Questions and Answers of Entrepreneurship

Why is it difficult for some firms to grow or scale their operations?
Describe economies of scale and economies of scope as rationales for firm growth.
List three reasons firms work hard to achieve market leadership.
Briefly describe each of the five stages in the organizational life cycle.
Give a brief overview of the managerial capacity problem.
Explain what is meant by adverse selection.
Explain what is meant by moral hazard.
What is meant by the statement in the chapter that reads, “The reality of the managerial capacity problem is one of the main reasons that entrepreneurs and managers worry so much about growth”?
Brian Willard, who lives in Denver, just read a lengthy article about Redbeacon, the subject of Case 13.1. He’s thinking about launching a Web-based service similar to Redbeacon’s. Brian just
Take a second look at Windspire, the subject of the “You Be the VC 1.1” feature.Imagine you just read an article that said that the founders of Windspire have decided to expand beyond
Spend some time studying PurBlu Beverages, the subject of the studentinitiated business profiled at the beginning of the chapter. In what ways have PurBlu Beverages’ business practices and its
Spend some time familiarizing yourself with Driptech, the subject of the“You Be the VC 13.1” feature. Reacquaint yourself with the four specific “Day-to-Day Challenges of Growing a Firm”
Look at the Web site of Scuba Toys (www.scubatoys.com). As you’ll see, this firm makes a wide range of products for all types of water sports. Spend some time familiarizing yourself with Scuba
Threadless is a community-centered T-shirt design site started in 2000 by Jack Nickell and Jacob DeHart. It’s called “Threadless” because it started as a thread on the Dreamlist message board.
Sam Calaginoe launched Dogfish Head Brewery in 1995. Although the company is now one of the U.S.’s premier microbreweries, that wasn’t always the case. When the company started, it was built
In November 2006, Wesabe launched a site to help people manage their personal finances. While it wasn’t the first personal finance site on the Web, it was the first to use a Web 2.0 approach. The
Need to get a faucet fixed? Need to find a personal trainer? Need to hire a carpenter for a home repair?Think about how people normally find service providers to meet these and similar needs. They
There are many similarities between music and entrepreneurship. To be successful, musicians must have talent, establish a brand, build a following, find distribution for their product, and handle
Describe the difference between an internal and an external growth strategy.Provide examples of each strategy and how each one contributes to firm growth.
Describe the keys to effective new product and service development.
What is a geographic expansion strategy, and what are the keys to implementing a successful geographic expansion strategy for an entrepreneurial firm?
What is an international new venture?Explain why it might be to the benefit of an entrepreneurial start-up to position itself as an international new venture from the outset.
What are the six foreign-market entry strategies? Briefly describe each strategy.
What are several rules of thumb to follow for selling products overseas?
What are the characteristics of a promising acquisition candidate?
What does the term licensing mean? How can licensing be used to increase a firm’s revenues?
Over the past several years, why have strategic alliances and joint ventures become increasingly prevalent growth strategies? Make your answer as thoughtful and as thorough as possible.
Spend some time studying thredUP, the focus of the “You Be the VC 14.2” feature.Is it more likely that thredUP will grow through internal or external growth strategies? Provide suggestions of
Reacquaint yourself with Proactiv, the subject of Case 11.2. Proactiv has relied almost exclusively on internal or organic growth since it launched in the late 1990s. Do you think Proactiv’s
Jessica Martin, a classmate of yours, just returned from an entrepreneurship boot camp, which was sponsored by her university’s technology incubator and consisted of three days of intense focus on
Spend some time studying Chipotle, the popular Mexican food restaurant chain.Identify the growth strategies Chipotle has utilized. Comment on Chipotle’s overall approach to growth and any
Zynga is a social network game developer that develops browser-based games that work both stand-alone and as application widgets on social networking sites like Facebook and MySpace. What are the
Refer to Joby Energy, the subject of the “You Be the VC 10.1” feature. Which of the foreign market entry strategies described in Table 14.4 make sense for Joby Energy? If you were the founder of
Review the “You Be the VC” features for Chapters 10 through 14. Which of the companies featured is most likely to own intellectual property that other companies will want to license? Explain your
Reacquaint yourself with Dry Soda, the focus of Case 9.1. Suppose the company hired you to investigate how licensing, strategic alliances, and joint ventures could spur its growth. How would you
Study the popular social networking site LinkedIn. What growth strategies has the company employed? Make recommendations for appropriate growth strategies for the future.
One thing that savvy growth-minded start-ups do is configure their products or services in ways that have built-in growth potential. Producing “one-off” products or services leads to limited
For two main reasons, many entrepreneurial firms aspire to be bought by larger companies. First, by selling to a large firm, an entrepreneurial venture is able to create a liquidity event for its
Although strategic alliances are an increasingly popular way for entrepreneurial firms to accelerate growth, they should be approached strategically and carefully. A failed alliance can cause a firm
How did Mint.com go from launch to a $170 million acquisition in 24 months? The answer isn’t as spectacular as you might think. Using a football metaphor, Mint.com did it more through blocking and
Groupon is a deal-of-the-day Web site that is located in major geographic markets across the world. Launched in October 2008 by Andrew Mason, Groupon has been characterized as one of the
Should employees who are not part of the startup team receive an equity position in the venture? What are the benefits and drawbacks that inform this decision?
Examples of risk facing a business include ________.A. Human risksB. Economic risksC. Natural risksD. All of the choices are correct.
What types of tangible, intangible, and funding resources exist? Give examples of each.
Which of the following business structures often involve two or more businesses starting a new business together?A. Sole proprietorshipB. General partnershipC. Joint ventureD. Corporation
Why would an entrepreneur choose to operate an S corporation rather than a C corporation?
