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Too many marketing plans describe in great detail what an entrepreneur intends to
accomplish and pay little, if any, attention to practical and affordable strategies to
achieve those targets.
Market research requires a business owner to define the objective, collect data, analyze
and interpret that data, and draw conclusions and act.
To get external financing, an entrepreneur's business plan must pass the reality test, the
competitive test, and the value test with potential lenders and investors.
The most common reasons that owners of small businesses give for selling are the
intensity of competition and an inability to raise sufficient cash to continue to grow.
A small company's cash balance is the difference between total revenue and total
expenses.
Flash always makes a Web site better.
In the breaking-the-ice phase of the interview process, skilled interviewers often use the
job description to explain the nature of the job and the company's culture to candidates.
A current ratio of 2.4:1 means that a small company has $2.40 in current liabilities for
every $1 in current assets.
Ninety-percent of businesses in the United States are family-owned and managed and
account for 62 percent of total U.S. employment.
A skimming pricing strategy sets a relatively high price for a product to appeal to the
segment of the market that is not sensitive to price.
Large companies create significantly more patents and other forms of innovations per
research and development dollars spent than small firms.
Enhancing individual creativity may be cultivated through such activities as modeling,
encouragement, recognition, allowing failure, listening, talking to children, and taking
time off.
Businesses that publish privacy policies, and then adhere to them, build trust among
their customers, an important facet of doing business on the Web.
Most export management companies (EMCs) are merchant intermediaries that work on
a buy-and-sell arrangement with domestic small companies, providing small businesses
with a low-cost, efficient, independent, international marketing department.
The law is the narrowest level of ethical standards.
The drawbacks of countertrading include which of the following?
A) Countertrade transactions can be complicated, cumbersome, and time-consuming.
B) Countertrade transactions can increase the chances that a company will be stuck with
merchandise it cannot move.
C) Countertrade transactions can lead to unpleasant surprises concerning the quantity
and quality of products required in the countertrade.
D) All of the above
Which of the following is not a potential advantage of franchising for the franchisee?
A) Management training and assistance
B) National advertising program
C) Centralized buying power
D) Limited product line
The majority of small companies are concentrated in the ________ and ________
industries.
A) manufacturing; retail
B) manufacturing; service
C) retail; service
D) wholesale; retail
To be successful online, small companies must create Web sites with features that
appeal to experienced Web shoppers, such as ________.
A) simple navigation and customer reviews
B) solid security and quick access to product information
C) videos and blogs
D) the successful Web site will include all the above
Search engine listings that are the result of 'spiders," powerful programs that crawl
around the Web and analyze sites for keywords links, and other data are ________
listings.
A) wikis, or Web 2.0
B) widgets, or organic
C) mashups, or natural
D) natural, or organic
The enactment of the Affordable Health Care Act in 2010 is an example of a ________
change.
A) economic
B) demographic
C) technological
D) political and legal
Which of the following items would not be listed as a current asset in a company's
financial reports?
A) Cash
B) Accounts receivable
C) Fixtures
D) Inventory
________ pay the bills: without them, you have no business.
A) Accountants
B) Employers
C) Employees
D) Customers
________ are a unique set of capabilities that a company develops in key operational
areas-such as service, innovation, and others that allow it to potentially vault past its
competitors.
A) Core competencies
B) Opportunities
C) Key success factors
D) Mission statements
Ideally, a business plan should be about ________ pages in length.
A) 10
B) 20 to 40
C) 40 to 75
D) 75 to 100
Discuss the potential benefits and drawbacks of entrepreneurship.
Mini-Case 10-1: Pricing for Profit
Miller Manufacturing, Inc., produces electronic components for television circuitry.
Variable costs comprise 67 percent of the product's selling price. The variable costs of
producing a component include:
Vicki Miller, President, expects to produce 80,000 electronic components and to incur
$280,000 of fixed costs.
If Miller desires a profit of $120,000, what price should she set?
Briefly describe the advantages and the disadvantages of buying an existing business.
List and briefly identify the five estate planning tools the owners of a family business
should consider.
One of the eight strategies a company uses to "go global" includes the use of trade
intermediaries. Identify the six types of trade intermediaries and explain why a small
business owner might use each one.
Name and explain the three basic pricing strategies a small business owner has in
establishing a new product's price.
Mini-Case 16-4: Plumbers Don't Want Recognition
"If I ever went out to those guys and asked them if they wanted a little more
recognition, they would laugh me out of the shop. People work for money." Norm
Schultz had been a plumber himself for 18 years before he saved enough money to open
a small plumbing contractor business. The men who worked for Norm knew what was
expected of them - a fair day's work for a fair day's pay. "You don't need to tell a person
that he or she is doing a good job; the person is either doing the work or not working for
me!"
Norm's son-in-law was taking a management course at a local college. When Norm
asked him what he was learning in class, he told him the management of people. Norm
was very emphatic about managing the plumbers who worked for him. "Tell an
employee what you expect from the beginning. Watch to see if they perform the job
properly. Treat your people fairly and never cheat them." Norm went on to tell his
son-in-law that this was the way good managers did things. "Recognition won't put
bread on the table."
Would you like working for Norm? Why or why not?
"Sometimes the greatest service a business plan provides an entrepreneur is the
realization that the business venture just won't succeed." Explain this statement.
Mini Case 6-1: "Today, You Gotta' Be a Corporation"
Duke has been a successful used car dealer for 25 years in the same location, operating
as a proprietorship. In those 25 years, he has expanded his operation and become the
largest independent car dealer in a city of 85,000 people. Few people in town can boast
of a business reputation better than Duke's. As he says, "I've always done business in a
fair and honest fashion, and I've tried to give my customers an honest deal. The public
has responded well, and last year the business revenue increased to an all-time high of
$830,000."
As the business has grown, so have Duke's liabilities. On a given day, Duke will have
cars worth from $350,000 to $450,000 as inventory on the lot. "Twenty years ago, if I'd
asked the bank for a line of credit of $200,000, they'd have tossed me out the front door.
There is no question that today business is different."
Duke's only daughter recently married a garage mechanic who has worked in the area
for the past three years. Though Duke thinks the boy is certainly nice enough, he does
not believe he is very smart. "The kid sure knows how to fix a car, but that's as far as it
goes," says Duke. "On my last visit to the accountant, he suggested I consider
incorporating. I guess he knows what he's talking about. That's all you hear today - 'you
gotta be a corporation.' I guess he's right. But, to tell you the truth, I don't know."
Would you recommend Duke establish an S corporation? What conditions would he
have to meet?
What does it mean to create a 'simple" Web site? Identify a Web site that you feel meets
this requirement and discuss why you selected it.
