Chapter 10 Entrepreneurial Ventures: Management, 14e (Robbins/Coulter)

Management, 14e (Robbins/Coulter)
Chapter 10 Entrepreneurial Ventures
1) Arthur has an idea. After performing a SWOT, he has identified a market that is not being
served so he is planning to start a new business and introduce a new product. Arthur is a(n)
________.
A) strategist
B) dreamer
C) entrepreneur
D) independent business developer
Answer: C
Diff: 2
AACSB: Application of knowledge
Learning Obj: LO 10.1: Define entrepreneurship and explain why it is important
Classification: Application
2) People who engage in ________ take advantage of opportunities to create new products or
services, or change existing ones.
A) social responsibility
B) social engineering
C) venture capitalism
D) entrepreneurship
Answer: D
Diff: 2
AACSB: Reflective thinking
Classification: Concept
3) Annabel operates a local hardware store that she inherited from her parents. When she took
over, she updated the point-of-sale equipment and installed a customer database. Annabel is a(n)
________
A) entrepreneur
B) opportunist
C) venture capitalist
D) small business owner
Answer: D
Diff: 2
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4) Rob is a CPA who works out of an office in his home. His business is named "Friendly
Accounting Services." Eventually Rob would like to grow his business to include partners and
bookkeepers. We would classify Rob as ________.
A) self-employed
B) an entrepreneur
C) an employee
D) a franchisee
Answer: A
Diff: 3
5) ________ is a process of changing, experimenting, transforming, and revolutionizing.

A) Developing
B) Research
C) Innovating
D) Inventing
Answer: C
Diff: 2
6) Brandon is examining the state of the economy, the regulatory situation, social trends, and the
local labor supply. This would indicate Brandon is ________.
A) performing a SWOT analysis
B) exploring the entrepreneurial context
C) self-employed
D) a small business owner
Answer: B
Diff: 3
7) The purpose of examining the state of the economy, the regulatory situation, social trends, and
the local labor supply is to ________.
A) identify possible customers and employees
B) locate resources for use in the new business
C) determine who are the major players in the market
D) identify opportunities and possible competitive advantages
Answer: D
Diff: 2
2
8) Belinda has found a business opportunity she believes will be successful, but there are already
a couple companies in that market. To be successful, Belinda will need to ________.
A) pinpoint a competitive advantage
B) patent her idea
C) pursue a joint venture with them
D) write her mission statement
Answer: A
Diff: 2
9) To demonstrate social responsibility, entrepreneurs are encouraged to ________.

A) consider community goals in their business plans
B) use recycled materials in their production processes
C) participate in community organizations such as Kiwanis and Rotary
D) sponsor youth sports teams
Answer: A
Diff: 2
10) If Camden wants his new business to be a good corporate citizen, he should ________.
A) hire only union labor
B) minimize the risks his business takes
C) consider community goals in his business plan
D) observe all the local ordinances and employment laws
Answer: C
Diff: 2
11) Small businesses are the same as entrepreneurial ventures.

Answer: FALSE
Diff: 1
3
12) The main difference between an entrepreneurial venture and a small business is size.
Answer: FALSE
Diff: 1
13) Entrepreneurship is important to every industry sector in the United States.

Answer: TRUE
Diff: 1
14) Entrepreneurship's importance can be shown mostly in three geographic areas in the United
States: the Northeast, the South, and the Southwest.
Answer: FALSE
Diff: 1
15) Innovation is a key aspect of entrepreneurship.

Answer: TRUE
Diff: 1
16) Entrepreneurships are more likely than large businesses to generate patentable ideas.
Answer: TRUE
Diff: 2
17) Despite their overall importance to the economy, small businesses account for fewer new
jobs than large corporations.
Answer: FALSE
Diff: 2
4
18) Nearly half of all workers in the U.S. are employed by small businesses.
Answer: TRUE
Diff: 2
19) Entrepreneurship is important to a nation's economic development.

Answer: TRUE
Diff: 1
20) Exploring the entrepreneurial context includes scanning the economic, political/legal, social,
and work environment.
Answer: TRUE
Diff: 3
21) Among the more important pre-launch activities the entrepreneur must perform is the
creation of a business plan.
Answer: TRUE
Diff: 1
22) Organizing an entrepreneurial venture involves, among other activities, choosing a legal
form of business organization.
Answer: TRUE
Diff: 1
23) After the venture is launched, the entrepreneur continues with the same activities as before
the launch.
Answer: FALSE
Diff: 1
5
24) Explain the differences between an entrepreneurial venture and a small business.
Answer: An entrepreneurial venture is an organization that pursues opportunities, is
characterized by innovative practices, and has growth and profitability as its main goal. A small
business is independently owned, operated, and financed; has fewer than 100 employees; doesn't
necessarily engage in any new or innovative practices, and has relatively little impact on its
industry.
Diff: 3
AACSB: Reflective thinking; Written and oral communication
25) Compare and contrast self-employment and entrepreneurship.

Answer: Self-employment refers to individuals who work for profit or fees in their own
business, profession, trade, or farm. This arrangement focuses on established professions. Both
entrepreneurs and self-employed individuals understand market needs but each approaches that
need in a different way. A self-employed individual is more likely to use traditional means and
established practices whereas an entrepreneur will use innovation to develop new products or
services or radically change the way the product and/or service is delivered to the customer.
Entrepreneurs may be self-employed but they may also be employees of the company they
started. Self-employed people always work for themselves; they are not paid employees of
another company and rely on their own initiative to ensure income generation. Also, self-
employed individuals make all the business decisions about how the work gets done. However,
self-employment does not preclude having one or more employees. Tax requirements and certain
laws require that both entrepreneurs and self-employed individuals create a legally recognized
organization.
Diff: 3
26) Arthur Fry thought his glue was a failure because it didn't stick permanently, but when
applied to small squares of paper, it became the popular Post-It ® note. Arthur Fry took
advantage of ________.
A) a process need
B) the unexpected
C) a market structure
D) changes in perception
Answer: B
Diff: 3
Learning Obj: LO 10.2: Explain what entrepreneurs do in the planning process for new ventures
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27) "Put a motor on a bicycle? You must be crazy!" Yet that is exactly what William Harley and
Walter Davidson did. These two founders of the best-known American motorcycle company saw
opportunity in ________.
A) the incongruous
B) the unexpected
C) demographics
D) changes in perception
Answer: A
Diff: 2
28) In the days before sterile adhesives, bandages were tied onto the patient. Next came adhesive
tape with small squares of gauze attached, but making these in the doctors' office was tedious
and time consuming. Finally Earle Dickson invented the Band-Aid for his wife, who needed a
bandage she could apply to herself for small kitchen burns. Dickson saw ________.
A) the unexpected
B) a new industry
C) new knowledge
D) a process need
Answer: D
Diff: 2
29) Before Henry Ford and Frederick W. Taylor collaborated, automobiles were built by
craftsmen, one at a time. After the establishment of the assembly line, Ford was able to produce
automobiles faster than his competitors. but with equivalent quality. and sell them for a fraction
of the cost. Ford saw opportunity in ________.
A) industry structure
B) the unexpected
C) changing perceptions
D) demographic shifts
Answer: A
Diff: 3
7
30) Recognizing the increase in birth rates since 1946, and disliking the task of changing his
grandchildren's diapers, Victor Mills began developing a disposable diaper. Pampers were
introduced to consumers in 1961. Mills saw opportunity in ________.
A) changes in demographics
B) changes in perceptions
C) new knowledge
D) the incongruous
Answer: A
Diff: 2
31) Decades ago only former military personnel and hoodlums sported tattoos. Today tattoos are
considered an art form, giving rise to a plethora of tattoo shops. These body artists have taken
advantage of changes in ________.
A) demographics
B) market structure
C) perception
D) processes
Answer: C
Diff: 2
32) In 1938 Dr. Roy Plunkett discovered that a certain material became very slippery when
frozen, and PTFE was invented. Under the brand Teflon, PTFE coatings were applied to a wide
variety of items from spacecraft to frying pans. DuPont was able to capitalize on ________.
A) the incongruous
B) the unexpected
C) new knowledge
D) process needs
Answer: C
Diff: 2
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33) Which one of the following would most likely be a source for ideas for the would-be
entrepreneur?
A) manufacturing exhibitions
B) trade publications
C) personal interests and hobbies
D) pure research
Answer: C
Diff: 3
34) Dharma is examining her financial position, the market for her proposed new product, the
types of ownership available to her, and the tax laws for her area to determine whether she
should go forward with her new business. Dharma is conducting a ________
A) market analysis
B) technical study
C) practicality study
D) feasibility study
Answer: D
Diff: 2
35) Before launching his new venture, Doyle is studying the potential competitors for his new
product. He will want to find an answer to which one of the following questions?
A) How do they finance their operations?
B) What competitive advantage do they have?
C) Where are they located?
D) How many employees do they have?
Answer: B
Diff: 3
36) The marketing plan becomes a part of the ________ section of the business plan.
A) description of the business
B) executive summary
C) analysis of the context
D) supporting documentation
Answer: A
Diff: 2
9
37) Which one of the following items is found in the financial data section of the business plan?
A) pricing
B) economic analysis
C) sales tactics
D) pro forma cash flow analysis
Answer: D
Diff: 2
38) Emily is calculating her annual revenues, balance sheets, and breakeven points so she can
write the ________ section of her business plan.
A) description of the business
C) financial data and projections
D) analysis of the context
Answer: C
Diff: 2
39) Farrah has created a computer-generated mockup of her new product for inclusion in the
________ section of her business plan.
A) supporting documentation
C) analysis of the context
D) description of the business
Answer: A
Diff: 2
40) An important difference between entrepreneurs and the rest of us is that entrepreneurs can
see opportunities the rest of us miss.
Answer: TRUE
Diff: 1
10
41) Competitive advantage is a necessary ingredient for an entrepreneurial venture's long-term
success and survival.
Answer: TRUE
Diff: 1
42) The purpose of a business plan is to secure financing for the start-up.
Answer: FALSE
Diff: 1
43) The executive summary of a business plan is constructed to remind the executive of his plan
for the new business
Answer: FALSE
Diff: 1
44) In a business plan, the analysis of the context is most closely related to the environmental
scan.
Answer: TRUE
Diff: 2
45) The financial data section of the business plan should contain projections for the first five
years and a breakeven analysis.
Answer: FALSE
Diff: 2
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46) Discuss three of the seven potential sources of opportunity for entrepreneurial ventures.
Answer:
a. The unexpected. Ideas can be found in the unexpected. When situations and events are
unanticipated, opportunities can be found.
b. The incongruous. When something is inconsistent and incompatible with the way it appears–
when things are not the way they ought to be–opportunities are present.
c. The process need. Small pockets of opportunity appear along the way as researchers and
technicians continue to work for the monumental breakthrough.
d. Industry and market structures. When changes in technology change the structure of an
industry and market, existing firms can become obsolete if they are not attuned to the changes or
are unwilling to change. Even changes in social values and consumer tastes can shift the
structures of industries and markets. These markets and industries become open targets for
nimble and smart entrepreneurs.
e. Demographics. Changes in demographics influence industries and markets by altering the
types and quantities of products and services desired and customers' buying power.
f. Changes in perception. When changes in perception take place, the facts do not vary but their
meanings do. Changes in perception lead to changes in what people value, what they believe in,
and what they care about. Changes in these attitudes and values create potential market
opportunities for alert entrepreneurs.
g. New knowledge. New knowledge is a significant source of entrepreneurial opportunity.
Entrepreneurs must be able to do something with that knowledge and to protect important
proprietary information from competitors.
Diff: 3
47) Identify at least three sources or areas where entrepreneurs can find ideas. What should
entrepreneurs look for as they explore these idea sources?
Answer: Some entrepreneurs find ideas within their own industry; others find them in personal
interests or hobbies, looking at familiar and unfamiliar products and services, and opportunities
in external environmental. About a third of entrepreneurs said their ideas came from a sudden
insight or chance.
Entrepreneurs should look for limitations of what is currently available; new and different
approaches, advances and breakthroughs, unfilled niches, or trends and changes.
Diff: 3
12
48) What kind of questions should entrepreneurs ask before embarking on a new venture?
Answer: Questions about personal considerations would include all of the following: Do you
have the capabilities to do what you've selected? Are you ready to be an entrepreneur? Are you
prepared emotionally to deal with the stresses and challenges of being an entrepreneur? Are you
prepared to deal with rejection and failure? Are you ready to work hard? Have you educated
yourself about financing issues? Are you willing and prepared to do continual financial and other
types of analyses?
Questions about marketplace considerations include the following: Who are the potential
customers for your idea: who, where, how many? What similar or unique product features does
your proposed idea have compared to what's currently on the market? How and where will
potential customers purchase your product? Have you considered pricing issues and whether the
price you'll be able to charge will allow your venture to survive and prosper? Have you
considered how you will need to promote and advertise your proposed entrepreneurial venture?
Diff: 3
49) Identify and describe the six sections of the business plan, including the type of information
that should appear in each section
Answer:
a. The executive summary summarizes key points about the venture, including a brief mission
statement; primary goals; a brief history of the venture; key people involved; the nature of the
business; concise product or service descriptions; brief explanations of the market niche,
competitors, and competitive advantage; proposed strategies, and selected key financial
information. In essence, it is a pared-down version of the entire plan.
b. The analysis of the opportunity section includes the demographics of the target market,
industry trends, and identification and evaluation of competitors.
c. The analysis of the context describes broad external changes and trends taking place in the
economic, political-legal, technological, and global environments.
d. The description of the business describes how the venture will be organized, launched, and
managed. It includes a thorough description of the mission statement; a description of the desired
organizational culture; marketing plans including overall marketing strategy, pricing, sales
tactics, service-warranty policies, and advertising and promotion tactics; product development
plans; operational plans; human resources plans; composition of the board of directors; and an
overall schedule and timetable of events.
e. The financial data and projection section includes financial plans for the first three years,
projected income statements, pro forma cash flow analysis, pro forma balance sheets, breakeven
analysis, and cost controls. It also describes expected costs for major equipment of capital
purchases and available collateral. Notes should explain any apparent contradictions.
f. The final section contains such supporting documentation as charts, graphs, tables, photos, or
other visual tools to illustrate details in other sections.
Diff: 3
13
50) The first organizing decision that an entrepreneur must make is the ________.
A) type of organizational culture
B) form of legal ownership
C) organization structure
D) assignment of duties and responsibilities
Answer: B
Diff: 2
Learning Obj: LO 10.3: Describe the six legal forms of organization and the choice of
appropriate organizational structure
51) Fallon wants total control over the decisions related to his business but is concerned that
should the business fail, his personal assets are at risk. Fallon has chosen the ________ form of
ownership.
A) sole proprietorship
B) C corporation
C) general partnership
D) S corporation
Answer: A
Diff: 2
52) In a sole proprietorship, profits are ________.

