Question 1

Adverse selection occurs when people take actions that benefit themselves at the expense of others.

Accepted Answer

A) True 
 B)False

Question 2

By developing a competitive advantage,the entrepreneur makes it tougher for others to imitate the business idea perfectly and allows the entrepreneur to the capture the profits.

Accepted Answer

A) True 
 B)False

Question 3

A situation in which something has increasing value as more people use it is referred to as __________?

Accepted Answer

A)  a patent. 
B)  network externalities. 
C)  hold-ups. 
D)  first mover. 
E)  licensing.

Question 4

Entrepreneurs have no ways of protecting their idea after the business is open to the public.

Accepted Answer

A) True 
 B)False

Question 5

Kathleen had developed and designed a new,innovative product which will allow hotels to more efficiently manage their room service orders. Before Kathleen informs the Hilton Suites of her new product,it is best that she take which of the following precautions?

Accepted Answer

A)  Place a patent on the technology. 
B)  Have the company sign a non-disclosure agreement. 
C)  Be cautious on what product details to disclose. 
D)  Make sure no trade secrets are revealed prior to signing a contract. 
E)  All of the above.

Question 6

A patent is a type of monopoly.

Accepted Answer

A) True 
 B)False

Question 7

Assume that an entrepreneur obtained a patent and produced a product based on it. Another entrepreneur purchased the product,studied it,and designed a new product that was even better than the one patented by the first entrepreneur. What the second entrepreneur did is known as

Accepted Answer

A)  inventing around. 
B)  illegal. 
C)  first mover strategy. 
D)  arrow's paradox. 
E)  efficacy.

Question 8

An entrepreneur who is in direct control of all business components,marketing,production,finance,human resource,etc.is probably using which of the following types of business mode for exploiting opportunities?

Accepted Answer

A)  Hierarchical. 
B)  Market-based. 
C)  Monopoly. 
D)  Franchise. 
E)  None of the Above.

Question 9

Which of the following leads people to have doubt that an entrepreneur's new business idea is legitimate?

Accepted Answer

A)  Investors have less information about a product that do entrepreneurs. 
B)  More small businesses fail than succeed. 
C)  People have bias against uncertainty and failure. 
D)  All of the Above. 
E)  None of the Above.

Question 10

Tacit knowledge is the hardest information for competition to obtain.

Accepted Answer

A) True 
 B)False

Question 11

Assume that you have developed several electronic spreadsheets that would help small business managers to keep track of information about purchases that their customers made. Your spreadsheets would help track who bought what,when,in combination with what other products,etc. The knowledge gained from this data would help the small business do a better job of overall marketing. Now you need to raise money to start your business to develop and sell your electronic spreadsheets. However,you are concerned that since you must explain your spreadsheets in order to get someone to invest in your business,others will now know how your products works and might develop their own rather than invest in your business. Your concern represents

Accepted Answer

A)  causal ambiguity. 
B)  monopoly. 
C)  Arrow's Paradox. 
D)  a patent. 
E)  networks.

Question 12

An entrepreneur starts a business but he doesn't know whether other companies producing a similar product will capture the market to the extent that there is very little left for his business. This is known as

Accepted Answer

A)  technical uncertainty. 
B)  competitive uncertainty. 
C)  tacit knowledge. 
D)  licensing uncertainty. 
E)  franchising uncertainty.

Question 13

What are three reasons that lead entrepreneurs to start a small-scaled company and expand only if the business idea proves to be successful?

Accepted Answer

The answer of What are three reasons that lead entrepreneurs...

Question 14

Dr.Vaughan discovered a secret recipe for barbeque sauce which everyone really liked. He began selling this in grocery stores. While others tried,no one can seem to master this sauce like Dr.Vaughan. What advantage does Dr.Vaughan have?

Accepted Answer

A)  Secrecy. 
B)  Monopoly. 
C)  Causal Ambiguity. 
D)  Trade Secret. 
E)  Franchise.

Question 15

Causal ambiguity is defined as a piece of intellectual property that can be patented.

Accepted Answer

A) True 
 B)False

Question 16

What term defines the following situation? An individual called up a possible vendor and explained in detail the scope and design of her new invention. However,when the entrepreneur didn't hear from the company in two weeks about getting this product to market,she called the company and it had already used her idea. It was being sold under the vendor's name.

Accepted Answer

A)  Arron's paradox. 
B)  Arrow's paradox. 
C)  Disclosure Rule. 
D)  Established Business Advantage. 
E)  None of the Above.

Question 17

Which of the following is most likely a competitive advantage?

Accepted Answer

A)  Using only fresh ingredients on pizzas when competitors use canned ingredients. 
B)  Having the most popular comedian in town perform at your bar. 
C)  Staying open later then your competitors. 
D)  Providing a type of service that your customers like and identify with your business. 
E)  None of the Above

Question 18

The authors suggest that a franchisee often has more ambition than a typical general manager of a store.

Accepted Answer

A) True 
 B)False

Question 19

Assume that there is an idea that has a high chance to be turned into a successful product. However,the person with the idea cannot do everything that is necessary fast enough in order to not miss the opportunity window. Therefore,she contracts with different functional experts in order get the product to market in the opportunity window. This situation is known as

Accepted Answer

A)  accelerating the pace to market. 
B)  market constraints. 
C)  making use of the best capabilities. 
D)  All of the above. 
E)  Non of the above.

Question 20

Which of the following is least likely to be related to a hierarchical mode of market exploitation?

Accepted Answer

A)  Hold-up of outlet operators. 
B)  Disclosure of knowledge. 
C)  Tacit business idea. 
D)  Adverse selection of potential employees. 
E)  None of the Above.

Exam 10: Strategy: Planning For Competitive Advantage

Adverse selection occurs when people take actions that benefit themselves at the expense of others.

By developing a competitive advantage,the entrepreneur makes it tougher for others to imitate the business idea perfectly and allows the entrepreneur to the capture the profits.

A situation in which something has increasing value as more people use it is referred to as __________?

Entrepreneurs have no ways of protecting their idea after the business is open to the public.

Kathleen had developed and designed a new,innovative product which will allow hotels to more efficiently manage their room service orders. Before Kathleen informs the Hilton Suites of her new product,it is best that she take which of the following precautions?

A patent is a type of monopoly.

Assume that an entrepreneur obtained a patent and produced a product based on it. Another entrepreneur purchased the product,studied it,and designed a new product that was even better than the one patented by the first entrepreneur. What the second entrepreneur did is known as

An entrepreneur who is in direct control of all business components,marketing,production,finance,human resource,etc.is probably using which of the following types of business mode for exploiting opportunities?

Which of the following leads people to have doubt that an entrepreneur's new business idea is legitimate?

Tacit knowledge is the hardest information for competition to obtain.

An entrepreneur starts a business but he doesn't know whether other companies producing a similar product will capture the market to the extent that there is very little left for his business. This is known as

What are three reasons that lead entrepreneurs to start a small-scaled company and expand only if the business idea proves to be successful?

Dr.Vaughan discovered a secret recipe for barbeque sauce which everyone really liked. He began selling this in grocery stores. While others tried,no one can seem to master this sauce like Dr.Vaughan. What advantage does Dr.Vaughan have?

Causal ambiguity is defined as a piece of intellectual property that can be patented.

Which of the following is most likely a competitive advantage?

The authors suggest that a franchisee often has more ambition than a typical general manager of a store.

Which of the following is least likely to be related to a hierarchical mode of market exploitation?