Entrepreneurship: The Practice and Mindset 1st Edition by Heidi M. Neck Test bank

 
3. Compare “entrepreneurship” with “startup.”
Ans:  The term startup came into vogue during the 1990s dot-com bubble when a plethora of web-based companies were born. While the term has various meanings, we subscribe to Steve Blank’s definition of startup: a temporary organization in search of a scalable business model. In the traditional view of startups, anyone who starts a business is called an entrepreneur. The entrepreneur creates a business based on research to assess the validity of an idea or business model. The business may be funded by seed money from family members or investors, but usually it is funded by the entrepreneurs themselves.
If the business is successful, the startup does not remain a startup. It can develop into an organization in its own right, be merged with another organization, or be bought or acquired by another company. In our parody example, lone-wolf Bob created a technology startup in his parents’ garage and sold it to a hugely successful organization. This traditional view of the startup, however, is not the only path for entrepreneurs. The truth is that entrepreneurs are everywhere, from corporations to franchises, to for-profit and nonprofit organizations, to family enterprises.
Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.
Cognitive Domain: Analysis
Answer Location: Entrepreneurship Is Not Reserved for Startups
Difficulty Level: Hard
AACSB Standard: Application of knowledge
 
4. Discuss the statement “Entrepreneurship can be taught (it’s a method that requires practice.”  Do you agree? Why or why not?
Ans: Many entrepreneurship courses are taught as a process, which involves identifying an opportunity, understanding resource requirements, acquiring resources, planning, implementing, and harvesting (exiting a business). But the word process assumes known inputs and known outputs, as in a manufacturing process. A process implies you will get to a specific destination. For example, building a car on an assembly line is a manufacturing process. You know all the parts, you know how they fit together, and you know the type of car you will have at the end. A process is quite predictable. 
Entrepreneurship is not predictable and, therefore, cannot adequately be taught as a process. Instead, a method or practice approach represents a body of skills or practices that together constitute a toolkit for entrepreneurial action. The entrepreneurial method requires consistent practice so that knowledge and expertise can be continuously developed and applied to future endeavors.
Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.
Cognitive Domain: Analysis
Answer Location: Entrepreneurship Can Be Taught
Difficulty Level: Hard
AACSB Standard: Analytical thinking
 
5. Discuss the Act–Learn–Build model as it relates to risk-takers.
Ans: Risk is very personal and relative. Things always seem more risky from the outside looking in because we really don’t know what calculations were made to take the next step. In fact, most entrepreneurs are very calculated risk-takers and gauge what they are willing to lose with every step taken. They practice a cycle of act–learn–build that encourages taking small actions in order to learn and build that learning into the next action (see Figure 1.1). Entrepreneurship should never be a zero-sum game—never an all-or-nothing decision. It’s not about ascending the summit without ropes or oxygen. It just looks that way from the outside.
Learning Objective: 1.2. List the seven lesser-known truths about entrepreneurship.
Cognitive Domain: Analysis
Answer Location: Truth #4: Entrepreneurs are not extreme risk-takers
Difficulty Level: Medium
AACSB Standard: Analytical thinking
 
6. Discuss the confined re-emergence entrepreneur and his or her opportunities.
Ans:  The confined re-emergence entrepreneur identifies, creates, and acts on new opportunities, coming back into fashion with the rise of information technology, advanced software development, biotech medical research, and more.  There is also the development of the service- and knowledge-based economy dominated by technology-related entrerprises, a critical role in the changing economy.
Learning Objective: 1.3. Explain the history of entrepreneurship in the United States.
Cognitive Domain: Application, Comprehension
Answer Location: Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present)
Difficulty Level: Hard
AACSB Standard: Diverse and multicultural work environments
 
7. Compare and contrast the pros and cons of owning a franchise.
Ans:

Pros	Cons
Ready-made business systems to help the franchise to become operational right away.	Franchise fee to be paid up front.
Formal training program (online modules, formal training class) after franchise agreement signed.	Royalties (percentage of sales) to be paid to franchisor every month.
Technology designed to help manage customers, and administrative tasks.	Strict franchisors’ rules with no wiggle room.
Marketing/Advertising already in place to help launch your franchise.	Requirement to pay a percentage of gross sales into the franchisor’s marketing fund.
Excellent support systems (in-house personnel, field reps, etc.)	Most products and supplies need to be purchased from the franchisor.
Real-estate resources to help source best location for franchise.	Sale of franchise requires approval from the franchisor.
A whole franchisee network to reach out to for help and advice.	Potential competition from other franchisees in the network.