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Ch06: Entrepreneurship and New Ventures
True/False
1. Classic entrepreneurs are risk-taking individuals who take action to pursue opportunities
others fail to recognize, or even view as problems or threats.
Answer: True
Learning Objective: 6.1
Difficulty: Easy
AACSB: Analytical thinking
Bloom’s Taxonomy: Knowledge
2. A first-mover advantage comes from being first to exploit a niche or enter a market.
Answer: True
Difficulty: Easy
3. Entrepreneurs are born, not made.
Answer: False
Difficulty: Easy
Bloom’s Taxonomy: Comprehension
Copyright © 2015 John Wiley & Sons, Inc. 6-1

4. Entrepreneurs’ belief that they are in control of their own destiny shows that they have an
internal locus of control.
Answer: True
Difficulty: Easy
5. Entrepreneurs have a tolerance for ambiguity.
Answer: True
Difficulty: Easy
6. Money is the key to entrepreneurial success.
Answer: False
Difficulty: Easy
7. Serial entrepreneurship is one way for people, including women and minorities who have
hit the “glass ceiling” in their careers or are otherwise cut off from other employment
choices, to strike out on their own and gain economic independence.
Answer: False
Difficulty: Moderate

8. Classic entrepreneurship is a form of ethical entrepreneurship that seeks novel ways to

solve pressing social problems.
Answer: False
Difficulty: Easy
9. Social enterprises have a social mission to help make lives better for underserved
populations.
Answer: True
Difficulty: Easy
10. The vast majority of small businesses employ between 100 and 150 persons.
Answer: False
Difficulty: Easy
11. One of the most common ways to get involved in a small business is to buy and run a
franchise.
Answer: True

Difficulty: Easy
12. In a franchise, the franchise parent receives a share of income or a flat fee from the
franchisee.
Answer: True
Difficulty: Easy
13. A startup is a new venture that the entrepreneur is hoping will take shape and prove
successful as things move forward.
Answer: True
Difficulty: Easy
14. Lean startups are permanent, cost-intensive organizations.
Answer: False
Difficulty: Easy
15. Growing too fast is one of the reasons small businesses fail.

Answer: True
Difficulty: Easy
16. A family business feud is the issue of who will run the business when the current head
leaves.
Answer: False
Difficulty: Easy
17. Business incubators are also called business accelerators.
Answer: True
Difficulty: Easy
18. Having a succession plan helps avoid a succession problem.
Answer: True
Difficulty: Easy
19. Small businesses have a high success rate.

Answer: False
Difficulty: Easy
20. Business incubators aid in the development of startups.
Answer: True
Difficulty: Easy
21. The life cycle of an entrepreneurial firm begins with the breakthrough stage.
Answer: False
Difficulty: Easy
22. The breakthrough stage involves establishing the firm and fighting for its existence.
Answer: False
Difficulty: Easy

23. Self-management is an ability to use objective understanding of personal strengths and

weaknesses to keep growing—individually and career-wise.
Answer: True
Difficulty: Easy
24. A succession plan describes the direction for a new business and the financing needed to
operate it.
Answer: False
Difficulty: Easy
25. In a business plan, the executive summary contains the mission of the company, the details
of the owners, and the legal form of the organization.
Answer: False
Difficulty: Easy
26. A sole proprietorship is simple to start, run, and terminate.
Answer: True
Difficulty: Easy

27. A sole proprietorship is the most common form of small business ownership in the United
States.
Answer: True
Difficulty: Easy
28. When establishing a corporation, a partnership agreement must be made.
Answer: False
Difficulty: Easy
29. A limited liability corporation combines the advantages of sole proprietorship, partnership,
and corporation.
Answer: True
Difficulty: Easy
30. Debt financing requires collateral that pledges business assets or personal assets, such as a
home, to secure the loan in case of default.
Answer: True

Difficulty: Easy
Multiple Choice
31. The term _____ describes strategic thinking and risk-taking behavior that results in the
creation of new opportunities.
A. business planning
B. partnership
C. entrepreneurship
D. proxemics
E. franchising
Answer: C
Difficulty: Easy
32. A _____ entrepreneur is a risk-taking individual who takes action to pursue opportunities
others fail to recognize, or even view as problems or threats.
A. serial
B. classic
C. follow-through
D. sustainer
E. social
Answer: B
Difficulty: Easy

33. The main characteristic of _____ entrepreneurs is that they start and run new ventures over
and over again, moving from one interest and opportunity to the next.
A. sustainer
B. classic
C. serial
D. first-mover
E. necessity-based
Answer: C
Difficulty: Easy
34. A first-mover advantage comes from:

A. making improvements to existing product lines.
B. being the first to exploit a niche or enter a market.
C. being the first to take a free-ride on the opportunity created by a pioneer.
D. the ability to poach trained personnel from an established business.
E. taking risks while strategizing to improve an existing market.
Answer: B
Difficulty: Easy
35. Which of the following is true about serial entrepreneurs?

A. They are born, not made.
B. They pursue innovations within the company that can change the organization in
significant ways.
C. They make large investments in new ventures in return for an equity stake in the business.
D. They start and run businesses and nonprofits over and over again, moving from one interest
and opportunity to the next.

E. They are primarily responsible for selling of shares of stock to the public at large.
Answer: D
Difficulty: Easy
36. Nadia is unemployment and is unable to pay her bills. She realizes she loves baking and
soon opens up her own bakeshop with the help of a friend. Which of the following is true
about Nadia?
A. She is a necessity-based entrepreneur.
B. She is a social entrepreneur.
C. She is a venture capitalist.
D. She is an intrapreneur.
E. She is a serial entrepreneur.
Answer: A
AACSB: Application of knowledge
Bloom’s Taxonomy: Application
37. Which of the following is true of entrepreneurs?

A. They believe that their destiny is beyond their control.
B. They like to avoid risk.
C. They have a high need for achievement.
D. They are averse to autonomy.
E. They have a low tolerance for ambiguity.
Answer: C
Difficulty: Easy

38. Entrepreneurs:
A. do not like situations with high degree of uncertainty.
B. thrive on performance feedback.
C. have an external locus of control.
D. are unwilling to admit problems and errors.
E. do not like autonomy.
Answer: B
Difficulty: Easy
39. Which of the following scenarios demonstrates an entrepreneur who has a tolerance for
ambiguity?
A. Jean’s decision to modify a pre-existing problem-tackling strategy in his private firm
B. Roger’s decision to hire an experienced manager to head his new branch in another state
C. Karl’s decision to expand his private firm overseas despite the risk of facing cultural
differences
D. Sasha’s decision to quit her job to enter into a partnership with a well-recognized firm
E. Giselle’s decision to join her family’s well-established business
Answer: C
40. _____ takes place because other employment options don’t exist.
A. Classic entrepreneurship
B. Serial entrepreneurship
C. Intrapreneurship
D. An initial public offering
E. Necessity-based entrepreneurship

