Because inventory is not a liquid asset, cash invested there is tied up and cannot be used
for other purposes.
About 75 percent of the businesses in the U.S. can be considered ‘small” businesses.
A corporation formed in Taiwan doing business in the United States is a foreign
corporation.
In startup companies, raising capital can easily consume as much as one-half of the
entrepreneur’s time and take many months to complete.
The most effective way to communicate the values of a company to everyone it touches
is to formulate an effective mission statement.
Having an attorney review and evaluate a franchise contract is unnecessary since the
FTC requires all franchisors to offer a ‘standard” franchise contract.
A franchise is an arrangement in which semi-independent business owners pay fees and
royalties to a parent company in return for the right to sell its products or services and
often to use its business format and system.
For setting prices, full absorption financial statements are much more useful to the
small business owner than are direct cost statements.
Price is a measure of what the customer must exchange to obtain goods and services,
and is an indicator of value to the customer.
A product feasibility analysis answers the question, “Are customers willing to purchase
our goods and services?”
Serial entrepreneurs repeatedly start businesses and grow them to a sustainable size
before striking out again.
The use of credit cards increases the probability, speed, and magnitude of customer
spending.
The “two-thirds rule” says that only two-thirds of the entrepreneurs with a sound new
business venture will get financing, that they will get only two-thirds of what they need,
and that it will take them two-thirds longer to get it than they anticipated.
The bounce rate measures the percentage of shoppers who place at least one item in a
shopping cart but never complete the transaction.
For many small businesses, nonprice competition (focusing on factors other than price)
is a more effective strategy than trying to beat larger competitors in a price war.
McDonald’s recently set up several small franchises in nontraditional locations such as
a hospital, a college campus, an airport, a subway station, and a sports arena. These
locations are based on the principle of ________.
A) conversion franchising
B) intercept marketing
C) multi-unit franchising
D) cobranding
Entrepreneurs typically possess ________.
A) the ability to easily access capital
B) a set of unique skills that is usually accompanied by advanced degrees in several
areas
C) a high level of commitment, have a tolerance for ambiguity, are flexible and
tenacious
D) specialized technical abilities
One form of primary research is ________.
A) to review published articles
B) internet research
C) library research
D) a focus group
The ability to develop new ideas and to discover new ways of looking at problems and
opportunities is called ________.
A) entrepreneurship
B) innovation
C) creativity
D) creative thinking
Small businesses contribute ________ percent of U.S. export sales.
A) 20
B) 25
C) 33
D) 40
A term loan ________.
A) is typically unsecured
B) may contain restrictions or covenants
C) is based on past operating history and a firm’s high probability of repayment
D) All of the above
Which of the following technological forces is driving the entrepreneurial trend in our
nation?
A) Cloud computing.
B) Mobile marketing.
C) The Internet.
D) All of the above
Generally, a seller of an existing business can assign any contractual right to the buyer
unless ________.
A) the contract specifically prohibits the assignment
B) the contract is personal in nature
C) A and B are correct
D) None of the above. Business sellers typically cannot assign any contractual rights to
buyers.
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
________ pricing is a technique that involves marking down the normal price of a
popular item in an attempt to attract more customers who make incidental purchases of
other items at regular prices.
A) Leader
B) Markup
C) Markdown
D) Multiple unit
An American executive went to a Middle Eastern country to sign an oil contract. Before
the contract was signed, the American and the Arab official met for tea. Relaxing, the
American put her/his feet up on a table. The official became angry and left the room.
Later it was found that showing the soles of shoes was a serious insult. This represents
which barrier to international trade?
A) Tactical
B) Political
C) Strategic
D) Cultural
Mini-Case 14-2: “It’s a Great Location for a Bar”
Fred Stanford has just completed bartenders’ school in Los Angeles and is ready to
build a life for himself. Sunday’s paper has an ad in the business opportunities section
for a bar in Mesa Verde, Colorado. Fred has heard that the West is a high growth area
and the quality of life in Colorado is very good. Fred’s best friend, Carl, begins to ask
Fred some questions about his new idea. “To begin with, Fred, where is Mesa Verde,
Colorado?”
Fred decides to call the telephone number in the ad and is put in touch with Ansel King,
a business broker located in Pueblo, Colorado. When asked where in Colorado Mesa
Verde was, Ansel was prompt to point out that it was only 35 miles from Pueblo on the
Interstate and has a population of nearly ten thousand. “Fred, this town is a great
location for a bar, and I have just the kind of deal for a young man like you looking to
get started.”
What publications could Fred use to investigate whether or not this is a good region for
this bar?
In a(n) ________, a domestic small business forms an alliance with a company in the
target nation for the purpose of exporting to that market.
A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company
A combination of hardware and software that allows employees to have access to the
Internet but keeps unauthorized users from entering the company’s network is called
________.
A) virus detection software
B) intrusion detection software
C) a firewall
D) Web protection
To attract potential customers, a ________ can serve multiple business purposes,
including keeping customers updated on new products, enhancing customer service,
and promoting the company.
A) newspaper advertisement
B) brochure
C) blog
D) radio promotion
________ is the process of creating and delivering desired goods and services to
customers and involves all of the activities associated with winning and retaining loyal
customers.
A) Marketing
B) Personal selling
C) Promotion
D) Customer service
Businesses facing rapidly rising costs should consider ________.
A) offering products in smaller sizes or quantities
B) communicating with customers about the cost increases
C) anticipating rising material costs and try to lock in prices early
D) All the above