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Entrepreneurs are people who grow existing businesses by careful management of existing resources. In exchange for the financing they receive from venture capitalists, entrepreneurs must give up a portion of their businesses, sometimes surrendering a majority interest and control of […]

While it is an essential quality for a successful family business, this quality is the one that cannot be imposed or forced. If family members refuse to embrace it, they can still be part of the business. A) Shared power […]

An established customer base is an example of structural capital. Web-based entrepreneurs often discover that the greatest challenge their businesses face is not necessarily attracting customers on the Web but creating a workable order fulfillment strategy. Answer: TRUE Because of […]

Small companies can no longer consider themselves to be strictly domestic businesses in this hotly competitive global environment. Impulse shoplifters steal on the spur of the moment when they succumb to temptation. Answer: TRUE Perhaps the most important feature of […]

Web-based entrepreneurs often discover that the greatest challenge their businesses face is attracting customers on the Web and not necessarily creating a workable order fulfillment strategy. The balance sheet provides owners with an estimate of the firm’s worth for a […]

Defining the target market is one of the hardest and most important things the entrepreneur can do in the business plan. Companies do not have an ethical obligation to inform consumers regarding their products. Answer: FALSE A valuable shoplifting reduction […]

When evaluating an existing building’s interior, the entrepreneur should pay particular attention to the building’s structural components and the suitability for his/her business. Most of the time of a performance evaluation should be spent discussing the future and what can […]

Quality is so important in franchising that most franchisers retain the right to terminate the franchise contract and to repurchase the outlet if a franchisee fails to maintain quality standards. Creating a meaningful presence on the Web requires an ongoing […]

Some cities have put restrictions or outright bans on the use of outdoor ads. Usually, trade credit from vendors is expensive, and small business owners should avoid it. Answer: FALSE A straight business sale may be worst for a seller […]

The ________ rule says that an offeree’s acceptance must be the mirror image of the offeror’s offer. A) mirror image B) promissory estoppel C) mailbox D) consideration ________ is the money that moves through the business in a continuous cycle. […]

When two small businesses in the target nation form an alliance, they have formed a foreign joint venture. In the checkout process, the site should include a progress indicator on each checkout page and provide a link back to the […]

A minor can void a contract at the minor’s option but the adult cannot void a contract simply because it is with a minor. With cooperative advertising, a manufacturing company shares the cost of advertising with a retailer. Answer: TRUE […]

Listening to customers and responding to what you hear from them is a highly effective way to achieve stellar customer service. A retailer who buys a product for $19.75 and has a desired markup of retail price of 55% should […]

Copyright © 2015 Pearson Education, Ltd. 45) Which of the following is not a common characteristic of entrepreneurs? A) Desire for responsibility B) Business plan expertise C) Preference for moderate risk D) High energy level Answer: B Page Ref: 33-35 […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 1 Entrepreneurs: The Driving Force Behind Small Business 1) The nation is rapidly moving from: A) industrial to capitalism. B) capitalism to industrial. […]

Copyright © 2015 Pearson Education, Ltd. 63) Business ethics consist of the fundamental ________ values and behavioral standards that form the foundation for the people of an organization as they make decisions and interact with stakeholders. A) religious B) moral […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 2 Ethics and Social Responsibility: Doing the Right Thing 1) ________ are the various groups and individuals who affect and are affected by […]

Copyright © 2015 Pearson Education, Ltd. 45) ________ thinking is the ability to see the similarities and the connections among various and often diverse data and events. A) Divergent B) Parallel C) Investigative D) Convergent Answer: D Page Ref: 127 […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 3 Creativity and Innovation: Keys to Entrepreneurial Success 1) ________ is the ability to develop new ideas and to discover new ways of […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 4 Strategic Management and the Entrepreneur 1) The strategic management process: A) is especially difficult for the small business because of its limited […]

Copyright © 2015 Pearson Education, Ltd. 57) ________ are a unique set of capabilities that a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, speed, responsiveness, and others that allow it to vault past […]

Copyright © 2015 Pearson Education, Ltd. 61) Complementary skills refers to: A) the sole proprietorship skills. B) partner’s skills that complement one another. C) complementary skills offered by the employees. D) None of the above Answer: B Page Ref: 174 […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 5 Choosing a Form of Ownership 1) The key to choosing the “right” form of ownership is: A) knowing the cost factor in […]