Answer: E
Difficulty: Easy
41. Yvette has recently lost her job and has not been able to find employment elsewhere. She
has to support her children, and take care of her mortgage. She realizes a niche for
chemical-free house cleaning services. Eventually she opens her own house cleaning
service. This is an example of _____.
A. classic entrepreneurship
B. serial entrepreneurship
C. intrapreneurship
D. necessity-based entrepreneurship
E. social entrepreneurship
Answer: D
42. _____ entrepreneurship is one way for people, including women and minorities who have
hit the “glass ceiling” in their careers or are otherwise cut off from other employment
choices, to strike out on their own and gain economic independence.
A. Classic
B. Necessity-based
C. Follow-through
D. Serial
E. Sustainable
Answer: B
Difficulty: Easy

43. Social entrepreneurs:

A. take risks and create enterprises whose missions is to help make lives better for
underserved populations.
B. bring buyers and sellers together for online business transactions and take a percentage
from the sales.
C. are wealthy individuals willing to invest in a new venture in return for an equity stake.
D. pursue innovations that can change the organization in significant ways.
E. start new ventures because they have few or no other employment and career options.
Answer: A
Difficulty: Easy
44. Barbara, a florist, realized the need for easily accessible organic compost in her
neighborhood. Her neighborhood consists mainly of senior citizens who are unable to
procure their own gardening supplies. She quickly established “We Compost,” a non-profit
organization that delivers compost to each household in her neighborhood. This is an
example of _____.
A. serial entrepreneurship
B. classic entrepreneurship
C. intrapreneurship
D. necessity-based entrepreneurship
E. social entrepreneurship
Answer: E

45. A(n) _____ necessarily has 500 or fewer employees, is independently owned and operated,
and does not dominate its industry.
A. small business
B. social organization
C. non-profit organization
D. classic entrepreneurship
E. Internet entrepreneurship
Answer: A
Difficulty: Easy
46. A _____ is a business in which the owner of a business sells to another the right to operate
the same business in another location.
A. non-profit organization
B. franchise
C. joint venture
D. family business
E. wholly-owned subsidiary
Answer: B
Difficulty: Easy
47. Which of the following is true about a franchise?

A. It is one of the least common ways to get involved in a business.
B. It runs under the franchisee’s name and guidance.
C. The franchise parent receives a flat fee from the franchisee.
D. It makes use of things like opensource software, while containing costs, staying small, and
keeping operations as simple as possible.
E. It refers to a business in which material or goods are given to another person, but
ownership is retained until the goods are sold.

Answer: C
Difficulty: Easy
48. A business model is a:

A. plan that describes the organizational structure of the company.
B. plan for making a profit by generating revenues that are greater than costs.
C. plan to determine the strengths and viability of a company’s organizational structure.
D. model that depicts the detail of an organization’s workflow.
E. model that lists the details of all the employees of an organization.
Answer: B
Difficulty: Easy
49. A(n) _____ is a new and temporary venture that is trying to discover a profitable business
model for future success.
A. family business
B. intrapreneurship
C. startup
D. business incubator
E. acquisition
Answer: C
Difficulty: Easy

50. Lean startups:

A. aim to create a sophisticated product with a big budget.
B. focus on increasing their acquisitions.
C. establish a complex and detailed work structure.
D. aim to keep operations as simple as possible.
E. focus on making lives better for underserved populations.
Answer: D
Difficulty: Easy
51. New small business startups often fail because of:

A. lack of business expertise.
B. strict financial controls.
C. high ethical standards.
D. slow growth.
E. strategic leadership.
Answer: A
Difficulty: Easy
52. Nailah had to quit her job to run her mother’s bookstore when her mother passed away. The
store was earning good profits and so she decided to open a new branch in another state.
What kind of a business does Nailah own?
A. Limited liability corporation
B. Social enterprise
C. Family business
D. Corporation
E. Necessity-based enterprise
Answer: C


Difficulty: Easy
53. In family businesses, _____ refers to the problem that arises when members of the family
have major disagreements over how the business should be run.
A. budget deficit
B. debt financing
C. an ethical dilemma
D. a reverse culture shock
E. a family business feud
Answer: E
Difficulty: Easy
54. A(n) _____ refers to the issue of who will run the business when the current head leaves.
A. family business integration
B. family business feud
C. family disagreement
D. succession problem
E. role confusion
Answer: D
Difficulty: Easy
55. Toby and William are both general managers at Alton & Sons, their father’s business. After
a heart attack, their father decides to retire. He is faced with the challenge of choosing

between one of his two equally capable sons to replace him in the business. Which type of
problem related to family businesses is the father facing?
A. Family business integration
B. Succession problem
C. Family disagreement
D. Role confusion
E. Family business feud
Answer: B
56. A(n) _____ plan describes how the leadership transition and related financial matters will
be handled when the time for changeover arrives.
A. partnership
B. startup
C. succession
D. liability
E. equity
Answer: C
Difficulty: Easy
57. Insufficient financing implies:

A. not taking the time to consolidate a position, fine-tune the organization, and systematically
meet the challenges of growth.
B. not having enough money available to maintain operations while still building the business
and gaining access to customers and markets.
C. not having expertise in the essentials of business operations, including finance.
D. not keeping track of the numbers, and failure to keep business finances to best advantage.
E. not making the best use of existing monies.

Answer: B
58. Stating that the failure of a small business was due to “lack of experience” implies:
A. not having expertise in the essentials of business operations, including finance, purchasing,
selling, and production.
B. not taking the time to craft a vision and mission, nor to formulate and properly implement a
strategy.
C. not keeping track of the numbers, and failure to control business finances and use existing
monies to best advantage.
D. not taking the time to consolidate a position, fine-tune the organization, and systematically
meet the challenges of growth.
E. not having sufficient know-how to run a business in the chosen market or geographical
area.
Answer: E
Difficulty: Easy
59. Daphne decided to open her first store in Dallas. Being new to the business, she was unable
to cope with the demands of running her store, and after several bad decisions, she finally
had to shut it down. What was most likely the main reason for the failure of Daphne’s
business?
A. Lack of experience
B. Insufficient financing
C. Lack of commitment
D. Ethical failure
E. Growing too fast
Answer: A


60. _____ implies that a business owner does not have the skill-sets required in the essentials
of business operations, including finance, purchasing, selling, or production.
A. Lack of experience.
B. Insufficient financing
C. Lack of expertise
D. Ethical failure
E. Growing too fast
Answer: C
61. Which of the following best describes lack of commitment?

