Entrepreneurship 9th Edition by Hisrich - Test Bank

Entrepreneurship 9th Edition by Hisrich – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 05 Identifying and Analyzing Domestic and International Opportunities Answer Key

True / False Questions

1. The key to successful entrepreneurship is to develop an idea that has a market with a need for the product or service idea conceived.
   TRUE

Difficulty: Medium
p.121

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

Difficulty: Medium
p.121

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

Difficulty: Medium
p.122 

4. The U.S. Chamber of Commerce and Small Business Development Centers are good places to get information and assistance in starting a new business.
   TRUE

Difficulty: Easy
p.122 

5. Gartner provides information on technology markets.
   TRUE

Difficulty: Hard
p.123 

 

6. The Kaufmann foundation Provides resources for entrepreneurship education and research and lists the angel (private investor) groups throughout the United States.

TRUE

 

Difficulty: Medium

p.123

 

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

FALSE

 

Difficulty: Medium

p.123

 

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

FALSE

 

Difficulty: Medium

p.124

9. International entrepreneurship is the process of an entrepreneur conducting business activities across national boundaries.
   TRUE

Difficulty: Easy
p.125

10. International entrepreneurial decisions are more complex than domestic decisions due to uncontrollable factors such as economic development and stage of economic development.
    TRUE

Difficulty: Medium
p.126

11. Entrepreneurs doing business in the former U.S.S.R. should be aware that barter, or third-party arrangements, are commonplace.
    TRUE

Difficulty: Medium
p.127 

12. The laws governing business arrangements have been standardized over 150 international legal systems.
    FALSE

Difficulty: Medium
p.127 

 

13. Only the pricing element in the business strategy of an international entrepreneur has the potential to be affected by the multiplicity of legal environments.
    FALSE

Difficulty: Medium
p.127

14. Transfer risk is the risk in attempting to shift assets or other funds out of the country.
    TRUE

Difficulty: Easy
p.128

15. Three major types of political risks that might be present are operating risk, transfer risk, and ownership risk.
    TRUE

Difficulty: Hard
p.128

16. Contract law varies significantly from country to country, in part reflecting the two types of legal tradition—commercial law and civil law.
    FALSE

Difficulty: Medium
p.128

17. If the legal system of the country the global entrepreneur is dealing with does not have a good track record, it is not possible for the contract to contain any agreement that contract disputes will be heard in the courts of a different country or home country.
    FALSE

Difficulty: Hard
p.128-129

18. For a global entrepreneur, technological environment variations are minimal since firms produce mostly standardized, relatively uniform products that can be sorted to meet industry standards.
    FALSE

Difficulty: Hard
p.129

 

19. Culture encompasses a wide variety of elements, including language, social structure,

religion, political philosophy, economic philosophy, education, and manners and customs.

TRUE

 

Difficulty: Medium

p.130

20. Nonverbal or hidden language of the culture can be thought of in terms of several components – time, intangible value, and business relationships.
    FALSE

Difficulty: Medium
p.131

21. Reference groups in any culture provide values and attitudes that influence behavior.
    TRUE

Difficulty: Medium
p.132

 

22. Gifts related to business proceedings are illegal in most other countries and should not be offered to foreign business partners.

FALSE

 

Difficulty: Easy

p.133

 

23. Profits and tax benefits are common motivations for going global.
    TRUE

 

Difficulty: Medium
p.134

 

24. For a U.S.-based entrepreneurial firm, the 75 percent of the world’s population living outside the United States offers a very large market opportunity.
    FALSE

 

Difficulty: Medium
p.134

 

 

 

25. In selecting a foreign market the selection decision should be based on both past sales and competitive positioning as well as an assessment of each foreign market alternative.

TRUE

 

Difficulty: Medium

p.136

 

26. When researching foreign markets, the entrepreneur will usually want data such as population, GDP, per capita income, inflation rate, literacy rate, unemployment, and education levels.
    TRUE

 

Difficulty: Medium
p.137

 

27. There are three general classifications for exporting; direct, indirect and third-party.
    FALSE

 

Difficulty: Medium
p.139

 

28. A disadvantage of using licensing as an entry strategy for a foreign market is the high amount of risk involved.
    FALSE

 

Difficulty: Medium
p.140

 

29. A nonequity arrangement is a method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market.

TRUE

 

Difficulty: Medium

p.140

 

30. Nonequity arrangements discussed by the text include licensing, management projects and exporting.

FALSE

 

Difficulty: Medium

p.140

 

31. A vertical merger is the combination of two firms that produce one or more of the same or closely related products in the same geographical area.

