Test Bank for Patterns of Entrepreneurship Management, 4th Edition, Jack M.

Kaplan, Anthony

Test Bank for Patterns of Entrepreneurship

Management, 4th Edition, Jack M. Kaplan, Anthony
C. Warren

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Chapter 7: Special Topic: Social Entrepreneurship

True/False

1. It is generally believed that the term social entrepreneur was first coined by William
Drayton in 1972.
Ans: True Page: 158

2. Traditional business entrepreneurs typically choose a nonprofit form to operate their

ventures, but social entrepreneurs unfortunately do not choose the nonprofit form.
Ans: False Page: 160

3. A significant pro for a social entrepreneur of using the nonprofit form is that the owners
can never take the value out of the venture for themselves.
Ans: False Page: 160

4. Fortunately, profiting from curing social ill is not acceptable by law.

Ans: False Page: 160

5. Social ventures tend to have greater stakeholder issues and challenges than traditional
entrepreneurial ventures.
Ans: True Page: 161

6. With growth come increased stresses on the ability of the venture to communicate
internally.
Ans: True Page: 162

7. People who believe in the social mission of the venture tend to be willing to pay a higher
price for products and services.
Ans: True Page: 163

8. An outline business plan is usually the first attempt at strategic planning.

Ans: True Page: 174

9. If you tend to become a global force, then you will have to have managers in your team
who have experience in managing small organizations.
Ans: False Page: 176

10. Social ventures are usually a short-tem mission.

Ans: False Page: 176
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Short Answer / Fill in the Blank

11. A(n) _______ profit status is what most people think of when they think of a nonprofit.
Ans: charitable Page: 160

12. The second class of models are called __________, in which a legal structure is created
to enable both a social and a business mission to exist in a mutually supportive
relationship.
Ans: hybrid Page: 163

13. The ___________ model usually requires the identification of a number of similar small
businesses that individually cannot grow or even be sustainable.
Ans: co-operative Page: 164

14. The __________ is a term first introduced by Eric Raymond that is used to describe the
result of sharing in which users of a “good” actually contribute to the overall value rather
than detracting from it.
Ans: inverse commons Page: 170

15. The ________ dates back to medieval England, where a “common” piece of land was set
aside for the village to share, with each family being allowed to graze one cow on the
commons.
Ans: law of commons Page: 170

16. The term __________ was first coined by a French social sciences researcher, who
observed machinists creating complex and personal ornaments that they placed close to
their workplace.
Ans: bricolage Page: 171

17. You can use ___________ to find people whose passion to help improve society aligns
with your ideas for a social venture.
Ans: social networks Page: 173

18. It is vital to realize and know how to deal with the various ______ that will be crucial to
your success.
Ans: interest groups Page: 174

19. The ________ needs to demonstrate that the opportunity is expressed in a clear roadmap
in order to compare and contrast where the business is going to where it was supposed to
go.
Ans: entrepreneur Page: 174

20. Choosing an appropriate ________ is particularly important for a socially driven venture.
Ans: business model Page: 175
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Multiple Choice

21. ______________ stakeholders to the social venture tend to place greater scrutiny on the
venture.
a. Internal
b. Employee
c. External
d. Entrepreneurial
Ans: C Page: 161

22. This type of model is a not-for-profit structure in which the enterprise is focused entirely
on a social mission:

a. Pure
b. Hybrid
c. Dual-mission
d. Self-help
Ans: A Page: 163

23. This type of model uses a normal business structure where profits can be attractive
enough for external investors to participate while the company fulfills a major social
need:
a. Pure
b. Hybrid
c. Dual-mission
d. Self-help
Ans: C Page: 163

24. This type of model is where a legal structure is created to enable both a social and a
business mission to exist in a mutually supportive relationship:
a. Pure
b. Hybrid
c. Dual-mission
d. Self-help
b. Ans: B Page: 163

25. All of the following are classifications of cooperatives except:

a. purchasing
b. producer
c. consumer
d. community
Ans: D Page: 164

26. Cooperative structures are much more common in all of the following places except:
a. India
b. United States
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c. Europe
d. Asian countries
Ans: B Page: 164

