HDCS 3369 Study Guide, Chapters 1-5 There will be 65 multiple choice questions from the textbook. The exam will cover chapters 1-5. Chapter One: Be able to recognize a description of an entrepreneur. What are the three primary rewards or incentives for entrepreneurs? Profit, independence & freedom. Why are individuals pulled toward entrepreneurship? What is a parental refugee? What is an entrepreneurial team composed of? Who is an opportunistic entrepreneur? A person with both sophisticated managerial skills and technical knowledge who starts a business. What should entrepreneurs do since they often compete against powerful companies? Because many entrepreneurs are innovators what do they see differently? What is the ideal period of life for starting a business? How does the internal and external locus of control relate to entrepreneurs? What are the drawbacks of entrepreneurship? How does risk relate to an entrepreneur? What is a precipitating event? An event, such as losing a job, that moves an individual to become an entrepreneur. Chapter Two: Do small firms strive to achieve truthfulness? What do most ethical problems relate to in a small business? What is the second most common category of ethical issues? Are small firms more or less vulnerable than large firms to acting unethically? Why are small firms likely to be tempted to act unethically? Define ethical issues. Questions of right and wrong. How does organizing a Better Business Bureau affect unethical business practices? Is the ethical influence of a leader in a small business more or less than that of a leader of a large corporation? Does the personal integrity of the small business owner affect ethical performance in the business? Yes. Does a code of ethics affect small businesses as the business grows? What should a code of ethics include? What is skimming? Is there a limit to the possible social responsiveness of small businesses - why or why not? Define a cookie. What is ethical relativism? The belief that ethical standards are subject to local interpretation. What is intellectual property? Know about property rights and the Internet. What is integrity? Chapter Three: What happens when people become infatuated with a business idea? What are the criteria used to judge whether a new business idea is a good investment opportunity? Be able to recognize a Type A, Type B, and Type C startup idea? What type of idea accounts for the largest number of startups? What is the most common source of new product ideas for small business startups according the NFIB? How does marketplace needs affect new businesses? What are barriers to entry? What creates new wealth-producing resources or endows existing resources according to Peter Drucker? What are the seven sources of opportunities in the environment recognized by Peter Drucker? How does an increase in rivalry among existing competitors affect the target market? What are resources? What is a SWOT analysis? What is a strategy? What is a differentiation-based strategy? What is a focus strategy? what can cause erosion of a small firm's focus strategy? Chapter Four: Why would an entrepreneur choose a franchise over an independent startup? What does the cost of a franchise include? Define franchisor and franchisee. Define franchise contract. What is multiple-unit ownership? Be able to recognize an example of products and trade name franchising? What is business format franchising? What are primary sources of information for a potential franchisee? What is or is not typically found in a disclosure document? What are the benefits of becoming a franchisee? What are the drawbacks of becoming a franchisor? What sources of help are important to a potential franchisee? What is the Uniform Franchise Offering Circular? Chapter Five: How are business decisions made in a family business? What are the benefits from the strength of family relationships? Why do the founder's values become part of the family business? Be able to recognize example of a business pattern. Does a family firm have a paternalistic culture - can that cause problems? What are some of the possible problems for couples involved in a family business and what may cause these problems? Why may children be reluctant to join a family firm? What does sibling rivalry do to a family business? Can in-laws create complications in a family business? What is the role for the entrepreneur's spouse in maintaining good family relationships in a business? What can an owner do to avoid problems with nonfamily employees? How does a family retreat help a family/business? In which stage of a business do children begin to function as part-time employees in a family business? What are the stages of the business and what are the attributes of each stage? Define core values. Know about the Gaylors' succession plan for Al's Formal Wear.