Chapter 2 Recognizing Opportunities and Generating Ideas
1) BenchPrep, the company profiled in the opening feature for Chapter 2, sells an iPhone app to help
students prepare for the GMAT and other exams. The original idea for the company stemmed from the
founders' recognition that if people could use their iPhones to study for the GMAT:
A) they wouldn't have to carry heavy study books around and they could maximize their study time by
catching a few minutes of studying between meetings and on similar occasions
B) they could study more questions and a computer within the app could keep track of their progress on
practice exams
C) they could save money by not having to buy multiple study guides and a small computer within the
app could keep track of their progress on practice exams
D) they wouldn't have to carry heavy study books around and they could interact online with other
people preparing for the GMAT and similar exams
E) they could maximize their study time by catching a few minutes of studying between meetings and on
similar occasions and they could save money by not having to buy multiple study guides
Answer: A
Rationale:
Option A best reflects the convenience and efficiency offered by using an iPhone app for studying, which
aligns with the founders' original idea of providing a more convenient study method.
2) A(n) ________ is a favorable set of circumstances that creates a need for a new product, service, or
business.
A) idea
B) scheme
C) design
D) proposal
E) opportunity
Answer: E
Rationale:
An opportunity is defined as a set of circumstances that makes it possible to do something, especially
something new or innovative, in this case, creating a new product, service, or business.
3) According to the textbook, opportunities are:
A) easy to spot
B) easy to spot in fast-growing industries but tough to spot in slow-growing industries
C) easy to spot in the manufacturing sector but tough to spot in the service sector
D) tough to spot
E) neither easy nor tough to spot
Answer: D
Rationale:
Opportunities are often not obvious and require careful analysis and observation to identify, making
them challenging to spot.
4) An opportunity has four essential qualities:
A) attractive, timely, durable, and anchored in a product, service, or business that creates or adds value
for its buyer or end-user
B) practical, opportune, appropriate, and anchored in a product, service, or business that is efficient and
effective
C) realistic, striking, timely, and anchored in a product, service, or business that is timely
D) attention-getting, attractive, timely, and anchored in a product, service, or business that creates or
adds value for its buyer or end-user
E) attractive, durable, resilient, and opportune
Answer: A
Rationale:
These qualities ensure that an opportunity is appealing, relevant, sustainable, and focused on delivering
value, which are essential for a successful venture.
5) Shelly Ford is starting a fashion boutique in an upscale mall near San Antonio. She wants to open her
store during the time period in which a business like hers can realistically enter the new market. Shelly is
trying to open her business while the ________ is open.
A) safe harbor
B) window of opportunity
C) portal of entry
D) doorway of opportunity
E) safety zone
Answer: B
Rationale:
The "window of opportunity" refers to the optimal time for entering a new market, indicating that Shelly
wants to open her boutique at the right time to maximize her chances of success.
6) The term "window of opportunity," as discussed in Chapter 2, is a metaphor that describes the time
period in which a firm can:
A) obtain funding or financing
B) hire new employees
C) complete a financial analysis
D) realistically enter a new market
E) write a business plan
Answer: D
Rationale:
The "window of opportunity" is the period when market conditions are favorable for a new entrant,
allowing a firm to enter and establish itself successfully.
7) Which of the following is correct regarding opportunities and ideas?
A) An opportunity and an idea are essentially the same thing.
B) An idea almost always meets the criteria of an opportunity.
C) An opportunity is a thought, an impression, or a notion.
D) An idea is a favorable set of circumstances that creates a need for a new product, service, or
business.
E) It's important to discern whether a particular idea meets the criteria for an opportunity.
Answer: E
Rationale:
This statement emphasizes the distinction between ideas, which are raw concepts, and opportunities,
which are ideas that meet specific criteria and have potential for success.
8) A(n) ________ is a favorable set of circumstances that creates the need for a new product, service, or
business. A(n) ________ is a thought, an impression, or a notion.
A) scheme, notion
B) opportunity, idea
C) idea, design
D) idea, opportunity
E) notion, scheme
Answer: B
Rationale:
This pair of definitions distinguishes between an opportunity, which is an external circumstance, and an
idea, which is an internal concept or thought.
9) Jessica Smith is thinking about starting a chain of fitness centers for young adults ages 18-30. Which
of the following is not an appropriate criterion for Jessica to test her idea against?