A) distributed to all partners equally
B) taxed at the prevailing business rate
C) taxed as the owner's personal income
D) distributed to the partners according to their level of participation
Answer: C
Diff: 2
14
53) Gaston knows he cannot be physically present at his new restaurant every hour it is open, so
he has decided to share management responsibility and profits equally with two others. Gaston
has formed a ________.
A) joint proprietorship
B) limited liability corporation
C) limited liability partnership
D) general partnership
Answer: D
Diff: 3
54) Geneva needs additional capital to launch her business but does not want to share
management responsibility with partners. Neither does she want to pay the high taxes often
assessed on businesses. Her best option may be a(n) ________.
A) sole proprietorship
B) limited liability partnership
C) C corporation
D) S corporation
Answer: B
Diff: 2
55) Hortense and a few of her family members want to launch a new venture but don't want to
place their personal assets at risk. For this privilege they are willing to incur the higher taxes
associated with the ________ form of organization.
A) limited liability partnership
B) limited liability company
C) S corporation
D) C corporation
Answer: D
Diff: 3
15
56) Hobart is at the point in his new venture that he needs to hire more people. He comes to you
for advice on the type of candidate he should seek. You tell him, "________."
A) Find someone who can be groomed to take over the business when you are ready to retire
B) Offer each candidate a stake in the business and hire the one who accepts the offer
C) The important thing is to get people on board whose strengths complement your weaknesses
D) Look for people who are exceptionally capable and fit well with the entrepreneurial culture
Answer: D
Diff: 3
57) Ignacio knows he cannot pay what the "big boys" pay, so he decides instead to emphasize the
________ his company offers.
A) health insurance benefits
B) retirement savings plan
C) learning opportunities and recognition
D) performance incentives
Answer: C
Diff: 2
58) As her business grew and competitors entered the market, Inez knew she had to step up her
game. What had worked well when the company was brand new no longer enabled her company
to meet its goals. Inez realizes she must become a(n) ________ if her company is to continue to
grow and prosper.
A) change agent
B) better manager
C) visionary
D) charismatic leader
Answer: A
Diff: 2
16
59) In a sole proprietorship, the founder keeps all the profits but must share management
responsibility with investors.
Answer: FALSE
Diff: 1
60) A sole proprietor's personal assets are protected from any liability associated with the
business.
Answer: FALSE
Diff: 1
61) The minimum number of partners in a general partnership is three: two general partners and
at least one limited partner.
Answer: FALSE
Diff: 1
62) In a general partnership, all partners assume full responsibility for all debts of the business.
Answer: TRUE
Diff: 1
63) Limited liability partners have the right to inspect the business and make copies of company
records.
Answer: TRUE
Diff: 1
17
64) A C corporation can have no more than 50 owners who agree not to sell their stock.
Answer: FALSE
Diff: 2
65) One advantage of the C corporation is that the owners have complete protection from
liability related to business activity.
Answer: TRUE
Diff: 1
66) The profits of an S corporation are taxed as a partnership.

Answer: TRUE
Diff: 1
67) The limited liability company has advantages for the new venture that neither the C or S
corporation do.
Answer: TRUE
Diff: 2
68) In a limited liability company, profits are taxed as a partnership.

Answer: TRUE
Diff: 1
18
69) As a company grows, an informal, loose, and flexible atmosphere may not work well.
Answer: TRUE
Diff: 1
70) By the time the new company has grown to the point that the founder can no longer make all
the decisions, s/he is typically glad to hand off some of that responsibility.
Answer: FALSE
Diff: 1
71) The ability of small firms to successfully recruit appropriate employees is one of the most
important factors influencing organizational success.
Answer: TRUE
Diff: 2
72) Corporations look for candidates who match job requirements; entrepreneurs look for
candidates to fill skills gaps.
Answer: TRUE
Diff: 2
73) Because small businesses cannot usually compete with the salaries offered by large
corporations, they tend to focus on psychological rewards for their employees.
Answer: TRUE
Diff: 2
19
74) Organizations that support innovation tend to be smaller with fewer rules and resources.
Answer: TRUE
Diff: 1
75) Identify each of the six legal forms of organizations. Discuss the responsibilities of owners,
their liability, and the tax treatment of profits of each form.
Answer:
a. In a sole proprietorship, the single owner has complete control of all management decisions
but is also personally and completely liable for all business debts. This means the owner's
personal assets are at risk. Profits are taxed as the owner's personal income.
b. A general partnership involves at least two people who jointly assume management duties and
financial liability for the business debts. Personal assets are at risk. Profits are shared according
to the written agreement between the partners. Profits are taxed as personal income to the
partners.
c. A limited liability partnership must have at least one general partner who manages the
business and assumes unlimited liability for the business's debts. The limited partners are passive
in that they do not participate in the decision-making or management of the business but they
retain the right to inspect the business and make copies of business records. Limited partners are
entitled to a share of the business's profits as agreed in the partnership agreement even though
their risk is limited to the amount of their investment. Profits are taxed as personal income to the
partners.
d. The C corporation is the most complex form of ownership. The C corporation is a legal entity
separate from the owners, giving it the right to make contracts, engage in business activities, own
property, sue and be sued, and pay taxes at the corporate tax rate. Owners' liability is limited to
the amount of their investment.
e. The S corporation has the regular characteristics of a C corporation but profits are taxed as a
partnership. Several restrictions are imposed on this type of organization; violation of any one of
them will cause the corporation to lose its S status.
f. The limited liability company is a hybrid between a partnership and a corporation. It offers the
liability protection of a corporation, the tax benefits of a partnership, and fewer restrictions than
an S corporation. As with either of the other corporate forms of ownership, legal counsel is
advised to guide the owners in the creation of the operating agreement, making the LLC
expensive to set up.
Diff: 3
20
76) Explain why it is difficult for a young business to recruit and retain employees.
Answer: Entrepreneurs are looking for high-potential people who can perform multiple roles
during the various stages of venture growth. They look for individuals who "buy into" the
venture's entrepreneurial culture–individuals who have a passion for the business. Unlike their
corporate counterparts who often focus on filling a job by matching a person to the job
requirements, entrepreneurs look to fill in critical skills gaps. They're looking for people who are
exceptionally capable and self-motivated, flexible, multi-skilled, and who can help grow the
entrepreneurial venture. While corporate managers tend to focus on using traditional HRM
practices and techniques, entrepreneurs are more concerned with matching characteristics of the
person to the values and culture of the organization; that is, they focus on matching the person to
the organization.
A unique and important employee retention issue entrepreneurs must deal with is compensation.
Whereas traditional organizations are more likely to view compensation from the perspective of
monetary rewards (base pay, benefits, and incentives), smaller entrepreneurial firms are more
likely to view compensation from a total rewards perspective. For these firms, compensation
encompasses psychological rewards, learning opportunities, and recognition in addition to
monetary rewards.
Diff: 3
77) Which one of the many personality traits of entrepreneurs appeared on two separate lists?
A) abundance of self-confidence
B) high energy level
C) persistent problem solver
D) moderate risk taker
Answer: B
Diff: 2
Learning Obj: LO 10.4: Describe the personality of entrepreneurs and how they lead
organizations
21
78) "There is absolutely no reason why I, the founder of this enterprise, should be making the
choice of floor cleaner. The housekeepers know what works and what doesn't. Let them choose."
So said Juan, owner of Miller's Office Cleaning. Juan's comment indicates he believes in
________.
A) employee empowerment
B) self-direction
C) autonomy
D) problem solving
Answer: A
Diff: 2
organizations
79) Juanita gathers her employees to solicit their opinions regarding big issues facing the young
business. After considering their input, Juanita makes the final decision. Juanita is engaging in
________.
A) employee empowerment
B) democratic management
C) participative management
D) autocratic management
Answer: C
Diff: 2
organizations
80) Karl and his top managers set goals for the organization, then each department sets
supporting goals with their employees, who then set their personal performance goals. These
non-managerial employees are allowed to pursue their goals, within certain guidelines, using
their best judgement, knowledge, and skills. These employees are ________.
A) called delegates
B) fully empowered
C) being taken advantage of
D) knowledge workers
Answer: B
Diff: 2
organizations
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81) Sam Walton knew exactly how he wanted his business to operate. He saw WalMart as the
cost leader in the discount department store industry. He took every opportunity to emphasize his
corporate goals to his employees and became literally a cheerleader at store meetings. We would
consider Sam Walton to be a(n) ________ leader.
A) autocratic
B) charismatic
C) transactional
D) visionary
Answer: D
Diff: 2
organizations
82) Karlee, a production worker, is working on a project with employees from accounting,
purchasing, engineering, and customer service. Karlee is part of a ________ team.
A) product launch
B) self-directed
C) cross-functional team
D) process improvement
Answer: C
Diff: 2
organizations
83) The risk propensity is higher for entrepreneurs concerned with providing a family income
than for those whose primary goal is growth of the business.
Answer: FALSE
Diff: 2
organizations
84) Employee empowerment is an important motivational tool for entrepreneurs to use.