A. Not having enough funding to maintain operations while still building the business and
gaining access to customers and markets
B. Not having sufficient know-how to run a business in the chosen market or geographical
area
C. Not having expertise in the essentials of business operations, including finance, purchasing,
selling, and production
D. Falling prey to the temptations of fraud, deception, and embezzlement
E. Not devoting enough time to the requirements of running a competitive business
Answer: E

62. Which of the following best describes lack of strategy and strategic leadership?
A. Not taking the time to craft a vision and mission, nor to formulate and properly implement
a plan
B. Not having enough funding to maintain operations while still building the business and
gaining access to customers and markets
C. Not having sufficient know-how to run a business in the chosen market or geographical
area
D. Falling prey to the temptations of fraud, deception, and embezzlement
E. Not having expertise in the essentials of business operations, including finance, purchasing,
selling, and production
Answer: A
63. Aisha has been successfully running a salon for over a year. She decided to use her profits
and expand her business by selling her homemade organic hair care products. This
involved miscellaneous costs that exhausted her funds, and she had to file for bankruptcy.
Which of the following is most likely the main reason for Aisha’s failure?
A. Lack of commitment
B. Poor financial control
C. Ethical failure
D. Late entry into the business
E. Lack of motivation
Answer: B
64. Habib, who owns a popular restaurant, plans to expand his business. After reading
favorable reviews, he decides to invest in an acquisition unaware that it is a dummy

corporation. This fraud leads to significant financial losses for him, and he is forced to shut
down his business. Which of the following is most likely to be the main reason for the
failure of Habib’s business?
A. Lack of motivation
B. Lack of strategy
C. Lack of commitment
D. Ethical failure
E. Late entry into the business
Answer: D
65. _____ offer space, shared services, and advice to help get small businesses started.
A. Business councilors
B. Business incubators
C. Succession plans
D. Social advisors
E. Internet entrepreneurships
Answer: B
Difficulty: Easy
66. The goal of business incubators is to:

A. ensure that established businesses retain their competitive advantage.
B. aid third generation family businesses resolve family business feuds.
C. formulate a succession plan for established family businesses.
D. increase the survival rates for new startups.
E. establish social enterprises.
Answer: D


Difficulty: Easy
67. Which of the following is true of small business development centers?

A. They concentrate on establishing social enterprises.
B. They exclusively support all non-profit organizations in the U.S.
C. They are supported by the U.S. Small Business Administration.
D. They offer guidance to entrepreneurs trying to invest in acquisitions.
E. They aid in the development of public sectors.
Answer: C
Difficulty: Easy
68. According to the life cycle of entrepreneurial firms, the birth stage signifies the stage in
which the:
A. entrepreneur recognizes a niche in the market and formulates an idea to take advantage of
it.
B. entrepreneur experiences the advantages of market success and financial stability.
C. entrepreneur faces the continuing management challenge of remaining competitive in a
changing environment.
D. business model begins to work well, growth is experienced, and the complexity of
managing the business operation expands significantly.
E. entrepreneur struggles to get the new venture established and survive long enough to test
the viability of the underlying business model in the marketplace.
Answer: E
Difficulty: Easy

69. According to the life cycle of entrepreneurial firms, the breakthrough stage signifies the
stage in which the:
A. entrepreneur recognizes a niche in the market and formulates an idea to take advantage of
it.
B. entrepreneur experiences the advantages of market success and financial stability.
C. entrepreneur faces the continuing management challenge of remaining competitive in a
changing environment.
D. business model begins to work well, growth is experienced, and the complexity of
E. entrepreneur struggles to get the new venture established and survive long enough to test
Answer: D
Difficulty: Easy
70. According to the life cycle of entrepreneurial firms, the maturity stage signifies the stage in
which the:
A. entrepreneur struggles to get the new venture established and survive long enough to test
B. business model begins to work well, growth is experienced, and the complexity of
C. entrepreneur recognizes a niche in the market and formulates an idea to take advantage of
it.
D. entrepreneur experiences the advantages of market success and financial stability while
facing the continuing management challenge of remaining competitive in a changing
environment.
E. entrepreneur formulates a plan for making a profit by generating revenues that are greater
than the costs of doing business.
Answer: D
Difficulty: Easy

71. _____ leadership brings the venture into being and sees it through the early stages of an
enterprise.
A. Transactional
B. Entrepreneurial
C. Bureaucratic
D. Transformational
E. Democratic
Answer: B
Difficulty: Easy
72. _____ leadership manages and leads the venture into maturity as an ever-evolving and still-
growing enterprise.
A. Strategic
B. Entrepreneurial
C. Bureaucratic
D. Transformational
E. Democratic
Answer: A
Difficulty: Easy
73. A(n) _____ plan describes the direction for a new business and the financing needed to
operate it.
A. succession
B. business

C. structural
D. operational
E. feasibility
Answer: B
Difficulty: Easy
74. In a business plan, the overview of the business purpose and the business model for making
money is contained in the _____.
A. market strategy
B. market description
C. company description
D. industry analysis
E. executive summary
Answer: E
Difficulty: Easy
75. In a standard business plan, an organization’s mission, ownership details, and, legal forms
are listed under _____.
A. market strategy
B. executive summary
C. company description
D. industry analysis
E. staffing description
Answer: C
Difficulty: Easy

76. In a business plan outline, the marketing strategy contains the:

A. description of the size of market, competitor strengths and weaknesses, and five-year sales
goals.
B. overview of the business purpose and the business model for making money.
C. description of the management and staffing skills needed and available, compensation, and
human resource systems.
D. details of the product characteristics, distribution, promotion, pricing, and market research.
E. description of cash flow projections for one to five years, breakeven points, and phased
investment capital.
Answer: D
Difficulty: Easy
77. In a business plan outline, the operations description contains the:

A. description of cash flow projections for one to five years, breakeven points, and phased
investment capital.
B. details of the product characteristics, distribution, promotion, pricing, and market research.
C. manufacturing or service methods, supplies and suppliers, and control procedures used.
D. description of the management and staffing skills needed and available, compensation, and
E. overview of the business purpose and the business model for making money.
Answer: C
Difficulty: Easy

78. In a business plan outline, _____ detail the amount of funds needed to run the business,
amount available, and amount requested from new sources.
A. capital needs
B. milestones
C. performance needs
D. liability needs
E. capability needs
Answer: A
Difficulty: Easy
79. In a business plan outline, the _____ provides details of cash flow estimate for one to five
years, break-even points, and phased investment capital.
A. staffing description
B. financial projection
C. capital need
D. milestones
E. operations description
Answer: B
Difficulty: Easy
80. Which of the following forms of ownership holds the business owner personally liable for
business debts and claims?
A. Sole proprietorship
B. Corporation
C. Limited liability partnership
D. General partnership
E. Limited liability corporation

Answer: A
Difficulty: Easy
81. Arianne has a passion for designing clothes and decides to open her own clothing store.
She starts it by taking personal loans from family and friends, and hires a few people to run
the store She maintains a tight control over costs as she does not want to incur further
debts. Arianne’s store is an example of a _____.
A. sole proprietorship
B. corporation
C. limited liability partnership
D. general partnership
E. limited liability corporation
Answer: A
82. In the context of business ownerships, a _____ is established when two or more people
agree to contribute resources to start and operate a business together.
A. corporation
B. limited liability corporation
C. partnership
D. social enterprise
E. business incubator
Answer: C
Difficulty: Easy

83. Erik and Elsa own a pet grooming business. Erik manages the financial responsibilities
while Elsa manages the customers. This is an example of a _____.
B. general partnership
C. corporation
D. limited liability partnership
E. limited liability corporation
Answer: B
84. “Sheng’s Designs” is an architectural firm owned by four investors but Sheng is the only
one who handles the day-to-day business management of the firm. They share their profits,
but their losses are restricted to the amount invested by each. This is an example of a
_____.
A. limited partnership
B. general partnership
C. corporation
D. limited liability corporation
E. sole proprietorship
Answer: A
85. A _____, common among professionals such as accountants and attorneys, limits the
liability of one partner for the negligence of another.
A. general partnership
B. sole proprietorship

C. limited partnership
D. limited liability corporation
E. limited liability partnership
Answer: E
Difficulty: Easy
86. Which of the following is true about a corporation?