A) Determine whether the "window of opportunity" is open.
B) Determine whether a fitness center for young adults ages 18-30 meets the threshold of being a good
idea.
C) Determine the extent to which the notion takes advantage of an environmental trend, solves a
problem, or fills a gap in the marketplace.
D) Determine whether opening a fitness center for young adults ages 18-30 is timely.
E) Determine whether opening a fitness center for young adults ages 18-30 is a concept that creates
value for its buyer or end-user.
Answer: B
Rationale:
This criterion is about the subjective evaluation of the idea's quality, which is not a definitive indicator of
an opportunity.
10) The three ways to identify an opportunity include:
A) observing trends, solving a problem, and finding gaps in the marketplace
B) studying industry trade journals, talking to consumers, and solving a problem
C) observing trends, conducting brainstorming sessions, and studying industry trade journals
D) observing trends, talking to consumers, and finding gaps in the marketplace
E) reading books, solving a problem, and finding gaps in the marketplace
Answer: A
Rationale:
These methods involve recognizing patterns in the market, addressing unmet needs or problems, and
identifying areas where demand exceeds supply, all of which can lead to the discovery of a viable
opportunity.
11) GasBuddy and GasPriceWatch.com are companies started to help consumers save money on
gas. Which environmental trend is most likely to have provided the impetus for the creation of
these companies?
A) regulatory changes
B) political changes
C) economic forces
D) technological advances
E) social forces
Answer: C
Rationale:
GasBuddy and GasPriceWatch.com were likely created in response to economic forces,
specifically the fluctuation of gas prices and consumers' desire to save money on fuel.
12) Economic forces impact the opportunities available to entrepreneurs. Which of the following
alternatives reflects a set of economic forces that would be of interest to entrepreneurs?
A) level of disposable income, new uses of old technologies, and new laws and regulations
B) new technologies, consumer spending patterns, and new laws
C) interest rates, consumer spending patterns, and level of disposable income
D) social and cultural trends, level of interest rates, and what people think is "in"
E) new changes in political areas, new laws, and level of disposable income
Answer: C
Rationale:
Economic forces such as interest rates, consumer spending patterns, and disposable income
directly impact the opportunities available to entrepreneurs by influencing consumer behavior
and market demand.
13) Which of the following is not an example of a social force?
A) changes in interest rates
B) emphasis on clean forms of energy including wind, solar, biofuels, and others
C) aging of baby boomers
D) increased diversity of the workforce
E) increasing number of people going back to school and/or retraining for new jobs
Answer: A
Rationale:
Changes in interest rates are driven by economic factors, not social forces. Social forces are
societal trends and changes that influence consumer behavior, attitudes, and lifestyles.
14) An increased focus on health and wellness has resulted in a number of new business ideas
including healthier foods and beverages, yoga instruction and training centers, and nutrition
consulting. An increased focus on health and wellness is an important ________ that is creating
opportunities in many areas for entrepreneurial firms.
A) economic force
B) regulatory force
C) legal force
D) technological advances
E) social force
Answer: E
Rationale:
The focus on health and wellness represents a societal shift (a social force) towards healthier
lifestyles, creating opportunities for businesses to cater to this growing demand.
15) The increasing number of social networks on the Internet is attributed to a jump in the
number of people who are wanting to connect with one another online. The increasing number of
social networks is an important:
A) political trend
B) economic trend
C) legal trend
D) social trend
E) economic trend
Answer: D
Rationale:
The increasing number of social networks is driven by a social trend, indicating a growing desire
for online social connectivity among individuals.
16) Hulu.com allows people to watch television shows and movies on the Internet. Hulu.com's
business opportunity was made possible by ________ that enhanced the ability of television
shows and movies to be uploaded to the Internet and played by anyone with a suitable computer
and an Internet connection.
A) social forces
B) technological advances
C) legal changes
D) regulatory changes
E) economic forces
Answer: B
Rationale:
Hulu.com's business opportunity was enabled by advancements in technology, specifically in the
ability to stream and deliver video content over the Internet.
17) If a new firm was launched to help public schools comply with The No Child Left Behind
Act of 2002, that opportunity was created by:
A) changes in economic forces
B) demographic changes
C) changes in social forces
D) changes in technological forces
E) political actions and regulatory changes
Answer: E
Rationale:
The No Child Left Behind Act of 2002 represents a political action and regulatory change that
created an opportunity for firms to offer services to help public schools comply with the new
legislation.