Answer: TRUE
Diff: 1
organizations
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85) A first step into employee empowerment is to allow employees to vote on issues that pertain
to them.
Answer: FALSE
Diff: 2
organizations
86) Fully empowering employees means releasing budgetary control to them.

Answer: FALSE
Diff: 2
organizations
87) When fully empowered, employees enjoy a greater variety of work that is more interesting
and challenging.
Answer: TRUE
Diff: 1
organizations
88) According to Max DePree, leadership combines the unpredictability of the future with the
gifts of the individuals.
Answer: TRUE
Diff: 2
organizations
89) Having a visionary leader early in its history is good for a company.
Answer: TRUE
Diff: 2
organizations
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90) Using employees in teams might provide some benefits to the organization but it is time-
consuming and costly; the costs outweigh the benefits.
Answer: FALSE
Diff: 2
organizations
91) In what ways does empowering employees benefit the entrepreneurial venture? How can
employees be empowered?
Answer: When employees are motivated, they feel energized and willing to work hard.
Empowerment can create that motivation. Empowered employees are less likely to leave the
organization and more willing to contribute ideas. The quality of their work improves.
Although giving up control is often difficult for entrepreneurs, they can begin by allowing
employees to participate in decisions then move on to delegation of specific tasks and decisions
and finally to full empowerment. Allowing employees to work on whole projects rather than
small pieces of it increases their feelings of autonomy which increases their job satisfaction.
Giving employees discretion over the way they do their work improves their effectiveness and
efficiency through the use of creativity, imagination, knowledge, and skills.
Diff: 3
organizations
92) ________ is what distinguishes an entrepreneurial venture.

A) Innovation
B) Determination
C) Competitive advantage
D) Growth
Answer: D
Diff: 2
Learning Obj: LO 10.5: Explain how managers control organizations for growth, downturns,
and exiting the venture
25
93) Lucien has just received an offer from a major retailer wanting to carry his products. But
Lucien doesn't have enough production capacity to keep up with their demand. A question
common to entrepreneurs in his situation is "________"
A) Will my board of directors be supportive of this opportunity?
B) Will my existing customers be hurt if I accept this offer?
C) What are my competitors doing?
D) Where can I get the money I need for expansion?
Answer: D
Diff: 3
94) Lucille's venture is finally taking off. To make sure the business grows as she would like,
Lucille should consider ________.
A) hiring a consultant to help with major decisions
B) enticing management candidates away from her competitors
C) investing in extensive training for her employees
D) stepping down as CEO in favor of someone with more experience
Answer: C
Diff: 3
95) When Michele had only three employees, she performed most of the records-keeping tasks
herself and kept a general idea of finances in her head. Now that her business has expanded, she
is having money problems. What should Michele do?
A) Reach out to the local business development organization for assistance.
B) Create and follow a set of financial controls.
C) Take a course in financial accounting at the local college.
D) Relinquish some of her other duties so she can focus on the money end of the business.
Answer: B
Diff: 2
26
96) Michael has a sense that his business isn't doing as well as it should but he isn't sure what to
look for to confirm his suspicions. Which one of the following could be a signal that the business
is in trouble?
A) difficulty finding skilled candidates
B) tolerance of work incompetence
C) more work than the business can handle
D) long lead times for new orders
Answer: B
Diff: 3
97) Ned has built his entrepreneurial venture into a successful business. Part of his original plan
was to build the business then sell it to another company that could take it to the next level of
success. In other words, Ned intends to ________ his business.
A) harvest
B) reap
C) relinquish
D) co-opt
Answer: A
Diff: 2
98) Nadine is ready to retire after many years building her business. Another entrepreneur has
indicated an interest in buying it so Nadine must set a selling price. Which one of the methods
below should she use?
A) the selling price of a similarly situated business
B) the sum of all taxable incomes for all the years she was in business
C) the sum of all assets currently on the balance sheet less all liabilities (outstanding debt)
D) the amount of retirement savings Nadine needs
Answer: C
Diff: 3
27
99) Finding people to support growth is an important issue for entrepreneurs.
Answer: TRUE
Diff: 1
100) Although important at every stage of the business life cycle, controls are especially
important during periods of growth.
Answer: TRUE
Diff: 1
101) When the entrepreneur is ready to exit the business, s/he should personally determine the
business value.
Answer: FALSE
Diff: 2
102) Why is it advisable for entrepreneurs to plan for growth? How can they do this?
Answer: Growth is a natural and desirable outcome for entrepreneurial ventures. Growth is what
distinguishes entrepreneurial ventures; they pursue growth. Growing successfully doesn't occur
randomly or by luck. Growth is a strategy; strategies require careful planning for successful
execution. Rapid growth without planning can be disastrous. Growth plans should be flexible
enough to exploit unexpected opportunities. To overcome the challenges of finding capital, and
people, the entrepreneur should have a plan in place from the beginning so when the time comes,
the resources can be made available. It is also important to maintain a positive, growth-oriented
culture that enhances the opportunities to achieve success both organizationally and individually.
It is also important to have proper controls in place before the growth escalates. It's all too easy
to let things "get away" or to put them off when there's an unrelenting urgency to get things
done. Procedures, protocols, and processes should already be in place and in use before rapid
growth.
Diff: 3
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103) How can downturns be managed successfully?
Answer: The first step is to recognize that the business is in or heading for trouble. An
entrepreneur should be alert to the warning signs of a business in trouble. These signals include
inadequate or negative cash flow, excess number of employees, unnecessary and cumbersome
administrative procedures, fear of conflict and taking risks, tolerance of work incompetence, lack
of a clear mission or goals, and ineffective or poor communication within the organization.
While entrepreneurs may be able to recognize crises, they may be less able to recognize a slowly
deteriorating situation.
Next, the entrepreneur should have a plan in place to deal with a business in trouble–before it
happens, much like mapping exits from a burning home before the fire starts. The plan should
focus on providing specific details for controlling the most fundamental and critical aspects of
running the venture–cash flow, accounts receivable, costs, and debt. Other actions would involve
identifying specific strategies for cutting costs and restructuring the venture.
Diff: 3
The primary difference between entrepreneurial ventures and small

