According to the textbook, the toughest decisions regarding business growth are made
in the ________ stage of the organizational life cycle.
A) introduction
B) early growth
C) continuous growth
D) maturity
E) decline
Answer:
The people who buy franchises from master franchises are typically called:
A) minor franchisees
B) secondary franchisees
C) mini-franchisees
D) subordinate franchisees
E) subfranchisees
Answer:
Debt financing involves:
A) raising venture capital or securing a private placement
B) selling corporate bonds or selling stock via an IPO
C) getting a grant or selling corporate bonds
D) getting a loan or raising venture capital
E) getting a loan or selling corporate bonds
Answer:
There are two primary reasons to conduct an intellectual property audit. First, it is
prudent for a company to periodically determine whether its intellectual property is
being properly protected. The second reason for a company to conduct an intellectual
property audit is to:
A) remain prepared for a Security & Exchange Commission spot inspection
B) remain prepared to justify its value in the event of a merger or acquisition
C) remain prepared for an initial public offering
D) update the value of its intellectual property on its balance sheet
E) make sure no intellectual property has been stolen
Answer:
Which of the following statements about pro forma financial statements is incorrect?
A) Pro forma financial statements are projections for future periods based on forecasts.
B) Pro forma financial statements are typically completed for two to three years into the
future.
C) Pro forma financial statements are required by the SEC.
D) Most companies consider their pro forma financial statements to be confidential and
reveal them to outsiders only on a “need to know basis.”
E) Pro forma financial statements are strictly planning tools.
Answer:
There are three types of business plans:
A) functional business plan, full business plan, feasibility plan
B) summary business plan, contingency plan, full business plan
C) functional business plan, contingency plan, full business plan
D) opportunity plan, feasibility plan, full business plan
E) summary business plan, full business plan, operational business plan
Answer:
Talking to industry experts, obtaining feedback from prospective customers, and
administering surveys are examples of:
A) primary research
B) secondary research
C) derivative research
D) principal research
E) fundamental research
Answer:
Which of the following statements is not true regarding new product development?
A) New product development involves designing, producing, and selling new products
as a means of increasing firm revenues and profits.
B) When new product development is properly executed, there is tremendous upside
potential.
C) The key to successful new product development strategy is to develop products that
aren’t simply “me-too” products.
D) In general, developing new products is a low-risk strategy.
E) In many fast-paced industries, new product development is a competitive necessity.
Answer:
Once a firm decides to enter an industry and chooses a market in which to compete, it
must gain an understanding of its competitive environment. This challenge can be
undertaken by completing a(n):
A) business analysis
B) industry analysis
C) competitor analysis
D) strategic analysis
E) market analysis
Answer:
On a firm’s income statement, net sales consists of:
A) operating expenses minus cost of sales
B) total sales minus allowances for returned goods and discounts
C) cost of sales minus allowances for returned goods and discounts
D) cost of sales minus operating expenses
E) total sales minus operating expenses
Answer:
According to the textbook, most experts recommend ________ pricing because it
hinges on the perceived value of a product or service.
A) value-based
B) cost-based
C) competitive-based
D) tactical
E) strategic
Answer:
Kimberly Jones is the founder of a company in the medical equipment industry.
Kimberly’s firm is still in the feasibility analysis stage and doesn’t have a product that is
ready to sell. The company is spending about $25,000 per month and expects to
maintain that level of spending until it reaches profitability. The $25,000 a month is
Kimberly’s:
A) consumption rate
B) utilization rate
C) burn rate
D) usage rate
E) liquidity rate
Answer:
According to the textbook, the main disadvantage of buying a franchise is:
A) franchise organizations typically grow slower than non-franchise organizations in
the same industry
B) franchisors typically provide poor levels of support
C) the cost involved
D) the service sector of the U.S. economy is waning in importance
E) franchising is waning in its popularity
Answer:
The Partnering for Success feature in Chapter 4 focuses on the types of partnerships
that are common in business plans. According to the feature, businesses often make
partnering an essential part of their business plans because they:
A) want to obtain a key customer
B) want to increase their visibility
C) want to reduce risk
D) what to appear legitimate
E) have limited resources
Answer:
A(n) ________ is the group of founders, key employees, and advisers that either
manage or help manage a new business in its startup years.
A) opening team
B) entrepreneurial team
C) scout team
D) launch team
E) new venture team
Answer:
Which of the following was not identified as one of the keys to effective new product
and service development?
A) focus on a broad rather than specific target markets
B) get quality and pricing right
C) conduct ongoing feasibility analysis
D) develop products that add value
E) find a need and fill it
Answer:
________ is a quick financial assessment of the viability of a business idea.
A) Organizational feasibility analysis
B) Institutional feasibility analysis
C) Product/service feasibility analysis
D) Financial feasibility analysis
E) Industry/market feasibility analysis
Answer:
________ are(is) generated when increasing production lowers the average cost of each
unit produced.