18) SafetyWeb is a Web-based service that helps parents protect their children's online
reputation, privacy, and safety. Which of the following approaches to identifying an opportunity
was most likely the impetus for SafetyWeb?
A) observing trends
B) studying government reports
C) finding gaps in the marketplace
D) talking to consumers
E) solving a problem
Answer: E
Rationale:
SafetyWeb was likely created to solve the problem of parents' concerns about their children's
online safety and reputation, indicating that the opportunity was identified by recognizing and
addressing a specific problem.
19) Sharon Simms is a very capable computer engineer. Recently, she noticed a problem that
computer engineers have, and thought of a solution to the problem that might represent an
opportunity for a new software product. Sharon's idea for a new software product is an example
of a(n) ________ discovery.
A) chance
B) serendipitous
C) traditional
D) conventional
E) opportune
Answer: B
Rationale:
Sharon's discovery of a solution to a problem that computer engineers face is serendipitous, as it
was found by chance and represents an unexpected opportunity.
20) The Savvy Entrepreneurial Firm feature in Chapter 2 focuses on Xhale and Vestagen, two
entrepreneurial startups. While each firm is different and is successful in its own right, the main
point of the feature is to illustrate that:
A) entrepreneurial startups can solve the same problem in different ways
B) entrepreneurial firms are often started by everyday people solving everyday problems
C) one of the most important points to consider before launching a business is to determine if its
window of opportunity is open
D) finding gaps in the marketplace is an effective way of identifying business opportunities
E) both economic and social forces impact the opportunities available to entrepreneurs
Answer: A
Rationale:
The feature highlights that entrepreneurial startups can address the same underlying problem or
need in different ways, showcasing the diversity of approaches that entrepreneurs can take to
innovate and create successful ventures.
21) Clothing boutiques and specialty shops often start because there is a need for a particular
product but large retailers like Wal-Mart and Costco can't sell enough of the item to stock it on
their shelves. If a clothing boutique started to sell designer clothes or clothing for hard-to-fit
people because the clothing wasn't being offered by a larger retailer, the best way to describe
how that idea was recognized is:
A) finding a gap in the marketplace
B) brainstorming
C) observing trends
D) solving a problem
E) talking to consumers
Answer: A
Rationale:
The boutique identified a gap in the marketplace where larger retailers were not meeting the
specific needs of certain customers, leading to the creation of a niche market for designer clothes
or clothing for hard-to-fit people.
22) In 2000, Tish Cirovolo realized that there were no guitars on the market made specifically
for women. As a result, she started Daisy Rock Guitars, a company that makes guitars just for
women. Daisy Rock Guitars are stylish and come in feminine colors, and incorporate design
features that accommodate a woman's smaller hand and build. The best way to describe how
Cirovolo's business idea was recognized is:
A) brainstorming
B) talking to consumers
C) reading industry reports
D) observing trends
E) finding a gap in the marketplace
Answer: E
Rationale:
Cirovolo recognized a gap in the marketplace where guitars specifically designed for women
were not available, leading to the creation of Daisy Rock Guitars to fill that gap.
23) A common way that gaps in the marketplace are recognized is:
A) by observing changing environmental trends
B) by recognizing problems that need to be solved
C) via studying industry reports
D) when people become frustrated because they can't find a product or service that they need and
recognize that other people feel the same way
E) via combined focus groups and brainstorming sessions
Answer: D
Rationale:
Gaps in the marketplace are often identified when individuals recognize a need or problem that is
not being addressed by existing products or services, leading to the realization that others may
also be experiencing the same frustration.
24) The What Went Wrong? feature in Chapter 1 focuses on Clearly Canadian, a company that
introduced a line of fruit-flavored bottled water in the early 1990s. The main takeaway from the
feature is that:
A) if a firm says it's capitalizing on an environmental trend, solving a problem, or filling a gap in
the marketplace, it has to deliver on its promises
B) if a firm is basing its business idea on solving a problem, its solution must be better than
solutions that are currently available
C) if a firm is capitalizing on an environmental trend, it must be a trend that will stay in place for
a minimum of 3-5 years for the opportunity to be sustainable
D) brainstorming is an effective technique for generating business ideas
E) focus groups are an effective technique for generating business ideas
Answer: A
Rationale:
The feature highlights the importance of delivering on promises made about capitalizing on
trends, solving problems, or filling gaps in the marketplace to ensure the success of a business
idea.