businesses is that entrepreneurial ventures ________.
A. minimally impact industry
B. innovate and pursue growth
C. employ fewer than 100 employees
D. are independently operated
E. are independently owned
Answer B. innovate and pursue growth
Starting a new business in pursuit of an opportunity to introduce a new
product or service to market through innovation is engaging in the process of
________.
A. small business development
B. entrepreneurship
C. social responsibility
D. sole proprietorship
E. venture capitalism
Answer B. entrepreneurship
All of the following are questions entrepreneurs might ask themselves when
they evaluate marketplace considerations for potential ideas EXCEPT
________.
A. How does your product compare to others in the market?
B. How will potential customers purchase your product?
C. Who are your potential customers?
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D. Do you have a realistic picture of the venture's potential?
E. Have you considered pricing issues?
Answer D. Do you have a realistic picture of the venture's potential?
Which of the following areas of a business plan is likely to address any broad
trends in the technological environment?
A. Analysis of opportunity
B. Description of the business
C. Executive summary
D. Financial data and projections
E. Analysis of context
Answer E. Analysis of context
Which of the following forms of business organizations has two or more
owners who share business management and risk but also have unlimited
personal liability?
A. S corporation
B. General partnership
C. LLC
D. C corporation
E. LLP
Answer B. General partnership
Which of the following forms of business ownership does not encounter a tax
treatment that involves income/losses passing through the owner(s)/partners
and taxed at a personal rate?
A. Sole proprietorship
B. S corporation
C. C corporation
D. General partnership
E. LLC
Answer C. C corporation
Giving employees the power to make decisions and take actions on their own
is known as ________.
A. empowerment
B. proactivity
C. harvesting
D. the boiled frog phenomenon
E. venture leadership
Answer A. empowerment
________ teams are nearly autonomous and responsible for many managerial
activities.
A. Proactive
B. Supervisory
C. Self-directed
D. Cross-functional
E. Empowered
Answer C. Self-directed
The challenge of finding capital and people and strengthening the
organizational culture is addressed by entrepreneurs when they are ________.
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A. controlling for growth
B. planning for growth
C. organizing for growth
D. harvesting growth
E. maintaining growth
Answer C. organizing for growth
The "boiled frog" phenomenon is best described as ________.
A. the creation of an exit plan if the venture is at a high risk for failure
B. the difficulty in recognizing subtly declining situations such as diminishing
performance
C. the need for controlling financial aspects of venture operations
D. the need for crisis planning
E. the ease in recognizing rapidly declining performance issues in an
organization
Answer B. the difficulty in recognizing subtly declining situations such as
diminishing performance
The process of starting new businesses, generally in response to
opportunities, is ________.
A. innovation
B. valuation
C. harvesting
D. sustainability
E. entrepreneurship
Answer E. entrepreneurship
Which of the following defines an entrepreneurial venture?
A. It pursues opportunities, is characterized by innovative practices, and has
growth and profitability as its main goal.
B. It is a small business that has pursued growth.
C. It is independently owned, operated, and financed and doesn't necessarily
engage in innovative practices.
D. It seldom pursues growth.
E. It is always set up as a sole proprietorship.
Answer A. It pursues opportunities, is characterized by innovative practices,
and has growth and profitability as its main goal.
In comparison to large firms, small firms ________.
A. create far fewer jobs
B. produce significantly fewer patents per employee
C. are approximately equal in patents generated
D. employ more than half of the US workforce
E. generate nearly three times the number of patents per research and
development dollar spent
Answer E. generate nearly three times the number of patents per research
and development dollar spent
What is the first step in the entrepreneurial process?
A. Identifying opportunities
B. Identifying possible competitive advantages
C. Starting the venture
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D. Managing the venture
E. Exploring the entrepreneurial context
Answer E. Exploring the entrepreneurial context
Which of the following defines high risk-seekers?
A. They avoid making social change.
B. They need to understand when to take risks and when to avoid them.
C. They have little awareness of global issues and social concerns.
D. They tend to emphasize the negative outcomes of risk.
E. They opt for non-profit status.
Answer B. They need to understand when to take risks and when to avoid
them.
The creation of ATMs in the 1960s paved the way for today's online banking.
According to Peter Drucker, the creation of ATMs is an example of which
potential source of opportunity?
A. The unexpected
B. The Internet
C. The incongruous
D. Changes in perception
E. The process need
Answer E. The process need
More than one third of entrepreneurs said their idea for a business came
from ________.
A. somebody else's product/service
B. following a passion
C. market research
D. sudden insight/chance
E. a suggestion or collaboration
Answer D. sudden insight/chance
Which of the following is the most important thing an entrepreneur develops
when planning a venture?
A. Business plan
B. Competitor analysis
C. Board of advisors
D. Financial plan
E. Feasibility study
Answer A. business plan
The two primary factors affecting an entrepreneur's choice of legal
ownership for a venture are ________ and ________.
A. choice of partner; legal liability
B. legal liability; personal control
C. taxes; legal liability
D. stock price; taxes
E. personal control; taxes
Answer C. taxes; legal liability
The first step for an entrepreneur in successfully managing a downturn is
________.
A. drafting severance packages
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B. recognizing that a crisis is brewing
C. turning it around
D. planning the layoff of employees
E. controlling for continued growth
Answer B. recognizing that a crisis is brewing
Which of the following would not be considered a challenge for managers
who have telecommuting employees?
A. The telecommuting employee can be more productive because there are
fewer workplace distractions to deal with.
B. Telecommuting employees are not physically present so they can't be
seen easily during the workday.
C. Managers must trust the telecommuting employee to balance work and
home priorities.
D. Managers must work to keep the telecommuting employee in the loop and
stay connected.
Answer A. The telecommuting employee can be more productive because
there are fewer workplace distractions to deal with.
Which of the following is considered a challenge that telecommuting
employees face?
A. Having the flexibility to work during non-traditional work hours.
B. Using technology, such as instant messaging, that allows them to stay
connected.
C. Finding the right computer equipment.
D. Staying focused and motivated.
Answer D. Staying focused and motivated.
Which of the following forms of technology would allow a manager to see the
expressions and body language of a person telecommuting from home?
A. Instant messaging
B. Telephone
C. Email
D. Video chat
Answer D. Video chat
How can a person working from a distance take responsibility for staying
connected when working from a distance?
A. Speak up during teleconferences with the manager or team so others
know you're taking an active part.
B. Ask questions during teleconferences so others know you're actively
involved.
C. Be proactive and volunteer for work assignments, committee work, etc.
D. All of the above.
Answer D. All of the above.
Based on what Jerred Langlais says in the video, his interpretation of the
manager-subordinate relationship is what the text would call ________.
A. manager as enabler
B. a traditional manager
C. manager as supreme authority
33
D. manager as span of control
E. manager as chain of command
Answer A. manager as enabler
The Elm City Market Board has been described as taking a broader view of
the business (e.g., approving budgets, reporting on the status of the store,
etc.) and staying out of the detailed day-to-day operations. This is most likely
an example of ________.
A. decentralized authority
B. acceptance of authority
C. highly centralized authority
D. direct line authority
E. span of control authority
Answer A. decentralized authority
As the organizational structure of Elm City Market is described in the video, it
could best be labeled as a(n) ________ structure.
A. unity of command
B. span of control
C. mechanistic
D. formalized
E. organic
Answer E. organic
The market environment of the Elm City Market is not simple and stable, but
rather complex and slightly uncertain. Which of the following would be an
ineffective structure for Elm City Market?
A. Formalized structure
B. Organic structure
C. Mechanistic structure
D. Unity of command structure
E. Span of control structure
Answer C. Mechanistic structure
Regni states that Elm City Market lacks a national headquarters with a huge
support staff of IT, finance, and marketing specialists, so local Elm City
Market managers and staff take on all those responsibilities themselves. Elm
City Market is definitely NOT a(n) ________.
A. decentralized structure
B. organic structure
C. divisional structure
D. structure approved of by the Elm City Market board
E. structure adapted to Elm City Market's situation
Answer C. divisional structure
The formal arrangement of jobs within an organization is known as ________.
A. work specialization
B. the organizational structure
C. the chain of command
D. decentralization
E. staff authority
Answer B. the organizational structure
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Laura is a billing clerk in a medium-sized manufacturing company. She
reports to the Supervisor of Accounts Payable, who in turn reports to the
Manager of Accounting. The Manager of Accounting is accountable to the
Chief Financial Officer, who reports to the company president. Which
element of organizational design does this illustrate?
A. Departmentalization
B. Chain of command
C. Staff authority
D. Work specialization
E. Decentralization
Answer B. Chain of command
Alec works on a new product development team at GTO Industries. His team
is composed of members from engineering, quality, manufacturing,
marketing, purchasing, and accounting. This describes a ________.
A. simple structure
B. divisional structure
C. network structure
D. cross-functional team
E. matrix structure
Answer D. cross-functional team
A textile mill has separate departments for spinning, weaving, dying, and
printing. The outputs of one department become the inputs for the next
department. This describes departmentalization based upon ________.
A. product
B. process
C. geography
D. division
E. customer
Answer B. process
In terms of how many employees a manager can effectively and efficiently
manage, the trend in recent years has been toward ________.
A. higher formalization of jobs
B. increased work specialization
C. less employee empowerment
D. more centralization
E. wider spans of control
Answer E. wider spans of control
Which of the following is NOT one of the six key elements of organizational
design?
A. Span of control
B. Regulation
C. Chain of command
D. Departmentalization
E. Formalization
Answer B. Regulation
Which of the following managers has line authority?
A. The finance manager assists the director of sales in developing an
35
incentive compensation program that is consistent with budgetary
constraints.
B. A customer service manager establishes the work schedules of customer
service representatives and can discipline them in accordance with the rules
of the company.
C. The quality control manager consults with the production manager about
statistical analysis of production to ensure compliance with quality
standards.
D. The company attorney advises the human resources manager with
respect to a discrimination lawsuit filed by an employee.
E. A human resources manager lends guidance to the customer service
manager to ensure that the proper documentation is in place before a
customer service representative is fired.
Answer B. A customer service manager establishes the work schedules of
customer service representatives and can discipline them in accordance with
the rules of the company.
Jolene owns her own marketing design consulting business. There are only
five employees, so the organization has a flat hierarchy, and Jolene retains
full authority. Jolene's company would best be described as a ________
structure.
A. divisional
B. functional
C. network
D. simple
E. matrix
Answer D. simple
A small, private college groups employees together by the work specialty,
such as academic affairs, financial aid, food service, and campus security.
This college appears to have a ________ structure.
A. network
B. functional
C. matrix
D. divisional
E. simple
Answer B. functional
An automobile manufacturer has four distinct business units - one for each of
its major brands. Each of these units is headed up by a senior manager who
has authority over that brand and is responsible for performance. Based on
this, it can be assumed that the company has a ________ structure.
A. divisional
B. functional
C. matrix
D. network
E. simple
Answer A. divisional
Which activity within the HRM process involves retaining competent and
high-performing employees?
36
A. Selection
B. Human resource planning
C. Performance management
D. Orientation
E. Training
Answer C. Performance management
All of the following are high-performance work practices EXCEPT ________.
A. self-managed teams
B. performance-based compensation
C. flexible job assignments
D. the decruitment of competent employees
E. increasing employee access to information
Answer D. the decruitment of competent employees
Which of the following laws protects workers, their families, and communities
by requiring most employers with 100 or more employees to provide
notification 60 calendar days in advance of plant closings and mass layoffs?
A. Consolidated Omnibus Reconciliation Act
B. Title VII of the Civil Rights Act
C. Worker Adjustment and Retraining Notification Act
D. Vocational Rehabilitation Act
E. Occupational Safety and Health Act
Answer C. Worker Adjustment and Retraining Notification Act
An organized association of workers formed to protect the rights and
interests of its members through the collective bargaining process is known
as a ________.
A. labor union
B. wage alliance
C. worker coalition
D. work council
E. board representative
Answer A. labor union
A ________ is a written statement describing job content, environment, and
conditions of employment.
A. job specification
B. performance appraisal
C. job analysis
D. job description
E. position assessment
Answer D. job description
Which of the following decruitment options involves reducing the workforce
by simply not filling openings created by voluntary resignations or normal
retirements?
A. Attrition
B. Layoffs
C. Early retirements
D. Transfers
E. Firing
37
Answer A. Attrition
When new employees join the company, HR specialist Angelica gives them a
brief tour of the facility and then spends several hours introducing them to
the company's history, goals, and philosophies and providing them with an
overview of HR policies. What term best describes Angelica's activities?
A. Organization orientation
B. Mentoring and coaching
C. Apprenticeship
D. Work unit orientation
E. On-the-job training
Answer A. Organization orientation
When he joined the accounting department, Mark spent two weeks learning
the payroll system in the organization. He then was assigned to the accounts
payable department for a few weeks, and finally to the accounts receivable
department so he would have a solid base of knowledge in all of the
accounting functions in the company. What term best describes Mark's
activities?
A. Organizational orientation
B. Mentoring and coaching
C. Work unit orientation
D. Job rotation
E. Apprenticeship
Answer D. Job rotation
As a sales associate at a luxury auto dealership, Andre receives a base salary
each month, but he also receives commission based on the number of
vehicles he sells and a percentage of the net profit on the vehicles sold. This
is an example of ________.
A. variable pay
B. skill-based pay
C. pay-for-knowledge
D. wages
E. seniority pay
Answer A. variable pay
Which of the following employee benefits would LEAST likely be considered a
family-friendly benefit?
A. Flextime
B. Telecommuting
C. Pension plan
D. Job sharing
E. Subsidized child care
Answer C. Pension plan
Managers should do all of the following when downsizing EXCEPT ________.
A. explain the impact of layoffs to others
B. delay or prolong the process of informing those who are being let go
C. focus on boosting morale
D. make plans for empty office spaces
E. provide counseling for remaining employees
38
Answer B. delay or prolong the process of informing those who are being let
go
According to Shiloe, what is the best way to reach common ground with
someone when negotiating pay?
A. State the minimum amount you will accept
B. Tell them you have another offer
C. Build rapport
D. Ask for their best offer
Answer C. Build rapport
Which of the following is NOT one of the ways Shiloe provided for building
rapport with an interviewer?
A. Inquire about where the interviewer attended college
B. Ask questions about the company
C. Determine how much the starting pay is
D. Find out how the interviewer attained his or her job
Answer C. Determine how much the starting pay is
When the interviewer cannot budge on the starting pay, Shiloe gave several
examples of other items you might ask for. Which of the following is NOT one
of the examples Shiloe provided?
A. Permit pets to join you at work
B. Flexible work schedule
C. Switch to commission-based pay
D. Paid time off
Answer C. Switch to commission-based pay
Assume you are interviewing for a job. The offer is $35 per hour, but you
want $40 per hour. Which of the following would Shiloe say is an
inappropriate statement to request the higher pay?
A. I researched other companies and they are paying $40 per hour.
B. I'm currently making $39 per hour.
C. I really need to get $40 per hour because I have three kids.
D. Based on my experience, education, and what I bring to the table, plus my
excitement for this job, is there any way you can get the pay closer to $40
per hour?
Answer C. I really need to get $40 per hour because I have three kids.
Which of the following generational cohorts currently comprises the largest
share of the workforce?
A. Silent generation
B. Gen Xers
C. Gen Zers
D. Gen Yers
E. Baby boomers
Answer E. Baby boomers
Darma, a 56-year-old female, believes she has a cause of action against her
employer because she is being paid less than a male worker who performs
the same work. Which law or ruling is most applicable to this scenario?
A. Age Discrimination in Employment Act
B. Equal Pay Act
39
C. Title VII of the Civil Rights Act
D. Consolidated Omnibus Reconciliation Act
E. Lilly Ledbetter Fair Pay Act
Answer B. Equal Pay Act
Approximately ________ percent of the U.S. workforce is represented by labor
unions.
A. 11%
B. 17%
C. 5%
D. 31%
E. 23%
Answer A. 11%
Aleena's mother is seriously ill in another state, and Aleena has requested
leave from her employer to care for her mother. Which law or ruling is most
applicable to this scenario?
A. Family and Medical Leave Act
B. Patient Protection and Affordable Care Act
C. Vocational Rehabilitation Act
D. Consolidated Omnibus Reconciliation Act
E. Worker Adjustment and Retraining Notification Act
Answer A. Family and Medical Leave Act
LaToya has developed a progressive form of hearing loss. To ensure that she
is still able to perform the essential functions of her job, her employer was
required to make a reasonable accommodation and equip her office
telephone with a specialized headset. Which law or ruling is most applicable
to this scenario?
A. Worker Adjustment and Retraining Notification Act
B. Patient Protection and Affordable Care Act
C. Occupational Safety and Health Act
D. Americans with Disabilities Act
E. Vocational Rehabilitation Act
Answer D. Americans with Disabilities Act
A job ________ describes the content, environment, and conditions of
employment, whereas a job ________ states the minimum qualifications a
person must possess to successfully perform the job.
A. specification; description
B. specification; analysis
C. description; specification
D. analysis; specification
E. analysis; description
Answer C. description; specification
The ________ for a human resources manager indicates that the individual
must have a minimum of 5 years of experience in human resources,
experience supervising and managing a professional staff, a bachelor's
degree in human resources or management, proficiency in organizational
development, and familiarity with HRIS and Microsoft Office.
A. job specification
40
B. performance appraisal
C. job description
D. graphic rating scale
E. job analysis
Answer A. job specification
One of the selection tools for firefighters is to be able to drag a 175-pound
dummy for a distance of 100 feet. What type of selection tool does this
represent?
A. Physical examination
B. Work sampling
C. Assessment center
D. Personality test
E. Background investigation
Answer A. Physical examination
Which performance appraisal method solicits performance feedback from
multiple persons with whom the employee interacts on a regular basis, such
as peers, subordinates, customers, and supervisors?
A. Multi-person comparison
B. 360-degree appraisal
C. Critical incident
D. BARS
E. MBO
Answer B. 360-degree appraisal
Which of the following is NOT true of sexual harassment?
A. If managers don't know what makes employees uncomfortable, it's
important to ask.
B. The victim must be the person harassed.
C. Sexual harassment is a global issue.
D. Sexual harassment can occur between members of the same sex.
E. Sexual harassment can include offensive remarks about a person's sex.
Answer B. The victim must be the person harassed.
Managers need to learn how to negotiate in order to:
A. manipulate employees, bosses, colleagues, suppliers, and customers.
B. always get what they need.
C. be a better communicator.
D. maximize outcomes.
Answer D. maximize outcomes.
Which of the following is NOT part of being a skilled negotiator?
A. Assess your own goals and the other party's goals.
B. Do your homework.
C. Begin with a negative proposal.
D. Address problems, not personalities.
Answer C. Begin with a negative proposal.
Doing your homework before negotiating involves:
A. assessing the strengths and weaknesses of the person(s) you're
negotiating with.
B. recognizing your own negotiating strengths and weaknesses.
41
C. gathering as much pertinent information as possible.
D. All of the above
Answer D. All of the above
Dealing with the interpersonal aspects of a negotiation involves:
A. telling the truth, being trustworthy, and honoring your commitments.
B. addressing problems, not personalities
C. beginning with a positive proposal.
D. paying little attention to initial offers.
Answer A. telling the truth, being trustworthy, and honoring your
commitments.
Which of these is NOT a step in effective negotiating?
A. Assessing goals
B. Addressing personalities, not problems
C. Doing your homework
D. Emphasizing win-win-solutions
Answer B. Addressing personalities, not problems
Which of the following aspects of group structure outlined in this chapter
would Mark Schurman, Herman Miller's Corporate Communications Director,
agree is a major factor in how Herman Miller decides to organize its teams?
A. Group cohesiveness
B. Conflict management
C. Status
D. Group size
E. Team member skills
E. Team member skills
Schurman's description of the teams—consisting of members from a cross
section of the Herman Miller organization—shows the importance of ________.
A. external conditions to the team's global performance
B. personality conflicts to the group's problem solving
C. group member structure to the team's global performance issues
D. group member resources to the group's performance potential
E. group member resources to the team's conformity
D. group member resources to the group's performance potential
Mark Schurman, Corporate Communications Director at Herman Miller,
describes a team designed as a cross section of the organization to allow the
right resources to be together in a specific time and place to work together
to succeed at whatever that ambition is. This also illustrates what the
chapter refers to as a ________ team.
A. virtual
B. norming stage
C. cross-functional
D. relationship conflict
E. global, interdependent
C. cross-functional
If Herman Miller organized smaller teams that are "tasked to solve specific
issues" on their own, these teams would be ________ teams.
A. self-managed work
42
B. status system
C. problem-solving
D. groupthink
E. virtual
A. self-managed work
By assigning people at Herman Miller to teams whose leaders are not
necessarily higher in rank, Tony Cortese, Herman Miller's Senior Vice
President of People, believes that employees achieve both the ________ and
________ needed to solve their problems effectively, which the chapter also
describes as two important characteristics of effective teams.
A. social network; mutual trust
B. unified commitment; norms
C. negotiating skills; social loafing
D. external support; clear goals
E. relevant skills; good communication
E. relevant skills; good communication
A group formed by people seeking friendship or pursuing common interests
that has no official leader or specific organizational goals is referred to as
a(n) ________.
A. self-managed team
B. cross-functional team
C. formal group
D. informal group
E. command group
D. informal group
The stage of group development that involves getting oriented and
acquainted is referred to as the ________ stage.
A. storming
B. forming
C. performing
D. norming
E. adjourning
B. forming
Caitlyn has been a member of the annual auction committee for the humane
shelter, but the auction has ended and the team is disbanding, at least until
next year. This illustrates the ________ stage of group development.
A. performing
B. norming
C. storming
D. forming
E. adjourning
E. adjourning
The college formed a group of faculty members, current and former
students, area employers, and community leaders to study student retention
and completion rates and identify strategies for increasing graduation rates
for students. This group is an example of a(n) ________.
A. problem-solving team
43
B. informal group
C. task group
D. virtual team
E. cross-functional team
C. task group
Leslie burst into her manager's office and complained, "I just can't work with
Ciera! She's rude and opinionated, and I'm sick of her complaining about how
much work she has to do." This is an example of ________ conflict.
A. process
B. task
C. relationship
D. functional
E. procedural
C. relationship
_______ conflict focuses on what needs to be done, whereas _______ conflict
focuses
A. Task; process
B. Process; task
C. Process; relationship
D. Relationship; process
E. Functional; dysfunctional
A. Task; process
Which conflict management style is characterized by a low degree of
cooperativeness but a high degree of assertiveness?
A. Compromising
B. Collaborating
C. Avoiding
D. Forcing
E. Accommodating
D. Forcing
Jason tries to avoid conflict at all costs. He is very uncomfortable when any
hint of conflict emerges and is convinced that conflict is destructive and
caustic and diverts the group's attention from the task at hand. It would
appear that Jason has a(n) ________ view of conflict.
A. consequential
B. traditional
C. utilitarian
D. human relations
E. interactionist
B. traditional
Jacquie and her colleague disagreed about how to approach a project.
Finally, Jacquie said, "I give up, we'll do it your way." Jacquie's approach
illustrates a(n) ________ conflict management technique.
A. accommodating
B. avoiding
C. collaborating
44
D. forcing
E. compromising
A. accommodating
Which of the following characterizes a work team rather than a work group?
A. One leader is clearly in charge.
B. Leadership is shared.
C. Work is decided upon by the group leader and delegated to individual
group members.
D. Members are accountable only to themselves.
E. Work is done individually.
B. Leadership is shared.
How does making eye contact contribute to active listening?
A. Making eye to intimidate the speaker.
B. Making eye contact focuses your attention, reduces the likelihood that you
will become distracted, and encourages the speaker.
C. Making eye contact signals a solution to the speaker's problem.
D. Making eye contact signals your wish to respond to the speaker's
problem.
B. Making eye contact focuses your attention, reduces the likelihood that you
will become
distracted, and encourages the speaker.
Which activity is a check on whether you are listening carefully?
A. Offering a solution before the speaker has finished talking.
B. Asking the speaker to find a solution even though several alternatives
failed.
C. Paraphrasing what the speaker has told you.
D. Ending the meeting without discussion.
C. Paraphrasing what the speaker has told you.
The main purpose of active listening is to__________________________.
A. make a concerted effort to understand and interpret the speaker's
message.
B. make a persuasive argument against the speaker's concerns.
C. make eye contact.
D. all of the above.
A. make a concerted effort to understand and interpret the speaker's
message.
Active listeners pay attention to ________
A. how frequently the speaker arrived late to the meeting.
B. nonverbal cues and what the speaker says
C. nonverbal cues only.
D. only what the speaker says.
B. nonverbal cues and what the speaker says
Speakers more likely feel that you have been listening when you ________
A. ask questions and paraphrase what the speaker has said.
B. maintain eye contact.
C. end the meeting without summarizing and paraphrasing the speaker's
concerns.
45
D. offer a solution to the problem before the speaker finishes stating his or
her concerns.
A. ask questions and paraphrase what the speaker has said.
Kurt Workman, a Digital Communications Manager at CH2MHill, explains that
the company uses ________ to perform the important function of
communicating ________ to employees who work "in the field."
A. company executives; control
B. emails; motivation
C. emails; information
D. direct supervisors; information
E. direct supervisors; emotions
D. direct supervisors; information
Because of the off-site locations of many of the CH2MHill employees, the
company relies heavily on ________ to make sure that everyone has the
correct information, which is one of the effective methods of overcoming
communication barriers mentioned in the chapter.
A. simplified language
B. active listening
C. nonverbal cues
D. feedback
E. decoding
D. feedback
CH2MHill's weekly field employee meetings with supervisors are best
referred to as ________ communication.
A. downward
B. lateral
C. grapevine
D. upward
E. diagonal
A. downward
Kurt Workman cites ________ as other important communication channels
with employees, which this chapter describes as part of ________.
A. social media and emails; the grapevine
B. the intranet and emails; a networked system
C. smartphones, emails, and blogs; a networked system
D. instant messaging and emails; wireless capabilities
E. emails, the intranet, and iPads; wireless capabilities
B. the intranet and emails; a networked system
Employees in the future will likely rely on multiple channels of
communication with heavy reliance on social networks, text messaging, and
instant messaging. With which of the following statements would Kurt
Workman of CH2MHill most likely agree?
A. People shouldn't be communicating through the Internet because there's
too much room for error.
B. Even though people can communicate through the Internet, face-to-face
communication is still the most effective method.
C. Employees should not be relying on multiple channels of communication,
46
which make things far too complex.
D. Face-to-face communication is valuable but time consuming, so firms
should stress the importance of virtual communication even more vigorously.
E. People should communicate through the Internet because face-to-face
interaction just doesn't work as well.
B. Even though people can communicate through the Internet, face-to-face
communication is still the most effective method.
Communication is the transfer and ________ of meaning.
A. decoding
B. understanding
C. encoding
D. retranslation
E. inference
B. understanding
________ communication consists of messages sent outside of the written or
spoken word.
A. Lateral
B. Informal
C. Nonverbal
D. Diagonal
E. Downward
C. Nonverbal
Drew is distracted from the professor's lecture because his girlfriend keeps
sending him text messages about their weekend plans. This is an example of
________ in the communication process.
A. decoding
B. noise
C. the channel
D. filtering
E. feedback
B. noise
Of the following methods of communication, which has the highest
confidentiality?
A. Teleconference
B. Publication
C. Face-to-face
D. Bulletin board
E. Videotapes
C. Face-to-face
The CEO of a relatively small company needs to deliver some important
information to employees about a proposed merger. He believes it's critical
that everyone have the ability to communicate at the same time and in the
same space so that he can address concerns and answer questions. Which of
the following methods would be most appropriate?
A. Voice mail
B. Group meeting
C. Memo
47
D. Fax
E. Postal mail
B. Group meeting
Pete was reluctant to reveal the business unit's dismal financial
performance, so when he was asked to report in the operations review, he
smiled and stated, "Given our initial high expectations, results have been
somewhat less than anticipated." This is an example of ________.
A. jargon
B. filtering
C. body language
D. selective perception
E. verbal intonation
B. filtering
When Lucinda interviewed a job candidate who was from Japan, she was
disconcerted by his lack of eye contact, unaware that many Japanese are
uncomfortable with direct eye contact. This demonstrates which barrier to
effective communication?
A. Selective perception
B. National culture
C. Information overload
D. Filtering
E. Faulty expression
B. National culture
Once each quarter, Bill holds an all-employee meeting in the cafeteria to
keep them apprised of business results, let them know of planned changes in
the industry, and answer questions. This is an example of ________.
A. diagonal communication
B. an open workplace
C. the grapevine
D. a town hall meeting
E. lateral communication
D. a town hall meeting
Martina's performance appraisal isn't based solely on her boss's opinion.
Feedback is solicited from several of her coworkers, colleagues in other
departments with whom she interacts on a regular basis, and even her
subordinates. What performance appraisal method does Martina's company
use?
A. Critical incident
B. MBO
C. 360-degree appraisal
D. Multiperson comparison
E. BARS
C. 360-degree appraisal
The manager of manufacturing consults with a customer service
representative to determine the status of a shipment to a customer. This is
an example of ________ communication.
A. diagonal
48
B. lateral
C. downward
D. upward
E. informal
A. diagonal
How can managers best encourage ethical communications?
A. Review all communications written by others
B. Write all communications themselves
C. Avoid being sidetracked by a consideration of why a message is being
communicated
D. Clearly define what is considered ethical and unethical communication
E. Avoid a focus on how the communication will appear in the future; focus
on the present
D. Clearly define what is considered ethical and unethical communication
Based on her experiences working with Verizon, Kathy Bowman-Williams,
Verizon's Manager of Diversity and Inclusion, would most likely agree with
which statement from this chapter?
A. Work teams with diverse backgrounds often bring different and unique
perspectives to discussions, which can result in more creative ideas and
solutions.
B. Awareness that local teams may have different solutions can sometimes
confuse the home office.
C. Local teams and workers do not count as "diverse" unless they are a
different race.
D. Organizations are better off relying on teams with higher technical skills.
E. Local, smaller teams need to learn the methods that the HQ staff
developedlong dash—whether they are diverse or not.
A. Work teams with diverse backgrounds often bring different and unique
perspectives to discussions, which can result in more creative ideas and
solutions.
If Verizon were to hire a few local engineers for the completion of their
project in another country, but did not continue to embrace racial and ethnic
diversity in their hiring practices after the project ended, this would be an
example of ________.
A. surface-level diversity
B. stereotyping
C. personal bias
D. a glass ceiling
E. deep-level diversity
Based on this short video, which of the seven types of diversity found in
workplaces described and illustrated in this chapter is probably the most
important for a global company like Verizon?
A. Age
B. Gender
C. Race and ethnicity
49
D. Disability/abilities
E. Sexual orientation
C. Race and ethnicity
Verizon in-home network engineer Gimbert Richiez's description of how
employees' different backgrounds and ideas impact the projects and things
they are working on to improve network service is an example of how
diversity matters to Verizon. This example shows that diversity is important
for _______________.
A. organizational analysis
B. organizational planning
C. cost savings
D. organizational performance
E. people management
D. organizational performance
Not all companies have the knowledge that employees at global companies
like Verizon gain from working in other countries and interacting with people
whose cultures, backgrounds, and experiences are vastly different from their
own. Some companies rely on ________ to teach their employees how to
communicate and work effectively in a diverse work environment.
B. mentoring
C. employee resource groups
D. deep-level diversity
E. diversity skills training
E. diversity skills training
Cheryl Newman, the Deputy Chief of Mission at Honest Tea, said that the
mission of Honest Tea is an integral part of how the company does business.
Honest Tea makes sure that the firm's money is used to build schools and
libraries, and provide scholarships, which illustrates ________.
A. the legal approach to social responsiveness
B. Sustainability
C. green management
D. social responsibility
E. the classical view of social responsiveness
D. social responsibility
Honest Tea's business decisions about its ingredients and bottling materials
reflect its commitment to the environment and ________.
A. green management
B. issue intensity
C. ethical culture
D. social screening
E. social responsiveness
A. green management
Honest Tea's business decisions illustrate a ________ approach to "going
green" and environmental issues.
A. market
B. legal
50
C. stakeholder
D. dark green
E. light green
D. dark green
Honest Tea was bought out by Coca-Cola. How will this new arrangement
most likely affect Honest Tea's efforts to be green and socially responsible?
A. Honest Tea's efforts will be limited somewhat because social responsibility
is considered a waste of money to Coca-Cola shareholders.
B. Honest Tea's efforts will not change because neither company is
particularly green or socially responsible.
C. Honest Tea's efforts will be enhanced because Coca-Cola will replace all of
Honest Tea's managers with Coca-Cola managers who have more experience
in green business.
D. Honest Tea's efforts will be drastically limited because Coca-Cola is a huge
conglomerate that is not socially responsible.
E. Honest Tea's efforts will be enhanced because Coca-Cola will look to
Honest Tea for leadership in how to become even more green and socially
responsible.
E. Honest Tea's efforts will be enhanced because Coca-Cola will look to
Honest Tea for leadership in how to become even more green and socially
responsible.
Seth Goldman, the president, co-founder, and "TeaEO" of Honest Tea, states
that their values and mission are what drive every action the company takes.
"We do our best to really take into account our mission every time we make
a decision." Which of the following does this attitude best represent?
A. Protective mechanisms for the company
B. Service review forums
C. Preconventional values
D. Conventional values
E. Values-based management
E. Values-based management
Workplace diversity can best be described as ________.
A. an organization's strategic response to diversity
B. easily perceived differences that may trigger certain stereotypes but do
not necessarily reflect the ways people think or feel
C. the ways in which people in an organization are different from and similar
to one another
D. differences in values, personality, and work preferences
E. the invisible barrier that separates women and minorities from top
management positions
C. the ways in which people in an organization are different from and similar
to one another
Which of the following statements regarding the differences between the
management styles of men and women is true?
A. Men tend to use a broader, more effective range of leadership styles to
motivate and engage their subordinates.
B. Women are more likely than men to view negotiations and business
51
transactions as zero-sum games.
C. Women are more likely than men to create more committed,
collaborative, and effective teams.
D. Male managers are more likely than women to coach and develop others.
E. Male managers are more likely than women to use a collaborative
management style.
C. Women are more likely than men to create more committed,
collaborative, and effective teams.
_______ is the biological heritage people use to identify themselves, whereas
________ is social traits shared by a population.
A. Diversity; uniformity
B. Ethnicity; race
C. Deep-level diversity; surface-level diversity
D. Race; ethnicity
E. Heritage; race
D. Race; ethnicity
Adjusting the height of a workstation to make it accessible to an employee in
a wheelchair is an example of ________ in accordance with the Americans
with Disabilities Act.
A. an employee resource group
B. a reasonable accommodation
C. diversity skills training
D. mentoring
E. the glass ceiling
B. a reasonable accommodation
Which of the following is designed to make employees aware of the
assumptions and biases that they may have?
A. Employee resource group
B. Diversity awareness training
C. Mentoring
D. Diversity skills training
E. Reverse mentoring
B. Diversity awareness training
Social ________ is defined as a business's intention, beyond its legal and
economic obligations, to do the "right thing" and act in ways that are good
for society.
A. obligation
B. entrepreneurship
C. screening
D. responsibility
E. responsiveness
D. responsibility
A company makes eco-friendly dog toys, mats, and beds; uses recycled
paper and soy-based ink in its packaging; and encourages customers to
return used products for recycling. According to the "four shades of green"
approach to addressing the environment, which approach is the company
using?
52
A. Progressive
B. Stakeholder
C. Legal
D. Activist
E. Market
D. Activist
An employee comes to work on time every day only because he knows that
his pay will be docked if he is caught coming in late. However, when he
knows his boss will be gone that day, he's frequently late. What stage of
moral development does this represent?
A. Stage 4
B. Stage 3
C. Stage 6
D. Stage 1
E. Stage 2
D. Stage 1
According to research, which of the following is the single most important
influence on an employee's decision to act ethically or unethically?
A. A code of ethics
B. Regular social audits of the company
C. Appointment of an ethics compliance officer
D. The behavior of managers
E. Ethics training
D. The behavior of managers
Which of the following is the best description of a code of ethics?
A. A report that conveys an organization's economic, environmental, social,
and governance performance
B. A description of what an organization would like to achieve or accomplish
C. Corporate rules, regulations, policies, and procedures that explain what
the company expects from its employees
D. A formal statement of an organization's primary values and the ethical
rules it expects its employees to follow
E. A formal summary of what the organization is, why it exists, and its
reasons for being
D. A formal statement of an organization's primary values and the ethical
rules it expects its employees to follow
Kedma Ough equates managing change with managing _____.
A. fear
B. hate
C. love
D. laziness
A. fear
In order to get employees to change, the manager must _____.
A. discipline those who fail to change
B. provide monetary incentives for managing change
C. make a list of all the changes
D. model the change
53
D. model the change
A person who acts as a catalyst and assumes the responsibility for managing
the change process is a change _____.
A. enforcer
B. agent
C. champion
D. guru
B. agent
When Kedma described how to be a change agent, she listed several items
that are important. Which of the following is NOT one of the items she listed
for being an effective change agent?
A. Find out who you are.
B. Don't be afraid of change.
C. Seek out something to change.
D. Follow people you aspire to be.
C. Seek out something to change.
iRobot builds improved home robots and customers Beta test its new
products in their homes. This is an example of approaching innovation with
a(n) __________ mentality.
A. design-thinking
B. organic
C. conflict-tolerant
D. idea champion
E. risk-tolerant
A. design-thinking
Nancy Dussault-Smith, iRobot's Vice President of Marketing Communications,
would most likely agree with the following statement from the text: "Success
in business today demands ________."
A. company-mandated experiment time
B. a creative staff
C. innovation
D. structural variables
E. toleration of the practical
C. innovation
Gerry Caron, iRobot's Director of Product Management, states that
innovation "often comes from looking at other technologies to see what can
put in our products." ________________ is an example of one of the innovative
organization characteristics.
A. Focusing on ends rather than means
B. Exhibiting empowering leadership
C. Accepting ambiguity
D. Tolerating risk
E. Tolerating conflict
D. Tolerating risk
By encouraging employees to help come up with innovative solutions to their
project problems, iRobot has created an organizational culture that nurtures
__________.
54
A. creativity
B. design thinking
C. ambiguity
D. an open-system focus
E. idea champions
A. creativity
Based on Gerry Caron's, iRobot's Director of Product Management, role in
creating, supporting, and implementing innovative solutions to problems,
Gerry Caron could be considered which of the following?
A. A Type A personality
B. An idea champion
C. A Type B personality
D. A top-down thinker
E. A maverick
B. An idea champion
A person who acts as a catalyst and assumes the responsibility for managing
the change process is referred to as a(n) ________.
A. visionary
B. idea champion
C. change strategist
D. innovator
E. change agent
E. change agent
In Kurt Lewin's three-step change process, organizations are pushed toward
change by ________.
A. driving forces
B. organizational development
C. refreezing
D. stress
E. restraining forces
A. driving forces
The focus of ________ is to minimize or eliminate dysfunctional conflict that
exists between groups by changing the attitudes, stereotypes, and
perceptions that groups have about each other.
A. survey feedback
B. sensitivity training
C. intergroup development
D. team building
E. process consultation
C. intergroup development
Gannon Enterprises is in the midst of a major strategic change. To lessen
resistance from some of the senior managers who are opposed to the
change, the company has offered early retirements so that the managers
can avoid having to experience the change effort. Which technique for
reducing resistance to change does this best describe?
A. Coercion
B. Negotiation
55
C. Manipulation and co-optation
D. Facilitation and support
E. Participation
B. Negotiation
Which technique of reducing resistance to change involves helping
employees see the logic of the change effort?
A. Facilitation and support
B. Negotiation
C. Manipulation and co-optation
D. Education and communication
E. Coercion
D. Education and communication
_______ is an adverse reaction that people have to excessive pressure placed
on them from extraordinary demands, constraints, or opportunities.
A. Role ambiguity
B. Role strain
C. Stress
D. Burnout
E. Role conflict
C. Stress
Which of the following is true of creativity?
A. A creative organization will naturally be innovative.
B. Creativity is enough by itself without innovation.
C. Creativity and innovation are synonymous.
D. A creative organization is characterized by its ability to generate new
ideas that are implemented into new products, processes, and procedures
designed to be useful.
E. A creative organization develops unique ways of working or novel
solutions to problems.
E. A creative organization develops unique ways of working or novel
solutions to problems.
Which of the following is considered a structural variable that positively
impacts an organization's innovation?
A. Limited resources
B. Minimizing feedback
C. Maximizing extreme time pressures
D. Limited interunit communication
E. An organic-type structure
E. An organic-type structure
An idea champion is best described as an ________.
A. individual who actively and enthusiastically supports new ideas, builds
support, overcomes resistance, and ensures that innovations are
implemented
B. individual who is not afraid of change but makes changes only when there
is a compelling reason to do so
C. individual who acts as a catalyst and assumes the responsibility for
managing the organizational change process
56
D. individual who introduces new methods, ideas, or products
E. individual with original ideas about what the future will be or what the
future could be like
A. individual who actively and enthusiastically supports new ideas, builds
support, overcomes resistance, and ensures that innovations are
implemented
A small IT firm that is challenging larger competitors and changing the
industry's rules of the game is engaged in _______.
A. process consultation
B. skunk works
C. disruptive innovation
D. sustaining innovation
E. creativity
C. disruptive innovation
Successful individuals use goals to:
A. focus their efforts.
B. build self-confidence as goals are successfully completed.
C. provide short-term motivation.
D. All of the above
D. All of the above
To be better at setting goals, which is the most appropriate sequence?
A. Identify what you'd like to do or achieve in important life areas; make your
plans for reaching those goals; make your goals actionable; determine how
you'll measure progress toward your goals; review your goals periodically.
B. Review your goals periodically, determine how you'll measure progress
toward your goals; identify what you'd like to do or achieve in important life
areas; make your goals actionable; make your plans for reaching those
goals.
C. Determine how you'll measure progress toward your goals; identify what
you'd like to do or achieve in important life events; make your goals
actionable; make your plans for reaching those goals; review your goals
periodically.
D. Identify what you'd like to do or achieve in important life areas; make your
goals actionable; make your plans for reaching those goals; determine how
D. Identify what you'd like to do or achieve in important life areas; make your
goals actionable; make your plans for reaching those goals; determine how
The S.M.A.R.T. approach stands for:
A. specific, measurable, attainable, relevant, time-trackable.
B. specific, measurable, available, relevant, time-trackable.
C. sustainable, measurable, attainable, relevant, terrific.
D. strong, measurable, available, relevant, time-trackable.
A. specific, measurable, attainable, relevant, time-trackable.
Making goals actionable involves:
A. thinking about them often.
B. using the R.A.D. approachlong dash—realistic, available, and describable.
57
C. having goals that are ambiguous, but very ambitious.
D. writing your goals down.
D. writing your goals down.
CH2MHill's planning cycle is carefully documented in its project delivery
system from winning the work through servicing the contract. As clearly
shown by this example, planning ________.
A. minimizes waste and redundancy
B. increases risk
C. establishes the goals or standards
D. reduces uncertainty
E. provides direction
D. reduces uncertainty
Scott Yanagihara, Project Manager at CH2MHill, stated that CH2MHill's
project delivery system "lays out a very systematic methodology of planning
to win the work, planning to execute the work, and then planning to service
the contract." CH2MHill's project delivery system is likely based on a(n)
________ plan.
A. strategic
B. short-term
C. long-term
D. operational
E. directional
D. operational
What is defined as the process by which people, generally responding to opportunities, start new
businesses?
A.
Innovation
B.
Entrepreneurship
C.
A feasibility study
D.
Harvesting
E.
Self-employment
Answer is b
Which of the following is a key distinction of how an entrepreneurial venture is different from a small
business?
A.
An entrepreneurial venture has fewer than 100 employees.
58
B.
An entrepreneurial venture is characterized by innovative practices.
C.
An entrepreneurial venture is independently owned.
D.
An entrepreneurial venture is publically traded.
E.
An entrepreneurial venture offers self-employment.
Answer is B
In the last 20 years, what percentage of net jobs in the United States were created by small businesses?
A.
63 percent
B.
10 percent
C.
88 percent
D.
47 percent
E.
23 percent
Answer is A
the process of starting new businesses, generally in response to