You are headed off to college. Some close family members decide it would be a good idea to buy a house in the college town and then rent it out to students, with you also living there and actively
How is an S corporation taxed?A. At the entity level as a corporationB. At the owner level as if it were a partnershipC. At both the entity and owner levelsD. At a special lower rate of income tax
What are the choices of entities for operating as a group of engineers?
Jackson owns and runs a small computer repair business, a sole proprietorship, out of his home, with one employee. He also goes to small businesses at their locations, mostly cleaning viruses and
A public corporation is ________.A. Owned or sponsored by the governmentB. Owned by member of the investing publicC. Owned by a combination of public and private investorsD. None of these choices are
How does a joint venture differ from the other business structures?
A C corporation is taxed ________.A. At the entity levelB. At the individual levelC. At both the entity and individual levels potentiallyD. Only at the state level, not federal
Distinguish between LLC and LLPs.
Limited liability partnerships (LLPs) ________.A. Are normally used for firms that consist of licensed professionals such as lawyers or accountantsB. Can be used for partnerships that sell services
Why are there more sole proprietorships than any other business entity in the US?
A joint venture ________.A. Must be a corporationB. Can choose to be any type of entityC. Must be either a partnership or a C corporationD. None of these choices are correct
What are the general guidelines used to determine where your business must pay sales taxes for sales made online?
General partners have what type of liability?A. LimitedB. Joint and severalC. Joint onlyD. Personal only
Identify the common types of risks that a business may face.
Of all the business entity choices, LLCs are the most like ________.A. S corporationsB. C corporationsC. Sole proprietorshipsD. joint ventures
LLC owners are called ________.A. MembersB. ShareholdersC. Limited equity investorsD. Directors
LLCs offer flexible tax treatment, meaning ________.A. They can be taxed like corporationB. They can be taxed like partnershipsC. They can be taxed like proprietorshipsD. All choices are correct.
Sole proprietorships offer limited liability ________.A. If you register it with the stateB. If you elect to be taxed as a corporationC. If you have an SBA loan guaranteeD. Sole proprietorships never
A sole proprietorship ________.A. Pays taxes at the highest corporate rateB. Pays taxes at the lowest corporate rateC. Pays taxes at the individual rateD. None of these choices are correct.
Sole proprietorships ________.A. Must register with the stateB. Are similar to general partnerships in terms of liabilityC. Are similar to LLCs in terms of liabilityD. Are not allowed by law to
States can levy a sales tax on items sold online to a customer in a different state if ________.A. The business has a nexus with that stateB. There is an contract between the business and the state
As a general rule, LLCs, GPs, and SPs are taxed as ________.A. CorporationsB. Not taxedC. IndividualsD. Taxed twice, once as entity and once as individuals
Entrepreneurs can choose what state to incorporate in, and many choose ________.A. New YorkB. DelawareC. CaliforniaD. Texas
Enterprise risk management includes ________.A. Identifying riskB. Risk assessmentC. Risk abatementD. All of the choices are correct.
A business owner can insure against all but which one of the following?A. EarthquakesB. A bad economyC. FloodingD. Hurricanes
Going back to this case question on Christina’s Confections, go over the list of resources that you created. Now that you have additional information, determine if that is a good list; if not, add
Discuss how a small business can be bootstrapped at its inception. What kind of costs can the entrepreneur avoid or lower with tenacity and sweat equity?
Christina has always wanted to open a small neighborhood bakery, Christina’s Confections. She is currently working out of her home, earning income making cakes and baked goods for weddings,
What is an example of a tangible resource and an intangible resource?
If you were to start a small business, what would it be and what kind of resources would you need to get started?
What is the PEST tool? How can entrepreneurs use it to their advantage before launching a business?
Which do you think are more difficult to protect: tangible or intangible resources and why?
Consider Christina’s Confectionaries bakery example and focus on the maturity phase of her business. Describe how Christina can develop her brand to distinguish her from other bakeries and what
Why is it important to figure out costs before launching a business?
Discuss how political factors can impact a business.
What are examples of costs that must be taken into consideration before opening a business?
What are some examples of sociocultural factors that may affect a business?
What is the difference between one-time costs and monthly costs? How much should an entrepreneur have of monthly costs in advance?
Explain how economic factors can increase the price of a product.
Define the resource dependence theory.
When is it a good time to hire an independent contractor and when is it a good time to hire an on-staff employee?
What is the life cycle of a business and how do resource needs and their associate costs shift over time?
Explain how resource dependence theory helps a venture grow.
Discuss the steps required in hiring new employees. What sorts of factors must you think of before you hire a new team?
Discuss the importance of having personal resources, such as a strong support system, when starting a venture.
Why should the entrepreneurial team begin with the end in mind?
Review the LuminAid story. Why did Sreshta and Stork focus on light as their business idea instead of a focus on other areas needed by survivors of a natural disaster?LuminAidOther components in a
A nondisclosure agreement protects the venture by ________.A. Outlining confidential information or knowledge that the parties do not want to share with outside, or third, parties and is considered a
How can a Gantt chart help in the preparation for starting the new venture?
Which of the following documents should be discussed and agreed upon prior to the start of the venture?A. Nondisclosure and noncompete agreementsB. Nondisclosure and founder’s agreementsC.
Why would an angel investor stress to the startup team the importance of not getting too attached to the venture?
The founder’s agreement includes which of the following content items?A. Non-disclosure clauseB. Personnel planC. Buyback clauseD. Marketing plan
Refer to Stacy Madison’s food cart story. What was the most important insight you gained from reading about Stacy’s food cart business?Stacy Madison’s food cartNow let’s look at how we can
Everlane started as an online clothing store focused on ethical business practices. Part of their commitment to ethical practices includes regular visits to their factories to ensure people receive

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