25) Which of the following statements is incorrect regarding the personal characteristics of
entrepreneurs?
A) Some people think that entrepreneurs have a "sixth sense" that allows them to see
opportunities that others miss.
B) The extent and depth of an individual's social network affect opportunity recognition.
C) Several studies show that prior experience in an industry actually blinds an entrepreneur to
the recognition of new opportunities in the same industry.
D) Creativity is the process of generating novel or useful ideas.
E) The corridor principle states that once an entrepreneur starts a firm, he or she begins a journey
down a path where "corridors" leading to new venture opportunities become apparent.
Answer: C
Rationale:
The statement that prior experience in an industry blinds an entrepreneur to recognizing new
opportunities is incorrect. While prior experience may limit an entrepreneur's perspective, it can
also provide valuable insights and knowledge that can be applied to new opportunities in the
same industry.
26) Frank Patterson started a firm in 2011 that creates and manufactures accessories for Apple
iPhones. He started with four accessories, and after several months added three new accessories
that have been very successful. The fact that Frank recognized the opportunity for the three new
accessories only after he started his firm and become immersed in the iPhone accessory industry
is an example of the ________ at work.
A) opportunity tenet
B) opportunity rule
C) chance rule
D) access principle
E) corridor principle
Answer: E
Rationale:
The corridor principle suggests that once an entrepreneur starts a firm, they become more attuned
to new venture opportunities within the same industry, as evidenced by Frank recognizing the
opportunity for new accessories after starting his firm.
27) The ability to notice things without engaging in deliberate search is referred to as:
A) cognitive alertness
B) cognitive awareness
C) managerial alertness
D) entrepreneurial alertness
E) individual awareness
Answer: D
Rationale:
Entrepreneurial alertness is the ability to notice opportunities without actively searching for
them, suggesting a heightened awareness or sensitivity to potential opportunities.
28) Kelly Pryor, who has launched several successful entrepreneurial firms, seems to have a
"sixth sense" that allows him to see opportunities that others miss. Kelly's ability is referred to
as:
A) individual awareness
B) cognitive alertness
C) entrepreneurial alertness
D) individual readiness
E) cognitive readiness
Answer: C
Rationale:
Kelly Pryor's ability to see opportunities that others miss is an example of entrepreneurial
alertness, which is the ability to recognize and capitalize on opportunities.
29) Which of the following statements is incorrect in regard to entrepreneurial alertness?
A) The research findings on entrepreneurial alertness are conclusive.
B) Alertness is largely a learned skill.
C) People who have more knowledge of an area tend to be more alert to opportunities in that area
than others.
D) The term "entrepreneurial alertness" is often associated with a "sixth sense" that seems to
allow some people to see opportunities that others miss.
E) Entrepreneurial alertness is defined as the ability to notice things without engaging in
deliberate search.
Answer: A
Rationale:
The statement that the research findings on entrepreneurial alertness are conclusive is incorrect.
While entrepreneurial alertness is a recognized concept, its nature and development are still areas
of ongoing research and debate.
30) According to the textbook, research results over time consistently suggest that somewhere
between ________ of those who start businesses got their ideas through social contacts.
A) 10 percent and 20 percent
B) 20 percent and 30 percent
C) 30 percent and 40 percent
D) 40 percent and 50 percent
E) 50 percent and 60 percent
Answer: D
Rationale:
Research indicates that a significant proportion of entrepreneurs get their business ideas through
social contacts, highlighting the importance of networking and social relationships in opportunity
31) An individual who identifies a business idea on his or her own is referred to as a(n):
A) separate entrepreneur
B) functional entrepreneur
C) lone entrepreneur
D) individual entrepreneur
E) solo entrepreneur
Answer: E
Rationale:
A solo entrepreneur is someone who identifies a business idea independently, without the
involvement of partners or a team.
32) A network entrepreneur is an individual who identifies his or her business idea:
A) on their own
B) through the assistance of a paid consultant
C) through social contacts
D) with one or more partners
E) through a business incubator program
Answer: C
Rationale:
A network entrepreneur is someone who identifies a business idea through interactions with their
social contacts or network.