Copyright © 2015 Pearson Education, Ltd. 53) In franchising, royalties are paid by the franchisee to the franchisor. Answer: TRUE Page Ref: 195 Topic: What is a Franchise? AACSB: Analytic Skills 54) By definition, a franchise is owned by a […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 6 Franchising and the Entrepreneur 1) In franchising, a ________ pays fees and royalties to a ________ in return for the right to […]

Copyright © 2015 Pearson Education, Ltd. 61) The median selling price of a private company is: A) $75,000. B) $125,000. C) $275,000. D) $420,000. Answer: D Page Ref: 241 Topic: Methods for Determining the Value of a Business AACSB: Analytic […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 7 Buying an Existing Business 1) When buying an existing business, the potential buyer should remember that: A) it is a long process […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 8 New Business Planning Process: Feasibility Analysis, Business Modeling, and Crafting a Winning Business Plan 1) For entrepreneurs, a business plan is: A) […]

Copyright © 2015 Pearson Education, Ltd. 57) A ________ is a descriptive fact about a product or service. A) feature B) product summary C) benefit D) None of the above Answer: A Page Ref: 285 Topic: Elements of a Business […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 9 Building a Bootstrap Marketing Plan 1) A business plan for the small business owner: A) is of relatively little importance due to […]

Copyright © 2015 Pearson Education, Ltd. 57) A ________ is a small number of customers who give you feedback on specific issues in your business—quality, convenience, hours of operation, service, and so on. A) survey B) questionnaire C) focus group […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 10 Creative Use of Advertising and Promotion 1) In reality, advertising: A) is a “luxury expense” to be undertaken only when the budget […]

Copyright © 2015 Pearson Education, Ltd. 65) When using advertising, the small business owner should ask him/herself certain questions such as “What business are we in?”, “What image do we want to project?”, etc. Answer: TRUE Page Ref: 335 Topic: […]

Copyright © 2015 Pearson Education, Ltd. 65) Businesses faced with rapidly rising raw materials costs should consider the following strategies: A) Communicate with customers and focus on improving efficiency everywhere in the company. B) Emphasize the value your company provides […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 11 Pricing and Credit Strategies 1) Tom is working on a pricing strategy for his company’s new product line. In order to determine […]

Copyright © 2015 Pearson Education, Ltd. 64) Martha has heard that Iranian caviar is in demand and is planning to start an importing business. After further research, she found that she is not able to import such product from Iran […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 12 Global Marketing Strategies 1) ________ is (are) said to link trading partners, whether they are giant corporations or single individuals with a […]

Copyright © 2015 Pearson Education, Ltd. 49) The ideal domain name should be: A) short & memorable. B) indicative of a company’s business or business name. C) easy to spell. D) All of the above Answer: D Page Ref: 467 […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 13 E-Commerce and Entrepreneurship 1) ________ is a trend where people test products in retail stores but buy them online. A) Showboating B) […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 14 Creating a Solid Financial Plan 1) A pro forma financial statement means: A) looking at the current financial statement. B) looking at […]

Copyright © 2015 Pearson Education, Ltd. 61) Which of the following is correct? A) Assets – Liabilities = Equity B) Assets – Equity = Liabilities C) Assets = Liabilities + Equity D) All of the above Answer: D Page Ref: […]

Copyright © 2015 Pearson Education, Ltd. 61) A ________ is a checking account that technically never has funds in it but is tied to another master account like payroll. A) cash account B) money market account C) zero balance account […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 15 Managing Cash Flow 1) The first step in managing cash more effectively is: A) having an adequate cash reserve for emergency expenditures. […]

Copyright © 2015 Pearson Education, Ltd. 62) Layered financing is the process of piecing start-up capital together from a variety of sources rather than relying on a single source of funds. Answer: TRUE Page Ref: 553 Topic: Introduction AACSB: Analytic […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 16 Sources of Equity Financing 1) The credit crunch has hit those entrepreneurs seeking between $100,000 and ________. A) $3 million B) $500,000 […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 17 Sources of Debt Financing 1) Sometimes small businesses have to use debt financing instead of equity financing. When they do, they discover […]

Copyright © 2015 Pearson Education, Ltd. 65) Convertible bonds: A) can’t be converted to equity. B) typically pay a lower interest rate. C) typically pay a higher interest rate. D) None of the above Answer: B Page Ref: 592 Topic: […]