opportunities, is __________
entrepreneurship
which of the following defines an entrepreneurial venture?
it pursues opportunities, is characterized by innovative practices, and has
growth and profitability as its main goal
in comparison to large firms, small firms __________
generate nearly three times the number of patents per research and
development dollar spent
what is the first step in the entrepreneurial process?
exploring the entrepreneurial context
59
which of the following defines high risk-seekers?
they need to understand when to take risks and when to avoid them
many start-ups today __________
are integrating revenue-generating and philanthropy
The creation of ATMs in the 1960s paved the way for today's online banking.
According to Peter Drucker, the creation of ATMs is an example of which
potential source of opportunity?
the process need
The success of eBay as an online intermediary between buyers and sellers to
connect people (versus selling them things) is an example of which of
Drucker's sources of opportunity?
industry and market structures
as a source of opportunity for entrepreneurs, new knowledge __________
requires entrepreneurs be able to do something with that knowledge
when an organization has a competitive advantage, __________
it has something that other companies don't, does something better than
other organizations, or does something that others can't
more than one third of entrepreneurs said their idea for a business came
from __________
sudden insight/chance
which of the following describes a feasibility study?
Answer it can serve as a basis for a business plan
which of the following is the most important thing an entrepreneur develops
when planning a venture?
Answer business plan
the two primary factors affecting an entrepreneur's choice of legal ownership
for a venture are __________ and __________
answer taxes; legal liability
An entrepreneur has decided to structure her business as a distinct legal
entity with its own charter. She wants to be sure the business entity is
separate from herself as owner and separate from her managers. Which of
the basic types of ownership has she chosen?
Answer corporation
the legal organization in which the owner maintains complete control over
the business and is personally liable for business debts is the __________
answer sole proprietorship
Martina has decided to structure her new business venture to provide liability
protection while gaining tax benefits over alternative structures. Her
attorney has prepared the operating agreement and advised her of the
complexities and expense of setting up this structure. Which of the basic
types of ownership has Martina chosen?
Answer LLC
when would an organic structure be most appropriate?
Answer when innovation is critical to the organization's competitive
advantage
in recruiting employees, entrepreneurs tend to focus on __________
answer matching the person to the organization
60
in identifying personality characteristics of entrepreneurs, it is likely that
entrepreneurs __________
answer are more proactive
which of the following is an important motivational tool entrepreneurs can
use?
Answer employee empowerment
Max DePree suggested that a successful entrepreneur could be compared to
________
Answer the leader of a jazz ensemble
the first step for an entrepreneur is successfully managing a downturn is
__________
answer recognizing that a crisis is brewing
how does the boiled frog phenomenon relate to entrepreneurs?
Answer they need to be alert to signals that the venture's performance may
be worsening
An entrepreneur's decision to exit the venture may be based on the fact that
he or she hopes to capitalize financially on the investment in the venture.
This is known as ________
Answer harvesting
which of the following would be the best example of a well-written goal?
Answer cut costs by 10% during the next 12 months
Which term refers to specifying an organization's goals, establishing
strategies for achieving those goals, and developing plans to coordinate work
activities?
Answer planning
The relationship between planning and performance is best described as
________
usually positive
Which of the following is NOT one of the reasons why managers should plan?
planning improves social status
By engaging in planning, a manager is most likely able to coordinate work
activities and ________.
correct inefficiencies
________ are desired organizational outcomes that guide management
decisions and serve as standards for measuring the results of work activities.
goals
________ goals are usually included in official documents and statements such
as an organization's charter or its annual report.
stated
Which type of plan is flexible and provides managers with a general set of
guidelines?
directional plan
Which term is LEAST likely to be used to describe different types of
organizational plans?
target
61
Which of the following involves top managers establishing goals, which then
trickle downward through the organization to become subgoals in
organizational areas?
traditional goal-setting
Jonah is a manager of a work group who has created a network of goals with
higher-level goals linked to lower-level goals. The lower-level goals pave the
way for the higher-level goals to be accomplished. This is an example of
________.
a means-ends chain
A mission is best defined as a ________.
general statement about an organization's purpose
What is the first step a manager should take when setting goals?
review the mission of the organization
Which of the following primarily involves assessing information to determine
emerging trends?
environmental scanning
Which of the following involves collecting basic information about rival firms
for the purpose of anticipating their actions?
competitor intelligence
How can managers plan effectively in dynamic environments?
Managers should train workers to set their own goals without management
aid
Which statement is true about competitive intelligence?
There is often only a small difference between what is legal and what is
ethical when working with competitive intelligence.
Almost all managers participate in some form of planning in order to provide
direction to employees, minimize waste and redundancy, and ________.
reduce uncertainty
Plans with time frames beyond three years are ________-term plans; plans
with time frames of one year or less are ________-term plans.
long; short
Which of the following is the fourth step in the MBO process?
Collaborative establishment of specific objectives with all department
members
Judi monitors her competitors' blogs, posts, and websites and the Twitter
messages of their CEOs, and she records dates and notes on a spreadsheet,
looking for patterns. Judi is performing ________.
competitor intelligence
The ________, which evolved from the General Agreement on Tariffs and
Trade (GATT), is the only global organization that deals with trade rules
among nations.
WTO
Teresa is conducting market research to assess the feasibility of introducing
a new product. She wants to determine the values, attitudes, lifestyles, and
tastes of the target market. Which component of the external environment is
Teresa assessing?
sociocultural
62
The perspective in management theory that managers are directly
responsible for an organization's success or failure is called the ________ view
of management.
omnipotent
The perspective in management theory that a significant amount of an
organization's success or failure is because of external factors outside the
control of a manager is called the ________ view of management.
symbolic
Managers face constraints in their ability to control their organizations; one
constraint is based on ________.
the organization's culture and is called internal constraint
Managers face constraints in their ability to control their organizations; the
constraint based on the company's environment is referred to as a(n)
________ constraint.
external
Of the following components, all of them might act as constraints to
managers in the external environment EXCEPT for the ________ component.
organizational culture
According to the World Economic Forum, two significant post-recession risks
facing business leaders and policy makers over the next decade are ________.
severe income disparity and chronic fiscal imbalances
The following are all demographic categorizations used in describing the
post-World War II generations, EXCEPT ________.
hispanic-americans
Environmental uncertainty refers to ________.
the degree of change and complexity in an organization's environment
Organizational culture comprises all of the following factors EXCEPT ________.
strategic plans
Which of the following is primarily used by firms to help employees adapt to
the organizational culture?
socialization
Which statement about organizational culture is most likely true?
strong cultures are associated with high organizational performance
Employees learn organizational culture through ________.
symbols and language
Which of the following is a characteristic of an innovative business culture?
debates
An innovative business culture most likely involves ________.
risk-taking
Which of the following is a characteristic of a customer-responsive culture?
clear roles and expectations
Jia wants to create a sustainability culture in the grocery store chain for
which she is the CEO. In order to do this she will need to integrate economic,
________, and social opportunities into business strategies.
environmental
According to research, an innovative culture would most likely be
characterized by all of the following EXCEPT ________.
63
autocracy
A manager focused on hiring friendly new team members with excellent
listening skills and patience is trying to enhance which of the following
characteristics of a customer-responsive culture?
type of employee
The layout of an organization's facilities, how employees dress, the kinds of
automobiles provided to top executives, and office sizes are examples of
which aspect of the organization's culture?
material artifacts and symbols
The process through which employees learn about and adapt to the
organization's culture is known as ________.
socialization
People with a(n) ________ attitude have a world-oriented view that focuses on
using the best approaches and people from around the globe.
geocentric
A manager who exhibits parochialism in his or her attitudes might be
expected to ________.
not recognize that others have different ways of living and working
A manager who has an ethnocentric attitude believes ________.
that foreigners lack the skills and knowledge to make effective business
decisions as compared to people from the home country
Managers that exhibit a polycentric attitude have the view that ________.
employees in the host country know the best work practices for running a
business
Managers who exhibit a geocentric attitude have a ________.
world-oriented view that uses the best approaches and people from around
the world
Which of the following is most likely a true statement about regional trading
alliances?
Regional trading alliances are developed in areas where member countries
believe it's in their best interests economically and globally to band together
and strengthen their economic position.
Which of the following is NOT a regional trade alliance?
WTO
Which of the following does NOT describe the WTO?
It was formed immediately after World War II and evolved from the General
Agreement on Tariffs and Trade (GATT).
Which organization has the goal of promoting international monetary
cooperation and can provide assistance to help stabilize and strengthen
economies?
International Monetary Fund
All of the following are important global trade mechanisms EXCEPT the
________.
European Union
A ________ is a type of multinational corporation (MNC) that decentralizes
management, hires local employees to manage its foreign operations, and
tailors marketing strategies to a country's unique characteristics.
64
multidomestic corporation
Firms that want to start getting into a global market with the least amount of
investment possible will most likely begin with ________.
global sourcing
A manufacturing firm in the United States is looking to find a foreign country
partner to team up with to share resources and knowledge for the purpose of
establishing a new product and production facility that does not involve
forming a completely new company. This is an example of ________.
a strategic alliance
A U.S.-based car company is pairing with a Japanese car company to create a

separate, independent organization for selling a line of motorcycles in Brazil.
This is an example of ________.
a joint venture
Global business managers should expect all these different issues EXCEPT
________.
similar work schedules around the world
Which statement about economic systems is most likely true?
A central government makes economic decisions in a planned economy.
According to the Global Leadership and Organizational Behavior
Effectiveness study, which dimension refers to how much a society relies on
social norms to alleviate the unpredictable nature of future occurrences?
uncertainty avoidance
Which term refers to a manager who exhibits both cultural awareness and
cultural sensitivity?
cultural intelligence
Which term refers to the values and attitudes shared by individuals from a
specific country that shape their behavior and beliefs about what is
important?
national culture
When expanding internationally, which of the following methods requires the
greatest commitment of company resources?
setting up a foreign subsidiary
What is defined as the process by which people, generally responding to
opportunities, start new businesses?
entrepreneurship
Which of the following is a key distinction of how an entrepreneurial venture
is different from a small business?
An entrepreneurial venture is characterized by innovative practices.
In the last 20 years, what percentage of net jobs in the United States were
created by small businesses?
63 percent
Juan is currently planning and organizing a new entrepreneurial business.
This is which step in the entrepreneurial process?
Starting the venture
65
Which of the following is NOT one of the on of opportunity entrepreneurs
might look to in the external context as identified by Peter Drucker?
the "boiled frog" phenomenon
What did one survey find to be the major source of ideas for entrepreneurial
ventures?
working in the same industry
Yuan wants to analyze his idea for an entrepreneurial venture using a
structured approach that looks at various aspects of the proposed venture
and how viable they are. This is known as ________.
a feasibility study
Maria wants to start a business where people let others borrow their lawn
equipment (e.g., lawn mowers, weed eaters) for a fee, with her business
working to connect people to make such arrangements. This is an example
of ________.
the sharing economy
Liz owns a small technology firm where she has sole control and has
personal liability for any business debts that arise. This is an example of
which form of legal organization?
sole proprietorship
Which kind of legal organization has the regular characteristics of a C
corporation but owners are taxed as a partnership as long as certain
established criteria are met?
S corporation
Roberto is one of several people who own an electronics chain corporation
where stocks are not traded publically. This type of legal organization is
called ________.
a closely held corporation
The document that outlines the provisions governing the way a limited
liability company will conduct business is known as a(n) ________.
operating agreement
Which of the following is a key challenge for an entrepreneur in organizing
for growth?
strengthening the organizational culture
Mario's entrepreneurial business has been slowly declining in sales and
profits over time, but due to its gradual nature he has not noticed the
problem. Mario not noticing is an example of ________.
the "boiled frog" phenomenon
Wallace has decided that he wants to move on from his entrepreneurial
business and take his financial profits from his hard work. This is an example
of ________.
harvesting
What is the hardest part of preparing to exit a venture?
determining the correct valuation of the venture
Starting a new business in pursuit of an opportunity to introduce a new
product or service to market through innovation is engaging in the process of
________.
entrepreneurship
66
Which of the following areas of a business plan is likely to address any broad
trends in the technological environment?
analysis of context
Which of the following forms of business ownership does not encounter a tax
treatment that involves income/losses passing through the owner(s)/partners
and taxed at a personal rate?
C corporation
________ teams are nearly autonomous and responsible for many managerial
activities.
self-directed
Answer the first two questions using this scenario:

You have always wanted to become a high school Spanish teacher. But, your professor strongly advised
against it. He encouraged you to major in computer science because there are many high-paying job
opportunities in the computer science field.
What should you do?
A.
Ignore your professor's advice.
B.
Major in Spanish because this is something you are passionate about.
C.
Major in computer science because there are many high-paying job opportunities
D.
Ignore your interests because your professor recommended a computer science major.
Answer is b
You have always wanted to become a high school Spanish teacher. But, your professor strongly advised
against it. He encouraged you to major in computer science because there are many high-paying job
opportunities in the computer science field.
You just received your course grades for the semester; and, you earned a grade of F in Spanish. Should
you change your major to computer science?
A.
Ask your professor to tell you what to do.
B.
No.
C.
67
Not necessarily.
D.
Yes, because your low grade signals failure.
Answer c
A key to success in management and your career is ____________
A.
ignoring the advice of friends.
B.
pursuing opportunities where you have no competitive advantage.
C.
considering setbacks as failures.
D.
taking control.
Answer D
What does it mean to think "entrepreneurial" in your career strategy?
A.
Allow others to decide what your career plan should be.
B.
Pursue the same career as someone who you deem a success.
C.
Consider setbacks as failures.
D.
Look for opportunities that others might have missed.
\
Answer D
__________________________ is an important element of thinking "entrepreneurial."
A.
Pursuing others' success
B.
Considering your strengths and weaknesses
Your answer is correct.
C.
68
Following what family and friends think you should be doing
D.
Ignoring setbacks
Answer is b
Entrepreneurial Ventures_5.19 mins