33) A solo entrepreneur is an individual who identified his or her business idea ________. A
network entrepreneur is an individual who identified his or her business idea ________.
A) through social contacts, on their own
B) through a business incubator program, through social contacts
C) on their own, through social contacts
D) through the assistance of a paid consultant, through social contacts
E) with one or more partners, on their own
Answer: C
Rationale:
A solo entrepreneur identifies their business idea on their own, while a network entrepreneur
identifies their idea through social contacts or networking.
34) ________ are characterized by frequent interactions that form between coworkers, friends,
and spouses.
A) Balanced relationships
B) Weak-tie relationships
C) Lateral-tie relationships
D) Moderate-tie relationships
E) Strong-tie relationships
Answer: E
Rationale:
Strong-tie relationships are characterized by close, frequent interactions between individuals,
such as those between coworkers, friends, and spouses.
35) Most of Jacob's ideas come from interacting with coworkers, friends, his spouse, his parents,
and other people that share the same beliefs that he does. Jacob is getting most of his ideas
through:
A) weak-tie relationships
B) horizontal-tie relationships
C) strong-tie relationships
D) multiple-tie relationships
E) vertical-tie relationships
Answer: C
Rationale:
Jacob is getting his ideas from strong-tie relationships, which are characterized by close
interactions with individuals who share similar beliefs and values.
36) Alex has a number of casual acquaintances that he interacts with infrequently. The
relationships that Alex has with these people are referred to as:
A) strong-tie relationships
B) moderate-tie relationships
C) lateral-tie relationships
D) weak-tie relationships
E) multiple-tie relationships
Answer: D
Rationale:
Alex's relationships with his casual acquaintances are weak-tie relationships, which are
characterized by infrequent interactions and lower levels of closeness.
37) According to research in this area, it is more likely that an entrepreneur will get a new
business idea through a ________ relationship than the alternatives.
A) weak-tie
B) moderate-tie
C) vertical-tie
D) lateral-tie
E) strong-tie
Answer: A
Rationale:
Research suggests that entrepreneurs are more likely to get new business ideas through weak-tie
relationships, as these connections provide access to diverse perspectives and information.
38) ________ is the process of generating a novel or useful idea.
A) Innovation
B) Imagining
C) Creativity
D) Visualization
E) Envisioning
Answer: C
Rationale:
Creativity is the process of generating new and useful ideas, often involving thinking outside the
box and exploring unconventional solutions.
39) Which of the following represents the correct order of the five stages of the creative process?
A) preparation, incubation, elaboration, insight, evaluation
B) insight, preparation, incubation, elaboration, insight
C) preparation, incubation, insight, evaluation, elaboration
D) incubation, evaluation, insight, preparation, elaboration
E) incubation, preparation, evaluation, elaboration, insight
Answer: C
Rationale:
The correct order of the five stages of the creative process is preparation, incubation, insight,
evaluation, and elaboration, as individuals prepare, incubate ideas, have insights, evaluate ideas,
and then elaborate on the chosen idea.
40) Macy is a very creative person. Often, when trying to generate a novel or useful idea, she
spends several days "mulling over" the idea, which is her way of thinking it through, at both the
conscious and unconscious level. The stage of the creative process that Macy is in while she is
mulling over an idea is referred to as:
A) preparation
B) insight
C) evaluation
D) elaboration
E) incubation
Answer: E
Rationale:
Macy is in the incubation stage of the creative process, where she is allowing the idea to develop
and mature in her mind, both consciously and unconsciously, before reaching a potential
breakthrough or insight.
41) In the five-stage creative process, the flash of recognition, or what is sometimes referred to
as the "eureka" experience, occurs in the:
A) insight stage
B) preparation stage
C) incubation stage
D) elaboration stage
E) evaluation stage
Answer: A
Rationale:
The insight stage is where the "eureka" moment occurs, characterized by a sudden realization or
understanding of a solution or idea.
42) ________ is (are) used to generate a number of ideas quickly.
A) Insight groups
B) Competitive intelligence gatherings
C) Examination groups
D) Survey groups
E) Brainstorming
Answer: E
Rationale:
Brainstorming is a technique used to generate a large number of ideas quickly, often in a group
setting where participants freely share ideas without criticism.
