The most detailed and scrutinized section of a formal marketing plan is the
a. competitor analysis.
b. marketing strategy.
c. market analysis.
d. consumer analysis.
Which of the following is a good source of consumer credit information?
a. Trade-credit agencies
b. The Federal Credit Reporting Agency
c. Third-party reports
d. Credit bureaus
When a business sells its accounts receivable to a finance company, this is called
a. selling short.
b. factoring.
c. mortgaging the future.
d. pledging receivables.
When the exchange rate for a currency rises relative to that of another country, the
rising currency
a. has decreased in value relative to the other currency.
b. has increased in value relative to the other currency.
c. has been devalued by its government.
d. reflects increased political risk in its home country.
One of the documented effects of increased economic freedom is
a. stable demand for goods and services.
b. greater acceptance from other economically-free nations.
c. increased prosperity.
d. rising government approval ratings.
Purchasing a fidelity bond on the company treasurer is a form of risk ________.
a. financing
b. provisioning
c. retention
d. transfer
A transportation director is using ___________ when she analyzes the competition and
uses the insights gained to improve quality internally.
a. control charts.
b. attribute inspection.
c. benchmarking.
d. ISO 9000.
The question “How long will it take to recover the original investment outlay?” is
answered using
a. accounting ratio analysis.
b. the payback period.
c. net present value.
d. discounted cash flow.
A founder’s values become part of the family business culture because
a. the founder insists that the values are sound.
b. others in the firm learn what’s important and absorb traditions established by the
founder.
c. the values coincide with modern management theory.
d. family members follow family traditions without excessive analysis.
Which of the following is least likely to provide assistance in preparing a business
plan?
a. An accounting firm
b. An incubator organization
c. An industrial park
d. A marketing specialist
Tariffs are
a. taxes charged on exported goods.
b. taxes charged on imported goods.
c. duties charged on exported goods.
d. duties charged on imported.
Essential elements in the forecasting of profits include all of the following EXCEPT
a. amount of sales levels.
b. cost of goods and operating expenses.
c. additional owner equity.
d. interest expense.
When Dan Feshbach went looking for equity capital for his company (Mortgage
Information Corporation) he usually
a. made the case for customer revenue.
b. undersold what he thought the company could do.
c. avoided talking about his competitors.
d. emphasized how short product cycles benefited his company.
When an entrepreneur establishes a blueprint for creating a new venture, he or she
prepares
a. an organization chart.
b. a budget.
c. a sales analysis.
d. a business plan.
Why does electronic commerce benefit small firms?
a. Small firms are often “tech savvy”, which allows them to embrace innovations more
quickly.
b. Large firms have complex business plans that fail to direct investment toward the
Internet.
c. Without e-commerce, small firms often lack the resources to expand beyond local
markets.
d. The government has committed significant resources to encourage small firms to go
online.
One section of the competitor analysis of a formal marketing plan should include all of
the following, except
a. competitor’s strengths and weaknesses.
b. a list of related products currently being marketed or tested by competitors.
c. the likelihood that competitors will enter the firm’s target market.
d. the competitiveness of plans such as warranty and repair policies.
Amy Mendez is contemplating opening her own business. She should
a. stick to traditional fields for women (such as women’s clothing stores or beauty
shops) since nontraditional fields are virtually closed to women.
b. realize that many banks will be slow to offer loans because she is a woman.
c. realize that she is going against the flow, in that the proportion of women-owned
firms is decreasing slightly.
d. know that women-owned firms are basically part-time businesses.
When a 32-year-old construction worker launches a construction firm after seven years’
experience in that industry, he
a. has experienced a precipitating event.
b. is facing a forced-choice career.
c. is launching his venture during the ideal time of life for starting a business.
d. is part of an entrepreneurial team.
The operations process is found in
a. manufacturing but not service businesses.
b. service but not manufacturing businesses.
c. neither service nor manufacturing businesses.
d. both service and manufacturing businesses.
Which of the following is an initiative of the U.S. government to assist small firms?
a. Inspire America!
b. The Small Business Administration’s Expanding Enterprise program
c. Empowerment Zones/Enterprise Communities
d. Coalition for Commerce
Will’s business will not be successful unless it charges a price for its products that
covers its
a. total variable cost.
b. total cost.
c. total fixed cost.
d. total cost and some margin of profit.
