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CHAPTER 2 THE CONTEXT OF ENTREPRENEURSHIP
TRUE/FALSE
1.The new economy has made physical assets irrelevant.
(false; Moderate; Drivers of the New Economy)
2.Virtual organizations have little or no work space, no formal structure and generally contract most tasks.
(True; Easy; Drivers of the New Economy)
3.Birthrates, income levels, and purchasing habits are examples of demographic data.
(False; Hard; Drivers of the New Economy)
4.The rate of technical diffusion is increasing.
(True; Easy; Drivers of the New Economy)
5.Knowledge intensity is increasing.
(True; Easy; Drivers of the New Economy)
6.The world’s least economically active people live in cities and urban areas.
(False; Moderate; Drivers of the New Economy)
7.Approximately 40% of the world’s 5.7 billion people live in households with incomes of less than $700 per year.
(False; Hard; Drivers of the New Economy)
8.The commercialization of innovations is increasing.
(True; Easy; Drivers of the New Economy)
9.A patent prevents others from employing property for a specified period of time.
(True; Easy; Drivers of the New Economy)
10.The product-based view holds that quality is determined by attention to details in the creation of a product or service.
(False; Moderate; Implications of These Driving Forces)
11.The user-based view holds that quality is determined by customer preferences, wants, and needs.
(True; Moderate; Implications of These Driving Forces)
12.The transcendent-based view holds that quality is determined by innate excellence.
(True; Moderate; Implications of These Driving Forces)
13.Customers should always be the most important stakeholder group.
(False; Hard; Social Responsibility and Ethics)
14.Competitors are usually considered primary organizational stakeholders.
(False; Hard; Social Responsibility and Ethics)
15. By 2015, The U.S. will likely represent the world’s second-largest market.
(False; Moderate; Drivers of the New Economy)
MULTIPLE CHOICE
16.Which of the following is not a driving force in the twenty-first century economy?
a.The information revolution
b.Stabilizing demographics
c.Globalization
d.Technological breakthroughs
(b; Moderate; Drivers of the New Economy)
17.Which of the following is a critical success factor for entrepreneurs?
a.Ambivalence about change
b.World-class management
c.Lack of vision
d.Total quality culture
(d; Hard; Drivers of the New Economy)
18.Which of the following is an implication of the new economy?
a.Reduced need for physical assets
b.Reduced need for capital
c.Increased importance of distance
d.Decreased turbulence
(a; Moderate; Drivers of the New Economy)
19.Individuals who are linked to a workplace by computers and modems are referred to as ______.
a.data managers
b.IS outsourcing
c.ISPs
d.telecommuters
(d; Easy; Drivers of the New Economy)
20.The rate of technical diffusion is ______.
a.increasing
b.relatively constant
c.decreasing
d.impossible to measure
(a; Easy; Drivers of the New Economy)
21.Amazon.com, LandsEnd.com, and Travelocity are all examples of ______.
a.E-commerce
b.ISPs
c.Web engines
d.All of the above
(a; Easy; Drivers of the New Economy)
22.______organizations have little or no work space, no formal structure and generally contract most tasks.
a.Virtual
b.E-commerce
c.Entrepreneurial
d.None of the above
(a; Moderate; Drivers of the New Economy)
23.Knowledge intensity is ______.
a.increasing
b.relatively constant
c.decreasing
d.impossible to measure
(a; Moderate; Drivers of the New Economy)
24.The commercialization of innovations is ______.
a.decreasing
b.relatively constant
c.increasing
d.impossible to measure
(c; Moderate; Drivers of the New Economy)
25.______is the process of creating an idea and turning it into a product or service that can be used or sold.
a.Manufacturing
b.Commerce
c.Innovation
d.All of the above
(c; Hard; Drivers of the New Economy)
26.A ______prevents others from employing property for a specified period of time.
a.copyright
b.trademark
c.patent
d.licensing agreement
(c; Moderate; Drivers of the New Economy)
27.Since 1990, the number of patents issued annually has ______.
a.increased
b.decreased
c.remained about the same
d.fluctuated considerably from year to year.