43) Which of the following is not one of the rules for a formal brainstorming session?
A) no criticism is allowed
B) the session moves quickly
C) freewheeling is encouraged
D) leapfrogging is encouraged
E) the session is used for decision making
Answer: E
Rationale:
The purpose of a formal brainstorming session is to generate ideas, not to make decisions.
Decisions are typically made after the brainstorming session is complete.
44) The number one rule for a brainstorming session is:
A) no criticism is allowed
B) no freewheeling is allowed
C) no leapfrogging is allowed
D) no more than 10 people are allowed to participate
E) no wild or unrealistic ideas are allowed
Answer: A
Rationale:
The primary rule of brainstorming is to encourage the free flow of ideas without criticism, as this
can stifle creativity and idea generation.
45) According to the textbook, a focus group is a gathering of 5 to 10 people who are selected
because:
A) they are most likely to purchase large amounts of the product or service being discussed
B) they responded to a self-selected opinion poll about the topic being discussed
C) of their relationship to the issue being discussed
D) they responded to a mail survey about the topic being discussed
E) they are spokespersons for the topic being discussed
Answer: C
Rationale:
Focus groups consist of individuals selected based on their relationship to the issue being
discussed, typically representing a diverse range of perspectives and experiences.
46) According to the textbook, the best approach to utilizing a library for entrepreneurshiprelated research is to:
A) discuss your general area of interest with a reference librarian
B) focus your efforts on studying newspapers and periodicals
C) focus your efforts on browsing through industry-related materials
D) discuss your general area of interest with other library patrons
E) focus your efforts on academic journals
Answer: A
Rationale:
The best approach to using a library for entrepreneurship-related research is to consult with a
reference librarian who can help guide your search and identify relevant resources.
47) An example of a valuable library resource is IBISWorld, which is a(n):
A) business publication
B) academic journal
C) Census Bureau publication
D) trade journal
E) database of industry-related information
Answer: E
Rationale:
IBISWorld is a database that provides industry-related information, making it a valuable
resource for researching specific industries and markets.
48) To make sure that its customers are satisfied and to probe for new product ideas, Intuit
routinely sends employees to the facilities of their customers. This technique for generating new
business ideas is called:
A) brainstorming
B) day-in-the-life research
C) focus group
D) survey
E) customer advisory board
Answer: B
Rationale:
Day-in-the-life research involves observing and interacting with customers in their natural
environment to gain insights into their experiences and needs, which can lead to the development
of new business ideas.
49) A(n) ________ is a physical or digital repository for storing ideas.
A) suggestion bank
B) idea depository
C) suggestion pool
D) idea bank
E) proposition pool
Answer: D
Rationale:
An idea bank is a place where ideas are stored for future reference or development, serving as a
repository for creative ideas.
50) Which of the following is an example of how to encourage creativity at the organizational
level?
A) Maintain a "stiff" organizational culture with no room for different behaviors.
B) Elevate creativity's importance throughout the organization.
C) Pigeonhole employees; keep them in the same job for years.
D) Make no attempt to hire creative people.
E) Promote a mentality suggesting that the best solutions to all problems have already been
found.
Answer: B
Rationale:
Elevating creativity's importance throughout the organization involves creating a culture that
values and encourages creative thinking and innovation, which can lead to the generation of new
and innovative ideas.
51) An idea is a favorable set of circumstances that creates a need for a new product, service, or
business.
Answer: False
Rationale:
An idea is actually a thought, impression, or notion, and it may or may not meet the criteria of an
opportunity.
52) An opportunity has four essential qualities: it is (1) rare, (2) attractive, (3) timely, and (4)
resilient.
Answer: False
Rationale:
An opportunity has four essential qualities: it is (1) attractive, (2) timely, (3) durable, and (4)
anchored in a product, service, or business that creates or adds value for its buyer or end user.
53) The term "window of opportunity" is a metaphor describing the time period in which a firm
can realistically raise money.
Answer: False
Rationale:
The term "window of opportunity" actually describes the time period in which a firm can
realistically enter a new market.
54) An idea is a thought, impression, or notion. It may or may not meet the criteria of an
opportunity.
Answer: True
Rationale:
An idea is indeed a thought, impression, or notion. Whether it becomes an opportunity depends
on factors such as its feasibility, market demand, and competitive landscape.
