Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 1
Indicate whether the statement is true or false.
1. All other factors being equal, retail and services businesses will find little advantage in selecting a location near the
center of the market.
a. True
b. False
2. Many entrepreneurs start their online businesses as a part-time venture.
a. True
b. False
3. Many entrepreneurs recognize the value of talking to local realtors to determine site availability and appropriateness.
a. True
b. False
4. E-commerce can provide a benefit to small firms by compressing the sales cycle and easing cash flow difficulties.
a. True
b. False
5. Sometimes an attorney can insert special clauses into a lease agreement that will allow the lessee to exit the agreement
under certain circumstances.
a. True
b. False
6. Purchasing used equipment is acceptable as long its use does not send the wrong message to a customer.
a. True
b. False
7. Manufacturing equipment can be categorized as general-purpose and special-purpose.
a. True
b. False
8. The primary factor in determining the location for a sawmill would probably be proximity to the market.
a. True
b. False
9. B2C startups offer two advantages over brick-and-mortar retailing—speed of access and of the transaction.
a. True
b. False
10. The transaction based model is the least complex type of website
a. True
b. False
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 2
11. If the cost of shipping the finished product is high, the factory should probably be located near a source of raw
materials.
a. True
b. False
12. A person who is selling product on eBay is using a B2C model.
a. True
b. False
13. One advantage B2C businesses have over traditional retailers is that they can quickly change product mixes and
prices, as well as the appearance of the online store.
a. True
b. False
14. The Internet has impacted small firms using an e-commerce business model by bringing new technology to the
management of customer service.
a. True
b. False
15. The role of a website can range from merely offering content and information to enabling complex business
transactions.
a. True
b. False
16. It is possible for an entrepreneur to do business over the Internet without either a website or storefront.
a. True
b. False
17. A business based in the owner’s home does not need to consider local zoning ordinances because owners can do
whatever they want with their property.
a. True
b. False
18. A content-based website provides only the history of an organization along with a physical address and phone
numbers.
a. True
b. False
19. A home location is still almost always considered a temporary situation until the business grows.
a. True
b. False
20. For many entrepreneurs, choosing a location for a small business is a one-time decision—made only when the
business is first established or purchased.
a. True
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 3
b. False
21. Blogs and podcasts are among the emerging options for an online presence.
a. True
b. False
22. Canning machines and auto assembly line machinery are examples of special-purpose equipment.
a. True
b. False
23. Because B2B success stories generally receive more publicity than B2C ventures, the potential for B2C opportunities
are overlooked.
a. True
b. False
24. Customer accessibility is vital in industries in which the cost of shipping the final product is high relative to the
product’s value.
a. True
b. False
25. A brick-and-mortar store is actually a general term that refers a retail outlet dealing in building supplies.
a. True
b. False
26. To maximize sales and profits, a discount shoe store should create an atmosphere similar to higher price point shoe
stores as the customers will expect the same atmosphere.
a. True
b. False
27. While one of the six key factors in determining a good business location may be more important in a given situation,
each factor will always have some influence.
a. True
b. False
28. Online businesses that begin as a part-time venture enjoy a lower risk of failure.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
29. The basis of eCRM is a
a. focus on customization.
b. conscientious work force.
c. flexible distribution system.
d. consumer-centric data warehouse.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 4
30. How does electronic commerce benefit small firms?
a. Small firms are often more “tech savvy” allowing quicker adoption of innovations.
b. Large firms may not push the consumer towards the Internet resulting in small firms being able to gain customers.
c. E-commerce allows small firms to expand beyond local markets without having to make a large investment.
d. The government has committed significant resources to encourage small firms to adopt an e-commerce business
model.
31. Calvert is contemplating building an aluminum smelting plant. The ratio of bauxite, the raw material from which
aluminum is extracted, to aluminum is two to one. It takes two tons of bauxite to product oen tone of usable
aluminum. Where should Calvert locate his smelting plant?
a. Close to his customers
b. Close to the bauxite mine
c. Close to transportation
d. Close to an area with a suitable labor supply
32. An example of special-purpose equipment for a carbonated beverage company is a
a. refrigerator that keeps the product at the appropriate temperature.
b. bottling machine that adjusts pressure for different flavors.
c. an assembly line moving the beverages to the loading dock.
d. mixer that combines the ingredients in the proper order.
33. Site-related factors that should be taken into consideration when selecting a manufacturing location include
a. future advertising costs.
b. access to key suppliers.
c. raw material availability.
d. customer accessibility.
