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
B) A willingness to learn and grow
C) Shared values
D) Family behavior
Alicia has decided to retire and sell her business. She wants to walk away from the
business and enjoy her retirement without having to think about the business. She has
no children or employees who want to buy it. Her best choice of an exit strategy is:
A) a sale for cash plus a note.
B) a leveraged buyout.
C) a straight sale.
D) an ESOP.
Corporations that are formed in other countries but do business in the United States are:
A) international partnerships.
B) domestic corporations.
C) foreign corporations.
D) alien corporations.
Typically, franchise contracts:
A) are short-term, for 10 years or less.
B) are heavily weighted in favor of the franchisee due to federal regulation.
C) do not cover transfer and buyback provisions.
D) are not negotiated by established franchisers.
The loans of commercial finance companies to small businesses:
A) tend to be for less than a commercial bank but at a lower interest rate.
B) are offered based on the company’s balance sheet.
C) tend to be at a lower interest rate but are harder to get.
D) are in many of the same forms as commercial bank offers.
Which of the following statements is correct?
A) Advertising, promotion, and public relations can be effective means of increasing
sales by informing customers of the business and its goods and services.
B) Advertising, promotion, and public relations can be effective by improving the
image of the firm and its products.
C) Advertising, promotion, and public relations can be effective by persuading
customers to purchase the firm’s goods or services.
D) All of the above
________ 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
The three key elements of any partnership are:
A) common ownership in the business, sharing the business’ profits or losses, and the
right to participate in managing the business.
B) equal ownership in the business, sharing its profits and losses, and the right to
participate in managing the business.
C) equal ownership in the business, sharing its profits and losses, and the right to
limited liability for all partners.
D) common ownership in the business, sharing its profits and losses, and the right to
limited liability for all partners.
When receiving investment money from friends and relatives entrepreneurs should:
A) use a clear verbal contract to ensure no misunderstandings.
B) only borrow from close friends and relatives who won’t cause them trouble.
C) discuss all the details of the investment up front.
D) not borrow more than 30% of the necessary capital from them.
Magazines have a number of advantages for the small business owner, including:
A) low cost.
B) short closing time.
C) high quality ad reproduction.
D) prominence of the ads in the medium.
Before launching an e-commerce, the business owner should consider:
A) handling of customer service for the site.
B) the impact of the Web site on the company’s traditional channels of distribution.
C) Both A and B
D) Neither A nor B
The ________ inventory system is designed to maintain a running count of the items in
inventory.
A) perpetual
B) ABC
C) visual control
D) JIT
A ________ bankruptcy provides a small firm a second chance; it protects a firm from
creditors while a reorganization plan is formulated.
A) Chapter 7
B) Chapter 11
C) Chapter 13
D) Chapter 21
Small businesses whose pricing decisions are greatly affected by the costs of shipping
merchandise to customers across a wide range of geographic regions frequently employ
one of the ________ techniques.
A) opportunistic pricing
B) geographic pricing
C) leader pricing
D) price lining
A ________ is any distinctive work, symbol, name, logo, etc., that a company uses to
identify the origin of a product or to distinguish it from other products.
A) patent
B) copyright
C) trademark
D) warranty
Improving quality:
A) lowers the associated cost with scrap.
B) reduces rework time.
C) increases worker productivity.
D) All of the above
A(n) ________ insures a buyer that the goods will be of average quality and that they
are fit for the ordinary purposes for which such goods are used.
A) implied warranty of merchantability
B) implied warranty of fitness for a particular purpose
C) express warranty
D) warranty of title
The problem with using ________ is that it clouds the true relationships among price,
volume, and costs by including fixed expenses in unit cost.
A) full-absorption costing
B) variable costing
C) contribution margin costing
D) break-even costing
Television ads are most commonly sold in what time increments?
A) 20 seconds
B) 30 seconds
C) 60 seconds
D) 15 seconds
Ted is retiring in five years and is thinking of selling the business. Ramon, his general
manager, tells him that he, the other managers, and the employees want to buy the
business from him. Ted sets up a process where all the managers and employees “buy”
stock in the company each month through payroll deductions, so that in five years the
employees hold 100% of the company. This is an example of:
A) a sale for cash plus a note.
B) a leveraged buyout.
C) a straight sale.
D) an ESOP.
The valuation method that is commonly used, but tends to oversimplify the valuation
process, is called:
A) the excess-earnings method.
B) the balance sheet method.
C) the capitalization method.
D) the market approach.
As the providers of debt financing to small businesses, banks tend to:
A) make only asset-based, long-term loans.
B) be very conservative and lend primarily short-term capital.
C) focus on either inventory or accounts receivable when evaluating a business’s loan
requests.
D) be eager lenders to start-ups as these tend to be smaller loans at less risk.
When using a skimming price strategy, small business owners should remember that:
A) it is difficult to correct pricing mistakes with this strategy.
B) it is a long-term policy and it will take time to see appropriate results.
C) if a price is set too low initially, it can be very hard to raise it later.
D) it is an excellent strategy for discouraging competitors from entering the market.
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.
Companies experience a number of benefits from JIT including:
A) better customer acceptance of their products and services.
B) increased job satisfaction among employees.
C) a reduction of inventory and handling costs.
D) longer equipment life and lower maintenance costs.
The most common reasons for leaving a site without purchasing include:
A) the shopping cart was easy to find.
B) checking out was easy and quick.
C) the site was trustworthy.
D) shipping charges were too high.
A ________ is a written statement of the standards of behavior and ethical principles a
company expects from its employees.
A) fidelity
B) promise-keeping
C) code of ethics
D) company credo
A Chapter 11 filing can be
A) involuntary.
B) voluntary.
C) Both A and B
D) None of the above
When a small business owner doesn’t want to make a pricing decision, he/she can use
a(n) ________ pricing strategy.
A) price lining
B) suggested retail
C) opportunistic
D) multiple unit
Geographical pricing includes numerous techniques, such as:
A) uniform delivered pricing.
B) loss-leader pricing.
C) markdowns.
D) multiple pricing.
Forces driving the entrepreneurial trend in our economy include which of the
following?
A) Technological advancement
B) Shift to a service economy
C) e-commerce
D) All of the above
Which of the following corporate trends have contributed to the growth of
entrepreneurship?
A) The acquisition and merging of mega corporations
B) The idea that “small is beautiful” in large companies, resulting in less hierarchy and
layers of management
C) The flood of venture capital being made available to small businesses
D) The downturn in international markets forcing a focus on the domestic market
The focal point of a firm’s strategy is:
A) the firm’s goals and objectives.
B) the firm’s key success factors.
C) the customer.
D) the firm’s strengths and weaknesses.