Altering the financial records of a firm such that the records do not reflect the true
conditional of the firm is
a. “gilding the lilies.”
b. “plugging the numbers.”
c. “cooking the books.”
d. “creative accounting.”
Profit-sharing plans
a. provide a more direct incentive in small firms than in large firms.
b. are practically impossible to use successfully in small firms.
c. are similar to individual incentive plans in their motivational effect.
d. are an expensive fringe benefit for small firms, costing 40 percent of payroll.
Punitive damages are intended to have a ________ effect, sending a message to society
that such conduct will not be tolerated.
a. chilling
b. deterrent
c. provocative
d. statutory
An entrepreneur’s concern that his values continued to be reflected in the ways in which
his firm conducts business after he retires is an example of the concept of ________.
a. self-assessment
b. entrepreneurial legacy
c. activity trade-offs
d. psychological aggrandizement
The Internet has brought new life and technology to the old-fashioned notion of
a. customer service.
b. the “push sell”.
c. the firm’s production orientation.
d. strategic management.
Irene Anderson, an experienced entrepreneur, is evaluating her customer profile. She
should check
a. her financial ratios to make sure they were calculated correctly.
b. the stability of her funding.
c. her customer benefits to make sure they are consistent with the “Products and
Services” section of her business plan.
d. her customer benefits to make sure her competitors offer the same benefits.
The basic methods of Web promotion include
a. customer targeting.
b. Web site replication.
c. creating banner ads and pop-ups.
d. establishing Web page “thumbprints.”
Crossborder Manufacturing USA has developed a new and wholly-owned subsidiary in
another country that is most accurately described as
a. a greenfield venture.
b. a cross-border acquisition.
c. an international transplant.
d. a duplication strategy.
Small firms may restrict their advertising by
a. media channel.
b. customers’ perceptions of products offered.
c. customer type.
d. business category.
Investment costs related to franchising include all of the following except
a. insurance premiums and legal fees.
b. inventory and supply costs.
c. building and equipment costs.
d. royalty payments.
The owner of a small sporting goods store wants to avoid hiring drug users. He checks
with his attorney and finds that
a. drug testing before hiring is legal.
b. drug usage is considered a disability and is not grounds for rejection.
c. no economical tests are available to check for drug usage.
d. the Americans with Disabilities Act of 1990 flatly prohibits drug testing for jobs in
private businesses.
A customer’s use of a discount coupon would most likely be recorded in which category
of her customer profile?
a. Customer contacts
b. Descriptive information
c. Responses to marketing stimuli
d. Transactions
Stage 1 in the growth of a business is characterized by
a. entrepreneur as player-coach.
b. multilayered organization.
c. hands-off management practices.
d. one-person operation.
A plant maintenance foreman would likely be responsible for
a. repairs, but not inspections.
b. inspections, but not repairs.
c. both repairs and inspections.
d. neither inspections nor repairs.
Quality circles consist of
a. small groups of employees who meet periodically to discuss quality problems.
b. managers of several companies who meet annually to give prizes for best quality
achievement.
c. leaders of labor unions who meet monthly to discuss the employees’ work
environment.
d. whistle-blowers within the company who wish to voice complaints.
A startup typically experiences losses for a period of time, frequently as long as
a. one year.
b. 2-3 years.
c. 3-5 years.
d. 5-10 years.
The sale of Linda Bush’s company, SafeRent, Inc., to First American Corporation is an
example of
a. a sale to a corporate buyer.
b. a sale to a financial buyer.
c. a sale to a strategic buyer.
d. an employee buyout.
Under the NPV method, the rate of return required to satisfy the firm’s investors is
a. the cost of capital.
b. its opportunity cost.
c. the internal rate of return.
d. the accounting return on investment.
Jarred Holmes, a college senior, is evaluating his prospects as an independent business
owner. As a practical matter, he should realize that
a. no major entrepreneurial successes have been realized in the last three decades.
b. the upper limit for entrepreneurial profits is somewhere between $750,000 and $1
million.
c. an entrepreneur can never earn as much as a major corporate executive.
d. any individual is free to enter into business for him/herself.
A person who starts a business is classified as a
a. founder.
b. general manager.
c. franchisee.
d. marginal-firm manager.
A reluctant entrepreneur is a woman who
a. leaves her children with a babysitter to follow a secretarial career.
b. divorces her husband because of his intense preoccupation with his business.
c. starts her own business after her grown children return to live with her.
d. leaves a family business to show that she can do it on her own.
You Make the Call – Situation 3
Dover Sporting Goods Store occupies an unimpressive retail location in a small city in
northern Illinois. Started in 1935, it is now operated by Duane Dovera third-generation
member of the founding family. He works long hours trying to earn a reasonable profit
in the old downtown area. Dover’s immediate concern is an announcement that
Wal-Mart is considering opening a store at the southern edge of town. As Dover reacts
to this announcement, he is overwhelmed by a sense of injustice. Why should a family
business that has served the community honestly and well for 60 years have to fend off
a large corporation that would take big profits out of the community and give very little
in return? Surely, he reasoned, the law must offer some kind of protection against big
business predators of this kind. Dover also wonders whether small stores such as his
have ever been successful in competing against business giants like Wal-Mart.
Question 1 Is Dover’s feeling of unfairness justified? Is his business entitled to some
type of legal protection against moves of this type?
Question 2 How should Dover plan to compete against Wal-Mart, if and when this
becomes necessary?
A corporate charter should be
a. very detailed.
b. prepared by an attorney.
c. brief in the statement of the firm’s power.
d. lengthy and precise.
Which of the following is least likely to be a problem for the founder of a small
manufacturing firm, in passing the business on to his or her son or daughter?
a. Avoiding favoritism among children
b. Preventing the business relationship from damaging the parent-child relationship
c. Motivating the son or daughter to take an interest in the business
d. Introducing the son or daughter to key people, especially outsiders such as bankers
The set of cultural patterns in a family business includes
a. the business pattern, the governance pattern, and the employee pattern.
b. the business pattern, the governance pattern, and the family pattern.
c. the business pattern, the managerial pattern, and the family pattern.
d. the business pattern, the managerial pattern, and the informal pattern.
Natural Well, a local supplier of natural bottled water, initially sold its product at a
premium price of $4 because the company believed consumers would view the bottled
water as a prestige item. The company decided that when startup costs had been fully
recovered and competition became imminent, the company would reduce the price to a
more reasonable $1. Natural Well is implementing a
a. variable pricing strategy.
b. skimming price strategy.
c. penetration pricing strategy.
d. price lining strategy.
A U.S. manager is upset with his overseas representative in Fannelstan for paying a
small “access fee” to a local customs official to ensure the expedited release of a
customer order. The manager’s belief such payments are wrong reflects his sense of
_________.
a. cultural insensitivity
b. ethical elitism
c. ethical imperialism
d. cultural integrity
Public and university libraries contain a wealth of information in the form of _______
data.
a. anecdotal
b. primary
c. secondary
d. tertiary
Recent research has shown that globalizing early in a company’s life tends to lead to
a. lower levels of firm risk.
b. a boost to the firm’s reputation.
c. increased sales growth.
d. financial disaster.
Work methods can be analyzed for
a. service firms.
b. merchandising firms.
c. manufacturers.
d. all of these answers.
Inspections of equipment is part of
a. production control.
b. supervising and follow-up.
c. scheduling and dispatching.
d. preventive maintenance.
Accounts payable __________ cash available for the firm.
a. increase the amount of
b. reduce the amount of
c. have no effect on the
d. represent all of the
New employees benefit most from orientation when it is given
a. during the employment review.
b. after selection, but prior to reporting for work.
c. during the first two or three days on the job.
d. during the first year of employment.
One of the extensions of the brick-and-mortar store is the contact-and-mortar strategy.
An employee buyer is most interested in the firm as a stand-alone, cash-generating
business.
Shippers that own their own means of transport are called common carriers.
Consumer needs can be completely satisfied by proper customer relationship
management.
Strategies for goods marketing and services marketing are essentially identical.
Entrepreneurs often regard distribution as the most glamorous marketing activity.
Even if a family member contributes to the success of a family business, this does not
mean that he or she has the ability to serve the firm in a key position.
Trade dress describes those elements of a firm’s distinctive operating image that are not
specifically protected under a trademark, patent, or copyright.
A management team is often stronger than an individual entrepreneur because it
provides a diversity of skills and assurance of continuity.
Business opportunities exist for any size firm, as long as they can provide products or
services that customer’s desire.
The SCORE program offers entrepreneurs the opportunity to enroll in college courses.
Compare prior work experience with accidental discovery and deliberate search as a
source of startup ideas.
Identify the six forms of legal organization discussed in the text.
List the textbook’s practical suggestions to guide financial forecasting.
Venture capitalists restrict their investment in startup companies.
In choosing accounting firms, bigger is better.
It is possible for an entrepreneur to do business over the Internet without either a Web
site or storefront.
Compare the different approaches to deliberate search for new venture ideas.