(a; Easy; Drivers of the New Economy)
28.Birthrates, income levels, and employment status are examples of ______data.
a.immeasurable
b.demographic
c.democratic
d.continuous
(b; Easy; Drivers of the New Economy)
29.The world’s population is getting ______.
a.older
b.younger
c.remaining about constant
d.both older and younger
(d; Hard; Drivers of the New Economy)
30.In the United States, the number of ______is increasing four times as fast as the rest of the population.
a.immigrants
b.Asian Americans
c.African Americans
d.Hispanics
(d; Moderate; Drivers of the New Economy)
31.By 2015, ______will likely represent the world’s largest market.
a.Russia
b.the United States
c.India
d.China
(d; Easy; Drivers of the New Economy)
32.The world’s most economically ______people live in cities and urban areas.
a.privileged
b.active
c.depressed
d.at-risk
(b; Hard; Drivers of the New Economy)
33.In the text, “poor” is defined as household income less than ______per year.
a.$700
b.$7,500
c.$15,000
d.$20,000
(a; Moderate; Drivers of the New Economy)
34.Approximately ______billion of the world’s 5.7 billion people live in households with incomes of at least $7,500 per year.
a.0.5
b.1.1
c.2.1
d.3.5
(b; Hard; Drivers of the New Economy)
35.Approximately ______billion of the world’s 5.7 billion people live in households with incomes of less than $700 per year.
a.0.5
b.1.1
c.2.1
d.3.1
(b; Hard; Drivers of the New Economy)
36.The ______-based view holds that quality is determined by customer preferences, wants, and needs.
a.user
b.product
c.transcendent
d.value
(a; Moderate; Implications of These Driving Forces)
37.A(n) ______is a comprehensive picture of what an entrepreneur wants an organization to become.
a.mission statement
b.strategy
c.vision
d.executive summary
(c; Easy; Implications of These Driving Forces)
38.The ______-based view holds that quality is determined by innate excellence.
a.user
b.product
c.transcendent
d.value
(c; Hard; Implications of These Driving Forces)
39.The ability to combine ideas in a unique way is referred to as ______.
a.insight
b.competence
c.assertiveness
d.creativity
(d; Moderate; Implications of These Driving Forces)
40.The ______-based view holds that quality is determined by a highly regarded product attribute.
a.feature
b.product
c.transcendent
d.value
(b; Moderate; Implications of These Driving Forces)
41.The ______-based view holds that quality is determined by the price placed on a product or service.
a.price
b.product
c.transcendent
d.value
(d; Moderate; Implications of These Driving Forces)
42.The ______-based view holds that quality is determined by attention to details in the creation of a product or service.
a.process
b.manufacturing
c.transcendent
d.product
(b; Moderate; Implications of These Driving Forces)
43.The ______requires employers to provide a safe working environment.
a.Toxic Substance Control Act of 1976
b.NAFTA Agreement of 1993
c.Occupational Safety and Health Act of 1970
d.None of the above
(c; Moderate; Changing World of Work)
44.The ______forbids discrimination in all areas of employer-employee relations.
a.Equal Employment Opportunity Act of 1972
b.NAFTA Agreement of 1993
c.Occupational Safety and Health Act of 1970
d.None of the above
(a; Easy; Changing World of Work)
45.The ______created a free-trade zone between the U.S., Canada, and Mexico.
a.Toxic Substance Control Act of 1976
b.NAFTA Agreement of 1993
c.Occupational Safety and Health Act of 1970
d.None of the above
(b; Easy; Changing World of Work)
46.Openness to new ways of thinking and a common vision are traits of a(n) ______organization.
a.effective
b.learning
c.growing
d.open
(b; Easy; Changing World of Work)
47.______organizations make decisions recognizing the connection between the organization and society.
a.World citizen
b.Socially responsible
c.Stakeholder
d.Societal
(b; Easy; Social Responsibility and Ethics)
48.Which of the following is a primary organizational stakeholder?
a.Governments
b.Political action groups
c.Suppliers
d.All of the above
(d; Hard; Social Responsibility and Ethics)
49.Which of the following stakeholder groups is most important?
a.Customers
b.Employees
c.Neither
d.It depends.