A) Business scalability
B) Economies of scale
C) Reaching for scale
D) Market leadership
E) Economies of scope
Answer:
The Partnering for Success feature in Chapter 15 focuses on how franchise
organizations can boost their sales while at the same time reduce their expenses. The
technique that the feature recommends to achieve these dual objectives is:
A) strategic alliances
B) joint ventures
C) outsourcing
D) licensing
E) cobranding
Answer:
Which of the following statements is correct regarding the concept of branding?
A) Brands cannot be built through advertising, public relations, sponsorships, social
media, or similar techniques.
B) A company doesn’t normally want its customers to identify with its brand.
C) Startups usually start with an established brand.
D) A brand can be one of a company’s most valuable assets.
E) A brand can denote a negative impression of a company.
Answer:
The number one rule for a brainstorming sessions is:
A) no criticism is allowed
B) no freewheeling is allowed
C) no leapfrogging is allowed
D) no more than 10 people are allowed to participate
E) no wild or unrealistic ideas are allowed
Answer:
________ licensing is the licensing of proprietary technology that the licensor typically
controls by virtue of a utility patent.
A) Skill
B) Intellectual property
C) Utility
D) Technology
E) Expertise
Answer:
A board of directors has three formal responsibilities: appoint the officers of the firm,
declare dividends, and:
A) write the firm’s strategic plan
B) conduct the annual meeting
C) provide funding for the firm
D) represent the firm in public relations activities
E) oversee the affairs of the corporation
Answer:
Which of the following statement is not correct regarding business angels?
A) Business angels invest in more startups on a yearly basis than venture capitalists.
B) The number of angel investors has decreased dramatically over the past decade.
C) Business angels usually take a seat on the board of directors of the firms in which
they invest.
D) Business angels are valuable because of their willingness to make relatively small
investments.
E) Business angels are difficult to find.
Answer:
A(n) ________ involves showing a preliminary description of a product or service idea
to prospective customers to gauge customer interest, desirability, and purchase intent.
A) concept test
B) product/service statement
C) impression test
D) idea prospectus
E) idea test
Answer:
“Don’t be evil” is the corporate motto for:
A) Facebook
B) Twitter
C) Zynga
D) Apple Inc.
E) Google
Answer:
The Partnering for Success feature in Chapter 11 focuses on Moxsie, an online retailer
that sells fashion items made by independent designers. Moxsie has accelerated its
growth by:
A) partnering with an influential Web site and soliciting feedback from customers
B) running Google AdSense ads and soliciting feedback from customers
C) utilizing viral marketing and putting in place a formal sales process
D) utilizing guerrilla marketing techniques and entering into a strategic alliance with
Google
E) co-branding its site with another online retailer and putting a formal sales process in
place
Answer:
Which of the following was not identified in Chapter 14 as one of the top 10 reasons
new products fail?
A) lack of passion for the product
B) target market is smaller than originally projected
C) target market is not defined correctly
D) sales and marketing efforts are not focused and aligned
E) product doesn’t address important customer needs
Answer:
Phone Halo, the company profiled in the opening feature for Chapter 14, developed a
device that prevents people from losing their mobile phones. Which growth strategy is
Phone Halo now pursuing?
A) joint ventures
B) strategic alliances
C) mergers and acquisitions
D) licensing
E) international expansion
Answer:
Pam Ryan owns a store that sells running shoes and related products. Pam is currently
trying to increase sales through endorsements by famous runners and former Olympic
athletics. Pam is pursuing a(n):
A) strategic alliance strategy
B) licensing strategy
C) market penetration strategy
D) geographic expansion strategy
E) improving an existing product or service strategy
Answer:
________ is a company’s ability to meet its short-term financial obligations.
A) Liquidity
B) Profitability
C) Effectiveness
D) Stability
E) Efficiency
Answer:
A financial statement is a(n):
A) set of ratios which depict relationships between a firm’s financial items
B) estimate of a firm’s future income and expenses
C) hybrid statement of cash flows
D) itemized forecast of a company’s income, expenses, and capital needs
E) written report that quantitatively describes a firm’s financial health
Answer:
Jennifer Burroughs is thinking about starting a firm in the upscale women’s fashion
industry. To get a full appreciation of the competitive nature of the industry, and how
she might position her products, Jennifer has spent considerable time looking at
industry-related publications, Hoover’s Online, and ABI-Inform, which is a database
that provides access to articles covering a wide-variety of business and industry related
issues. Jennifer is conducting:
A) primary research
B) secondary research
C) action research
D) temporary research
E) purposeful research
Answer:
Which of the following statements is incorrect regarding founding teams?
A) The members of heterogeneous teams are diverse in terms of their abilities and
experiences.
B) Teams that are working together for the first time have an advantage over teams that
have worked together before.
C) The psychological support that cofounders of a new business can offer one another is
an important element of a firm’s success.
D) The members of homogeneous teams are very similar in terms of their abilities and
experiences.
E) Studies show that more than one individual starts 50 to 70 percent of all new teams.
Answer: