Dumping involves selling large quantities of a product in a foreign market below cost.
An inventory turnover ratio above the industry average suggests that a business is
overstocked with obsolete, stale, overpriced, or unpopular merchandise.
For many entrepreneurs, the key barrier to not using the Web as a business tool is that
they do not see any benefits to selling online.
Taking on debt destroys a business; therefore, small business owners should avoid it at
all costs.
It is illegal for a franchisor to require franchisees to purchase products only from
“approved suppliers.”
Although building a business plan does not guarantee an entrepreneur’s success, it does
increase his or her chances of succeeding in business.
As soon as an account receivable becomes past due, a business owner should turn it
over to a collection agency.
Entrepreneurs choose to enter their particular business fields because they have an
interest in them and enjoy those lines of work. They have often made their hobbies their
business.
Starting a part-time business is a popular gateway to entrepreneurship.
Knowing the type of labor a business needs and preparing job descriptions and job
specifications in advance will help a business owner determine whether or not there is a
good match with the available labor pool.
A community center is an upscale shopping experience with specialty stores, dining and
entertainment in an outdoor setting.
Which of the following statements about a company’s culture is false?
A) Company culture manifests itself in a variety of ways, from how workers dress and
act to the language they use.
B) As a company grows larger, its culture tends to remain constant.
C) Culture arises from an entrepreneur’s consistent and relentless pursuit of a set of core
values that everyone in the company can believe in.
D) All of the above
The most common form of business ownership that is also the simplest to create is the
________.
A) sole proprietorship
B) partnership
C) corporation
D) S corporation
Which of the following is not a primary market research source?
A) Customer surveys
B) Focus groups
C) Daily transactions
D) All of the above are sources of primary market research.
Unlike entrepreneurs of the past, today’s entrepreneurs ________.
A) are finding more government interest and funding for business start-ups than in the
past decade
B) find fewer closed doors as small business start-ups have become less risky
C) have to piece their capital together from several sources
D) are spending a smaller percentage of their time raising capital for their businesses
Which of the following is a characteristic of copreneurs?
A) Mutual respect
B) Complementary business skills
C) A clear division of roles and authority
D) All of the above
Your local grocery store uses a pricing technique known as ________ on a weekly
basis, in which they mark down the price of several popular items, sometimes well
below their normal price, in an effort to increase customer traffic and to boost sales of
other items.
A) odd pricing
B) leader pricing
C) price lining
D) suggested retail pricing
________ franchising involves providing the franchisee with a complete business
system, with an established name, the building layout and design, accounting systems,
and other elements while ________ franchising allows the franchisee to use the
franchisor’s trade name without distributing the products exclusively under the
franchisor’s name.
A) Product distribution; trade name
B) Trade name; pure
C) Pure; trade name
D) Pure; product distribution
On March 10th, a business owner receives an invoice from a supplier for $416.27 with
“Net 30” credit terms marked on it. On April 7th, the owner writes the supplier a check
for $416.27 and mails it. When would this cash disbursement show up on the
company’s cash budget?
A) March 10th
B) March 30th
C) April 7th
D) April 10th
One of the most important group of stakeholders that a business must satisfy is its
________.
A) customers
B) employees
C) investors
D) banks
A ________ is an agreement between an exporter’s bank and the foreign buyer’s bank
that guarantees payment to the exporter for a specific shipment of goods.
A) bank draft
B) letter of credit
C) repurchase agreement
D) trade acceptance
Financial analysts suggest that a small business should maintain a current ratio of at
least ________.
A) 1:1
B) 2:1
C) 3:1
D) 4:1
Ideally, a company reaches a point where increases in operating efficiency mean that
expenses as a percentage of sales revenue flatten or even decline. This is referred to as
________.
A) net profit to assets ratio
B) profitability ratio
C) net profit to equity
D) operating leverage
________ is a special type of limited partnership in which all partners who, in many
states must be considered to be professionals, are limited partners.
A) Limited liability partnership (LLP)
B) Master limited partnership (MLP)
C) General partnership
D) Limited partnership
An effective tool used to help assess ideas is the ________.
A) idea toolkit
B) idea dashboard
C) idea sketch pad
D) idea metric
A ________ interview involves offbeat questions to determine how job candidates think
and reason, allowing the interviewer to assess their capacity for creativity.
A) situational
B) puzzle
C) circumstantial
D) game-based
Which of the following issues would influence an entrepreneur’s choice of a form of
business ownership?
A) Tax considerations
B) Management succession plans
C) Liability exposure
D) All of the above
Describe why a small business might gain a competitive edge over its rivals by using a
focus on the customer, devotion to quality, paying attention to convenience,
concentration on innovation, dedication to service, and emphasis on speed.
What are the steps in establishing an ethical framework?
What are the parameters used in an idea sketch pad?
Assume you own a small shoe store. Discuss the three different types of competition
you might face and give examples of each.
Mini-Case 7-1: Pipe Dreams
Ralph Emerson thought he’d been a librarian long enough, and when the opportunity
arose to open a small tobacco, pipe, and cigar shop in the newly-renovated downtown
business district, he was ready to act. Pipe Dreams is a franchisor of smoke shops, and
was founded eight years ago by a noted tobacconist in New York City. The concept for
the shops is simple, yet sophisticated. It is simple in the sense that the shops sell only
tobacco-related products, but sophisticated in the breadth and quality of the inventory
they carry. Each franchise, depending on size, is stocked with inventory selected by the
company’s founder. The franchisor finances the shop’s initial inventory. The franchisee
is expected to create a decor within predetermined standards that Pipe Dreams
established. Each franchisee must attend a three-day workshop, outlining the
fundamentals of tobacco blending, the merchandising of pipes and cigars, and the
techniques of successful business operation.
The franchise contract requires the franchisee to contribute 1.5 percent of gross revenue
to a national advertising campaign. According to the contract, Pipe Dreams will finance
the required fixtures for the store for ten years. In addition, the franchisor supplies all
inventory at very favorable prices because it purchases in large quantities.
Ralph knows he can buy tobacco products from a variety of wholesalers. He also has
some ideas on what would make a tobacco shop successful in this town. Ralph knows
that Pipe Dreams franchisees have had a high success rate in the past.
Assuming that Ralph has adequate capital, would you recommend that he invest in the
franchise or open his own tobacco shop? Why?
List five of the barriers that limit creativity.