(d; Moderate; Social Responsibility and Ethics)
50.The growing Hispanic population is an example of a(n) ______.
a.demographic trend
b.marketing opportunity
c.instance of change
d.All of the above
(d; Easy; Identifying Environmental Opportunities)
ESSAY
51.Describe some of the challenges faced by managers in adapting to the drivers of the new economy.
Answer:The information revolution has resulted in rates of change never experienced before. Many older workers have had difficulty adapting to this new world. Globalization has also required companies to take a much broader view of business than in the past. Changing demographics also continue to reshape the business landscape.
Teaching Note:Students can be challenged to identify examples of these new drivers. The instructor can launch a discussion about which of these changes will be sustained and which are likely short-term conditions.
52.How has the e-commerce environment changed in the past two years?
Answer:Over the past two years, much of the initial hype about E-commerce has been replaced by a more skeptical view. While the Internet will remain a powerful aspect of business, greater scrutiny is now being placed on individual business models.
Teaching Note:This question can be used to discuss the sustainability of some of the high-profile Internet companies. What has separated those who are succeeding from those who have failed?
53. Describe some of the trade-offs associated with running a socially responsible company.
Answer:Although social responsibility can be a significant long-term benefit to a company, it often requires businesses to absorb additional costs and pass on otherwise profitable opportunities.
Teaching Note:The instructor can challenge students to look in the community for examples of social responsibility. Students should be prepared to discuss whether these examples are well intentioned or merely designed to gain public favor.
54.What are the different views of quality, and how are they applied differently by businesses?
Answer:The text describes five different views of quality: Transcendent-based, user-based, product-based, manufacturing-based, and value-based.
Teaching Note:The instructor can ask students to identify, compare, and contrast examples of the application of each approach to quality management.
55.What are some of the legal issues that should be addressed by entrepreneurs in the start-up phase?
Answer:First, a business owner must determine the legal form of business organization. They must then establish a recordkeeping system, establish financing, and often draw up contracts. In some cases, patent, trademark, or copyright applications should also be filed.
Teaching Note:The instructor can identify some local business examples—some product based and others service based.
CASE ESSAY
56.Describe the conditions that led to the founding of O’Naturals.
Answer:The popularity of fast food combined with the desire of many to find a more healthy alternative created the perfect conditions for the founding of O’Naturals.
Teaching Note:Students can be challenged to do some research on other fast food alternatives to the largest established firms.
57.What might cause O’Naturals to struggle?
Answer:The founders of O’Naturals are betting that a large segment of the fast food market is truly serious about wanting a healthier alternative to traditional fast food.
Teaching Note:The instructor can challenge students to take a position about whether O’Naturals will achieve long-term success or not.
58.What are some of the challenges that JobDirect might face in the future?
Answer:while JobDirect has carved out a nice niche in the job/employee search, theirs is an industry filled with many competitors. They will need to constantly challenge themselves to remain as creative as they were in the initial stages of the business.
Teaching Note:The instructor can ask students to identify examples of companies that compete with JobDirect and contrast each company’s strategy.
59.How is Green Mountain Coffee “doing well by doing good”?
Answer:Bob Stiller is very open about the many steps his company is taking to be a good community and environmental citizen.
Teaching Note:Students can identify and discuss other examples of socially responsible companies.
60.How is Buckman Labs challenging conventional wisdom with respect to the internal sharing of information?
Answer:Most entrepreneurs and managers are very reluctant to share significant amounts of information broadly throughout the business. Buckman has demonstrated that the benefits can far outweigh any risks.
Teaching Note:The instructor can lead students in a discussion of the pros and cons of this type of information sharing.
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