A. It combines the advantages of the other forms—sole proprietorship, partnership, and
limited liability corporation.
B. Only a for-profit business can be registered as a corporation.
C. It exists separately from its owners.
D. For tax purposes, it functions as a partnership.
E. For liability purposes, it functions as a partnership.
Answer: C
Difficulty: Easy
87. Which of the following characteristics of a corporation gives it a life of its own that can
extend beyond that of its owners?
A. It grants the organization certain legal rights.
B. It is a legal entity that is chartered by the state.
C. The cost for incorporating a corporation is very high.
D. The corporation becomes responsible for its own liabilities.
E. Incorporated businesses require complex documentation.
Answer: D
Difficulty: Easy

88. Which of the following is true of a limited liability corporation?

A. It is commonly identified by the “Inc.” designation in a name.
B. It consists of a general partner and one or more “limited” partners who do not participate in
day-to-day business management.
C. The business owner is personally liable for business debts and claims.
D. For tax purposes, it functions as a sole proprietorship in the case of a single owner.
E. It involves the owners going into debt by borrowing money from another person, bank, or
financial institution.
Answer: D
Difficulty: Easy
89. For liability purposes, a limited liability corporation functions like a _____ and protects the
assets of owners against claims made against the company.
A. sole proprietor
B. corporation
C. general partnership
D. limited partnership
E. limited liability partnership
Answer: B
Difficulty: Easy
90. _____ involves going into debt by borrowing money from another person, bank, or
financial institution.
A. Debt financing

B. Risk management
C. Securitization
D. Debt consolidation
E. Equity financing
Answer: A
Difficulty: Easy
91. _____ involves giving ownership shares in the business to outside investors in return for
their cash investments.
A. Debt consolidation
B. Equity financing
C. Debt financing
D. Securitization
E. Risk management
Answer: B
Difficulty: Easy
92. _____ facilitates making large investments in new ventures in return for an equity stake in
the business.
A. State-directed financing
B. Entrepreneurial capitalism
C. Venture capitalism
D. Debt financing
E. Oligarchic capitalism
Answer: C
Difficulty: Easy


93. When shares of stock are first sold to the public and begin trading on a stock exchange, it is
referred to as _____.
A. venture capitalism
B. equity financing
C. angel investing
D. an initial public offering
E. an Internet entrepreneurship
Answer: D
Difficulty: Easy
94. _____ are wealthy individuals willing to invest in a new venture in return for an equity
stake.
A. Limited liability partners
B. Sole proprietors
C. General partners
D. Debt financers
E. Angel investors
Answer: E
Difficulty: Easy
95. Arthur, a young college graduate, started a store for traditional musical instruments. He
liked working independently and without being directed by others. He believed that his

destiny is under his own control. Which of the following personality traits of an
entrepreneur is exhibited by Arthur?
A. Internal locus of control
B. High energy level
C. High need for achievement
D. Tolerance for ambiguity
E. Flexibility
Answer: A
AACSB: Application of Knowledge
96. Wendy, a single parent of two boys, has started a small bakery in her house. She cannot
work away from home because her children are very young. Which of the following kinds
of entrepreneurship is this an example of?
A. Serial entrepreneurship
B. Necessity-based entrepreneurship
C. Intrapreneurship
D. Internet entrepreneurship
E. Social entrepreneurship
Answer: B
Difficulty: Hard
97. Colin and Becky started a garbage disposal and recycling program called “No More Trash”
in their city, which has seen enormous growth in the last few years. The public waste
management system has proved to be a failure as the authorities are overwhelmed by the
influx of people from all parts of the country. Which of the following kinds of
entrepreneurship is “No More Trash” an example of?
A. Serial entrepreneurship
B. Necessity-based entrepreneurship

C. Intrapreneurship
D. Internet entrepreneurship
E. Social entrepreneurship
Answer: E
Difficulty: Hard
98. Before starting on his new venture, Mike writes down the specifics of his ideas, the amount
of money needed, and future business operations. Mike is involved in preparing a _____.
A. succession plan
B. business portfolio
C. business plan
D. competitive analysis
E. mission statement
Answer: C
99. Ali, a small business owner, is concerned about passing the business to his heirs after his
retirement or death. He should prepare a formal _____ plan.
A. retirement contingency
B. business
C. succession
D. liquidation
E. franchising
Answer: C

100. Julia is an entrepreneur. At the current stage in which her company is stated, her main
concerns are if she will have enough customers and money. Julia’s company is in the:
A. birth stage.
B. breakthrough stage.
C. maturity stage.
D. stagnant stage.
E. failure stage.
Answer: A
Difficulty: Hard
101. Karl takes a loan from a reputed bank to set up a recording studio. Which of the following
best represents Karl’s source of finance?
A. Initial public offering
B. Revolving credit
C. Debt financing
D. Angel investment
E. Venture capital financing
Answer: C
102. Igor needed financing for his budding business, but was rejected by many financing
companies. Finally, one of his uncle’s friends, a wealthy man, got interested in the business
and gave Igor a substantial amount for a share in the venture. Which of the following best
represents Igor’s source of finance?

A. Initial public offering

B. Revolving credit
C. Debt financing
D. Angel investor
E. Loan shark
Answer: D
Difficulty: Hard
103. Joe has started his one-man audio consulting business under the name Sound Wiz. The
legal structure for the company can best be described as a _____.
B. partnership
C. trade alliance
D. corporation
E. benefit corporation
Answer: A
Difficulty: Hard
104. Emma, Heidi, and Hilda have opened a new cafe. Each of them have contributed $1,500
toward start-up costs and have agreed on dividing costs and profits equally. The legal
structure for the company can best be described as a:
A. proprietorship.
B. partnership.
C. trade alliance.
D. corporation.
E. benefit corporation.
Answer: B


Difficulty: Hard
Essay
105. Write a short note on the attitudes and personal interests of entrepreneurs.
Answer: The typical personality traits and characteristics of entrepreneurs are:

• Internal locus of control: Entrepreneurs believe that they are in control of their own destiny;
they are self-directing and like autonomy.
• High energy level: Entrepreneurs are persistent, hardworking, and willing to exert
extraordinary efforts to succeed.
• High need for achievement: Entrepreneurs are motivated to accomplish challenging goals; they
thrive on performance feedback.
• Tolerance for ambiguity: Entrepreneurs are risk takers; they tolerate situations with high
degrees of uncertainty.
• Self-confidence: Entrepreneurs feel competent, believe in themselves, and are willing to make
decisions.
• Passion and action orientation: Entrepreneurs try to act ahead of problems; they want to get
things done and not waste valuable time.
• Self-reliance and desire for independence: Entrepreneurs want independence; they are self-
reliant; they want to be their own bosses, not work for others.
• Flexibility: Entrepreneurs are willing to admit problems and errors, and are willing to change a
course of action when plans aren’t working.
Difficulty: Easy
106. Give the outline of a sample business plan.

