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The key to a successful differentiation strategy is to build it on a distinctive
competencesomething the small company is uniquely good at doing in comparison to
its competitors.
Leverage ratios are a gauge of the depth of a company's debt.
The bargaining process may eventually lead both parties into the non-compete zone.
Pure franchising occurs when the franchisee purchases only the right to become
identified with the franchiser's trade name.
When an entrepreneur develops a relationship with a manager in a large established
company in order to draw on the corporate manager's experience, it is called
"Copreneurship."
At Stage II, when the successor graduates from college, real decision-making authority
begins to grow rapidly.
One of the biggest pitfalls many entrepreneurs stumble into is failing to differentiate
their companies from the crowd of competitors.
In an IPO, the letter of intent outlines the details of the deal.
Competitive pressures assumes that the greater the reward or the smaller the penalty for
unethical acts, the greater is the probability that such behavior will occur.
A common killer of creativity is myopic thinking.
A limited partner is liable only for the amount he has invested in the business.
Growth capital, unlike working capital, is not related to the seasonal fluctuations of a
small business.
A business owner does not pay interest on a floor-planned item in inventory until it is
sold.
A valid copyright lasts the lifetime of the author plus fifty years after death.
A multi-unit franchise gives the franchisee the right to open more than one franchise
outlet in a territory within a specific time frame.
Hiring is very important for the small company, because the typical entry-level hire that
quits in six months costs the company about $5,000 besides the wages and benefits
paid.
The inventory investment is usually the largest single investment for a small firm.
There is no legal limit to the number of general partners a partnership must have, but it
must have one.
Visual inventory control systems work best with firms that have strong variations in
their sales.
Foreign distributors work in a close partnering relationship with a small business,
providing a wide range of services to a limited number of domestic companies.
The key to the balanced scorecard is identifying the key single measure for the specific
company being evaluated.
Research shows that consumers make nearly three-fourths of all buying decisions at the
point of sales.
The marketing function cuts across the entire company, affecting every aspect of its
operation.
Typically, the entire process of going public takes about 21 days.
Trade name franchising involves licensing the rights to sell specific products under the
manufacturer's brand name.
Going up against some of the toughest competition in the world forces a company to
hone its competitive skills.
A retail layout should pull customers into the store.
While there are many forms of ownership, the three major forms are: proprietorship,
partnership, and S-corporation.
Left-brain people see mistakes as mere "pit stops" on the way to success.
Speeding new products to market is one of the philosophies of Total Quality
Management (TQM).
Cash is money that flows through the business and is not tied up in any asset.
The entrepreneur should begin the presentation with an explanation of the opportunity,
the benefit to the investors, and what the new venture is.
One of the advantages of a sole proprietorship is that skills and capabilities are
unlimited because you, as sole proprietor, are able to assume all of these
responsibilities.
Under a CAP, the bank and the borrower each pay an upfront fee (a portion of the loan
amount) into a loan-loss reserve fund at the participating bank, and the state matches
this amount.
As one writer explains, "trialand lots of erroris embedded in entrepreneurship."
Employees cannot bind a company to an agreement unless the owner intended for them
to do so.
Urban Development Grants are used to construct buildings and plants for small
businesses and have no ceilings or geographic limitations.
Price wars can eradicate companies' profit margins and scar an entire industry for years.
Innovation is always revolutionary.
The first step in the IPO process is:
A) negotiating a letter of intent.
B) preparing the registration statement.
C) choosing the underwriter.
D) doing the road show.
Small businesses have a natural advantage over large competitors when it comes to
developing a strategy for competitive advantage because small businesses have all these
except:
A) fewer product lines.
B) better-defined customer base.
C) access to more capital.
D) specific geographic market area.
________ ratios tell whether or not the small company will be able to meet its maturing
obligations as they come due.
A) Leverage
B) Profitability
C) Liquidity
D) Operating
Focusing too much effort on being logical also discourages the use of one of the mind's
most powerful creations: ________.
A) rationality
B) rigidity
C) credibility
D) intuition
In a(n) ________ advertising program, a group of similar businesses forms a
"syndicate" to produce "generic" ads that allow the individual businesses to dub in local
information.
A) cooperative
B) shared
C) direct
D) integrated
Small bookstores have a giant killer of a competitive advantage in their:
A) lower costs.
B) better locations.
C) customer service.
D) large selection.
________ typically lead(s) sales; ________ typically lag(s) sales.
A) Production; receivables
B) Collections; purchases
C) Receipts; production
D) Purchases; collections
When seeking to evaluate the financial soundness of the company prior to purchase, the
buyer needs to examine:
A) sales tax records.
B) income tax returns.
C) financial statements.
D) all of the above.
The first step an entrepreneur should take when acquiring an existing business is to:
A) explore financing options.
B) prepare a list of potential candidates.
C) analyze his/her skills, abilities, and interests in an honest self-audit.
D) contact existing business owners in the area and ask if their companies are for sale.
What is Albemarle's total inventory cost using the EOQ point?
A) $191,954
B) $192,388
C) $192,166
D) $192,087
An agent's duties when executing agency include:
A) reimbursement of the principal for all expenses incurred in the execution of the
agency.
B) indemnification of the principal for any authorized payments or any loss incurred by
the agency.
C) performance of duties according to the principal's instruction and notification of the
principal of all facts concerning the subject matter of the agency.
D) All of the above
In the business strategy section of the business plan, the owner needs to explain to
investors:
A) significant financial and operational events in the life of the company.