34. Melissa would like to reduce the number of phone calls she gets from customers who want to place orders. Which
model would best work for Melissa?
a. The information-based model
b. The content-based model
c. The transaction-based model
d. The customer relationsship-based model
35. Zoning ordinances
a. may limit what type of business can be located on the property.
b. will prevent commercial signs.
c. typically will allow parking of customers but not employees.
d. All of the above statements are true about zoning ordinances.
36. Tracy is looking for a building for her shoe store. A major consideration would be:
a. the building should have a welcoming exterior.
b. the building should be on one level.
c. the building should accommodate the growth she anticipates in the next five years.
d. the building should be located in a shopping mall.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 5
37. Jason has neither a website nor a storefront. Instead, he lists his products for sale on a site that provides customers
with the ability to list products for potential buyers. Jason is using a ______ site.
a. C2C
b. C2B
c. B2C
d. B2B
38. Bart is ready to look for a site for his new business. To help him in his search he should:
a. contact a local real estate agent.
b. check property for sale ads in the local newspaper.
c. check into site selection software.
d. check with the local small business development office.
39. Callista can locate her business in any state regardless of its weather because she sells:
a. air conditioners.
b. outdoor swimming pools.
c. consumer yard irrigation systems.
d. mattresses.
40. A good reason for relocating a typical manufacturing business is to
a. stabilize income taxes.
b. increase customer traffic.
c. be closer to raw materials.
d. provide free-flow space.
41. Amazon.com represents the classic ____ firm.
a. B2B
b. B2C
c. C2C
d. Auction site
42. Reliable Construction created a website to post photos of some of their completed projects and display their address
and phone number along with a list of the types of projects they can complete. Reliable has used the ___________ model.
a. transaction-based
b. content-based
c. information-based
d. customer-relationship-based
43. Helen is planning to open a high-fashion clothing store for young professional women. Which descriptor is the most
important consideration for the fixtures?
a. Economical
b. Elegant
c. Feminine
d. Practical
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 6
44. Annie is starting her photography business and is locating it in her family home. Which aspect is critical in the
balance between her business and her family?
a. Making sure family members don’t spoil the image of the business when clients arrive
b. Having a professional studio area that is separate from the family area
c. Shielding her family from the business taking over the home
d. All of the above statements are true.
45. Harry is starting a business where he restores homes built before 1900 and is purchasing used equipment, specifically
lathes, planing mills, and drill presses. This equipment is would be an example of what type?
a. Special-purpose
b. Product-layout
c. General-purpose
d. Automated
46. E-commerce refers to
a. B2B models of doing business.
b. the facilitation of business by making initial contact by electronic means.
c. the buying and selling of products or services over the Internet
d. a form of business that involves online trades and auctions.
47. Basic considerations that enter into the selection of a location for a manufacturing business normally include
a. availability of raw materials.
b. customer accessibility.
c. neighborhood conditions.
d. federal income taxes.
48. ShoeBiz produces shoes that until recently have been available only at the most exclusive stores. ShoeBiz decided to
create its own website and sell directly to the consumer. This strategy is known as:
a. intermediation.
b. disintermediation.
c. disinterment.
d. dismantling the distribution chain.
49. The major difference between the information-based model and the content-based model is:
a. the presence of ads in the content-based model
b. the ability to contact the site developoer in the information-based model.
c. the presence of an order-processing feature in the information-based model.
d. the ability for the visitor to post comments on the content-based model.
50. Genevieve just completed her residency and is ready to open her medical office. The image her office should convey
is:
a. trendy, minimalist, futristic with bold colors and modern art.
b. old-fashioned, dark, somber with dark colors and heavy furniture.
c. solid, trustworthy, confident with neutral colors and comfortable furniture.
d. light-hearted and whimsical with pastel colors and playful art.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 7
51. Rachel is starting a daycare at her home in a suburban area. Which professional should she contact first before
starting?
a. The city’s planning and zoning board to make sure she can have a business in the home
b. Her CPA to determine if she can claim a tax deduction for the business
c. Her insurance agent to increase the policy for coverage on the equipment and business activities on site
d. All of the professionals are equally important and should be contacted before she starts the business.
52. Why are gas stations frequently located at the interchanges of interstate highways?
a. The site provides easy access to raw materials
b. The site is easy to find at night.
c. The site provides tax incentives because many are in rural areas.
d. The site provides easy access to both customers and transportation.
53. Juanita is considering locating her a consulting business in her home. Which consideration is the greatest challenge?
a. The increased time needed to get the business running
b. Her business image may not be perceived as highly as a brick and mortar business
c. The higher cost she may face for equipment and technology
d. The decreased time she will have with friend
54. Bettina has found a relatively inexpensive building that is a converted service station. Before she signs the lease, she
should ask:
a. How is the location zoned?
b. What happened to previous businesses at that location?
c. What are the real estate taxes on the property?
d. Is street parking allowed?
