When a company makes a product available to the customer when he/she wants it, the
company is providing place utility to the customer.
If an owner or his/her relatives take the product home without properly logging it out,
employees will perceive that it is okay and will be more likely to “steal” from the
company in this way.
A typical venture capital company seeks to purchase 20 percent to 40 percent of a
business.
Cultural differences among countries have little impact on international trade.
If stockholders in a corporation are displeased with the business’s progress, they can sell
their shares to someone else.
One advantage of leasing is that in most cases, it does not require any down payment.
The use of random drug testing by small businesses is on the rise.
The sole proprietorship is the simplest and least expensive form of ownership to begin.
A disadvantage of the market approach to valuing a business is finding similar
companies for comparison.
A survey of small companies shows that nearly half reward their workers with bonuses
or other performance-related compensation.
Embargo is when there is a limit on the amount of a product imported into a country.
Venture capital companiesare private, for-profit organizations that purchase equity
positions in young businesses they believe have high-growth and high-profit potential,
producing annual returns of 300 to 500 percent over five to seven years.
A lease is treated as an operating expense and is not carried as a liability on a company’s
balance sheet.
When the location of the business is critical to its success, it may be wise to purchase a
business in another location.
Term loans impose restrictions called covenants.
Although the three types of capital are interdependent, each has certain sources,
characteristics, and effects on the business.
When developing a marketing approach to pricing, business owners must establish
prices that are compatible with what their customers expect and are willing to pay.
A lock-up agreement prevents the sale of “insider” shares for a specific time periodoften
12 to 36 monthsafter an initial public offering.
SBICs act as government-backed venture capitalists.
Management skills keep the leader under some degree of control.
For most products, there is an ideal price.
The secret to good control is the identification and tracking of key performance
indicators.
The market approach to company valuation evaluates goodwill, risk-of-return, and
estimated net earnings.
The strategic planning process for small companies should begin with setting goals and
objectives.
Small businesses create more jobs than either medium or large businesses.
The basic principle of ABC analysis is that inventory costs are reduced when the small
business owner spends time and effort controlling items representing the greatest
inventory value.
Individualized marketing requires business owners to gather and assimilate detailed
information about their products.
Most retailers consider what customers want to experience when designing their spaces.
Loan contracts sometimes prohibit assignments with due-on-sale clauses.
A strategic plan doesn’t need to be put into action to be complete.
Building a reputation for ethical behavior typically takes a long time.
A skimming price strategy is best for quickly building market share.
One of the best ways to identify your own cultural biases is to get exposure to people
who are like you.
In a sole proprietorship, the owner has limited liability.
When negotiating the deal, it is important to remember that the seller is looking for the
best terms and to maintain some contact with the company, at least for a while.
One way to have a killer Web site is tosurprise customers by high charges at checkout.
Failing to age accounts receivable could lead a buyer into paying more for a business
than it is worth.
Objectives are long-range, broad statements of what the company plans to accomplish
in the distant future.
The first, second and third growth wave in franchising respectively, are:
A) low-cost franchises that focus on niche markets; shift to service sector; fast-food
restaurant using the concept of rapid growth.
B) fast-food restaurant using the concept of rapid growth; shift to service sector;
low-cost franchises that focus on niche markets.
C) low-cost franchises that focus on niche markets; fast-food restaurant using the
concept of rapid growth; shift to service sector.
D) shift to service sector; low-cost franchises that focus on niche markets; fast-food
restaurant using the concept of rapid growth.
Probably the biggest disadvantage of “going public” to the entrepreneur is the:
A) dilution of ownership interest.
B) diminished corporate image.
C) future threat of being acquired through the use of stock.
D) loss of key employees.
Small businesses have a number of responsibilities to their investors including:
A) selling a high-quality product at a reasonable price.
B) observing all government requirements for product manufacture.
C) earning the lowest profits at the highest cost of production.
D) providing an attractive return on their investments.
Developing a community refers to:
A) attracting customers and keeping them coming back.
B) giving customers the chance to interact with other like-minded visitors .
C) providing chat rooms.
D) All of the above
A hardware store giving customers nail aprons and yardsticks emblazoned with its
name, address, phone number, logo, and slogan is using which advertising medium?
A) Point-of-purchase ads
B) Cooperative advertising
C) Specialty advertising
D) Shared ads
John wants to expand into the foreign markets, but he can’t convince his partners. They
feel international markets are the domain of large corporations. John is facing which
barrier to international trade?
A) Financing
B) Political
C) Cultural
D) Attitude
The ________ method is the most difficult and least used technique of establishing an
advertising budget.
A) percentage of sales
B) spending what competitors spend
C) objective-and-task
D) what-is-affordable
An external test of a business plan that revolves around proving that a market exists is
the:
A) competitive test.
B) consumer test.
C) value test.
D) reality test.
Researchers who study entrepreneurs have discovered that:
A) successful entrepreneurs start with an idea, resources, and a small management
team.
B) there is one key set of traits that mark a successful entrepreneur.
C) entrepreneurs desire responsibility and are willing to take moderate risks.
D) the most successful entrepreneurs are willing to take extreme risks and bet the farm
in order to succeed.
The budgeting strategy that evaluates the necessity of every item on the budget each
year by starting with a zero in each budget category is called:
A) accrual budgeting.
B) cash budgeting.
C) zero-based budgeting.
D) cash flow budgeting.
Jones Manufacturing has been in business for 30 years. About 3 years ago, the company
spent about $2.5 million in upgrading/purchasing new equipment. Currently, due to bad
weather, the company is suffering cash flow problems and is not able to pay its
expenses or inventory purchases. One option for financing would be:
A) inventory financing.
B) asset-based financing.
C) sell the business.
D) All of the above
Cash managementinvolves:
A) forecasting.
B) collecting.
C) disbursing and investing.
D) All of the above
The marketing plan builds a strategy for success:
A) from the customer’s point of view.
B) as described by the marketing manager.
C) based on eliminating all competition.
D) by focusing on product development and market management.
As sales volume increases with the broad acceptance of the new products, the firm can
lower its price. This is a characteristic of:
A) price wars.
B) competitive pricing.
C) skimming.
D) penetration.
Items classified as “A” in ABC analysis should be controlled by a(n) ________
inventory system.
A) periodic
B) perpetual
C) visual
D) ABC
When small manufacturing companies face rapidly increasing raw material costs, they
can adopt a number of strategies including:
A) pass the increasing costs along to their customers without comment.
B) absorb costs for the short term and plan for double price increases in the next pricing
cycle.
C) reconsider their competitive strategy and seek a niche they can service.
D) emphasize the value their company provides customers.
What software is essential for any company doing business on the Web to constantly
monitor the activity on a company’s network server and sound an alert if it detects
someone breaking into the company’s computer system?
A) Firewall
B) Alarm detention program
C) Intrusion detection software
D) Artificial intelligence
More businesses fail because of ________ than for any other reason.
A) incompetent management
B) theft by employees
C) insufficient capital
D) poor choice of location
Innovation is ________ when it creates market-changing, disruptive breakthroughs that
are the result of generating something from nothing.
A) mandatory
B) perfunctory
C) evolutionary
D) revolutionary
Around the world, the most successful entrepreneurs have ________ status.
A) villain
B) hero
C) profiteer
D) shirker
The balance sheet is usually prepared on the ________ day of the month.
A) first
B) last
C) 15th
D) None of the above
________ franchising involves providing the franchisee with a complete business
systemthe established name, the building layout and design, accounting systems, etc.
A) Product distribution
B) Trade name
C) Pure
D) Conversion
A retail version of just-in-time inventory control is called:
A) EDI.
B) TQM.
C) efficient consumer response.
D) JIT II.
Creative thinking is no place for ________.
A) ambiguity
B) conformity
C) flexibility
D) All of the above
When selecting a state in which to locate, one should consider:
A) the financing options available to the small business owner.
B) zoning laws.
C) the compatibility of the business with the community.
D) the proximity to one’s markets.
Evie works for a domestic wholesaler who does business in foreign markets, buying
goods from domestic companies and selling them in foreign markets. Evie’s firm is
a(n):
A) resident buying office.
B) export trading company.
C) foreign distributor.
D) export merchant.
Compute the reorder point for a small business owner using the following data.
∙ Lead time =7 days
∙ Usage rate=28 units/day
∙ Safety stock=56 units
∙ EOQ=740 units
________ involves giving workers at every level of the organization the authority, the
freedom, and the responsibility to control their own work, to make decisions, and to
take action to meet the company’s objectives.
A) Empowerment
B) Open-book management
C) Job simplification
D) Job enlargement
A significant advantage a franchisee has over the independent small business owner is
participation in the franchiser’s ________.
A) centralized and large-volume buying power
B) social gatherings
C) profits
D) policies
Potential drawbacks of small business ownership include:
A) a relatively low guaranteed income.
B) a significantly freer personal schedule but less personal income and assets with
which to enjoy the more relaxed schedule.
C) a high likelihood of a lower quality of life while starting and establishing the small
business.
D) relatively limited potential for further personal development.
When a business owner purchases protection for losses occurring when a contract is not
completed on time or is performed incorrectly, it is buying ________ insurance.
A) casualty
B) surety
C) liability
D) comprehensive