55) The three ways to identify an opportunity include observing trends, solving a problem, and
finding gaps in the marketplace.
Answer: True
Rationale:
These are indeed three common ways to identify business opportunities, by observing trends,
addressing unmet needs or problems, and finding areas where the market is underserved.
56) Economic factors, social factors, technological advances, and political action and regulatory
changes are the most important trends to follow in trying to identify opportunities.
Answer: True
Rationale:
These trends can significantly impact business opportunities, as they shape consumer behavior,
market demand, and the competitive landscape.
57) Many new businesses are successful by taking advantage of fads.
Answer: False
Rationale:
While some businesses may succeed by capitalizing on fads, sustainable success typically comes
from addressing enduring needs or creating lasting value for customers.
58) Aging of baby boomers, the increasing diversity of the workplace, and increasing interest in
healthy foods and "green" products are important economic trends.
Answer: False
Rationale:
These are actually important social trends, not economic trends.
59) Several studies have shown that prior experience in an industry helps entrepreneurs
recognize business opportunities.
Answer: True
Rationale:
Prior experience in an industry can provide entrepreneurs with valuable insights and knowledge
that help them recognize business opportunities within that industry.
60) Opportunity recognition may be an innate skill or cognitive process.
Answer: True
Rationale:
Some individuals may have a natural ability to recognize opportunities, while others may
develop this skill over time through experience and learning.
61) Weak-tie relationships are characterized by infrequent interaction and ties between casual
acquaintances.
Answer: True
Rationale:
Weak-tie relationships involve interactions that are not as frequent or deep as those in strong-tie
relationships. These relationships often connect individuals to diverse sources of information and
ideas.
62) It is more likely that an entrepreneur will get a new business idea through a strong-tie than a
weak-tie relationship.
Answer: False
Rationale:
Research suggests that entrepreneurs are more likely to get new business ideas through weak-tie
relationships, as these connections provide access to new information and perspectives.
63) The five stages of the creative process include preparation, incubation, insight, evaluation,
and elaboration.
Answer: True
Rationale:
These stages represent a typical sequence in the creative process, from preparing to generate
ideas, to incubating them, gaining insight, evaluating their feasibility, and finally elaborating on
the chosen idea.
64) Incubation is the stage of the creative process during which an idea is subjected to scrutiny
and analyzed for its viability.
Answer: False
Rationale:
Incubation is actually the stage during which the idea is left to rest in the mind, allowing the
subconscious to process and develop it further, rather than subjecting it to scrutiny.
65) Elaboration is the stage of the creative process during which the idea is put into its final
form.
Answer: True
Rationale:
Elaboration involves refining and developing the idea into a tangible form, such as a product or
service, ready for implementation.
66) Brainstorming is used to generate a number of ideas quickly.
Answer: True
Rationale:
Brainstorming is a technique used to generate a large number of ideas in a short period of time,
often used in the early stages of the creative process.
67) Brainstorming sessions are designed to move slowly, so ideas can be presented and
evaluated.
Answer: False
Rationale:
Brainstorming sessions are typically designed to be fast-paced, with a focus on generating ideas
without criticism or evaluation, to encourage creativity and free thinking.
68) Focus groups typically involved a group of people who are unfamiliar with a topic and are
brought together to respond to questions.
Answer: False
Rationale:
Focus groups usually consist of individuals who are selected based on their knowledge or
experience with a topic, and they are brought together to provide in-depth feedback and insights.
69) An idea bank is a physical or digital repository for storing ideas.
Answer: True
Rationale:
An idea bank is a storage system, either physical or digital, where ideas can be stored, organized,
and accessed for future reference or development.
70) Creativity and innovation are almost identical concepts.
Answer: False
Rationale:
While closely related, creativity refers to the ability to generate new and novel ideas, while
innovation involves implementing those ideas to create value, often through the development of
new products, services, or processes.
71) Describe the difference between an idea and an opportunity. Why is the distinction
important?
Answer: An opportunity is a favorable set of circumstances that creates a need for a new product,
service, or business. An opportunity has four essential qualities: it is (1) attractive,
(2) durable, (3) timely, and (4) is anchored in a product, service, or business that creates or adds
value for its buyer or end user. In contrast, an idea is a thought, impression, or notion. It may or
may not meet the criteria of an opportunity. This distinction between an idea and an opportunity
is important because many entrepreneurial ventures fail not because the entrepreneurs that
launched them didn't work hard, but rather because there was no real opportunity to begin with.