Answer: A business plan describes the direction for a new business and the financing needed to
operate it. Although there is no single template, it is generally agreed that a good business
plan includes an executive summary, covers certain business fundamentals, is well
organized with headings and easy to read, and runs no more than about 20 pages in length.
Here is a sample business plan outline.
• Executive summary—overview of the business purpose and the business model for making
money.
• Industry analysis—nature of the industry, including economic trends, important legal or
regulatory issues, and potential risks.
• Company description—mission, owners, and legal form.
• Products and services description—major goods or services, with competitive uniqueness.
• Market description—size of market, competitor strengths and weaknesses, five-year sales
goals.
• Marketing strategy—product characteristics, distribution, promotion, pricing, and market
research.
• Operations description—manufacturing or service methods, supplies and suppliers, and control
procedures.
• Staffing description—management and staffing skills needed and available, compensation, and
• Financial projection—cash flow projections for one to five years, breakeven points, and phased
investment capital.
• Capital needs—amount of funds needed to run the business, amount available, and amount
requested from new sources.
• Milestones—a timetable of dates showing when key stages of the new venture will be
completed.
Difficulty: Easy
107. Write a short note on business partnerships.
Answer: A partnership is formed when two or more people agree to contribute resources to start
and operate a business together. It is usually backed by a legal and written partnership
agreement. Business partners agree on the contribution of resources and skills to the new
venture, and on the sharing of profits and losses. The simplest and most common form is a
general partnership where the partners share management responsibilities. A limited
partnership consists of a general partner and one or more “limited” partners who do not

participate in day-to-day business management. They share in the profits, but their losses
are limited to the amount of their investment. A limited liability partnership, common
among professionals such as accountants and attorneys, limits the liability of one partner
for the negligence of another.
Difficulty: Easy
108. What is a corporation? What advantages does a corporate form offer?
Answer: A corporation, commonly identified by the “Inc.” designation in a name, is a legal

entity that is chartered by the state and exists separately from its owners. The corporation
can be for-profit, such as Microsoft, Inc., or nonprofit, such as Count-Me-In, Inc.—a firm
featured early in the chapter for helping women entrepreneurs get started with small loans.
The corporate form offers two major advantages: (1) It grants the organization certain legal
rights (e.g., to engage in contracts), and (2) the corporation becomes responsible for its own
liabilities. This separates the owners from personal liability and gives the firm a life of its
own that can extend beyond that of its owners.
Difficulty: Easy
109. Describe equity financing.
Answer: Equity financing is an alternative to debt financing. It involves giving ownership shares
in the business to outside investors in return for their cash investments. This money does
not need to be paid back. It is an investment, and the investor assumes the risk for potential
gains and losses. The equity investor gains some proportionate ownership control in return
for taking that risk.
Difficulty: Easy

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tubercles as younger stages of the larger scars characteristic of the
genus Ulodendron. Williamson’s contributions to our knowledge of
Halonia are of primary importance; he supplied further proof of the
Lepidodendroid nature of these branches and advanced our
knowledge of their anatomy. In an early paper[315] he expressed the
view that the differences on which Halonia and Ulodendron are
separated are such as result from a difference in age and are not of
generic importance. In the last memoir, of which he was sole author,
published by the Royal Society[316], Williamson brought forward
further evidence in support of this well-founded opinion.
That the fossils known as Halonia are branches of a
lepidodendroid plant is at least certain, and it is probable that the
lateral branches which they bore were fertile, though satisfactory
proof of this is lacking. We know also that Halonia branches are
characterised by the Lepidophloios form of leaf-cushion; there is,
however, no sufficient reason to assume that such branches were
never attached to stems with the cushions of the Lepidodendron
form. The further question, namely whether Williamson was correct
in his contention as to the absence of any essential distinction
between Ulodendron and Halonia, does not admit of an
unchallenged answer. In 1903 Weiss[317] described the anatomy of a
specimen of a biseriate Halonia branch of Lepidophloios. The form of
the leaf-cushions is unfortunately not very well preserved, but Weiss
figures other specimens with two rows of tubercles on which the leaf-
cushions are sufficiently distinct to justify a comparison with those of
Lepidophloios. He believes with Williamson that it is the presence of
tubercles in place of scars which distinguishes Halonia from
Ulodendron, and that the arrangement of the tubercles or scars is a
matter of little importance. He expresses the opinion justified by the
evidence available that the absence or presence of tubercles is
merely due to accidents of preservation or, one may add, to
difference in age. Kidston[318] dissents from Weiss’s description of his
specimen as a biseriate Halonia; he regards it as a Ulodendron
branch of Sigillaria discophora (König). Until specimens with more
clearly preserved external features are forthcoming it is impossible to
settle the point in dispute, but on the facts before us there would
seem to be a prima facie case in favour of Weiss’s contention.
The designation Halonia may be retained as a descriptive term for
Lepidodendroid shoots characterised by spirally disposed scars or
tubercles and bearing leaf-cushions of the Lepidophloios type. In the
case of specimens showing prominent tubercles, the superficial
tissues are usually absent and, as in the fossil represented in fig.
161, the name Halonia does not necessarily imply the presence of
leaf-cushions of a particular type.
vii. Anatomical characters of Vegetative

Lepidodendron shoots (Lepidodendron and
Lepidophloios).
The type already described under the name Lepidodendron
vasculare differs from those dealt with in the following pages chiefly
in the anatomy of the stele. The simplest and probably most primitive
type of Lepidodendron stem is that in which the xylem forms a solid
rod; the type of stele most frequently represented is that of L.
Harcourtii, L. fuliginosum, and other species in which the diameter of
the stele is greater and a cylinder of primary xylem encloses a
comparatively large parenchymatous pith.
1. Lepidodendron esnostense, Renault[319].

