b.
Small businesses can compete better on the basis of economies of scale than large businesses.
c.
Small businesses perform better than large businesses in manufacturing industries.
d.
Small businesses dominate high-investment industries more than large businesses.
e.
Large businesses are usually better at identifying new markets than small businesses.
49. Which of the following is an example of identifying a new niche in an established market?
a.
Copying a competitor’s popular computer design
b.
Modifying a computer so that it is usable by untrained persons
c.
Reducing the price of a printer so that it is more affordable
d.
Introducing a new computer to another country
e.
Using a bundle pricing strategy for computers and printers
A niche is simply a segment of a market that is not currently being exploited.
Moderate
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50. Henry discovered and added a new flavor of ice cream to his menu of homemade ice creams in the ice cream parlor he
owns in Florida. The ice cream became an instant hit; he plans to sell the ice cream in Georgia by supplying it to the
retailers there. Henry is involved in _____.
a.
divesting
b.
harvesting
c.
identifying a niche in an emerging market
d.
identifying an established market
e.
identifying a new market
e
a
Moderate
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51. A(n) _____ is any advantage that comes to a firm because it exploits an opportunity before any other firm does.
a.
b.
c.
d.
e.
Easy
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52. Relish LLC. spent a lot of resources to open an exclusive outlet of low-fat pizzas made from organic ingredients.
Relish made huge sales on the pizzas. Relish enjoys customer loyalty because it introduced the pizza range before
any of its competitors. Which of the following concepts is illustrated in the scenario?
a.
Opportunism
b.
First mover advantage
c.
Divesting strategy
d.
Market penetration
e.
Anti-competitive strategy
Challenging
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sometimes create entire industries.
Challenging
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53. A business plan is most likely to contain:
a.
self-dealing strategies.
b.
trade restraint strategies.
c.
anti-competitive strategies.
d.
divesting strategies.
e.
production strategies.
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54. In a _____, the entrepreneur summarizes the business strategy and how that strategy is to be implemented.
a.
market summary
b.
mission statement
c.
business plan
d.
cost-benefit analysis
e.
business environment analysis
A business plan is a document that summarizes the business strategy and structure.
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55. The financial plan is made up of a cash budget, an income statement, balance sheets, and a _____.
a.
environmental scanning report
b.
management summary
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c.
break-even chart
d.
mission statement
e.
business description
56. The most important element of a business plan’s financial plan is the cash budget, which shows:
a.
how many units must be sold to recover start-up costs.
b.
the tangible assets owned by the firm.
c.
how much money is needed to start the business and keep it operating.
d.
the salary which the entrepreneur will earn.
e.
how many business units should be opened and the annual tax payment to be made.
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57. Which of the following is an important question that is answered in a business plan?
a.
What are the marketing strategies used by the entrepreneur’s competitors?
b.
What are the trade restraint strategies used by businesses in the external environment?
c.
What are the entrepreneur’s goals and objectives?
d.
What are the overhead costs of the entrepreneur’s venture?
e.
How will the entrepreneur divest strategic business units?
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58. Which of the following is an advantage of buying an existing business?
a.
Established supplier relationships
b.
Increased customer loyalty
c.
Freedom to choose locations
d.
Opportunity to develop new inventories
e.
Minimal production costs
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59. Which of the following is a disadvantage of buying an existing business?
a.
Potential buyers have less clarity on what to expect from the venture.
b.
The entrepreneur may suffer the ill effects of a prior owner’s errors.
c.
The task of predicting sales becomes more difficult.
d.
The task of identifying customers becomes more difficult.
e.
The risks involved are higher.
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60. Which of the following is an advantage of starting a business from scratch?
a.
The entrepreneur can easily estimate product sales.
b.
The entrepreneur is free to choose inventories and locations.
c.
Potential buyers have a clear idea of what products to expect from the venture.
d.
The risks involved are lesser.
e.
The entrepreneur is relieved of the task of identifying markets.
61. Dan wants to start a supermarket in his hometown, and wants to get into the business only after finding out about the
market and how successful his business might be. The best way for Dan to gain knowledge is to:
a.
take advice about the market from his friends and relatives.
b.
conduct a consumer survey.
c.
study the history of the world’s famous supermarkets to get an idea of how to go about the business.
d.
work in a supermarket before starting his own.
e.
start the business on a small scale and test the market, and then expand the business by selling more of the
products with greater demand.
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62. Delta Inc., an electric car maker, initially had financing from a small group of investors seeking to make profits
through rapid growth. The investors did not lend money, but invested it in the company in return for stock. Delta’s source
of financing was:
a.
personal resources.
b.
a commercial bank.
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c.
a strategic alliance.
d.
a venture capital company.
e.
a small-business investment company (SBIC).
63. Which of the following statements is true about sources of financing for entrepreneurs?
a.
Banks and government loans provide much larger portions of start-up funds than the personal resources of
owners.
b.
Lending institutions such as banks are more likely to help finance the purchase of an existing business than a
new business.
c.
Getting money from banks and government loans is an easy task for business owners.
d.
Business owners have to spend very little time in business plans and other documents while borrowing money
from banks.
e.
Government loans have flexible eligibility guidelines to encourage entrepreneurship among the general public.
Lending institutions are more likely to help finance the purchase of an existing business than
a new business because the risks are better understood.
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64. Marianne, who has started a software development firm, is looking for sources of financing. Marianne has approached
Zenith LLC., a large consulting firm, to partner with her venture. Zenith has agreed to partner with Marianne’s venture and
provide it with capital. In this scenario, Marianne’s source of financing falls in the category of:
a.
personal resources.
b.
government loans.
c.
strategic alliances.
d.
Small Business Administration loans.
e.
venture capital companies.
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65. ____ are a group of small investors seeking to make profits on companies with rapid growth potential.
a.
Intrapreneurs
b.
Hierarchical allies
c.
Strategic allies
d.
Venture capitalists
e.
Banks
Easy
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66. Venture capital companies:
a.
exchange money for partial ownership in the new business.
b.
exclusively fund not-for-profit organizations.
c.
grant no-interest loans to small business firms.
d.
are federally licensed to grant loans to businesses with more than 20 employees.
e.
provide management consulting services to small businesses.
a
Moderate
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c
Strategic alliances are becoming a popular method for financing business growth.
Moderate
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67. Which of the following is the the most important source of money for individuals starting up new businesses?
a.
Strategic alliances
b.
Government loans
c.
Personal resources
d.
Banks and private investors
e.
Venture capital companies
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68. _____ are federally licensed to borrow money from the Small Business Administration and to invest it in or lend it to
small businesses.
a.
Small business investment companies
b.
Small business angel investors
c.
Venture capitalists
d.
Small business management consultants
e.
Regulatory agencies
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69. One disadvantage of hiring management consultants to solve problems in business is that:
a.
management consultants are expensive and charge high fees for their services.
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b.
most management consultants do not provide objective opinions.
c.
managment consultants can be of little help to businesses in the manufacturing industry.
d.
management consultants can only provide suggestions for general administrative issues.
e.
it is very difficult to find consultants who specialize in one area.
70. Begun in 1976, _____ are designed to consolidate information from various disciplines and institutions, including
technical and professional schools.
a.
Small Business Development Centers
b.
Small Business Angel Investors
c.
Service Corps of Retired Executives
d.
Active Corps of Executives
e.
Small Business Colleges
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71. Jane has started a new business venture. Since the resources available are minimal, Jane needs to reduce the
production costs of the venture. Jordon, a student of advanced business management, is helping Jane come up with
techniques and strategies to reduce costs. Jordon’s grades will be influenced by how effectively he helps Jane. Such an
arrangement is provided by the _____ project of the Small Business Administration.
a.
Service Corps of Retired Executives
b.
management consulting
c.
Active Corps of Executives
d.
Small Business Investment Company
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e.
Small Business Institute
72. Jason worked as a manager for 30 years in a leading corporation who now works with the Small Business
Administration. As he wishes to help small business, he provides free consultation and assistance to new entrepreneurs.
Jason is most likely to belong to:
a.
Service Corps of Retired Executives.
b.
Small Business Management Consultants.
c.
Venture capitalist companies.
d.
Small Business Investment Companies.
e.
angel investors.
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73. The _____ boasts a total membership of more than 10,000 small-business owner largest number in the country;
it offers its members not only networking possibilities but also educational programs and services tailored to their needs.
a.
Small Business Development Center
b.
Active Corps of Executives
c.
Council of Smaller Enterprises of Cleveland
d.
Historically Underutilized Business Zone
e.
Small Business Investment Company
The Council of Smaller Enterprises of Cleveland, boasts a total membership of more than
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74. The National Association of Women Business Owners:
a.
provides networking forums for entrepreneurs.
b.
provides 85 educational programs in a year for entrepreneurs for free.
c.
provides management consulting for free to small business owners.
d.
exclusively funds not-for-profit organizations run by women.
e.
provides interests-free loans to women entrepreneurs.
a
Moderate
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75. When an entrepreneur pays a parent company a monthly percentage of the gross income of her business in return for
using the parent company’s name and products, it is known as _____.
a.
a franchise agreement
b.
a merger
c.
a partnership
d.
a business plan
e.
networking
a
Moderate
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Easy
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