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Exam 17: Entrepreneurship

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Question 1

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A ________ is a legal structure that can sell rights of ownership in the form of stocks or shares.

A) sole proprietorship
B) general partnership
C) corporation
D) limited liability company (LLC)
E) limited partnership

F) B) and D)
G) C) and E)

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C

Question 2

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List and explain at least four possible sources of funding for start-ups.

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The following are six common sources of ...

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Question 3

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Research has uncovered several important differences between managers and entrepreneurs. One of these differences is that

Many companies start with the founder's ________. For example, Jeff Bezos, the founder of Amazon.com and the world's wealthiest man, has said that he intends for Amazon to be "Earth's most customer-centric company" and to be "a place where people can come to find and discover anything they might want to buy online."

If you were giving an aspiring entrepreneur advice, which statement would you avoid?

The following is an excerpt from a business plan: Cake Walk is an upscale new bakery whose baked goods reflect what's happening in the news today. For example, during Oscar week, our windows will show cakes of the nominees for Best Actor and Best Actress. During Super Bowl week, we'll offer baked football-oriented treats, such as football-shaped cookies and cupcakes, and we'll offer edible cake jerseys of the competing teams. The principals of Cake Walk will be Francesca Miller, who has run a successful New York City bakery for more than ten years, and her business partner Daryce Livingston, a Wharton-educated MBA who has worked at a major Manhattan investment firm since 2004. The firm is organized as a partnership between Miller and Livingston. $\begin{array} { | l | l | } \hline\text { Strengths } & \text { Weaknesses } \\\text { - Excellent location } & -\text { Product prices will be higher than } \\\text { - Superb product by a well-known } & \text { those of similar products sold at } \\\text { baker } & \text { supermarkets. } \\\text { - Strong media presence by the } & -\text { High rent required for downtown } \\\text { principals }&\text { location creates large overhead. }\\\hlineOpportunities&Threats\\- \text{There is no other bakery within a five-mile radius.}&- \text{Cakes and other confections are a}\\- \text{National market trends show a consistent 10 \%}& \text{luxury good; possible downturns in the}\\ \text{increase yearly in consumers choosing} &\text{economy mean that consumers may give}\\\text{to purchase from a bakery rather than a mass}&\text{up freshly baked cakes before they give}\\ \text{producer such as a supermarket.}&\text{up other items.}\\&- \text{The success of Cake Walk may}\\& \text{quickly cause other competitors to open}\\& \text{up shops in the same vicinity.}\\\hline\end{array}$ In which section of Cake Walk's business plan would this information be found? Explain.

A business plan will likely not answer this question.

The following is an excerpt from a business plan: "To open our new upscale toy store, We R Toys, we require a total of $225,000. The owners will be providing $100,000 of this amount from their own savings, and their friends and families have promised an additional $25,000. Therefore, We R Toys requires a bank loan of $100,000." In which section of We R Toys' business plan would this information be found?

Which example best fits the definition and expectations of a start-up company?

Accel, Greylock Partners, Sequoia Capital, Benchmark, and Andreessen Horowitz are all in the business of providing funds to new businesses in exchange for an ownership share in the company. These companies are all seeking a high return on their investment, and they tend to be drawn to technology and biotechnology companies. Accel, Greylock, Sequoia, Benchmark, and Andreessen are all

________ is the level of necessaries, comforts, and luxuries that a person is accustomed to enjoying.

Explain the difference between an entrepreneur and an intrapreneur. Name at least one successful entrepreneur and the company he or she founded.

Think about a company or a business that you might like to start. You need not have a grand idea for a multinational corporation; you might decide, for example, that you want to start a company in which you mow people's lawns in the summer and shovel their sidewalks after snowstorms. Or you might decide to learn how to be a tattoo artist and then become a "mobile" tattoo artist who goes to people's homes to give them tattoos. For your chosen business, explain how you would follow the advice given by the authors: 1. Identify your motives. 2. Build clients. 3. Practice humility. (This is more about self-development. Explain how you would practice humility). 4. Surround yourself with the right people. 5. Learn the basics of accounting. If you cannot think of a business you would like to start, use the lawn mowing/snow shoveling business to answer this question.

Sequoia Capital is a venture capital firm that invests in promising new start-ups that have a high potential for strong profitability over a fairly short period of time. In one day, Sequoia's management team hears presentations from five businesspeople who are looking for a $5 million investment for their new firm. Based on Dr. Lakshmi Balachandra's research, ________ is mostly likely to receive the $5 million funding from Sequoia.

Identify and explain at least three ways in which self-employment differs from entrepreneurship. How might self-employment be the first step on the road to entrepreneurship?

We Are the World is an importing company that specializes in importing hand-made arts and crafts from crafters and artisans around the world. The company has about $4 million worth of stock outstanding. Due to its desire to avoid double taxation, it is structured so that its individual shareholders pay taxes on all of the company's income. The shareholders report the flow-through of income and losses on their personal tax returns and are assessed at their individual tax rates. We Are the World is a(n)

Although estimates vary widely, it seems reasonable to suggest that start-up costs for the average business are approximately

Who is least likely to describe himself or herself as self-employed and most likely to self-identify as an entrepreneur?

How does organizational culture and design develop in a start-up company?

Your name is Joanne Warren, and you are writing a business plan for a coffee house that you plan to open in the downtown district of your city. Your business will be called A Cup of Joanne, and you plan to distinguish yourself from your competitors by offering blends from all around the world. You will also sponsor international coffee tastings and sell one-pound bags of freshly ground fair-trade coffee. The bank from which you are seeking to borrow $20,000 has asked you for a full business plan. ________ is/are not required in your business plan.