50) Delicious Donuts Store has been making and distributing donuts for the past 4 years from the
same location. It also maintains a good payment record. However, due to some bad operational
decisions, it is now facing cash crunch. Nevertheless, the suppliers are ready to supply material for
a credit period of 120 days. Which of the following terms is the most probable reason behind the
trust that suppliers have on Delicious Donuts Store?
A) Efficiency
B) Transparency
C) Elasticity
D) Legitimacy
51) According to the book, which of the following terms is used to discuss the acceptance by key
stakeholders that your business is more than just a “start-up” and will be successful?
A) Efficiency
B) Applicability
C) Efficacy
D) Legitimacy
52) Which of the following terms is used by key stakeholders for acceptance of a company as a
reputable ongoing business?
A) Positive cooperation
B) Legitimacy
C) Acceptance contract
D) Dual compact
53) Which of the following is true of the effects of business incubators in establishing a business
operation?
A) They are a potential setting for new businesses, except nonfood service businesses, to fund their
initial operations.
B) They offer office space for new businesses at reduced rates and provide services such as a
receptionist.
C) They maintain the liquidity of the business by entering into agreements with financiers and
creditors.
D) They are usually swamped with failing businesses that face bankruptcy and would like to be
considered for a turnaround.
54) All of these are items that establish legitimacy EXCEPT
A) a professional business card.
B) a high-quality Web page.
C) a land line.
D) a bank line of credit.
55) In production management, the two most important elements are
A) charting and quality.
B) financing and quality.
C) charting and organization.
D) financing and organization.
56) Why is the importance of a production management system exaggerated in the early stages of
a new business?
A) There are customers who are ready to pay exorbitant price for a newly launched product.
B) The firm has only limited resources and strong time pressures to perform well at the outset.
C) There are a number of suppliers who are ready to supply raw materials for a credit.
D) The firm has to pay very high interest rate to banks and other financial institutions.
57) Which of the following have well-established methods of operation?
A) Franchises
B) New start-up firms
C) Bankrupt firms
D) All of these
58) Which of the following gives a detailed understanding about a firm’s method of operation and
its sequence?
A) A production chart
B) A main path analysis diagram
C) A production management system
D) A directed acyclic graph
59) A production chart is similar to a
A) analysis chart.
B) critical path chart.
C) deficit gap chart.
D) pro forma chart.
60) What percentage of businesses have a production process?
A) 25
B) 50
C) 75
D) 100
61) Which of the following statements is true of the production chart of a business firm?
A) It focuses on the founding of a business.
B) It details each step that must occur within a production process.
C) It starts with the delivery to a customer and finishes with a final order being received.
D) It is different from a critical path chart in that all steps in a production process must occur
simultaneously.
62) Mama’s Hot Dogs Store is a leading fast-food restaurant that sells a variety of hot dogs. This
restaurant is known for its impeccable customer service. It provides a playground for kids,
maintains clean tables and restrooms, and provides free Wi-Fi. John, an entrepreneur, wants to
start a fast-food restaurant and compete against Mama’s Hot Dogs Store. Which of the following
strategies would most probably help John to be more successful than Mama’s Hot Dogs Store?
A) Providing better quality of food and service
B) Charging higher prices for the food and service
C) Giving more quantity of food
D) Giving discounts on unsold food items
63) According to Dr. W. Edwards Deming, rather than focusing on obtaining the lowest prices for
supplies, firms should focus on
A) the quantity of inputs.
B) the quality of inputs.
C) both of these.
D) none of these.
64) ________ is considered the father of the quality movement in the United States.
A) Peter Drucker
B) Dr. W. Edwards Deming
C) George Isoo
D) Frederick Taylor
65) According to Dr. W. Edwards Deming’s quality movement, quality efforts need to be
________ and ________ improved.
A) fair; consistently
B) constantly; consistently
C) constantly; justly
D) fair; justly
66) Universal Studios, which made the Indiana Jones movies, forms a relationship with Burger
King to put advertisements for a movie on drink cups. This is a form of ________.
A) compact alliance
B) strategic alliance
C) promotional alliance
D) none of these
67) Bubbles Beverages Company entered into a sponsorship agreement with Play Big Stadium.
According to this agreement, the company will sponsor the stadium to maintain its courts
regularly. In return, the stadium should allow only company products to be sold inside its
premises. Identify the type of business relation between Bubbles Beverages Company and Play
Big Stadium.
A) Limited partnership
B) Investment alliance
C) Limited liability partnership
D) Strategic alliance
68) Which of the following is typical when purchasing new equipment instead of used equipment?
A) It is usually the most expensive option.
B) It is delivered directly to the new business.
C) It is guaranteed that the new equipment is the most current available.
D) All of these
69) It is relatively common for new equipment to depreciate in the first year after purchase. What
is the typical rate of depreciation of new equipment in the first year?
A) Less than 50 percent
B) More than 10 percent
C) More than 50 percent
D) Less than 40 percent
70) What does a new business owner need to keep in mind while making a decision about what
equipment to buy?
A) How long it will be before the equipment will need to be replaced
B) The type of equipment needed
C) The cost of the equipment
D) All of these
71) Which of the following factors should a new business owner consider when deciding the best
time to start a new business?
A) Competitors’ moves
B) The general environment
C) Lifestyle issues
D) All of these
72) Which of the following correctly depicts the typical cycle of the economy?
A) Growth, boom, slowdown, recession, and boom
B) Boom, growth, slowdown, recession, and boom
C) Boom, slowdown, recession, growth, and boom
D) Boom, slowdown, recession, and growth
73) The timing of opening up a new business is impacted by all the following EXCEPT
A) line of credit.
B) general environment.
C) competitor moves.
D) lifestyle issues.
74) Which of the following is true of the opening time of a business?
A) The opening of a new business does not depend on the competitors’ moves
B) The timing of start is a function of the general environment and lifestyle issues.
C) Entrepreneurs should realize that businesses depend on similar conditions for opening.
D) One should open a business during or at the beginning of a recession.
75) Your ability to obtain critical supplies may dictate your ________ time and ________ time.
A) order; supply
B) lead; opening
C) supply; lead
D) none of these
76) When using a time management system, a new owner must ________ his or her tasks.
A) alphabetize
B) prioritize
C) study
D) analyze
77) A(n) ________ is a living document that should be modified during the process of actually
accomplishing the tasks.
78) ________ stores are major retail stores in a mall. They serve as the foundation for the rest of
the establishments.
79) ________ are a potential setting for new businesses (especially nonfood service businesses) to
locate their initial operations.
80) A(n) ________ defines the steps that are involved in moving from a product or service offering
to the point where one actually receives money.
81) ________ alliances are the joining together of firms to form long-term, mutually beneficial
relationships.
82) List the actions that must occur in order for a new business to begin operations.
83) Why is a critical path chart necessary for a new business owner? What are the benefits of
creating one?
84) How do commercial agents become a valuable asset to new business owners as they seek to
locate properties that match their needs?
85) List and explain what expenses a new business will need to cover in order to finance the initial
operations.
86) List the “classic” items that assist a company in establishing its legitimacy.
87) How can quality be built into a product or service?
88) List the four factors that impact the timing of the opening of a new business.
89) List and explain the steps that will help new business owners in managing their time.