The owner of a home-based business can establish boundaries between the business and
the home by
a. setting aside specific space for the business.
b. using an outside bookkeeping service.
c. selling to wholesalers rather than to ultimate consumers.
d. limiting his or her participation in community activities.
Investors who review business plans typically
a. look only at brief reports.
b. read about one-half of a plan.
c. read plans thoroughly.
d. read only the marketing and finance sections.
Compensatory damages include ___________ damages .
a. economic
b. breach
c. tort
d. punitive
Active Feet, a small manufacturer of shoes, hired an additional vice-president and
purchased a barrel of synthetic rubber used to make shoe soles. These two expenses
should be considered a (an) _____ and a (an) _____, respectively.
a. selling cost/cost of goods sold
b. overhead cost/cost of goods sold
c. selling cost/overhead cost
d. overhead cost/selling cost
Facilities that rent space only to new businesses and that provide services for them are
called
a. industrial parks.
b. community development centers.
c. shopping centers.
d. business incubators.
Which of the following factors affect the size of a firm’s cash reservoir?
a. the volume of sales
b. cash receipts
c. cash payments
d. all of these
A new business has been launched with four employees who work for the
entrepreneur-owner. As the owner contemplates growth in sales and personnel, she
realizes that the next step of growth will involve the special problem of
a. intermediate supervision.
b. formal policies.
c. direct supervision.
d. quality management.
The salesman told Todd that the high price of the dealerships’ automobiles was
indicative of their high quality. The dealership is using a ________ pricing strategy.
a. skimming
b. penetration
c. variable
d. prestige
All of the following are appropriate vehicles for testing a product in the product
development process except
a. laboratory tests.
b. limited market field tests.
c. purchase simulations.
d. tests of the physical product.
List an discuss the challenges that entrepreneurs face in designing the physical facilities
for their businesses.
You Make the CallSituation 1
Ted Green and Mark Stroder became close friends as 16- year-olds when both worked
part-time for Green’s dad in his automotive parts store. After high school, Green went to
college, while Stroder joined the National Guard Reserve and devoted his weekends to
auto racing. Green continued his association with the automotive parts store by buying
and managing two of his father’s stores.
In 1995, Green conceived the idea of starting a new business that would rebuild
automobile starters, and he asked Stroder to be his partner in the venture. Originally,
Stroder was somewhat concerned about working with Green because their personalities
are so different. Green has been described as outgoing and enthusiastic, while Stroder is
reserved and skeptical. However, Stroder is now out of work, and so he has agreed to
the offer. They will set up a small shop behind one of Green’s automotive parts stores.
Stroder will do all the work; Green will supply the cash.
The “partners” have agreed to name the business STARTOVER, and now they need to
decide on a legal form of organization.
Question 1 How relevant are the individual personalities to the success of this
entrepreneurial team? Do you think Green and Stroder have a chance to survive their
“partnership”? Why or why not?
Question 2 Do you consider it an advantage or a disadvantage that the members of this
team are the same age?
Question 3 Which legal form of organization would you propose for STARTOVER?
Why?
Question 4 If Stroder and Green decided to incorporate, would STARTOVER qualify as
an S corporation? If so, would you recommend this option? Why or why not?
Research has shown that most entrepreneurs generate their business ideas by searching
external sources of ideas.
B2B success stories generally receive more publicity than B2C ventures.
What are the “five C’s of credit”?
The small firm should concentrate its training on nonmanagerial employees,
recognizing that development of managers is beyond its range of expertise.
One hundred percent inspection of products prior to shipment to customers could
theoretically eliminate all defective items.
It is clear that a small firm can generate the greatest financial returns using international
licensing strategies when these efforts involve the company’s products.
Accounting profits are not identical to actual cash flows.
Older people are often discouraged from starting businesses because of family
responsibilities and interests in retirement programs.
Sales people must often walk a fine line between persuasion and deception.
By following enlightened personnel policies, small firms can reduce the likelihood of
unionization.
What marketing activities suggest that a small firm is following a focus strategy?
Objectivity is a particularly valuable contribution of outside directors to the small firm.
Use of debt financing increases potential returns when a company is performing well,
but it also increases the possibility of lower-even negative-returns if the company does
not attain its goals in a given year.
One drawback of becoming a franchisor relates to the increase in required operating
support.
Insurance is most applicable and practical for probable losses.
Because of unique characteristics of franchising, the success rate for franchises is
higher than the success rate for nonfranchised businesses.