Joseph described three skills that are important for someone who wants to be entrepreneurial within an
organization. What are those three skills?
A.
leadership, controlling, planning
B.
facilitating, teambuilding, motivating
C.
budgeting, building, organizing
D.
innovation, creativity, adaptability
Answer D
Which of the following is the MOST important question an entrepreneur must ask?
A.
When?
B.
What?
C.
How?
D.
Why?
ANSWER D
Joseph explained how one gets past failure. Which of the following is NOT one of the ways he suggested
to move past the concept of failure?
A.
Take an analytical approach.
B.
Don't take it personally.
69
C.
Don't feel that you have to please someone else.
D.
Pretend it never happened.
A NSWER D
Joseph provided several ways a person can develop his or her entrepreneurial skills. Which of the
following was NOT mentioned by him?
A.
Focus on perseverance.
B.
Meet new people.
C.
Learn about the organization you're in.
D.
Do well at budgeting.
ANSXWER D
Chapter 10 Video_Our Labor of Love_8.15 mins

Whitney Chamberlin, an experienced event production manager, and Jesse Chamberlin, a talented
photographer, used their time, energy, and bank accounts to begin Our Labor of Love. According to the
text, Whitney and Jesse are _____________________.
A.
employees
B.
investors
C.
leaders
D.
entrepreneurs
E.
managers
ANSWER D
70
Our Labor of Love's smilebooth is a digital booth where the participants can play and become a creative
partner. This demonstrates how ________ is one of the important areas in which entrepreneurship plays
a key role.
A.
a copyright
B.
innovation
C.
a patent
D.
a new start-up
E.
job creation
ANSWER B
Chapter 10 Video_Our Labor of Love_8.15 mins

Our Labor of Love initially began as a two-person company and now consists of four photography teams,
one editor, one office manager/editor, and one smilebooth director. This demonstrates how ________ is
one of the important areas in which entrepreneurship plays a key role.
A.
a patent
B.
a copyright
C.
innovation
D.
a new start-up
E.
job creation
ANSWER E
71
Our Labor of Love advertised in nonbridal and nonwedding magazines and used social media and blogs
to showcase its work. Our Labor of Love developed nonexistent avenues, demonstrating the ________
step in the entrepreneurial process.
A.
closing the venture
B.
identifying opportunities and possible competitive advantages
C.
exploring the entrepreneurial context
D.
starting the venture
E.
managing the venture
ANSWER B
Our Labor of Love dealt with the challenge of storing and manipulating the wedding images into wedding
packages and albums. Whitney Chamberlin had to hire an editor and an editor/office manager for Our
Labor of Love to offer these new products. Employee ________ is consistently rated as one of the most
important factors influencing organizational success.
A.
promotion
B.
termination
C.
retention
D.
recruitment
E.
discipline
ANSWER D
Matt Chapman, HomeStarRunner.com Vice President, relays how he and his brother started selling T-
shirts in their spare time, which developed into something that allowed them, their friends, and family to
make a livelihood. This process describes ________.
A.
controlling
B.
visioning
72
C.
entrepreneurship
D.
transformation
E.
innovation
ANSWER C
CaringWorks, Inc. was developed because the current solutions for homelessness were found not to be
effective or cost effective. This is an example of which of Peter Drucker's seven potential sources of
opportunity that entrepreneurs might look for in the external context?
A.
The process need
B.
The incongruous
C.
The unexpected
D.
New knowledge
E.
Industry and market structures
ANSWER D
CaringWorks, Inc.'s President Carol S. Collard states that CaringWorks "started off a lot stronger than
perhaps a lot of other non-profit startups would have because of the reputation of the parent affiliate and
the in-house resources." CaringWorks is most likely organized as which of the following legal ownership
forms?
A.
Limited liability corporation
B.
Sole proprietorship
C.
Partnership
D.
S corporation
E.
C corporation
73
ANSWER E
Sound in Motion's partner Adrian Carlan describes how he "was out spinning music . . .but also I was
marketing and selling and creating promo materials, doing my own graphic art" in the beginning stages of
the company. This example best illustrates which of the following personality characteristics?
A.
Ability to set goals
B.
Ability to be involved for the long term
C.
Moderate risk taker
D.
High degree of initiative
E.
High level of motivation
ANSWER E
Chapter 10 Video_Entrepreneurship_5.01 mins

Kaneva's Founder/Chief Executive Officer Christopher Klaus describes how he is "constantly thinking of
here's where we want to go, but then you're zig-zagging to get there." This example best illustrates which
of the following personality characteristics?
A.
Ability to set goals
B.
High level of motivation
C.
Ability to be involved for the long term
D.
Moderate risk taker
E.
Ability to be involved for the short term
ANSWER C
74

Chapter 10 Entrepreneurial Ventures: Management, 14e (Robbins/Coulter)

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Chapter 10 Entrepreneurial Ventures: Management, 14e (Robbins/Coulter)

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Management, 14e (Robbins/Coulter)

Chapter 10 Entrepreneurial Ventures

5) ________ is a process of changing, experimenting, transforming, and revolutionizing.

9) To demonstrate social responsibility, entrepreneurs are encouraged to ________.

11) Small businesses are the same as entrepreneurial ventures.

13) Entrepreneurship is important to every industry sector in the United States.

15) Innovation is a key aspect of entrepreneurship.

19) Entrepreneurship is important to a nation's economic development.

25) Compare and contrast self-employment and entrepreneurship.

52) In a sole proprietorship, profits are ________.

66) The profits of an S corporation are taxed as a partnership.

68) In a limited liability company, profits are taxed as a partnership.

84) Employee empowerment is an important motivational tool for entrepreneurs to use.

86) Fully empowering employees means releasing budgetary control to them.

92) ________ is what distinguishes an entrepreneurial venture.

The primary difference between entrepreneurial ventures and small

the process of starting new businesses, generally in response to

A U.S.-based car company is pairing with a Japanese car company to create a

Answer the first two questions using this scenario:

A key to success in management and your career is ____________

What does it mean to think "entrepreneurial" in your career strategy?

__________________________ is an important element of thinking "entrepreneurial."

Entrepreneurial Ventures_5.19 mins

Chapter 10 Video_Our Labor of Love_8.15 mins

Chapter 10 Video_Our Labor of Love_8.15 mins

Chapter 10 Video_Entrepreneurship_5.01 mins

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