This species was founded by Renault on petrified specimens from
the Culm beds of Esnost in France. The surface of a young twig
bears prominent leaf-cushions of elongated rhomboidal form similar
to those of Lepidodendron obovatum (fig. 173) and other species. In
older branches the primary cortex is replaced by a considerable
thickness of radially disposed secondary cortical tissue which, as
shown in tangential section, consists of a reticulum of elongated
pointed elements with comparatively thick walls enclosing meshes
filled with large-celled parenchyma. It is worthy of note that if such a
branch were exposed to decay, the earlier destruction of the more
delicate tissue in the meshes of the secondary cortex would produce
a series of oval depressions, corresponding to the parenchymatous
areas, separated by a projecting reticulum of the more resistant
elements: a cast of this partially decayed surface would be
indistinguishable from that of some types of Sigillaria or of a
Lyginodendron. The inner regions of the cortex of the type-
specimens have not been preserved. The xylem, which is the only
part of the stele represented, has the form of a protostele or solid
cylinder of scalariform tracheids with peripheral groups of narrower
protoxylem elements which mark the points of exit of the leaf-traces:
in a branch 1–2 cm. wide the xylem column has a diameter of 3 mm.
The small leaves (fig. 143, B, C), similar to those of a Sigillaria, are
sub-rhomboidal in section near the base and approximately circular
near the apex[320]. The mesophyll consists of palisade cells having
the appearance of typical chlorophyll-tissue. The heterosporous
strobili attributed to this species bore microsporangia on the upper
and megasporangia on the lower sporophylls; the megaspores, of
which a considerable number occur in each megasporangium, are
identical in size with those of another Culm form, Lepidodendron
rhodumnense. Some of these have retained traces of prothallus
tissue, and in one spore Renault figures what he regards as an
archegonium: the drawing is by no means convincing.
2. Lepidodendron rhodumnense, Renault[321].

The species from the Culm of Combres (Loire) agrees in its solid
xylem cylinder and in the differentiation of the secondary cortex, as
also in the association of two kinds of spore, with Lepidodendron
esnostense. A comparison of the leaves of the two types reveals
certain differences which may be of specific rank, but, apart from
minor differences, these Culm species may be classed under one
anatomical type.
3. Lepidodendron saalfeldense, Solms-Laubach[322].

This Devonian species was founded on a specimen 3 × 2·5 cm.
broad at the base, which shows the stumps of four branches
recalling the dichotomously branched arms of Stigmaria and
Pleuromeia. If these are in reality the remains of Stigmaria-like
horizontal branches the species affords an interesting example of a
Lepidodendron axis with a subterranean rhizome of the type which
has been found in several Sigillarian stems. In the upper end of the
axis the stele consists of a solid strand of xylem which is not
sufficiently well preserved to show the position of the protoxylem
groups. A transverse section taken near the base reveals a type of
stele differing from that at the upper end in being composed of
radially disposed tracheids and in its resemblance to the stele of
Stigmaria.
4. Lepidodendron fuliginosum, Williamson. Figs. 162–172, 179,

E.
1871. Lepidodendron Harcourtii, Binney, Palæont. Soc., p. 48,
Pl. vii. fig. 6.
1872. Halonia regularis, Binney, Palæont. Soc., p. 89, Pl. xv.
1881. Lepidodendron Harcourtii, Williamson, Phil. Trans. Roy.
Soc., Vol. 172, p. 288, Pls. xlix–lii.
1887. Lepidodendron fuliginosum, Williamson, Proc. Roy.
Soc., Vol. xlii. p. 6.
1891. Lepidodendron Williamsoni, Solms-Laubach, Fossil
Botany, p. 226.
1893. Lepidophloios fuliginosus, Kidston, Trans. Roy. Soc.
Edinburgh, Vol. xxxviii. p. 548.
The name Lepidodendron fuliginosum was proposed by

Williamson in 1887 for petrified stems previously included by him in
Witham’s species L. Harcourtii, but subsequently recognised as a
distinct type characterised by “the greater uniformity in the
composition of the entire cortex” and by other features some of
which do not constitute distinctive characters. The species agrees
with L. Harcourtii and with L. Veltheimianum in having a medullated
stele; it is distinguished not only by the more frequent preservation of
the middle cortex, a fact due to a difference in minute structure, but
chiefly by the peculiar structure of the secondary tissue added to the
stele; this is in part composed of radial series of parenchymatous
cells and of a varying amount of tracheal tissue the elements of
which are narrower than in other species and are characterised also
by their sinuous vertical course. As is pointed out in the sequel, the
anatomical features of L. fuliginosum, as at present understood, are
not confined to one type of Lepidodendron stem. Specimens have
been described with leaf-cushions of the form characteristic of L.
aculeatum, L. obovatum and Lepidophloios combined with the
anatomical features of Williamson’s species: it is possible that the
two species L. obovatum and L. aculeatum are not really distinct[323],
but it is certain that shoots with both the Lepidodendron and
Lepidophloios cushions may have the same type of anatomical
structure.
A more detailed knowledge of the structural features of
Lepidodendron shoots may enable us to define anatomical species
with more exactness than is possible at present. There can,
however, be little doubt that well-marked anatomical features may be
associated with more than one specific form of shoot as defined by
the form of the leaf-cushions.
Solms-Laubach proposed the name Lepidodendron Williamsoni
for the anatomical type L. fuliginosum of Williamson, but the latter
name has been generally adopted.
In the following account special attention is directed to the nature
and origin of the secondary stelar tissue and to the secretory zone,
as difference of opinion exists as to the interpretation of these
features. Among the best examples of shoots of Lepidodendron
fuliginosum without secondary tissue or in which it is feebly
developed are those originally described by Binney. The stele
includes a large parenchymatous pith, the cells of which frequently
show signs of recent division, a feature observed also in the pith of
the large stem of L. Wünschianum, represented in figs. 181, 182.
The primary xylem cylinder has an irregularly crenulate outer edge
like that of L. Wünschianum and L. Harcourtii and the protoxylem
elements occupy an exarch position. Isodiametric reticulately-pitted
elements are met with both on the inner and outer edge of the xylem.
Fig. 162. Lepidodendron fuliginosum. Part of the stele in transverse
section. (Binney Collection, Sedgwick Museum, Cambridge.)
Fig. 163. Lepidodendron fuliginosum. Longitudinal section. (Binney
Collection, Cambridge.)
Figs. 162 and 163 illustrate the structure of the outer portion of the
xylem and adjacent tissues in a section of a shoot 3·8 cm. × 2·5 cm.
in diameter, which is in the act of branching, as shown by the
occurrence of two steles of equal size. A figure of the complete
section will be found in Binney’s memoir[324], and additional
illustrations were published in 1899[325].
Fig. 164. Lepidodendron fuliginosum. Leaf-trace. (Binney Collection,
Cambridge.)
The primary xylem (figs. 162, 163, x) is succeeded by 2–3 rows of
polygonal cells with dark contents and associated with isodiametric
tracheae: these pass into clearer parenchymatous tissue, a,
characterised by the arrangement of the cells in vertical series, to
which the term meristematic zone has been applied. The secretory
zone, s, abutting on the meristematic zone, consists of more or less
disorganised parenchymatous cells and broader and more elongated
spaces; it is interrupted here and there by an outgoing leaf-trace, as
at lt 1 and lt 2 in fig. 162. The secretory zone is succeeded by a
homogeneous inner cortex like that described in L. vasculare; part of
this region is seen at the upper edge of fig. 162. The broad middle
cortex, which is separated from the inner cortex by a sharply defined
boundary, is composed of rather small lacunar parenchymatous
tissue consisting of sinuous tubular elements interspersed among
isodiametric cells of various sizes (fig. 166, p). In the middle cortical
region the leaf-traces pursue an almost horizontal course; one is
shown in fig. 164, in oblique longitudinal section, in a reversed
position; the xylem, x, should be on the inner side of the secretory
tissue, s. The clear space between the two parts of the vascular
bundle was originally occupied by a few layers of parenchymatous
cells, as seen in the transverse sections, figs. 165 and 166. In some
specimens the leaf-traces pass through the middle cortex in a much
more vertical course, as shown by the section represented in fig.
165. This section illustrates the structure of a typical leaf-trace with
unusual clearness; it shows the tangentially elongated group of
xylem, the strand of tissue which occupies the position of phloem, s
(to which the term secretory zone is applied), the compact
parenchyma between the two parts of the bundle, and surrounding
the whole a narrow sheath sharply contrasted by the smaller and
more uniform size of the cells from the middle cortex, a few cells of
which are seen in the photograph. The middle cortex shows a well-
defined junction with the more compact outer cortical region, which
consists of primary parenchyma passing externally into a zone of
phelloderm composed of thick-walled and more elongated cells. A
noticeable feature in many Lepidodendron shoots is the occurrence
of a circle of strands of secretory cells often surrounding fairly large
ducts just internal to the edge of phelloderm: similar strands form
irregularly concentric circles, as was pointed out in the case of L.
vasculare, in the phelloderm itself.
Fig. 165. Lepidodendron fuliginosum. Leaf-trace: x, xylem; s, secretory
zone. (Binney Collection, Cambridge.)
Fig. 166. Lepidodendron fuliginosum. Leaf-trace: p, parichnos. (Binney
Collection, Cambridge.)
Fig. 166 shows a leaf-trace in the outer cortex accompanied by its
crescent-shaped parichnos, p, derived from the middle cortex and by
means of which the outer cortex and the lamina of the leaves are
connected with the inner region of the shoot. This lacunar middle
cortex and parichnos doubtless constitute an aerating tissue-system
which after leaf-fall is exposed directly to the air at the ends of the
parichnos arms on the leaf-scars.
Some of the sections in the Binney Collection (Sedgwick Museum,
Cambridge) show early stages in the production of secondary xylem:
in the section represented in fig. 167 the secretory zone is
succeeded on its inner face by a zone of radially elongated cells, m,
which are clearly in a meristematic condition. The same section
shows also the more radially extended form of the xylem of a leaf-
trace with its internal protoxylem, px, in contrast to the tangentially
elongated form which is assumed during its passage through the
cortex (cf. figs. 165, 166).
Fig. 167. Lepidodendron fuliginosum. (Binney Collection, Cambridge.)
Some sections of Lepidodendron fuliginosum in the Manchester
University Collection are of special interest from the point of view of
the method of secondary thickening. In the section reproduced in fig.
168, B, the meristematic zone is seen to consist in part of radially
elongated elements, m, with parallel cross-walls evidently of recent
origin. The same tissue is shown also in fig. 168, C, a, D, a, and in
fig. 169, A, a This band of meristem, which we may speak of as the
cambium, occurs in the outer region of the meristematic zone
immediately internal to the secretory zone, sc.
Fig. 168.
A. Lepidodendron vasculare. (Botany School, Cambridge.)
B. Lepidodendron fuliginosum. (From a specimen from Shore,
Lancashire, in the Cambridge Botany School Collection).
C. L. fuliginosum. (“Biseriate Halonia” of Weiss No. 257, Manchester
University Museum.)
D. L. fuliginosum. (Manchester Univ. Museum.)
The result of the activity of this cambium band is the production of

secondary parenchyma and tracheal tissue. In fig. 179, E, drawn
from a portion of the section represented in fig. 168, B, a projecting
arm of primary xylem is seen at x; this is followed by 2–3 layers of
parenchymatous cells, some of which have dark contents, and
beyond this is seen a group of secondary elements, tr, cut across
somewhat obliquely, which are evidently products of the cambial
cells on the inner margin of the secretory zone, sc. The longitudinal
section (fig. 169, D) shows the cambial cells, a, next the secretory
zone, sc, passing internally into crushed and imperfectly preserved
elongated elements which are presumably miniature tracheae, and
these are succeeded by older and more completely lignified xylem
elements, x. In larger shoots the amount of secondary tissue is
considerably greater; it may consist almost entirely of short-celled
parenchyma (fig. 168, C, from x to sc), or it may include a large
proportion of radially disposed and vertically elongated tracheae (fig.
168, D, x2, and fig. 170, A, x2), or it may consist of parenchyma
containing scattered groups of tracheae (fig. 169, A, x2)[326].
Fig. 169. Lepidodendron fuliginosum.
A, B. (Manchester University Collection. No. Q. 645 A.)
B, C. (Manchester. No. 257.)
D. (Manchester. No. 6.)
Fig. 169, A, is a diagrammatic sketch of the tissues—1 mm. wide

—between the primary xylem, x, and the inner cortex. The primary
xylem is succeeded by short parenchymatous cells followed by a
zone of radially elongated elements passing occasionally into rows
of narrow scalariform tracheae, some of which, owing to their
sinuous longitudinal course (fig. 171, C), are seen in oblique section,
as at C, fig. 169, A. At its outer edge this secondary tissue, x2,
consisting of parenchyma and tracheae, passes into the cambial
band (fig. 169, B, a).
Fig. 170. Lepidodendron fuliginosum. (From sections in the Manchester

Museum.)
The radial longitudinal section represented in fig. 168, C, is taken
from the fossil described by Weiss as a biseriate Halonia; it agrees
sufficiently closely in structure with others referred to Lepidodendron
fuliginosum to be classed as an example of this anatomical type. A
complete transverse section of the stem measures 9 × 6·3 cm.; the
breadth of the tissues between the edge of the primary xylem and
the outer edge of the secretory zone is 2·5 mm. The middle cortical
region, characterised by the sooty appearance, which led Williamson
to choose the specific name fuliginosum, is traversed by the leaf-
traces and is sharply differentiated from both the inner and outer
cortex. The longitudinal section (fig. 168, C) shows the outer edge of
the primary xylem, x, abutting on a band of dark and small-celled
parenchyma which passes into the broad zone of secondary tissue,
m, the inner region of which consists of fairly thick-walled elements
in radial series passing externally into the thin-walled cells of the
cambial region, a, on the inner edge of the secretory zone, sc. This
section shows also the interruption of the secretory zone by an
outgoing leaf-trace, lt, the lower part of which, sc, is continued
downwards into the secretory zone. The exit of a leaf-trace produces
a gap in the secretory zone of the stem, but not in the xylem. If we
applied the term phloem to the secretory zone—a course adopted by
Prof. F. E. Weiss and some other authors, but which I do not propose
to follow—we should speak of a phloem foliar-gap as a characteristic
feature of a Lepidodendron shoot. This applies to other species of
the genus as well as to L. fuliginosum.
Fig. 171. Lepidodendron fuliginosum. (From sections in the Manchester