55. Businesses that operate in the home
a. can increase profits by decreasing costs.
b. require customer traffic.
c. are called family businesses.
d. are less common today than they were 10 years ago.
56. Which statement is true about location decisions?
a. Franchisers assist entrepreneurs with location decisions.
b. Location decisions have an temporary effect on business operations.
c. Location decisions should be made independently of consumer needs.
d. The location decision is equally critical to all types of businesses.
57. John created Acme Online to allow paper suppliers to compete for manufacturers’ orders over the Internet in live
auctions. This model would best be described as
a. B2B.
b. B2C.
c. C2B.
d. C2C.
58. Hermione decided to create an Internet site to complement her bricks-and-mortar store:
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 8
a. to allow her customers to preview her products before coming to her store.
b. to attract customers from outside her local area.
c. to keep up with the competition.
d. to reduce her overall expenses.
59. Renee plans to open a gift shop in a tourist location. She will rely heavily on walk-in customers to support her
business. Renee will need:
a. a point-and-click facility.
b. a bricks-and-clicks facility.
c. a brick-and-mortar facility.
d. a professionally develooped Website.
60. Fletcher has pre-school children. He might choose to work from home:
a. so he can have more quiet time.
b. so he can spend more time with his family.
c. because he shies away from contact with outsiders.
d. because he has read horror stories about daycare centers.
61. A variation of the content model is sometimes called the ____ model.
a. electronic
b. emerging
c. information
d. transaction
62. Which statement is true about starting a business online as a part-time entity?
a. While launching a business online as a part-time startup typically has a lower cost, the over all cost is greater as
the company grows.
b. Flexibility is the main reason why an entrepreneur will start a business in this format.
c. Starting a Internet-based businesses on a part-time basis reduces the entrepreneur’s personal risk if the company
should fail.
d. Two of the above statements are true.
63. An important advantage an entrepreneur gains by leasing rather than buying a facility is
a. receipt of an investment tax credit.
b. a decrease in investment risk.
c. a decrease in the amount of promotion required.
d. a customized layout.
64. Steve started a Web-based business offering a mechanism for buying and selling antiques. He has set up his company
using the ____ model.
a. transaction-based
b. content-based
c. information-based
d. premium-based
65. For small businesses, the Internet tends to blur ____ boundaries.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 9
a. industry
b. geographic
c. skill-dependent
d. technological
66. Which emerging model of e-commerce is used to generate significant amounts of advertising revenue?
a. eCRM
b. Disintermediation
c. Blogging
d. Auction Site
67. Eaton is writing the location plan for his business plan. He should be sure to include his requirements for office
equipment because:
a. this is the largest expense he will have for his start-up.
b. he does not plan to work from home.
c. it is important to present the proper image to his clients.
d. the cost for this equipment needs to be included in his financial plan.
68. Daisy is planning a clothing manufacturing company. When selecting the location for her production facility, Daisy
will want to consider:
a. ease of access to her customers.
b. ease of access to transportation.
c. availability of suitable labor.
d. ease of access to raw materials.
69. Ethical questions are being raised about the combination of the _________ and _________models on one website.
a. information, content
b. information, transaction
c. content, transaction
d. content, blogging
70. Sites such as eBay and Bidstart.com derive most of their revenues from:
a. banner ads.
b. listing fees and commissions on sales.
c. corporate sponsors.
d. investors.
71. Roger is analyzing regional differences in seeking a location for a new firm and is looking at states with favorable tax
laws. Based on this information, he should look at which stated?
a. Wyoming
b. Massachusetts
c. Ohio
d. New York
72. Dallas is considering starting his business in his hometown, hoping that:
a. he can get a more favorable tax treatment.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 10
b. he does not have problems with zoning laws.
c. his friends and family will use his service and encourage others to follow suit.
d. his short commute will help reduce costs.
73. Charmaine has never bought anything from an online seller. Many others feel the same way. A frequent reason for
their reluctance is:
a. they have had a bad online purchase experience in the past.
b. it is difficult to predict how much time it will take to ship the product.
c. websites are difficult to navigate.
d. they are reluctant to purchase a product without first seeing it.
74. An advantage for choosing a hometown as a location for a new business venture include the fact that
a. the entrepreneur knows the landmarks around his or her home community.
b. credit can be established more easily.
c. friends and relatives line up new customers.
d. the reduced risk.
75. Garland uses the family room of his home for his business. The children share his computer for their homework and
games. The family room also contains the TV and homework space for the children. The IRS is likely to disallow his
deduction for this space because:
a. a separate space must be clearly set aside for the sole use of the business.
b. his business did not generate enough income to qualify as a real business.
c. no deduction is allowed for space in the home used for a business.
d. the IRS designates any home-based business as a hobby and hobby expenses are not deductible.
76. Using special-purpose equipment in the manufacturing process can result in
a. increased operator errors.
b. higher costs of processing.
c. a rise in accident rates.
d. greater output per machine-hour of operation.
77. In the B2B model, the customers are
a. businesses.
b. other consumers.
c. franchisees.
d. auction participants.
78. For small service or retail businesses, the top priority in location decisions is
a. personal preference.
b. resource availability.
c. customer accessibility.
d. environmental conditions.
79. For many new firms, the most important reason to lease rather than buy a facility is
a. avoidance of a large cash outlay.
b. freedom in modifying the building.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 11
c. avoidance of interest payments.
d. avoidance of liability lawsuits.
80. According to the National Federation of Independent Business, what is the main reason entrepreneurs buy equipment
as opposed to leasing?
a. Can treat the asset as they wish
b. Don’t have to return it
c. Less expense
d. Puts the asset on the books
81. Which statement is true concerning business environment conditions for a new business?
a. State governments will help new business by levying taxes.
b. Determining the zoning is important as it may limit a company’s operations.
c. Many states offer location incentives to attract jobs to very stable areas.
d. Finding an area that has a low cost of living means a low standard of living for employees.
82. Facilities that rent shared space, services and management only to new businesses are called
a. industrial parks.
b. community development centers.
c. shopping centers.
d. business incubators.
83. Customer accessibility is the most critical factor in evaluating a specific site for a
a. clothing manufacturer.
b. drugstore.
c. plumber.
d. software development company.
84. Arthur’s business needs a physical building. Arthur’s most important decison will be:
a. where to locate.
b. how much to spend.
c. whether to rent or own.
d. whether to build or purchase an existing structure.
85. Jeff’s Website Design and Data Storage deals directly with corporate customers online and builds websites and data
storage to specifications after an order is placed. By reducing the firm’s storage and carrying costs, this example illustrates
that B2B firms can create
a. greater efficiency in their operatoins.
b. greater efficiency in their buying and selling
c. synergies between buying and selling.
d. market reach through e-commerce.
Match the term with its definition. Some terms may not be used.
a. auction sites
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 12
b. brick-and-mortar facility
c. business incubator
d. B2B model
e. B2C model
f. C2C model
g. content-based model
h. disintermediation
i. e-commerce
j. eCRM
k. general-purpose equipment
l. home-based business
m. information-based model
n. special-purpose equipment
o. transaction-based model
p. zoning ordinance
86. A B2B wholesaler’s bypassing of a “middleman” to sell its product or service directly to the final consumer
87. Web-based businesses offering participants the ability to list products for consumer bidding
88. An electronically based system that emphasizes customer relationships
89. A facility that provides shared space, services, and management assistance to new businesses
90. A business model in which a website provides information about a business, its products, and other related matters but
doesn’t charge for its use
91. A business that maintains its primary facility in the residence of its owner
92. A business model in which a website provides a mechanism for buying or selling products or services
93. A business model in which a website charges a fee for access to information but does not offer the ability to buy and
sell products and services
94. Local laws regulating land use
95. A business model usually set up around Internet auction sites that allow individuals and companies to list items
available for sale to potential bidders
96. Machines designed to serve specialized functions in the production process
97. A business model based on selling to business customers electronically
98. Machines that serve many functions in the production process
99. The traditional physical facility from which businesses have historically operated
100. The buying and selling of products or services over the Internet
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 13
101. List and discuss the challenges that an entrepreneur faces in designing the new operation’s physical facilities. Give
examples to support the answer.
102. List and describe business environment conditions that may impact the location decision.
103. Discuss the motivations for starting a home-based business. Are these motivations financial or family based?
104. List and explain the attractions and challenges of operating a home-based business.
105. List and describe the different e-commerce business models related to the customer type.
106. After identifying the five major factors in deciding the location for a business, summarize the impact each factor has
if an entrepreneur was opening a restaurant.
107. Discuss the legal considerations for a home-based business. What professionals should an entrepreneur talk to before
starting the business?
108. Describe the critical resource considerations that should guide the location decision.
109. Distinguish between manufacturing equipment, retail equipment and office equipment using a candle factory and a
candle store as examples.
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 14
Answer Key
1. False
2. True
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 15
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 16
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 17
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 18
Name:
Class:
Date:
chapter 9
Copyright Cengage Learning. Powered by Cognero.
Page 19