Entrepreneurship and Effective Small Business Management, 11e (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 for the business.
B) knowing the customer and what is convenient to them.
C) the tax rate of the local and state governments.
D) the security of the area and the services provided by the site to the business owner.
Topic: Introduction
AACSB: Reflective Thinking
2) The first phase in determining where to locate a business is:
A) choosing what state the business owner wants to move to.
B) determining which city has the demographics that fit the business best.
C) conducting an Internet search for information on the cities of choice and competitors in those
cities.
D) determining what regions in the country have what the new business needs to succeed.
Topic: Introduction
AACSB: Analytic Skills
3) At the broadest level of the location decision, entrepreneurs usually identify regions of the
country that:
A) have many professional sports teams.
B) are experiencing substantial population growth.
C) contain many car drivers.
D) consist of the most employed inhabitants.
Topic: Selecting the Region
AACSB: Reflective Thinking
4) ________ is a useful Web site that gives entrepreneurs help in the location decision.
A) Consumer Reports
B) Index of Retail Saturation
C) ZoomProspector
D) Sales Conversion Index
Topic: Selecting the Region
AACSB: Analytic Skills
1
5) A Geographic Information System (GIS):
A) is a software package combining the ability to draw detailed maps with the power to search
through databases.
B) records data not available through the census and includes eleven indicators of economic
growth.
C) contains the name of every street in the country and detailed block statistics for 345 urban
areas.
D) breaks down the population, retail sales, etc., by census region.
Topic: Selecting the Region
AACSB: Use of IT
6) TIGER:
A) is a software package combining the ability to draw detailed maps with the power to search
through databases.
B) records data not available through the census and includes eleven indicators of economic
growth.
C) contains the names of every street in the country and detailed block statistics for 345 urban
areas.
D) breaks down the population, retail sales, etc. by census region.
Topic: Selecting the Region
AACSB: Use of IT
7) When selecting a state in which to locate, one should consider:
A) the financing options available to the small business owner.
B) zoning laws.
C) the compatibility of the business with the community.
D) the proximity to one’s markets.
Topic: Selecting the State
AACSB: Analytic Skills
8) Carlos owns a heavy equipment repair and maintenance business. Which of the following
criteria for selecting a state in which to locate the business would be of greatest concern to
Carlos?
A) Labor supply
B) Proximity to markets
C) Tax laws and incentives
D) Proximity to raw materials
Topic: Selecting the State
AACSB: Reflective Thinking
2
9) A small brick manufacturer would be concerned most with which location criterion?
A) Business climate
B) Labor supply needs
C) Wage rates
D) Proximity to markets
Topic: Proximity to Markets
AACSB: Reflective Thinking
10) The ________ matches population demographics with lifestyle interests.
A) Rand McNally Commercial Atlas & Marketing Guide
B) Source Book of County Demographics
C) Lifestyle Market Analyst
D) Nielsen Media Guide
Topic: Selecting the Region
AACSB: Use of IT
11) A glass manufacturer that requires an extremely pure, very fine type of sand in its production
process would be most concerned with which location criteria?
A) Business climate
B) Proximity to raw materials
C) Proximity to markets
D) Wage rates
Topic: Proximity to Needed Raw Materials
AACSB: Reflective Thinking
12) When examining a state’s available labor force, the potential business owner needs to know:
A) the state’s labor relations history.
B) the demographics of the target customers.
C) both the number and education of the available workforce.
D) the proximity of its customers.
Topic: Labor Supply
AACSB: Analytic Skills
3
13) ________ would be most important to someone wishing to locate a manufacturing facility
for computers.
A) Proximity of the target market
B) Business climate
C) Labor supply
D) Proximity to raw materials
Topic: Labor Supply
AACSB: Reflective Thinking
14) An interstate trucking firm would be most concerned with which selection criterion at the
state level?
A) Business climate
B) Proximity to markets
C) Proximity to raw materials
D) Wage rates
Topic: Business Climate
AACSB: Analytic Skills
15) When selecting a city, an entrepreneur will need to factor into her decision:
A) the population density and growth trends.
B) the nature of competition.
C) the cost of the location.
D) All of the above
Topic: Selecting the City
AACSB: Analytic Skills
16) A telemarketing customer service unit for the credit card business of an interstate bank would
be most concerned about ________ in the choice of state.
A) proximity to markets
B) wage rates and labor supply
C) competition and business climate
D) population trends and competition
Topic: Wage Rates
AACSB: Reflective Thinking
4
17) Which of the following characteristics for selecting a city would be of greatest interest to a
retail store selling fine china and collectibles?
A) Public services
B) Transportation
C) Zoning
D) Population trends
Topic: Selecting the City
AACSB: Reflective Thinking
18) The index of retail saturation is:
A) retail expenditures times retail facilities divided by the number of customers.
B) the ratio of a trading area’s sales potential to its sales capacity.
C) a buying power index.
D) retail facilities times the number of customers divided by the retail expenditures.
Topic: The Index of Retail Saturation
AACSB: Analytic Skills
19) ________ is a system that divides a county or a city into small cells or districts to control the
use of land, buildings, and sites.
A) An enterprise zone
B) Zoning
C) TIGER
D) A central business district
Topic: Local Laws and Regulations
AACSB: Analytic Skills
20) Which of the following sets of city factors does an entrepreneur need to consider when
choosing a location for his/her new business?
A) The business growth potential
B) Business climate and labor market
C) Proximity to the target market and raw materials
D) The availability of transportation, public services, and police and fire protection
Topic: Appropriate Infrastructure
AACSB: Analytic Skills
5
21) A manufacturer would be most interested in which of the following criteria for the selection
of a city location for a new business?
A) Public services
B) Transportation
C) Reputation of the location
D) Compatibility with the community
Topic: The Location Decision for Manufacturers
AACSB: Reflective Thinking
22) A ________ is the traditional center of town.
A) hub
B) business area
C) central business district
D) community center
Topic: Central Business District
AACSB: Reflective Thinking
23) The area from which a small business expects to draw customers over a reasonable time span
is its:
A) trading area.
B) metropolitan statistical area.
C) enterprise zone.
D) incubator.
Topic: Trade Area Size
AACSB: Analytic Skills
24) The primary variable(s) that influence(s) the scope of a trading area is (are):
A) the character of the transportation network.
B) the nature of competing businesses.
C) the type and size of the business operation.
D) the racial and political barriers in the local community.
Topic: Trade Area Size
AACSB: Analytic Skills
6
25) Which of the following factors influences the size of a retail store’s trading area?
A) The location of competitors
B) The physical layout of the store
C) Zoning regulations
D) The nature of competing businesses
Topic: Degree of Competition
AACSB: Analytic Skills
26) Shopping malls typically average ________ parking spaces per ________ square feet of
shopping space.
A) 10; 1,000
B) 5; 1,000
C) 15; 5,000
D) 3; 1,000
Topic: Adequate Parking
AACSB: Analytic Skills
27) Mary’s successful clothing store was located on the back edge of the parking lot of a large
mall. She didn’t pay mall rents since she wasn’t part of the mall, but drew a lot of customers who
parked at the mall and then noticed her store. The mall developers built a movie theater on the
part of the parking lot directly in front of Mary’s store, basically hiding her from most mall
customers and her business dropped off so much she had to move. What retailer site selection
criterion forced Mary to move?
A) Proximity of competitors
B) Visibility
C) Adequate parking
D) Room for expansion
Topic: Visibility
AACSB: Reflective Thinking
28) A central business district is:
A) the traditional center of town.
B) a plan that contains 12 to 50 stores and has a department store as a leading tenant.
C) a type of “mall” that has experienced 1500 percent growth over the last 5 years.
D) a shopping area that draws its customers primarily from the immediate local area.
Topic: Central Business District
AACSB: Analytic Skills
7
29) Central business districts:
A) provide ample parking in front of the stores.
B) are characterized by one-stop shopping.
C) tend to have better prices and selection than malls do.
D) are experiencing a resurgence in popularity.
Topic: Central Business District
AACSB: Reflective Thinking
30) The ________ serves a large trading area (10 to 15 miles or more), contains from 50 to 100
stores, and has several major department stores as its anchors.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
Topic: Regional Shopping Malls
AACSB: Analytic Skills
31) The type of business that does well when located near competitors is:
A) one that has a unique product line, dissimilar to that of its competitors.
B) one that sells high-priced products that customers comparison shop for.
C) one whose location is part of its trademark.
D) one located in an incubator.
Topic: Near Competitors
AACSB: Analytic Skills
32) Locating near ________ might be a key factor for success in businesses that sell goods that
customers compare on the basis of price, quality, color, and other factors.
A) customers
B) suppliers
C) competitors
D) employees
Topic: Near Competitors
AACSB: Analytic Skills
8
33) As the service economy has grown, a business location being used more and more by service
businesses is:
A) the industrial park.
B) home.
C) central business districts.
D) outlying areas.
Topic: Home-Based Businesses
AACSB: Analytic Skills
34) Some cities develop ________ in cooperation with private industry for the benefit of
manufacturers.
A) incubators
B) central business districts
C) industrial parks
D) high visibility locations
Topic: The Location Decision for Manufacturers
AACSB: Analytic Skills
35) Foreign trade zones were created in:
A) 2001.
B) 1992.
C) 1902.
D) 1934.
Topic: The Location Decision for Manufacturers
AACSB: Analytic Skills
36) Incubator facilities are established in order to:
A) enhance economic development and diversify the local economy.
B) revitalize central business districts.
C) centralize types of businesses and provide tax breaks to those businesses.
D) encourage businesses to locate in economically depressed areas of a city.
Topic: Business Incubators
AACSB: Analytic Skills
9
37) To ensure that a building will accommodate expansion plans, a new business should:
A) plan space requirements for one to two years into the future and update the plans every six
months.
B) build, buy, or lease facilities that are 50–100% too big for their current operations.
C) buy or lease facilities that had the same type of business in them previously.
D) always build a new facility.
Topic: Size and Adaptability
AACSB: Analytic Skills
38) When evaluating existing buildings, retailers:
A) need to find the lowest cost per-square-foot possible due to the need for maximum display
space.
B) should locate in store space previously occupied by a similar type of business.
C) should recognize that the store’s appearance and layout create an image for the customer of
the business.
D) can discount the interior appearance of the building if it has a strong exterior appeal.
Topic: External Appearance
AACSB: Analytic Skills
39) Entrances should invite entry. The way to accomplish this is to:
A) have large doors and attractive displays set back from the doorway that can lure customers
into the store.
B) offer discounts.
C) have displays as close to the entry of the store as possible.
D) have a big sign to attract customers.
Topic: Entrances
AACSB: Analytic Skills
40) The Americans with Disabilities Act of 1990 requires that:
A) businesses with more than 25 employees comply fully with the Act by June 1993.
B) all buildings be remodeled to accommodate any disabled customer or employee.
C) all businesses must accommodate all disabled customers or job candidates, regardless of the
cost.
D) buildings occupied after January 23, 1993 must be designed to accommodate disabled
customers and job candidates.
Topic: The Americans with Disabilities Act
AACSB: Analytic Skills
10