Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough)
Chapter 14 Choosing the Right Location and Layout
1) The first phase of determining where to locate a business is:
A) choosing a state in which the business owner wants to live.
B) determining which city has the demographics that best fit the business.
C) conducting a specific site analysis.
D) determining which regions of the country are experiencing growth.
2) The location has far-reaching ramifications, such as high-tech companies that need:
A) a highly skilled work force.
B) a high traffic site.
C) easy access to shipping routes.
D) a nearby retail district.
3) Entrepreneurs using the Census Bureau’s Web site to evaluate potential locations have access
to which of the following information about the residents in those locations?
A) Income levels
B) Age distributions
C) Occupational data
D) All of the above
4) Which of the following information is available from U.S. Census data?
A) The value of the homes in an area
B) The number of rooms in the homes in an area
C) Number of vehicles owned
D) All of the above
5) Which of the following information is not available from Census data?
A) Education levels
B) Income levels
C) Expenditures on dining out
D) Occupational data
6) ________, published annually, provides a detailed breakdown of population, retail sales,
spendable income, and other characteristics for census regions, states, metropolitan areas,
counties, and cities. It also includes analyses of changes in metro markets, descriptions of
newspaper and TV markets, and summaries of sales of certain merchandise.
A) The Survey of Buying Power
B) The Commercial Atlas and Marketing Guide
C) The Zip Code Atlas and Market Planner
D) A Researcher’s Guide to the 1990 Census
7) A publication that reports on more than 120,000 places in the United States, many of which
are not available through census data, and includes eleven economic indicators for major
markets, is the:
A) Topological Integrated Geographic Encoding Referencing.
B) Commercial Atlas and Marketing Guide.
C) Zip Code Atlas and Market Planner.
D) Sales and Marketing Management’s Survey of Buying Power.
8) A Geographic Information System (GIS):
A) is a software package combining the ability to draw detailed maps with the power to search
through databases.
B) helps entrepreneurs discover important trends and characteristics in the population that
otherwise might go unnoticed.
C) can be an incredibly powerful tool for determining the ideal location based on specific criteria
the entrepreneur establishes.
D) All of the above
9) TIGER:
A) is a software package combining the ability to draw detailed maps with the power to search
through databases.
B) breaks down the population, retail sales, etc., by census region.
C) contains the names of every street in the country and detailed block statistics for 345 urban
areas.
D) All of the above
10) When choosing a state in which to locate, one must evaluate which of the following?
A) The general business climate
B) The state’s business laws, regulations, and taxes
C) Tax incentives and/or investment credits
D) All of the above
11) Locating close to ________ is critical for manufacturers, service providers and other
companies that will be competitive.
A) markets they plan to serve
B) suppliers
C) transportation routes
D) airports and rail transportation
12) When the cost of transporting finished goods to market is high relative to their value, the key
location criterion is:
A) low rental or lease rates.
B) proximity to raw materials.
C) proximity to markets.
D) zoning regulations.
13) A glass manufacturer that requires an extremely pure, very fine sand in its production
process would be most concerned about the:
A) business climate.
B) proximity to raw materials.
C) demographic profile of the local market.
D) local wage rates.
14) When would a business choose to locate near the source of the raw material?
A) The company requires an important raw material that is difficult to transport.
B) The company requires an important raw material that is expensive to transport.
C) The company keeps its inventory of an important raw material low to keep costs down and
counts on quick deliveries from suppliers.
D) All of the above
15) When examining a state’s available labor force, the potential business owner needs to know:
A) the state’s labor relations history.
B) the demographics of the target customers.
C) both the number and education of the available workforce.
D) the proximity of its customers.
16) A labor force that has technical training would be most important to a:
A) clothing store.
B) restaurant.
C) skiing equipment specialty store.
D) computer company.
17) What is the state’s overall attitude toward your kind of business? Has it passed laws that
impose restrictions on the way a company can operate? Does the state offer small business
support programs of financial assistance to entrepreneurs? These questions help an entrepreneur
to assess the overall:
A) population trends.
B) proximity to markets
C) labor supply.
D) business climate.
18) One direct way to lower annual operating costs is to locate in a state where:
A) there is an attractive business climate.
B) the labor market is highly competitive.
C) taxes and regulatory costs are lowest.
D) the key markets are relatively accessible.
19) The “Best and Worst States for Doing Business” indicates that California is one of the least
attractive states in which to do business based on these factors:
A) wage costs based on hourly and salaried compensation.
B) tax costs and electricity costs .
C) industrial and office rent costs.
D) all the above
20) Which of the following characteristics for selecting a city would be of greatest interest to a
retail store selling fine china and collectibles?