72) Describe the three separate ways that entrepreneurs identify new business, product, and
service opportunities?
Answer: The three ways that entrepreneurs identify new business, product, and service
opportunities are through observing trends, solving a problem, and finding gaps in the
marketplace.
The first approach to identifying opportunities is to observe trends and study how they create
opportunities to pursue. Economic forces, social factors, technological advances, and political
action and regulatory changes are the most important trends to follow. The second approach to
identifying opportunities is solving a problem. Sometimes identifying opportunities simply
involves noticing a problem and finding a way to solve it. These problems can be pinpointed
through observing trends and through more simple means, such as intuition, serendipity, or
chance. The third approach is finding gaps in the marketplace. This approach is accomplished by
finding a need that customers have that is not being satisfied—by either large, established firms
or entrepreneurial ventures. Large retailers like Wal-Mart, Costco, and Home Depot compete
primarily on price by serving large groups of customers with similar needs. They do this by
offering the most popular items targeted towards mainstream consumers. While this approach
allows the large retailers to achieve economies of scale, it leaves gaps in the marketplace.
Entrepreneurs step in to start businesses to fill these gaps. There are also gaps in the marketplace
that represent consumer needs that aren't being met by anyone.
73) Describe the difference between strong-tie and weak-tie relationships. Is it more likely that
an entrepreneur will get new ideas through strong-tie or weak-tie relationships?
Answer: Strong-tie relationships are characterized by frequent interaction and form between
coworkers, friends, and spouses. Weak-tie relationships are characterized by infrequent
interaction and form between casual acquaintances. According to research in this area, it is more
likely that an entrepreneur will get a new business idea through a weak-tie than a strong-tie
relationship because strong-tie relationships, which typically form between like-minded
individuals, tend to reinforce insights and ideas the individuals already have. Weak-tie
relationships, on the other hand, which form between casual acquaintances, are not as apt to be
between like-minded individuals, so one person may say something to another that sparks a
completely new idea.
74) Describe how brainstorming can help facilitate the generation of ideas, and outline the four
rules for conducting a brainstorming session.
Answer: Brainstorming is a technique that is used to generate a number of ideas quickly. Among
the purposes a brainstorming session could be used for, is the generation of new business,
product, or service ideas.
In a brainstorming session, the leader of the group of people is instructed to come up with ideas.
One person shares an idea, another person reacts to it, another person reacts to the reaction, and
so on. A flip chart is typically used to record all the ideas. A productive session is freewheeling
and lively. The main objective is to create an atmosphere of enthusiasm and originality where
lots of ideas are generated. The four strict rules of brainstorming are as follows:
1. No criticism is allowed.
2. Freewheeling is encouraged; the more ideas, the better.
3. The session moves quickly, and nothing is permitted to slow down the pace.
4. Leapfrogging is encouraged. This means using one idea as a means of jumping forward
quickly to other ideas.
75) Describe how library and Internet research can be used to generate new business ideas.
Answer: Library and Internet research are important tools for generating business ideas. A
natural tendency is to think that an idea should be chosen, the process of researching the idea
should then begin. This approach is too linear. Often, the best ideas emerge when the general
notion of an idea, like creating casual electronic games for adults, is merged with extensive
library and Internet research, which might provide insights into the best types of casual games to
create. The best approach to utilizing a library is to discuss your general area of interest with a
reference librarian, who can point you to useful resources, such as industry-specific magazines,
trade journals, and industry reports. Simply browsing through several issues of a trade journal
can spark new ideas. Internet research is also important. If you are starting from scratch, simply
typing "new business ideas" into Google or Yahoo! will produce links to newspaper and
magazine articles about the "hottest" and "latest" new business ideas. If you have a specific idea
in mind, a useful technique is to set up a Google or Yahoo! e-mail alert using keywords that
pertain to your topic of interest The Internet can also be used for specific searches and to access
blogs that provide insightful information on almost any topic.
Test Bank for Entrepreneurship: Successfully Launching New Ventures
Bruce R. Barringer, R. Duane Ireland
9780132555524, 9780131393905, 9780134729534, 9780133797190