Museum.)
Fig. 171, A, shows more clearly the broad zone of secondary
parenchyma with the thinner-walled cambial region, a; the latter is
represented on a larger scale in fig. 171, B. The section shown in fig.
168, D, and in fig. 170, A, affords an example of a stem in which the
secondary tissue consists largely of narrow scalariform tracheae, x2;
the primary stele has a diameter of 1 cm.; the secondary xylem, x2,
forms a fairly broad zone of parenchyma and tracheal elements
through which leaf-traces pass vertically, a fact of some interest in
comparison with the horizontal course which they pursue through the
medullary rays in the normal secondary wood of L. vasculare and L.
Wünschianum. The secondary tracheae pass gradually into thin-
walled cambial cells (a, fig. 168, D; 170, A) with parallel tangential
walls. Fig. 171, C, shows the sinuous course of the secondary
tracheae as seen in longitudinal section, and a few small groups of
parenchymatous cells, mr, which may be of the nature of medullary
rays, enclosed between the winding scalariform tracheae.
Fig. 172. Lepidodendron fuliginosum. From a section (4 × 3·4 cm.) in the

Williamson Collection, British Museum (No. 379), figured by
Williamson, Phil. Trans. R. Soc. 1881, Pl. 52.
The secretory zone of Lepidodendron fuliginosum agrees
essentially with that of other species; it usually presents the
appearance shown in fig. 168, B, sc; fig. 169, B and C; fig. 170, B
(longitudinal section); fig. 171, D, sc. The comparatively large clear
spaces which characterise this tissue, as seen in fig. 168, B, appear
to owe their origin to groups of small cells which gradually break
down and give rise to spaces containing remnants of the
disorganised elements, as in fig. 171, D, and fig. 169, B, b. The
secretory tissue seen in fig. 170, B, consists of large and small
parenchymatous cells without any of the broad sacs or spaces such
as are shown in fig. 169, C.
Fig. 172 represents a diagrammatic sketch of a transverse section
(4 × 3·4 cm. in diameter) of a young shoot from the Lower Coal-
Measures of Lancashire figured by Williamson[327] in 1881 as
Lepidodendron Harcourtii. It shows the features characteristic of L.
fuliginosum and is of importance as affording an example of a shoot
giving off a branch from the stele to supply a lateral axis of the type
characteristic of Halonia. The exit of the branch-stele forms a gap in
the main stele; a ramular gap as distinguished from a foliar gap. The
outgoing vascular strand is at first crescentic, but becomes gradually
converted into a solid stele. The primary xylem of the main stele
(black in the figure) consists of a ring six tracheae in breadth; this is
succeeded by a few layers of dark parenchymatous cells and a band
of radially elongated elements, a, which abuts on the secretory zone.
The middle lacunar cortex, c2, with Stigmaria rootlets, s, is fairly well
preserved. In the outer cortex occur several leaf-traces, lt,
accompanied by spaces originally occupied by the parichnos strand,
p. A band of secondary cortex, consisting chiefly of phelloderm, is
seen at pd. The prominent leaf-cushions, some of which show the
parichnos, p, appear to be of the Lepidophloios type.
• • • • •
It remains to consider the external characters of Lepidodendroid
shoots possessing the anatomical features represented by the
comprehensive species Lepidodendron fuliginosum.
Certain sections exhibiting this type of structure were described by
Binney in 1872 as Halonia regularis[328] on evidence supplied by Mr
Dawes, who stated that they were cut from a specimen bearing
Halonia tubercles. The section represented in fig. 172 is no doubt
from an Halonia axis. In 1890 Cash and Lomax[329] stated that they
had in their possession a stem of the L. fuliginosum type with the
external features of Lepidophloios; this identification has been
confirmed by Kidston[330] and Weiss[331]. It is, however, equally clear
that certain species with the elongated leaf-cushions of
Lepidodendron must be included among examples of shoots with the
anatomical characters of L. fuliginosum.
Fig. 173. Lepidodendron obovatum. (From a specimen lent by Dr D. H.

Scott.)
Dr Scott[332] published in 1906 a short account of the structure of a
specimen from the Lower Coal-Measures of Lancashire, the external
features of which were identified by Kidston with those of
Lepidodendron obovatum Sternb. Dr Scott generously allowed me to
have drawings made from his specimen; these are reproduced in fig.
173. The form of the leaf-cushion is by no means perfect; there is a
well-marked median ridge, and the small circular scar near the upper
end of some of the cushions may represent the ligular cavity. At the
base of the leaf-cushions a cortical meristem has produced a zone of
secondary cortex; at c a second meristem is seen in the outer cortex:
the dark dots in the cortex mark the positions of leaf-trace bundles.
The inner cortex, d, is a more compact tissue surrounding the

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Ch06: Entrepreneurship and New Ventures

3. Entrepreneurs are born, not made.

Copyright © 2015 John Wiley & Sons, Inc. 6-1

5. Entrepreneurs have a tolerance for ambiguity.

6. Money is the key to entrepreneurial success.

Copyright © 2015 John Wiley & Sons, Inc. 6-2

8. Classic entrepreneurship is a form of ethical entrepreneurship that seeks novel ways to

Copyright © 2015 John Wiley & Sons, Inc. 6-3

14. Lean startups are permanent, cost-intensive organizations.

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17. Business incubators are also called business accelerators.

18. Having a succession plan helps avoid a succession problem.

19. Small businesses have a high success rate.

Copyright © 2015 John Wiley & Sons, Inc. 6-5

20. Business incubators aid in the development of startups.

Copyright © 2015 John Wiley & Sons, Inc. 6-6

23. Self-management is an ability to use objective understanding of personal strengths and

26. A sole proprietorship is simple to start, run, and terminate.

Copyright © 2015 John Wiley & Sons, Inc. 6-7

28. When establishing a corporation, a partnership agreement must be made.

Copyright © 2015 John Wiley & Sons, Inc. 6-8

Copyright © 2015 John Wiley & Sons, Inc. 6-9

34. A first-mover advantage comes from:

35. Which of the following is true about serial entrepreneurs?

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37. Which of the following is true of entrepreneurs?

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Copyright © 2015 John Wiley & Sons, Inc. 6-13

43. Social entrepreneurs:

Copyright © 2015 John Wiley & Sons, Inc. 6-14

47. Which of the following is true about a franchise?

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48. A business model is a:

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50. Lean startups:

51. New small business startups often fail because of:

Copyright © 2015 John Wiley & Sons, Inc. 6-17

Learning Objective: 6.2

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57. Insufficient financing implies:

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Copyright © 2015 John Wiley & Sons, Inc. 6-20

Learning Objective: 6.2

61. Which of the following best describes lack of commitment?

Copyright © 2015 John Wiley & Sons, Inc. 6-21

Copyright © 2015 John Wiley & Sons, Inc. 6-22

66. The goal of business incubators is to:

Copyright © 2015 John Wiley & Sons, Inc. 6-23

Learning Objective: 6.2

67. Which of the following is true of small business development centers?

Copyright © 2015 John Wiley & Sons, Inc. 6-24

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Bloom’s Taxonomy: Knowledge