FALSE

 

Difficulty: Medium

p.142

 

32. 32. A product extension merger occurs when acquiring and acquired companies have related

production and/or distribution activities but do not have products that compete directly

with each other.
TRUE

Difficulty: Medium

 p.143

33. 33.The General Agreement on Tariffs and Trade is an attempt to impose significant tariffs on business between nations.
    FALSE

Difficulty: Medium
p.144

34. The objectives of the General Agreement on Tariffs and Trade was to liberalize trade by eliminating or reducing tariffs.
    TRUE

Difficulty: Medium
p.144

35. The North American Free Trade Agreement (NAFTA) increases trade barriers and quotas among the U.S., Canada, and Mexico.
    FALSE

Difficulty: Easy
p.145

 

Multiple Choice Questions

36. An opportunity assessment plan:
    A.is the same thing as a business plan.
    B. is longer than a business plan.
    C. has a lot of computer-based spreadsheets.
    D. focuses on the opportunity, not the venture.

 

Difficulty: Medium
p.121

 

37. All of the following are questions an opportunity assessment plan might answer except:
    A.How much capital do I need?
    B. What market need does it fill?
    C. What business skills do I have?
    D. Can a patent be obtained?

 

Difficulty: Hard

p.121-122

 

38. ______ is a nonprofit organization that provides free online and in-person assistance to entreprenuers in the form of training, consulting and mentoring provided mainly by retired executives and entreprenuers.
    A. CSBC
    B. NAICS
    C. SCORE
    D. SIC

 

Difficulty: Medium
p.122 

 

 

39. ____ and _____ are both government sources of information that might be helpful in gathering the information needed to start a business.
    A.Mergent and The Industrial monitor
    B. NAICS and SIC codes
    C. Business Source Complete and Small Business News
    D. The Euromonitor and Business Source Complete

 

Difficulty: Medium
p.123-124

 

40. ______ provides information on industries such as aerospace, energy, healthcare and defense.
    A. Mergent
    B. Plunkett
    C. Frost and Sullivan
    D. Business Source Complete

 

Difficulty: Hard
p.123 

 

41. All of the following are government sources of information except:
42. Census reports
43. Export/Import Authority
44. NAICS and SIC
45. Hoovers

 

Difficulty: Easy

p.123

 

42. _____________ is the process of an entrepreneur conducting business activities across national borders.
    A. Intrapreneurship
    B. International entrepreneurship
    C. Domestic entrepreneurship
    D. Direct importing

 

Difficulty: Medium
p.125

 

43. Concerns regarding roads, electricity, banking facilities, communication, and educational systems have to do with a country’s:
    A.infrastructure.
    B. balance of payments.
    C. political climate.
    D. economics.

 

Difficulty: Medium
p.127 

 

44. A country’s _______________ is the difference between the value of a country’s imports and exports over time.
    A.gross national product
    B. purchasing power parity
    C. current account
    D. foreign exchange reserve

 

Difficulty: Easy
p.127

 

45. What term describes the practice of paying for goods indirectly through another source?
    A.Licensing
    B. Barter
    C. Promotion
    D. Exporting

 

Difficulty: Easy
p.127

 

46. Which among the following political risks is considered the biggest risk of all?
    A.Transfer risk
    B. Ownership risk
    C. Investment risk
    D. Operating risk

 

Difficulty: Hard
p.128

 

 

47. ______ is defined as the risk of interference with the operations of the venture.
    A. Transfer risk
    B.Ownership risk
    C. Investment risk
    D. Operating risk

 

Difficulty: Medium
p.128

 

 

 

48. Which of the following statement is (are) true?
    A.Most countries have laws and court procedures protecting intellectual property such as those in the United States.
    B. Civil laws tend to be relatively nonspecific.
    C. Laws of a country regulate the manner in which business transactions are executed.
    D. Global entrepreneurs cannot specify in the contract that any contract disputes will be heard in the courts of another country.

 

Difficulty: Medium
p.128 

 

49. Which of the following is not an aspect of nonverbal or hidden language?
    A.Energy
    B. Business relationships
    C. Space
    D. Time

Difficulty: Easy
p.131 

 

50. It is a practice in some cultures to hug and even kiss when greeting a known business partner. What aspect of nonverbal language is being referred to in the above example?
    A.Time
    B. Business relationship
    C. Space
    D. Customs

 

Difficulty: Easy
p.131 

 

51. Which of the following statements is not true?
    A.Religion in a culture defines the ideas for life, reflected in the values and attitudes of individuals and the overall society.
    B. The tenets of nonreligious or secularist societies do not affect behavior.
    C. The impact of religion varies depending on the strength of the dominant religious tenets and their impact on the values and attitudes of the culture.
    D. Religion provides the basis for some degree of transcultural similarity under shared beliefs and attitude.

Difficulty: Medium
p.132-133 

 

52. Which among the following influences whether customers are able to use the good or service properly and whether they are able to understand the firm’s advertising or other promotional messages?
    A.Political philosophy
    B. Religion
    C. Manners and customs
    D. Education

 

Difficulty: Easy
p.133

53. Motivations for going global, discussed in the text, include all the following except:
    A.cheap shipping costs
    B. excess production capacity
    C. technological advantage
    D. competitive pressures

Difficulty: Medium
p.134

54. Primary data is:
    A.data that has been collected by the private sector.
    B. data collected by the government.
    C. original information collected by the entrepreneur.
    D. data that is hard to find.

Difficulty: Medium
p.137

 

55. Exporting:
    A.is the least popular method for going global.
    B. results in a lack of control over quality.
    C. results in an inability to realize location economies.
    D. can be direct or indirect.

 

Difficulty: Medium
p.139 

 

56. _____ is not considered a nonequity arrangement.
    A. Turn-key projects
    B. Exporting
    C. Licensing
    D. Management contracts

 

Difficulty: Medium
p.140

 

 

57. _____ has the main disadvantages of high transportation costs, trade barriers, and problems with local marketing agents.
    A.Exporting
    B. Turn-key projects
    C. Licensing
    D. Franchising

Difficulty: Medium
p.140 

 

58. Licensing is best described as:
    A. a nonequity method of international business in which an entrepreneur contracts his or her

management techniques and skills to a (foreign) purchasing company.

1. a method of doing international business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners.
2. a method that involves giving a foreign manufacturer the right to use a patent, technology, production process, or product in return for the payment of a royalty.
3. an equity partnership that involves selling patents to foreign governments.

Difficulty: Easy
p.140-141 

 

59. A turn-key project is best defined as:
    A.a method of doing business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners
    B. giving a foreign manufacturer the right to use a patent in return for the payment of a royalty
    C. a method in which an entrepreneur contracts his or her management techniques and skills to a (foreign) purchasing company
    D. a form of direct foreign investment in which the investing entrepreneur holds a minority ownership position in the foreign venture

Difficulty: Medium
p.141

 

60. A _____ is the joining of two firms in order to form a third company in which the equity is shared.
    A.majority interest
    B. joint venture
    C. product extension merger
    D. minority interest

 

Difficulty: Medium
p.141 

 

61. _____ is a type of merger in which acquiring and acquired companies have related production and/or distribution activities but do not have products that compete directly with each other.
    A.Market extension merger
    B. Horizontal merger
    C. Product extension merger
    D. Vertical merger

Difficulty: Medium
p.143

62. McDonald’s acquiring its store franchises is an example of what type of merger?
    A.Market extension merger
    B. Horizontal merger
    C. Product extension merger
    D. Vertical merger

 

Difficulty: Medium
p.143

63. According to the text, the most prevalent reason for mergers is:
    A.taxation.
    B. economies of scale.
    C. currency fluctuations.
    D. to combine complementary resources.

Difficulty: Hard
p.143

 

64. Philip Morris acquiring Miller Brewing is an example of what type of merger?
    A.Market extension merger
    B. Horizontal merger
    C. Product extension merger
    D. Vertical merger

 

Difficulty: Hard
p.143

 

65. All of the following is true of the General Agreement on Tariffs and Trade except:
    A.it includes over 100 nations.
    B. it reduces tariffs, subsidies, and import quotas.
    C. it has extensive authority to enforce trade practices due to its voluntary membership.
    D. it is one of the longest-lasting agreements on trade.

Difficulty: Medium
p.144

66. The North American Free Trade Agreement (NAFTA) is between which of the following countries?
    A.United States, Brazil, and Canada
    B. United States, Mexico, and Brazil
    C. United States, Argentina, and Brazil
    D. United States, Canada, and Mexico

Difficulty: Medium
p.145

 

 

Short Answer/Essay Questions

67. Explain what the differences are between a business plan and an opportunity assessment plan.
68. Shorter
69. Focuses on the opportunity rather than the venture
70. No computer-based spreadsheets
71. Is the basis for whether to act upon an opportunity or wait until another, better opportunity comes along.

 

Difficulty: Medium

p.121

68. Identify and briefly describe the four sections of an opportunity assessment plan.

The first major section develops the product/service idea, analyzes the competitive

products and companies, and identifies the uniqueness of the idea in terms of its

unique selling propositions.

 

The second major section of the opportunity assessment plan focuses on the market—

its size, trends, characteristics, and growth rate.

 

The third section focuses on the entrepreneur and the management team in terms of their background, education, skills, and experience.

 

The final section of the opportunity assessment plan develops a time line indicating

what steps need to be taken to successfully launch the venture and translate the idea into a

viable business entity.

 

Difficulty: Medium/Hard depending on detail required by instructor.

p.121-122

69. Define political risk analysis, and identify and briefly describe the three major types of political risk.

    Political risk analysis – Prior to entering into business in another country, an assessment of that country’s political policies and its stability

    A. Operating risk – risk of interference with the operations of the venture
    B. Transfer risk – risk in attempting to shift assets or other funds out of the country
    C. Ownership risk – the largest potential risk, where the country takes over the venture’s property and employees

Answer will vary.

Difficulty: Medium

p.128

70. List the seven various aspects of culture.

Social Structure

Religion

Political Philosophy

Economics and Economic Philosophy

Education
Manners and Customs

Language

 

Difficulty: Hard (ask for less for a medium level of difficulty)

p.132 figure 5.1

 

71. Explain the major factors an entrepreneur needs to consider in choosing the best distribution channel in a foreign country.

 

(1) the overall sales potential

(2) the amount and type of competition,

(3) the cost of the product

(4) the geographical size and density of the country

(5) the investment policies of the country

(6) exchange rates and any controls

(7) the level of political risk

(8) the overall marketing plan

 

Difficulty: Hard

p.134

 

 

 

 

 

72. What are the major reasons why an entrepreneur would go global?

 

• Profits
• Competitive pressures
• Unique product(s) or service(s)
• Excess production capacity
• Declining home country sales
• Unique market opportunity
• Economies of scale
• Technological advantage
• Tax benefits

 

Difficulty: Medium (depending of number of reasons instructor requires)

p.134 table 5.3

 

73. (p. 147-149)What is a nonequity arrangement? Define the two major types of nonequity arrangements: licensing and turn-key projects, and give at least one advantage and disadvantage for each.

    Nonequity arrangement – a method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market.

    A. Licensing – involves an entrepreneur who is a manufacturer (licensee) giving a foreign manufacturer (licensor) the right to use a patent, trademark, technology, production process, or product in return for the payment of a royalty.
    Benefit: Low development costs and risks.
    Disadvantages: Lack of control over technology, inability to realize location and experience curve economies, inability to engage in global strategic coordination.
    B. Turn-key projects – A method of doing international business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners.
    Benefits: relatively low risk, ability to earn returns from process technology skills in countries where FDI is restricted.
    Disadvantages: Creation of efficient competitors, lack of long-term market presence.

Answer will vary.

Difficulty: Medium

p.140-141