chapter 1

Question 1

Entrepreneurs

Answer 1

start own business
recognize opportunities that others may not have noticed
shift economic resources from low productivity to high with greater yield
add value to scarce resources

Question 2

Free Enterprise System

Answer 2

Economic system in which businesses are privately owned and operate relatively free of government interference
based on voluntary exchange

Question 3

Entrepreneurs and the Free Enterprise Economy

Answer 3

encourages entrepreneurs who use resources efficiency to satisfy consumer needs by rewarding them with profit

Question 4

Voluntary Exchange

Answer 4

transaction between two parties who agree to exchange money for a product or service
both parties agree and will have benefits

Question 5

5 Roots of Opportunity

Answer 5

1 Problems the business can solve
2 Changes in laws situations or trends
3 Inventions of totally new products or services
4 Competition
5 Technological advances

Question 6

Profit as Signal

Answer 6

profit sign that an entrepreneur has added value to the scarce resources they used
lack of sign that entrepreneur is not using resources well and is not adding value to resources

Question 7

Business opportunity and 4 Characteristics

Answer 7

1 Attractive to customers
2 Will work in your business environment
3 Can be executed in available window
4 Resources and skills available

Question 8

Cost/Benefit Anaylsis

Answer 8

decision making process in which the costs of taking an action are compared to the benefits

Question 9

Using cost/benefit analysis

Answer 9

can be inaccurate unless opportunity cost is considered

Question 10

Opportunity Cost

Answer 10

Cost of missing next best investment

value of what must be given up in order to obtain something else

Question 11

SWOT

Answer 11

Strengths
Weaknesses
Opportunities
Threats

Question 12

Strengths

Answer 12

capabilities and positive points that entrepreneurs has from experiences to contacts
internal to organization

Question 13

Weaknesses

Answer 13

negatives entrepreneurs faces
lack of capital or training or failures to set up a workable accounting system
external to organization

Question 14

Opportunities

Answer 14

positive external events or circumstances that can help the entrepreneur get ahead of competition

Question 15

Threats

Answer 15

external factor event or circumstance that can harm the business
competitors legal issues or declining economy

Question 16

Porters strategy framework

Answer 16

delineates cost leadership and differentiation as low cost and product uniqueness strategies

Question 17

Small Business

Answer 17

0 to 500 full time employees with annual sales less than 5 million

Question 18

Why be an Entrepreneur

Answer 18

control over time
fulfillment
creation/ownership
control over compensation
control over working conditions

Question 19

Benefit examples

Answer 19

independence
satisfaction
financial reward
self esteem
contribution to society

Question 20

Cost examples

Answer 20

business failure
obstacles
loneliness
financial insecurity
long hours/hard work
strain on personal relationships

Question 21

Benefit defined

Answer 21

money earned and knowledge and experience gained

Question 22

Cost defined

Answer 22

money and time invested

Question 23

Entrepreneurial Options

Answer 23

social entrepreneurship
venture philanthropy
green entrepreneurship

Question 24

Strategy defined

Answer 24

a plan for how an organization or individual plans to perform and outdo competitors

Question 25

Path to Small Business

Answer 25

start from beginning
buy an existing business
secure a franchise rights
license technology
do not steal creativity

Question 26

Franchise defined

Answer 26

a business that markets a product or service developed by a franchisor typically in the manner specified by that franchisor

Question 27

Acquisition defined

Answer 27

the purchase of a business

Question 28

Due Diligence

Answer 28

the exercise of reasonable care in the evaluation of a business opportunity

Question 29

Faces of Entrepreneurship

Answer 29

Gazelle
Microenterprise
Lifestyle Business

Question 30

Gazelle

Answer 30

company that achieves the annual growth rate of 20% or greater typically measured by the increase of sales revenue

Question 31

Microenterprise

Answer 31

a firm with 5 or less employees initial capitalization requirements of under $35,000 and the consistent operational involvement of the owner

Question 32

Lifestyle Business

Answer 32

microenterprise that permits its owners to follow a desired pattern of living

Question 33

7 Rules for a Successful Business

Answer 33

1 recognize opportunity
2 evaluate with critical thinking (SWOT) 
3 Build a team
4 create a business plan
5 gather resources
6 establish ownership
7 create wealth