27. All of the following are pros of a “pure” model except:

a. Clear focus on social mission
b. Low or zero tax liability
c. Ease in attracting top talent
d. Can get foundation grants
Ans: C Page: 165

28. All of the following are cons of a “pure” model except:

a. Difficult to attract top talent
b. Inability to attract equity investments
c. Too many conflict-of-interest issues
d. Inability for founders to participate financially
b. Ans: C Page: 165

29. A nonprofit and a for-profit organization are linked in what model?

a. Hybrid model
b. Pure model
c. Co-operative model
d. Dual-mission model
Ans: A Page: 165

30. All of the following are pros of choosing a dual mission model except:
a. Ease in maintaining social mission over time
b. Simple governance and tax structure
c. Can attract talent
d. Provide social benefits and wealth creation
Ans: A Page: 168

31. All of the following are cons of choosing a dual mission model except:
a. Exit strategies for investors limited
b. Potential conflict of interests between founders and investors
c. Difficult to maintain social mission over time
d. High accounting and legal fees
Ans: D Page: 168

32. All of the following are pros of choosing a cooperative model except:
a. Low or zero tax payments
b. Easier to sustain over long time
c. Founders significantly benefit financially
d. Members can extract profits
Ans: C Page: 169
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33. All of the following are cons of choosing a cooperative model except:
a. Governance issues may be complex
b. Deciding payments to management executives
c. Difficult to maintain social mission over time
d. Profit distributions can be contentious
Ans: C Page: 169

34. Which motivation deals with individuals who are motivated by a spiritual need to “leave
the world a better place” for others?
a. Altruism
b. Bricolage
c. Philosophy of Life
d. Peer recognition
Ans: C Page: 171

35. Which motivation was the term first coined by a French social sciences researcher, who
observed machinists creating complex and personal ornaments that they placed close to
their workplace?
a. Bricolage
b. Peer recognition
c. Fame
d. Philosophy of Life
Ans: A Page: 171

36. Which motivation is the term used to describe the personal satisfaction comes from
having your peers witness the excellent work that you have contributed?
a. Peer recognition
b. Fame
c. Altruism
d. Bricolage
Ans: A Page: 171

37. Which motivation is the term used to describe the individual wants to be known for the
excellence of his or her contribution?
a. Altruism
b. Fame
c. Philosophy of Life
d. Peer recognition
Ans: B Page: 171

38. When personal motivations create a(n) ____________, the network effects can be
extremely powerful.
a. physical activity
b. social activity
c. ethical activity
d. physiological activity
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Ans: B Page: 171

39. All of the following are ways to use social networks to find people whose passion to help
improve society aligns with your ideas for a social venture except:
a. ask them to volunteer
b. ask them to engage their friends
c. host a fundraiser
d. send them messages asking them repeatedly to help
Ans: D Page: 173

40. Which of the following is a free social network for professionals?

a. Huluplus
b. Groupon
c. LinkedIn
d. Facebook
Ans: C Page: 173

41. Entrepreneur can use a business plan as a guide for all of the following except:
a. seeking partners
b. Measuring customers’ feedback
c. defining a hiring plan
d. establishing the direction of the company and the action steps needed
Ans: B Page: 174

42. Before drafting the plan, the entrepreneur will need to collect information on all of the
following except:
a. the “market”
b. operating resources
c. financial/cash flow
d. the government
Ans: D Page: 175

43. Which section of the business plan must establish the need for the product or service and
the potential for the enterprise?
a. marketing section
b. company description section
c. operations section
d. finance section
Ans: A Page: 175

44. Which section of the business plan describes how the business will reach the
beneficiaries of the social venture?
a. HR section
b. company description section
c. operations section
d. marketing and sales strategy section
Test Bank for Patterns of Entrepreneurship Management, 4th Edition, Jack M. Kaplan, Anthony
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Ans: D Page: 175

45. Which section of the business plan begins with a brief general description of the
company?
a. marketing section
b. company description section
c. marketing and sales strategy section
d. operations section
Ans: B Page: 175

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