Copyright © 2015 Pearson Education, Ltd. 53) The manufacturing layout that arranges workers and equipment according to sequence of operation and is best suited for highly standardized or mass-produced products is called: A) process layout. B) fixed-position layout. C) function […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 18 Location, Layout, and Physical Facilities 1) The secret to selecting the ideal location for a business is: A) the available labor pool […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 19 Supply Chain Management 1) The primary objective of the purchasing function is to: A) ensure an adequate turnover of merchandise. B) acquire […]

Copyright © 2015 Pearson Education, Ltd. 67) Which of the following statements is correct? A) Benchmarking is the process of calculating carrying cost, EOQ and other inventory management procedures and being able to compare it to others. B) Benchmarking is […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 20 Managing Inventory 1) For most retailers and wholesalers, the investment in ________ is the largest capital outlay next to payroll. A) office […]

Copyright © 2015 Pearson Education, Ltd. 65) When storage space or the type of item does not suit the two-bin system, the owner can use the ________. A) sales system B) inventory system C) tag system D) weighted average system […]

Copyright © 2015 Pearson Education, Ltd. 66) Company culture is a process by which a firm determines the duties and nature of the jobs to be filled and the skills and experience required of the people who are to fill […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 21 Staffing and Leading a Growing Company 1) The process of influencing and inspiring others to work to achieve a common goal and […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 22 Management Succession and Risk Management Strategies in the Family Business 1) The essential quality for a family business that shows a recognition […]

Copyright © 2015 Pearson Education, Ltd. 50) What types of financing requirement dramatically reduces the number of potential buyers? A) 80% financing, 20 % cash B) 100% cash only C) 100% financing by the seller D) All of the above […]

Copyright © 2015 Pearson Education, Ltd. Entrepreneurship and Effective Small Business Management, 11e, Global Edition (Scarborough) Chapter 23 The Legal Environment: Business Law and Government Regulation 1) Something of legal value that the parties exchange as part of a bargain. […]

Copyright © 2015 Pearson Education, Ltd. 58) The Robinson-Patman Act focuses on: A) price discrimination. B) product warranty. C) product liability. D) unsafe products. Answer: A Page Ref: 836 Topic: Trade Practices AACSB: Analytic Skills 59) The FTC forbade the […]

The key to a successful differentiation strategy is to build it on a distinctive competencesomething the small company is uniquely good at doing in comparison to its competitors. Leverage ratios are a gauge of the depth of a company’s debt. […]

A penetration pricing strategy allows the business to build market share quickly. The average SBA loan guarantee is $150,000 and has an average duration of seven years. Answer: FALSE The Federal Trade Commission (FTC) enacted the Trade Regulation Rule, requiring […]

Outdoor ads tend to reach people who are older, poorer, and not as well educated as the average person. The current ratio can sometimes be misleading, because it does not show the quality of a company’s current assets. Answer: TRUE […]

The gross profit margin is calculated by dividing net income by net sales revenue. Franchisors are obligated to renew a franchisee’s contract unless there has been malfeasance on the part of the franchise. Answer: FALSE Research has isolated a set […]

When a company makes a product available to the customer when he/she wants it, the company is providing place utility to the customer. If an owner or his/her relatives take the product home without properly logging it out, employees will […]

Because private investors are willing to take greater risks than banks, they are more willing to finance deals through private placements than are banks. Spoilage, obsolescence, and pilferage are all part of the set-up costs of inventory. Answer: FALSE The […]

Most SBIC loans are between $10,000 and $50,000 and the loan term is longer than most banks allow. One of the most important advertising decisions the small business manager must make is selecting the specific media to employ in disseminating […]

While market research is a sophisticated and complex process, the small business owner can conduct some of it for him/herself, but will need assistance interpreting it. Every risk can be insured. Answer: FALSE The primary purpose of building a business […]

Many incidents of employee theft go undetected, and only a small percentage of those employees who are caught stealing are prosecuted. Most of the start-up businesses that attract venture capital are technology companies. Answer: TRUE One element of the location […]

Decisions based on assumptions are bound to be flawless. Generation X, made up of those people born between 1965 and 1980, is the most entrepreneurial generation in history. Answer: FALSE One advantage of the excess-earnings method is that it offers […]

In terms of ethical behavior, the law merely establishes the minimum standard of behavior. A free trial offer is an example of non-price competitive factor. Answer: TRUE Specialty advertising is an example of narrow casting in advertising. Answer: TRUE Only […]

Unique selling proposition (USP) refers to akey customer benefit or a product or service that sets it apart from its competition. Profits generally are low and marketing cost high in the introductory stage of the product life cycle. Answer: TRUE […]

Foreign licensing is when a business buys and sells products in many countries, either in its own name, or as an agent for its buyer-seller clients. The best purchase price is the lowest price at which the owner can obtain […]

A line of credit means: A) the company has access to unlimited funds. B) a line of credit is the same as long-term loan. C) a line of credit remains active forever. D) None of the above A corporation receives […]

The growth of entrepreneurship is being fed by: A) the return to a manufacturing-based economy. B) technological advancements. C) diminished opportunities in overseas markets for larger corporations. D) the vilifying of large corporations in society. The ________ is a document […]

The quick ratio is the most commonly used measure for a small firm’s short-term solvency. The best way to deal with shoplifting is to take steps to prevent it rather than stress catching the shoplifter in the act. Answer: TRUE […]

The time gap between placing an order and receiving is called lead time. The most effective pricing strategy for small businesses is follow-the-leader pricing due to its simplicity and its ability to keep price parity for the small business. Answer: […]

One of the best ways to evaluate the effectiveness of an ethics system is to perform periodic audits. By choosing a radio station with the appropriate listener profile, a small business owner can reach almost any target market desired. Answer: […]

This term denotes the awareness of a company’s management of the social, environmental, political, human, and financial consequences that its actions produce. A) Company policies and procedures B) The corporate culture C) Social responsibility D) Business ethics Transit advertising has […]

“Double taxation” refers to the fact that the corporation itself must pay taxes on its net profits, and the stockholders must also pay taxes on the portion of those same profits distributed to them as dividends. Research shows that for […]

The majority of loans provided by the SBA are direct. A well-prepared business plan helps determine the risks facing the venture. Answer: TRUE In the basic EOQ model, the higher the economic order quantity, the greater the number of orders […]

A master franchise is called a piggyback franchise. In start-ups, it is often safest to be a “me-too” business, follow the leaders in the market until sufficient cash flow develops to permit R & D into new and innovative products. […]

Most service firms base their prices on: A) fairly stable pricing policies. B) the cost of the service plus an estimate of the value they add in delivering the service. C) market surveys on their respective industries. D) an hourly […]

The nice thing about a family business is that there is always a guaranteed successor within the family whenever the owner decides to step down. Business ethics consist of the fundamental moral values and behavioral standards that form the foundation […]

Kleptomaniacs have a compulsive need to steal even though they have little, if any, need for the items they shoplift. The most common method of controlling inventory in a small business is the perpetual system. Answer: FALSE[/cpmembership] The key to […]

Even though the owner has stepped aside, he/she should always jump back in to fix problems as they occur. Under FOB Factory terms, the customer pays all shipping costs. Answer: TRUE Whenever a business has shared leadership, such as co-presidents, […]

To begin an offering, the entrepreneur and the underwriter must negotiate a letter of intent. An “incubator” is a facility with low rent that permits start-up small businesses to share resources. Answer: TRUE Employers can be held responsible for third-party […]

A cash budget is a forecast of the firm’s cash inflows and outflows over a specific time period. Selling to a resident buying office is just like selling to domestic customers since the buying office handles all of the details […]

The simple reorder technique assumes that the rate of usage is constant and that lead time is constant. When it comes to debt collection, it is appropriate to seek to motivate the customer to pay and not get into why […]

The formula for calculating net profit margin is net profit/net sales (annual). A recent study concluded that American firms with global operations grew faster and earned more than purely domestic companies. Answer: TRUE A focus strategy recognizes that all markets […]

“________ points” are missing products or services or flaws in existing products or services. A) Opportunity B) Opening C) Pleasure D) Pain Janis Reardon is in the process of launching a craft shop. Her biggest supplier, Lothrop’s Craft Supply, agrees […]

The key to successfully establishing an international location is properly screening for the right partner company with compatible goals and products/services. Due to the low cost, most small businesses rely almost solely on outdoor/billboard advertising. Answer: FALSE In the excess-earnings […]