Entr 421 midterm Questions and Answers

Entr 421 midterm Questions and Answers Entrepreneurial Motivation - Answer -personal reasons, economic reasons What is entrepreneurship? - Answer -An act of innovation, creating something of value from nothing, the creation of a new enterprise, the creation of new organizations There are many different definitions of entrepreneurship. Which characteristics do they all mention? - Answer -Creativity What is creative destruction? - Answer -Entrepreneurship moves market away from the equilibrium What is entrepreneurial discovery? - Answer -Entrepreneurship moves market towards the equilibrium What is the Schumpeterian view of entrepreneurship? - Answer -individual entrepreneurs are the central actors for economic development. Through the process of creative destruction, independent entrepreneurs create new economic combinations that enhance productivity growth and raise living standards. Entrepreneurial p rofits result from organizing "the relationship between factors of production and market opportunities in ways that create value that would not otherwise have been generated". Individuals are less likely to create new combinations that generate surplus val ue if they are agents in professionally managed organizations than if they are independent entrepreneurs. What is the definition of entrepreneurship? - Answer -"The process of creating or seizing an opportunity in order to create new value out of the given resources ". What do entrepreneurs do? - Answer -seize opportunities, marshal resources, commit incessant energy to their venture, possess a growth orientation, add value to the customers, build an organization What is invention? - Answer -A novel device, method, product, process or technique. The creation of a new technical idea and the physical means to accomplish or embody the idea. The creation of a product or introduction of a process for the first time . What is innovation? - Answer -The process that translates knowledge into economic growth and social well -being. It addresses and satisfies a specific market need. Brings the invention idea to the market. Which of the following is NOT an innovation by itself? a. Wheel b. Ford Mustang c. Assembly line production process d. PayPal - Answer -Wheel Are all entrepreneurs young? - Answer -The distribution of entrepreneurship is independent of age. Median = 39 Are all entrepreneurs already rich before becoming entrepreneurs? - Answer -Less than 1% come from extremely rich or extremely poor family backgrounds. Are all entrepreneurs college dropouts? - Answer -95% of entrepreneurs had earned their bachelor's degrees, 47% had more advanced degrees. Is entrepreneurship gender biased? - Answer -The share of men owned firms in total entrepreneurial activity is 66%. Which one of the following myths about entrepreneurs is often true? a. Entrepreneurs are young. b. Entrepreneurs are college dropouts. c. Entrepreneurs were already rich before becoming entrepreneurs. d. None of the above - Answer -None of the above What are some invention examples? - Answer -The secret coco -cola formula, Bluetooth, MP3 music format What are some innovation examples? - Answer -iPhone, Google revenue model, The ford assembly line production system, Amazon's logistics chain, Walmart store design What are the 5 stages of the successful Venture Life Cycle? - Answer -Development stage, startup stage, survival stage, rapid -growth stage, early -maturity stage What is the development stage? - Answer -Progressing from an idea to a promising business opportunity, usually 1.5 years to 0.5 years prior to market entry, time frame varies for different industries (e -commerce vs manufacturing) What is the startup stage? - Answer -Venture organized, developed and an initial revenue model put in place. Typically 0.5 years before market entry to 0.5 years after market entry. Revenue generation begins at this stage (at "time zero") What is the survival stage? - Answer -Period when revenues start to grow and help pay some (but not all) of the expenses. Usually 0.5 years to 1.5 years after market entry (very dependent on industry). Gap between revenue and expenses covered by borrowing or by allowing others to own a part of the venture. Lenders or investors to provide financing only if they expect positive and large enough cash flows in the near future. Ventures to have serious concerns about their financial impression on outsiders. Formal financial statements and planning t o begin. What is the rapid growth stage - Answer -Period of rapid revenue and cash flow. Cash flows from operations to grow much more quickly than cash outflows. Large