B) how the entrepreneur intends to accomplish the company's goals and objectives.
C) the nature and characteristics of the target market.
D) the historical evolution of the market, market size, ease of entry, etc.
Newspapers have a number of disadvantages for the small business, such as:
A) poor timeliness; it's already old news.
B) high expense.
C) lack of prominence of the ads.
D) readership of primarily older women.
Which of the following is an exception among important factors that a potential buyer
should investigate?
A) Lease agreements
B) HR policy
C) Accounts receivable
D) Business records
In the ABC method of inventory, B refers to:
A) items that account for a moderate dollar usage volume.
B) items that account for a high dollar usage volume.
C) items that account for low dollar usage volume.
D) None of the above
Lusia, the director of human resources, is discussing the duties and responsibilities of a
new position and its working conditions with Delmar, the manager over the position.
Lusia and Delmar are discussing the:
A) job description.
B) human resource plan.
C) job specification.
D) job analysis.
The information-gathering process in competitive analysis:
A) is an expensive process that only established small companies can afford.
B) can be relatively inexpensive and easy for the small business owner to conduct.
C) is closely regulated by various federal laws.
D) is a process that requires expert help but is relatively inexpensive.
When it comes to financial assistance for franchisees, the franchiser often:
A) provides direct financing.
B) assists in finding financing and occasionally provides direct assistance in a specific
area.
C) waives royalty fees for franchisees not making an adequate profit.
D) generally does nothing, as finding financing is a requirement for qualifying for a
franchise.
The company's overall direction and answer to the question, "Where do I want the
company to be in 3 to 5 years?" is answered in this section of the business plan.
A) executive summary
B) company history
C) business and industry profile
D) marketing strategy
Carlos founded the "Taco Factory" 20 years ago as a family-oriented restaurant
business. Over the years as he grew the business, he incorporated and sold stock.
Recently the stockholders voted to seek liquor licenses and sell beer and hard liquor in
the restaurants. Carlos opposed this, citing the history of the restaurant's "family"
environment, but was voted down. Carlos experienced which drawback of the corporate
form of ownership?
A) The inability to accumulate capital
B) The potential for diminished managerial incentives
C) Legal requirements and red tape
D) The potential loss of control
A visual inventory system works best in firms where:
A) daily sales are slow.
B) the variety of merchandise is very limited.
C) the store is small.
D) All of the above
The ________ environment in which people work has an impact on their level of
creativity.
A) emotional
B) physical
C) national
D) All of the above
In a retail environment, the concept of JIT II is more commonly known as ________.
A) electronic inventory process
B) efficient consumer response (ECR)
C) electronic consumer behavior
D) None of the above
In reality, advertising:
A) is a "luxury expense" to be undertaken only when the budget permits.
B) requires a large budget to be successful.
C) is an investment in the future; without steady advertising the customer base will dry
up.
D) is relatively ineffective in increasing sales but it does increase customer awareness.
Expanding a small business into international markets:
A) guarantees its success in the marketplace.
B) makes it a member of GATT automatically.
C) often helps it to grow faster and better survive competition.
D) leads to business failure for companies under $100 million in annual revenue.
George is planning to export fabrics to the Bahamas. After investigating the trade rules,
he found that he can only export limited yards of fabrics to the Bahamas. This is an
example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.
Small businesses are those that employ:
A) more than 100 employees.
B) fewer than 20 employees.
C) fewer than 100 employees.
D) Number doesn't matter.
The most common method of SBIC financing is the:
A) equity instrument.
B) debt instrument combined with equity investment.
C) debt instrument.
D) line of credit.
Perhaps the most visible impact of the Internet is in the world of ________.
A) services
B) manufacturing
C) education
D) retailing
The typical grocery store uses a(n) ________ layout.
A) grid
B) free-form
C) boutique
D) arcade
Sexual harassment is a serious problem in the workplace and:
A) about 40% of all sexual harassment in the workplace is done by females to males.
B) is especially bad in small businesses.
C) employers are only liable if the sexual harassment is "quid pro quo."
D) more than 80% of the charges are brought by women.
The C of the five Cs that is a synonym for "cash flow" is:
A) capital.
B) character.
C) collateral.
D) capacity.
Explain the different kinds of credit a small business can offer its customers and the
impact each has on pricing.
Explain the basic prohibitions on trade practices of the Sherman Anti-Trust Act, the
Clayton Act, and the Robinson-Patman Act.
Venture capital companies are an important source of equity funding for small
businesses. Discuss their policies, ownership, control, and investment preferences when
it comes to funding small businesses.
How can an entrepreneur manage inventory in order to improve cash flow?
Timing is a critical element of the purchasing process. Explain the various elements of
the timing of purchases: usage rate, stockouts, safety stock, reorder points, and demand
patterns.
Define and explain the terms: price, price range, price ceiling, and price floor. Why is it
important to keep these terms distinct in the entrepreneur's thinking?
What is the difference between creativity and innovation?
Discuss the role of "angels" in financing small companies, and what and how they tend
to finance start-ups.
What is the value of market research to the small business owner? How can he/she use
it?
Describe the product life cycle, naming and explaining what characterizes each stage.
There are at least eight different pricing strategies for established goods and services.
Explain four of those strategies and why you'd use them.
What is a business incubator? What can an incubator offer an entrepreneur just starting
out?
What part do patents, trademarks, and copyrights play in protecting intellectual property
rights?
How should a small business owner manage his/her accounts payable?
What are the benefits of moral management?