A) Public services
B) Transportation
C) Zoning
D) Population characteristics
21) Geographic concentrations of interconnected companies, specialized suppliers, and service
providers that are present in a region are called:
A) zones.
B) clusters.
C) trading areas.
D) variances.
22) ________ is a system that divides a county or city into small cells or districts to control the
use of land, buildings, and sites.
A) An enterprise zone
B) Zoning
C) Apportioning
D) Redistricting
23) When Jan and Detmar Wolcinski bought their 152-year-old house, they began remodeling it
with one goal in mind: opening a bed and breakfast inn. The Chadwick Inn has exceeded the
Wolcinski’s expectations in its first year of operation, but now some neighbors are starting to
complain about the increased traffic in their neighborhood and the late hours some of the Inn’s
guests keep. The Wolcinski’s greatest challenge in the near future is most likely:
A) convincing the local historical preservation board that the modifications they made to the
house are in keeping with its historical character.
B) zoning laws prohibiting commercial businesses in a residentially zoned area.
C) major hotel chains opening competing “bed and breakfast” hotels on adjacent lots.
D) encroaching shopping centers and malls that push up real estate prices.
24) The purpose of zoning regulations is to:
A) restrict the growth of businesses.
B) contain similar types of activities in suitable locations.
C) help new businesses “incubate” in their startup period.
D) build the traffic volume for retail and service businesses.
25) Job training for workers and reduced tax rates, to financial grants and loans, are examples of
what some ________ offer as business ________ to locate in their jurisdictions.
A) states; motivators
B) cities; incentives
C) regions; perks
D) counties; attractions
26) A ________ is a special exemption to a zoning ordinance.
A) variance
B) exception
C) trade area
D) cluster
27) A location in a city offering a high quality of life can be attractive to the entrepreneur and
may make ________ easier.
A) financing
B) recruiting employees
C) resolving zoning issues
D) access to a trading area
28) The region from which a business can expect to draw its customers over a reasonable time
span is called its:
A) enterprise zone.
B) zoning area.
C) trading area.
D) retail draw.
29) The primary variable(s) that influence(s) the scope of a trading area is/are:
A) the character of the transportation network.
B) the nature of competing businesses.
C) the type and size of the business operation.
D) the racial and political barriers in the local community.
30) Nature’s Way, a health food store, has just opened in a popular neighborhood shopping
center next to Silver’s Gym, a physical fitness center catering to both men and women. Nature’s
Way is relying on which location principle?
A) Trade area
B) Retail consistency
C) Retail compatibility
D) Zoning
31) The index of retail saturation:
A) is retail expenditures times retail facilities divided by the number of customers.
B) is the ratio of a trading area’s sales potential to its sales capacity.
C) evaluates both the number of customers and the intensity of competition in a trading area.
D) B and C above
Refer to the following information to answer the(se) question(s):
An entrepreneur considering two sites for a men and boys’ shop determines that he needs sales of
$158 per square foot to be profitable. Site #1 has 13,500 potential customers who spend an
average of $160.20 per year on men and boys’ wear. Two competitors occupy 14,200 square feet
of space. Site #2 has 10,800 potential customers spending an average of $152.10 per year on
men and boys’ wear. One competitor has 10,000 square feet.
32) The index of retail saturation for site #1 is:
A) $150.21.
B) $168.51.
C) $152.30.
D) $166.19.
33) The index of retail saturation for site #2 is:
A) $164.27.
B) $140.83.
C) $170.64.
D) $146.30.
34) Based on the above calculations, what is the entrepreneur’s best option?
A) He should choose site #1.
B) He should choose site #2.
C) Neither site meets minimum criteria of $158 per square foot.
D) Either site will work well since both meet minimum criteria of $158 per square foot.
35) Reilly’s Law of Retail Gravitation:
A) uses the analogy of gravity to estimate the attractiveness of a particular business to potential
customers.
B) predicts the declining fate of brick-and-mortar retail to online shopping.
C) is based on downward trending of established locations.
D) uses the analogy of contagious diseases and attracting customers.
36) Shopping malls typically average ________ parking spaces per 1,000 square feet of shopping
while a typical central business district offers ________ spaces per 1,000 square feet of shopping
space.
A) 20; 1
B) 3; 6
C) 5; 3.5
D) 3; 8
37) Carmen is starting a childcare center. One location closed after a murder on the property and
is near a neighborhood where there are many single parents. What city site selection factor might
give Carmen problems with her childcare center?
A) Transportation
B) Police and fire protection
C) The reputation of the location
D) Compatibility with the community
38) Mary’s successful clothing store was located on the back edge of the parking lot of a large
mall. She did not have to pay mall rents since she was not part of the mall, but drew many
customers who parked at the mall and then noticed her store. The mall developers built a movie
theater on the part of the parking lot directly in front of Mary’s store, basically hiding her from
most mall customers. After about six months, Mary’s business dropped off so much she had to
move. What retailer site selection criterion forced Mary to move?
A) Proximity of competitors
B) Visibility
C) Adequate parking
D) Room for expansion
39) Factors such as ________ should be sought out in the selection of retail and service business
locations.
A) the lowest possible rent/lease options, transportation network, adequate parking, physical and
psychological barriers
B) modest customer traffic, transportation network, lack of parking, physical and psychological
barriers
C) customer traffic, transportation network, adequate parking, physical and psychological
barriers
D) customer traffic, isolation from other stores, adequate parking, physical and psychological
barriers
40) The central business district (CBD):
A) is the traditional center of town.
B) in many cities experienced decay in years past as customers began shopping more frequently
at malls and shopping centers, but are now going through revitalization programs.
C) attracts customers from the entire trading area of the city.
D) All of the above
41) Which of the following is an advantage of locating in a central business district?
A) Low rent
B) Easy and abundant parking
C) The ability to attract customers from the entire trading area
D) Moderate to low levels of competition
42) Which of the following are disadvantages of locating in a central business district?
A) Intense competition
B) High rental rates
C) Traffic congestion and inadequate parking facilities
D) All of the above
43) The typical ________ is relatively small, contains from 3 to 12 stores, and serves a
population that lives within a 10-minute drive.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
44) A ________ contains from 12 to 50 stores and serves a population of 40,000 to 150,000
people.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
45) The ________ serves a large trading area (10 to 15 miles or more), contains from 50 to 100
stores, and draws customers from a population that lives within 20- to 40-minutes driving time.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
46) A ________ combines the drawing strength of a large regional mall with the convenience of
a neighborhood shopping center.
A) power center
B) community shopping center
C) central business district
D) strip mall
47) Which of the following is an important consideration for an entrepreneur evaluating a
shopping mall or center location?
A) In terms of customer demographics, is the mall or center a good fit for my products or
services? How much foot traffic and vehicle traffic does the mall or center generate?
B) Who are the other tenants? The anchor tenants? Is there a good fit for my products and
services?
C) What are the mall’s or center’s vacancy and turnover rates?
D) All of the above
48) A ________ center combines the drawing strength of a large regional mall with the
convenience of a neighborhood shopping center.
A) neighborhood
B) power
C) theme or festival
D) lifestyle
49) Typically located near affluent residential neighborhoods where their target customers live,
________ centers are designed to look less like shopping centers and malls and more like the
busy streets in the central business districts that once existed in town and cites.
A) neighborhood
B) power
C) lifestyle
D) community shopping
50) A type of business that does well when located near competition is:
A) one that has a unique product line, dissimilar to that of its competitors.
B) one that carries products for which customers comparison shop.
C) one whose location is part of its trademark.
D) None of the above
51) Which of the following is the greatest advantage of operating a home-based business?
A) The ability to save money by avoiding business startup taxes
B) The exemption that home-based businesses receive from local zoning laws
C) The low cost of setting up and operating the business
D) The ability to claim all household expenses as business deductions for tax purposes
52) Which of the following is not true of home-based businesses?
A) Home-based businesses represent the fastest-growing segment of the U. S. economy.
B) The biggest benefit of operating a business from home typically is its low cost.
C) Home-based retail businesses represent the fastest-growing segment of all home-based
businesses.
D) None of the above
53) Which of the following is a potential disadvantage of a home-based business?
A) Frequent interruptions of work
B) Feelings of isolation
C) Problems with zoning laws from running a business
D) All of the above
54) A specially designated area in or near a U.S. customs port of entry that allows resident
companies to import materials and components from foreign counties; assemble, process,
manufacture, or package them, and then ship the finished product back out while either reducing
or eliminating tariffs and duties is a:
A) empowerment zone.
B) foreign trade zone
C) business incubator.
D) trading area.
55) ________ offer new businesses the protection of low-cost locations and a multitude of
support services in an attempt to improve the companies’ chances of success.
A) Research parks
B) Business incubators
C) Industrial parks
D) Discount malls
56) Incubator facilities are established in order to:
A) revitalize central business districts.
B) enhance economic development and diversify the local economy.
C) centralize types of businesses and provide tax breaks to those businesses.
D) reuse old military bases and abandoned structures in economically depressed areas of a city.
57) The most common sponsors of business incubators are:
A) colleges and universities.
B) government agencies.
C) private investment groups.
D) public/private partnerships.
58) Most business incubator residents are engaged in which businesses?
A) Heavy manufacturing
B) Light manufacturing, service, or technology-related fields
C) Mixed retail and restaurant business
D) Heavy manufacturing, food preparation, and service
59) Which of the following do incubators offer their tenants?
A) Flexible rental space at discounted market rates
B) Larger trading areas
C) Exemptions from zoning regulations
D) Lower, or an exemption from, state and city taxes
60) According to the National Business Incubation Association, graduates from incubators have
a success rate of ________ percent.
A) 57
B) 67
C) 77
D) 87
61) The National Business Incubation Association reports that ________ percent of the
companies that have graduated from a incubator stay in the local community.
A) 84
B) 70
C) 54
D) 33
62) ________ is the logical arrangement of the physical facilities in a business that contributes to
efficient operations, increased productivity, and higher sales.
A) The Index of Retail Saturation
B) Layout
C) Logistics
D) The Sales Conversion Index
63) When evaluating existing buildings, retailers:
A) need to find the lowest cost per square foot possible due to the need for maximum display
space.
B) should locate in store space previously occupied by a similar type of business.
C) should recognize that the store’s appearance and layout create an image for the customers of
the business.
D) can discount the interior appearance of the building if it has a strong exterior appeal.
64) Which of the following statements concerning layout is true?
A) A company’s physical facilities send important messages to potential customers about its
“personality.”
B) The physical appearance of a building provides customers with their first impressions of a
business.
C) Communicating the right signals through a business’s layout and physical facilities is an
important step in creating a competitive edge over rivals.
D) All of the above
65) Entrances should invite entry. The way to accomplish this is to:
A) have wide entryways and attractive displays set back from the doorway that can lure
customers into the store.
B) offer discounts.
C) have displays as close to the entry of the store as possible.
D) have a big sign to attract customers.
66) When designing the layout of a store, office, or plant, a business owner’s primary focus is
usually on ________, however, it should be on ________.
A) minimizing costs; maximizing security
B) enhancing workers’ productivity; minimizing costs
C) increasing sales; customer accessibility
D) minimizing costs; minimizing injuries and enhancing employees’ productivity
67) The Americans with Disabilities Act of 1990 requires:
A) buildings be remodeled to accommodate any disabled customer or employee.
B) businesses must accommodate all disabled customers or job candidates, regardless of the cost
to the business.
C) that businesses have all facilities available to physically challenged customers and employees.
D) All of the above
68) The Justice Department estimates that more than 20 percent of the cases customers have filed
under the Americans with Disabilities Act involved changes the business owners could have
made at a cost of:
A) $0.
B) $250.
C) $1,000.
D) $8,000.
69) Under the Americans with Disabilities Act, a newly constructed:
A) building must have elevators if they are three stories or higher.
B) retail store must have checkout aisles wide enough to accommodate wheelchairs (36 inches).
C) restaurant must make five percent of its tables accessible to wheelchair-bound patrons.
D) All of the above
70) The Americans with Disabilities Act:
A) protects disabled employees, job candidates, and customers.
B) does not apply to small businesses with fewer than 15 employees.
C) requires companies to hire any disabled worker who applies for a job and then find a way to
fit the job requirements to that worker’s abilities.
D) All of the above
71) To be effective, a business sign should:
A) be large enough for passersby to read from a distance.
B) contain a message that is short, simple, and clear.
C) be properly illuminated so that it is legible both day and night.
D) All of the above
72) Which of the following is not a characteristic of an effective business sign?
A) Includes a message that is short, simple, and clear.
B) Is illuminated so that it is readable both day and night.
C) Uses complementary color schemes and ornate typefaces.
D) Is well maintained.
73) The science of adapting work and working conditions to complement employees’ strengths
and to suit customers’ needs is called:
A) physiology.
B) ergonomics.
C) terminology.
D) kinesiology.
74) Which of the following is an example of ergonomics?
A) Evaluating the climate-control needs of the work environment
B) Assessing the lighting needs and the acoustics of a business office
C) Considering the proper height of desks, chairs, etc., when designing a work station
D) All of the above
75) Studies and experts have concluded that changes in office design have a direct impact on
workers’:
A) performance.
B) job satisfaction.
C) ease of communication.
D) All of the above
76) In addition to the layout of the store, behavioral experts recommend that retailers consider
the impacts of ________ , ________ and ________ on customer behavior.
A) lighting; sound; scent
B) lighting; noise; orientation
C) lighting; sound; noise
D) signage; sound; scent