

1.   A) competition.

2.   B) strategy.

3.   C) liabilities.

4.   D) resources.

 

Answer:  D

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

50) To be the basis of a firm’s superior performance over competitors for an extended period of time, valuable and rare resources need to be:

1.   A) inimitable.

2.   B) fully utilized.

3.   C) patented.

4.   D) shared.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

51) ________ are used to protect the owner of the technology from people imitating the technology.

1.   A) Franchises

2.   B) Switching costs

3.   C) Patents

4.   D) Distributors

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

 

 

52) Which of the following statements is true?

1.   A) Knowledge is a valuable entrepreneurial resource that is gained through formal education.

2.   B) Knowledge is easily communicated and common.

3.   C) Knowledge based on experience is unlikely to be learned in a classroom.

4.   D) Research, more than knowledge, leads to the generation of new entries in markets and technologies.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

53) ________ knowledge refers to the entrepreneur’s possession of information, technology, know-how, and skills that provide insight into the industry and customers.

1.   A) Technological

2.   B) Resource

3.   C) Opportunity

4.   D) Market

 

Answer:  D

Difficulty: 1 Easy

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

54) Which is the best way to gain knowledge about a potential new entry?

1.   A) Marketing research

2.   B) Internet research

3.   C) Entrepreneur’s market experience and knowledge

4.   D) Surveys

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

 

 

55) Technological knowledge:

1.   A) is gained through market research.

2.   B) can lead to a new product that is the basis for a new entry.

3.   C) does not help unless the market applicability is obvious.

4.   D) does not help if the market is limited.

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

56) When conducting research on a new entry:

1.   A) the more information the entrepreneur has, the more difficult it is to focus on the consumer.

2.   B) the entrepreneur must rely upon surveys more that market knowledge.

3.   C) extensive research is expensive in terms of time and money.

4.   D) lesser prior knowledge is advantageous since it minimizes the risk of entrepreneurial bias.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

57) The window of opportunity is part of:

1.   A) assessing the attractiveness of a new entry opportunity.

2.   B) creating a resource bundle.

3.   C) choosing an entry strategy.

4.   D) choosing a risk reduction strategy.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

58) The period of time when the environment is favorable for entrepreneurs to exploit a particular new entry is the:

1.   A) market research phase.

2.   B) window of opportunity.

3.   C) technology window.

4.   D) narrow-scope strategy.

 

Answer:  B

Difficulty: 1 Easy

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

59) The ________ is less about whether an opportunity really exists and more about whether the entrepreneur believes they can make it work.

1.   A) error of commission

2.   B) window of opportunity

3.   C) error of omission

4.   D) assessment of a new entry’s attractiveness

 

Answer:  D

Difficulty: 1 Easy

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

60) An error of omission occurs when an entrepreneur:

1.   A) enters a market but overestimates the customer demand.

2.   B) develops a product for a market that is too narrow.

3.   C) decides not to enter a market that is, in fact, desirable.

4.   D) fails to understand the limitations of a market.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

61) Regarding entry into a new market, which of the following is true?

1.   A) First movers gain expertise through participation.

2.   B) First movers are not able to detect changes in the market.

3.   C) First movers suffer a cost disadvantage.

4.   D) First movers face more competitive rivalry.

 

Answer:  A

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

62) First movers:

1.   A) are not able to gain from moving down the experience curve.

2.   B) are better positioned to satisfy customers.

3.   C) face more competition than late movers.

4.   D) fail to secure important channels.

 

Answer:  B

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

63) Which of the following is not a reason that first movers are better positioned to satisfy their customers?

1.   A) They have a chance to select and secure the most attractive segments of the market

2.   B) They have the chance to position themselves at the center of the market

3.   C) They have less uncertainty over the nature of the market

4.   D) They have a chance to establish their product as the industry standard

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

64) A disadvantage of being a first mover is:

1.   A) environmental instability.

2.   B) cost disadvantages.

3.   C) long lead time to gain knowledge.

4.   D) a limited market.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

65) If there is a good fit between the venture’s bundle of resources and the external environment:

1.   A) the firm will be rewarded with superior performance.

2.   B) the entrepreneur will be unable to compete in the market segment.

3.   C) environmental variables will be irrelevant.

4.   D) demand uncertainty will be irrelevant.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

66) In emerging industries:

1.   A) environmental factors do not affect customer demand.

2.   B) entrepreneurs confront demand certainty.

3.   C) environmental changes are highly likely.

4.   D) it is easier to respond effectively to sudden changes.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

67) First movers face:

1.   A) market rigidities.

2.   B) high entry barriers.

3.   C) cost disadvantages.

4.   D) demand uncertainty.

 

Answer:  D

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

68) Later movers do not face:

1.   A) entrenched competitors.

2.   B) high growth markets.

3.   C) lower market uncertainty.

4.   D) reduced uncertainty over technologies.

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

69) By delaying entry, late movers:

1.   A) can learn from the actions of first movers without incurring the same costs.

2.   B) have less information about market demand.

3.   C) secure the window of opportunity.

4.   D) can avoid high entry barriers.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

70) Technological uncertainty:

1.   A) is a result of uncertainty about customer demand.

2.   B) occurs because an alternative technology could be introduced by competitors.

3.   C) only occurs in emerging markets.

4.   D) can be avoided by early entrants with superior technology.

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

71) Changes needed to adapt to environmental changes:

1.   A) are easier in established organizations because of inertia.

2.   B) can be avoided by late entry.

3.   C) are more difficult because of the tendency to escalate commitment.

4.   D) don’t affect smaller organizations.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

72) The entrepreneurial attributes of persistence and determination, which are so beneficial when the new venture is on the “right course,”

1.   A) can make the entrepreneur more suitable to work in volatile markets.

2.   B) can hasten the process of adapting to sudden changes.

3.   C) can aid the entrepreneur in recognizing, and implementing changes.

4.   D) can inhibit the ability of the entrepreneur to detect, and implement, change.

 

Answer:  D

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

73) By entering a market later,

1.   A) customer uncertainties have already been substantially reduced.

2.   B) the venture can build a reputation as a “founder.”

3.   C) the company can erect barriers to entry and imitation.

4.   D) the player gets to operate only for a grace period.

 

Answer: A

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

74) Customer uncertainty can take all of the following forms except:

1.   A) not understanding how to use the product

2.   B) not knowing whether the product will perform as expected

3.   C) not knowing where to buy the product

4.   D) being uncertainty adverse in general and resistant to change

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

75) By being first to market a product, the venture:

1.   A) tends to lose customer loyalties to late entrants.

2.   B) loses out to switching costs.

3.   C) secures access to important sources of supply.

4.   D) can sell its products and services at a higher price.

 

Answer:  C

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

76) The costs that must be borne by customers if they are to stop purchasing from the current supplier and begin purchasing from another is:

1.   A) customer switching costs.

2.   B) lead time.

3.   C) resource costs.

4.   D) resource bundle errors.

 

Answer:  A

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

77) Lead time is:

1.   A) the time from production to market delivery

2.   B) the time in which the first mover operates in the market under conditions of limited competition

3.   C) the time it takes for an entrepreneur to go from the concept stage to the delivery stage

4.   D) the time between product introduction and customer acceptance

 

Answer:  B

Difficulty: 1 Easy

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

78) Barriers to entry include all of the following except:

1.   A) patents

2.   B) switching costs

3.   C) environmental instability

4.   D) building customer loyalties

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

79) Frequent flier miles would be an example of which barrier to entry?

1.   A) Building customer loyalties

2.   B) Securing access to supply of key resources

3.   C) Creating product uniqueness

4.   D) Building in switching costs

 

Answer:  D

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

80) ________ refers to the probability, and magnitude, of downside loss.

1.   A) Reward

2.   B) Risk

3.   C) Liability of newness

4.   D) Technology error

 

Answer:  B

Difficulty: 1 Easy

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

81) Offering a small product range to a small number of customer groups is:

1.   A) a narrow-scope strategy.

2.   B) an imitation strategy.

3.   C) a broad-scope strategy.

4.   D) a way of reducing market uncertainties.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

82) A narrow-scope market strategy:

1.   A) does not provide the entrepreneur an opportunity to build up specialized knowledge and expertise.

2.   B) provides substantial protection against competitors.

3.   C) is like putting all your eggs in one basket.

4.   D) can be thought of as taking a “portfolio” approach to dealing with uncertainties.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

83) A broad-scope market strategy:

1.   A) focuses on producing customized products.

2.   B) provides substantial protection against competitors.

3.   C) is used to reduce market uncertainty.

4.   D) is based primarily on product quality.

 

Answer:  C

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

84) A broad-scope strategy:

1.   A) is vulnerable to the risk that market demand does not materialize as expected and/or changes over time.

2.   B) opens the firm up to many different “fronts” of competition.

3.   C) focuses the firm on producing customized products, localized business operations, and high levels of craftsmanship.

4.   D) offers a way of reducing some competition-related risks.

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

85) Imitation strategies:

1.   A) require expensive and extensive research.

2.   B) are rare and inimitable.

3.   C) does not provide organizational legitimacy.

4.   D) can enhance a firm’s performance.

 

Answer:  D

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

86) A ________ strategy that copies products that already exist and attempts to build an advantage through minor variations.

1.   A) technological

2.   B) narrow scope

3.   C) me-too

4.   D) broad scope

 

Answer:  C

Difficulty: 1 Easy

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

87) Which of the following is a liability of newness?

1.   A) Costs associated with learning new tasks are high.

2.   B) Lack of established routines and processes give the venture a new slate.

3.   C) Communication in informal systems is increased.

4.   D) Market for potential consumers is limited.

 

Answer:  A

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

88) Franchising:

1.   A) is the only imitation strategy discussed in the text.

2.   B) reduces risk of downside loss.

3.   C) is the same as the me-too strategy.

4.   D) reduces the amount of competition an entrepreneur will face.

 

Answer:  B

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

89) Identify and briefly describe the major stages of entrepreneurial strategy.

 

Answer:Three major stages:

 

Stage 1 New entry generation—The generation of a new entry is the result of a combination of knowledge and other resources into a bundle that its creators hope will be valuable, rare, and difficult for others to imitate. Depending on how in-depth the instructor wants the answer items like market and technological knowledge, window of opportunity and error of omission/commission may be required/discussed.

 

Stage 2 New entry exploitation—comprised of choosing an entry strategy, a risk reduction strategy. Depending on how in-depth the instruction wants the answer items like first mover advantages/disadvantages, demand and technological uncertainty, adaptation, lead time, and narrow/broad scope strategies may be discussed.

 

Stage 3 Feedback loop of resources—a brief description is appropriate since not much time is spent on this stage. Answer may include items from the following excerpt from the textbook: “We should not underestimate the importance of the feedback loop of stage 3 because an entrepreneur cannot rely on the generation and exploitation of only one new entry; rather, long-run performance is dependent upon the ability to generate and exploit numerous new entries. If the firm does rely on only one new entry, then as the life cycle for the product enters maturity and declines, so goes the life cycle of the organization.”

Difficulty: 2 Medium

Learning Objective:  03-02 To be able to think about how an entrepreneurial strategy can first generate and then exploit over time a new entry.

Accessibility:  Keyboard Navigation

 

90) Explain what constitutes a new entry.

 

Answer:New entry refers to (1) offering a new product to an established or new market, (2) offering an established product to a new market, or (3) creating a new organization (regardless of whether the product or the market is new to competitors or customers).

Difficulty: 1 Easy

Learning Objective:  03-01 To understand that the essential act of entrepreneurship involves new entry.

Accessibility:  Keyboard Navigation

 

 

 

91) Explain the difference between errors of omission and commission.

 

Answer:  An error of commission occurs from the decision to pursue this new entry opportunity, only to find out later that the entrepreneur had overestimated his or her ability to create customer demand and/or to protect the technology from imitation by competitors. The costs to the entrepreneur were derived from acting on the perceived opportunity.

 

An error of omissionoccurs from the decision not to act on the new entry opportunity, only to find out later that the entrepreneur had underestimated his or her ability to create customer demand and/or to protect the technology from imitation by competitors. In this case, the entrepreneur must live with the knowledge that he let an attractive opportunity slip through his fingers.

Difficulty: 2 Medium

Learning Objective:  03-05 To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty.

Accessibility:  Keyboard Navigation

 

92) List the five main first-mover advantages and identify the three main disadvantages of being a first-mover.

 

Answer:  Advantages:

 

Cost advantages

 

Less competition

 

Secure important channels

 

Prime position for customers

 

Expertise from participation

 

 

Disadvantages:

 

Environmental instability

 

Customer uncertainty

 

Short lead time

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

93) When considering whether to be first to enter with a new product and/or into a new market, entrepreneurs must assess whether the first-mover advantages outweigh the first-mover disadvantages. Identify the three influences such an assessment depends on and briefly describe each one.

 

Answer:  Such an assessment depends on (1) the stability of the environment surrounding the entry, (2) the ability of the entrepreneur to educate customers, and (3) the ability of the entrepreneur to erect barriers to entry and imitation to extend the firm’s lead time. A good fit between a firm’s bundle of resources and the external environment results in superior performance. Entrepreneurs use key success factors to obtain a good fit but environmental changes are highly likely in emerging industries. Environmental stability includes demand uncertainty, technological uncertainty, and adaptation.

 

Offering a superior product is not sufficient to enable a first mover to make sales; the entrepreneur must also reduce customer uncertainty. To do this, the entrepreneur can offer informational advertising or through demonstration and documentation on how to use the product.

 

Lead time can be extended if the first mover can erect barriers to entry. Important barriers to entry are derived from relationships with key stakeholders, which may dissuade entry by (potential) competitors. This can be done by: building customer loyalties, building switching costs, protecting product uniqueness, and securing access to important sources of supply and distribution.

Difficulty: 2 Medium

Learning Objective:  03-06 To be able to assess the extent of first-mover advantages and weigh them against first-mover disadvantages.

Accessibility:  Keyboard Navigation

 

 

 

94) The ability to obtain, and then recombine, resources into a bundle represents an important entrepreneurial resource. Knowledge is the basis of this entrepreneurial resource. Briefly explain knowledge in general as well as market and technological knowledge.

 

Answer:  Knowledge is built up over time through experience, and it resides in the mind of the entrepreneur and in the collective mind of management and employees. This sort of knowledge is unlikely to be learned in a textbook or in a classroom. Knowledge that is particularly relevant to the generation of new entries is that which is related to the market and technology.

 

Market knowledge refers to the entrepreneur’s possession of information, technology, know-how, and skills that provide insight into a market and its customers. This knowledge is deeper than the knowledge that could be gained through market research.

 

Technological knowledge might lead to a technology that is the basis for a new entry, even though its market applicability is unobvious. This knowledge has led to technological advancement that in many ways has created new markets rather than generating a technology to satisfy an unmet market need.

Difficulty: 2 Medium

Learning Objective:  03-03 To understand how resources are involved in the generation of opportunities.

Accessibility:  Keyboard Navigation

 

 

 

95) Identify and describe the three major risk reduction strategies.

 

Answer:

1.   Narrow scope—A narrow-scope strategy offers a small product range to a small number of customer groups to satisfy a particular need. The narrow scope can reduce the risk that the firm will face competition with larger, more established firms in a number of ways. A narrow-scope strategy focuses the firm on producing customized products, localized business operations, and high levels of product quality. By focusing on a specific group of customers, the entrepreneur can build up specialized expertise and knowledge that provide an advantage over companies that are competing more broadly. The high end of the market typically represents a highly profitable niche.

 

1.   Broad scope—broad-scope strategy can be thought of as taking a “portfolio” approach to dealing with uncertainties about the attractiveness of different market segments. By offering a range of products across many different market segments, the entrepreneur can gain an understanding of the whole market by determining which products are the most profitable. Unsuccessful products (and market segments) can then be dropped and resources concentrated on those product markets that show the greatest promise. In essence, the entrepreneur can cope with market uncertainty by using a broad-scope strategy to learn about the market through a process of trial and error.

 

1.   Imitation strategies—Imitation is another strategy for minimizing the risk of downside loss associated with new entry. Imitation involves copying the practices of other firms, whether those other firms are in the industry being entered or from related industries. Entrepreneurs may simply find it easier to imitate the practices of a successful firm than to go through the process of a systematic and expensive search that still requires a decision based on imperfect information. In essence, imitation represents a substitute for individual learning. Imitating some of the practices of established successful firms can help the entrepreneur develop the skills necessary to be successful in the industry, rather than attempting to work out which skills are required and develop these skills from scratch. Imitation also provides organizational legitimacy. If the entrepreneur acts like a well-established firm, it is likely to be perceived by customers as well established. Imitation is a means of gaining status and prestige. Customers feel more comfortable doing business with firms that they perceive to be established and prestigious.

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

 

 

96) When assessing whether a new product and/or new market are sufficiently attractive to be worth exploiting and developing, an entrepreneur partly depends on the level of information available on a new entry. Why is prior knowledge important and what are the limits of an information search? Also, briefly define a window of opportunity.

 

Answer:  More prior knowledge means that the entrepreneur starts from a position of less ignorance about the assessment task at hand. Less information needs to be collected to reach a threshold where the entrepreneur feels comfortable making a decision to exploit or not to exploit. Knowledge can be increased by searching for information and the search is streamlined by prior knowledge. Costs associated with searching for additional information include both money and time.

 

The window of opportunity is the period of time when the environment is favorable for entrepreneurs to exploit a particular new entry. When the window is open, the environment is favorable to exploit a particular new product or to enter a new market. Once the window of opportunity is closed, the environment for exploitation is unfavorable. While more information is desirable, the time spent collecting additional information increases the likelihood that the window of opportunity will close.

Difficulty: 2 Medium

Learning Objective:  03-04 To be able to assess the attractiveness of a new entry opportunity.

Accessibility:  Keyboard Navigation

 

97) Explain the three major causes of “liabilities of newness.”

 

Answer:

• New organizations face costs in learning new tasks. It may take some time and training to customize employees’ skills to the new tasks they are asked to perform.
• As people are assigned to the roles of the new organization, there will be some overlap or gaps in responsibilities. This will often cause conflict until the boundaries around particular roles are more formally set (once management has gained sufficient knowledge to do so) and/or until they have been informally negotiated by the parties to the conflict.
• Communication within the organization occurs through both formal and informal channels. A new organization has not yet had the opportunity to develop informal structures, such as friendships and organizational culture. It takes time for a new firm to establish these informal structures.

Difficulty: 2 Medium

Learning Objective:  03-07 To understand that risk is associated with newness, but there are strategies that the entrepreneur can use to reduce risk.

Accessibility:  Keyboard Navigation

 

Entrepreneurship, 11e (Hisrich)

Chapter 5   Identifying and Analyzing Domestic and International Opportunities

 

1) The key to successful entrepreneurship is to develop an idea that has a large, reachable market.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  05-02 To be able to create an opportunity assessment plan.

Accessibility:  Keyboard Navigation

 

2) An opportunity assessment plan is basically the same thing as a business plan.

 

Answer:  FALSE

Difficulty: 1 Easy

Learning Objective:  05-02 To be able to create an opportunity assessment plan.

Accessibility:  Keyboard Navigation

 

3) SCORE is a for-profit organization that provides online and in-person assistance in about 100 locations throughout the United States.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  05-01 To understand how to identify viable domestic or international opportunities

Accessibility:  Keyboard Navigation

 

4) An opportunity assessment plan has four sections—two major sections and two minor sections.

 

Answer:  TRUE

Difficulty: 1 Easy

Learning Objective:  05-02 To be able to create an opportunity assessment plan.

Accessibility:  Keyboard Navigation

 

5) Gartner provides information on technology markets.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  05-01 To understand how to identify viable domestic or international opportunities

Accessibility:  Keyboard Navigation

 

 

 

6) The Small Business Association provides Business Development Centers but also has a Women’s Business Center and a Minority Business Center.

 

Answer:  TRUE

Difficulty: 2 Medium

Learning Objective:  05-01 To understand how to identify viable domestic or international opportunities

Accessibility:  Keyboard Navigation

 

7) The Euromonitor provides very industry-specific information on companies in the European Union.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  05-01 To understand how to identify viable domestic or international opportunities

Accessibility:  Keyboard Navigation

 

8) Useful government sources of information include Business Source Complete and Mergent.

 

Answer:  FALSE

Difficulty: 2 Medium

Learning Objective:  05-01 To understand how to identify viable domestic or international opportunities

Accessibility:  Keyboard Navigation