Entrepreneurs who are deeply committed to ethical values operate their businesses in
ways that reflect
a. the standard practices of the industry.
b. their personal interpretations of those values.
c. profit motivations above all others.
d. their personal religious values.
Most of the reasons for failure in many high growth ventures may be traced to
a. a weak business concept.
b. a lack of adequate resources.
c. poor market timing.
d. specific flaws in the venture team.
John Smith, a car repair shop owner, is developing the warranty and repair policies for
his business. What area of the marketing strategy is he addressing?
a. Promotional plan
b. Total product or service
c. Distribution plan
d. Pricing plan
Which of the following plays the central role in attracting and motivating employees?
a. Flexible work duties
b. Job sharing arrangements
c. Compensation
d. Vacation benefits
A leveraged buyout involves a high level of _______ financing.
a. debt
b. equity
c. strategic
d. unsecured
A balloon payment
a. is an upfront payment to obtain a loan.
b. is due when a loan comes due.
c. may be due at any time during the term of a loan.
d. is used to lift (remove) a loan covenant.
The tension that occurs immediately following a purchase is referred to as
a. cognitive dissonance.
b. post-purchase satisfaction.
c. cognitive assessment.
d. post-decisional distress.
When it comes to cutting costs, an emerging motivation for going global is to
a. obtain tariff reductions.
b. find raw materials.
c. follow large client firms that locate abroad.
d. find suppliers offering highly specialized products.
Private placement
a. is the sale of capital stock to selected individuals.
b. is the sale of capital stock to investment bankers.
c. requires compliance with all securities laws.
d. maintains the ownership control of the original owners.
A change in a firm’s credit and collection policies will likely affect which of the
following records?
a. Accounts payable records
b. Accounts receivable records
c. Cash records
d. Inventory records
Drawbacks of selling stock as a source of funds include
a. enhanced corporate image.
b. loss of voting control of the company.
c. future financing.
d. estate planning.
Mistakes that an employee makes made in assembling a product for a customer could
be a source of ________.
a. premises liability
b. employee liability
c. product liability
d. personal liability
In the early stages of a family business, according to Dyer, a common cultural
configuration consists of a _________ business pattern.
a. paternalistic
b. patriarchal
c. pluralistic
d. platonic
To determine a firm’s ability to convert accounts receivable into cash on a timely basis,
you divide
a. accounts receivable by daily credit sales.
b. cost of goods sold by accounts receivable.
c. accounts receivable by average daily cash balance.
d. accounts receivable by daily cash sales.
Capital-constrained entrepreneurs cannot afford to do much prior analysis and research
because
a. the affordability of properly conducted research is beyond the means at their disposal.
b. the costs of any mistakes are lower than the risks of missing out on opportunistic
actions.
c. the limited profit potential and high uncertainty of the opportunity they pursue also
make the benefits low compared to the costs.
d. potential competitors could quickly discern the entrepreneurs’ intentions and motives
from their research.
In recent years, the emphasis in U.S. businesses has been on
a. consumers.
b. production.
c. sales.
d. time-honored values.
A typical common stockholder of a corporation
a. has the right to act for the firm.
b. has the right to receive declared dividends.
c. can always buy new stock in proportion to stock already owned.
d. can fire employees of the corporation.
With _____ , the customer obtains possession of goods or services when they are
purchased, with payment due when billed at a later date.
a. an open charge account
b. an installment account
c. a revolving account
d. a selective account
If Fran Fishburn, who runs a wholesale flower business, successfully creates properly
functioning self-managed teams among her employees, her supervisors
a. will feel threatened by her leadership approach to teams.
b. will likely become fewer in number.
c. will likely attempt to delegate mundane tasks to the teams.
d. will need to maintain close supervision.
An example of a current asset is
a. equipment.
b. land.
c. leased property.
d. accounts receivable.
The types of sales forecasts that should ideally be prepared include the ________
scenario.
a. rapidly shifting
b. pessimistic
c. predominant
d. contingency
Characteristics of artisan entrepreneurs include all of the following EXCEPT:
a. They are paternalistic.
b. They are good delegators.
c. They use few capital resources.
d.Their time orientation is short.
Capital budgeting is important to the owner of a small business because
a. long-term investment decisions are made on a frequent basis.
b. short-term investment decisions are made on a frequent basis.
c. correct investment decisions add value to the firm.
d. constraints on expansion have little effect on the small firm.
When a large business like IBM or General Motors downsizes and lays off workers,
some of these displaced employees decide to start their own businesses. They are best
described as
a. foreign refugees.
b. welfare profiteers.
c. reluctant entrepreneurs.
d. corporate entrepreneurs.
A sole proprietor
a. assumes all losses of the business.
b. assumes no profits.
c. receives tax-free fringe benefits.
d. assumes no losses.
Insurance is most applicable and practical for __________losses.
a. all
b. few
c. improbable
d. contingency
A company’s net income depends on all of the following except
a. amount of sales.
b. cost of goods sold.
c. interest expenses and taxes.
d. inventory estimates.
The marketing plan should follow the establishment of user benefits and document the
existence of
a. sources of financing.
b. managerial experience.
c. customer interest.
d. patent protection.
The two broad strategies for building a competitive advantage are the
_______________ strategies.
a. cost-based and differentiation-based
b. price-advantage and cost-advantage
c. marketing-advantage and price-advantage
d. focus-advantage and marketing-advantage
Which of the following is a tool for managing high severity, low frequency risks?
a. Loss prevention
b. Risk retention
c. Loss reduction
d. Self-insurance
Charlie Colson wants to pay employees on the basis of the individual number of units
they produce. The compensation system he should use is a
a. profit-sharing plan.
b. standard hourly system.
c. commission system.
d. piece work system.
One primary source of information for a potential franchisee should be
a. the franchisor being evaluated.
b. the franchisor’s suppliers.
c. other parties considering the same franchisor.
d. other franchisors.
An increase in the bargaining power of suppliers
a. increases both the attractiveness and the profitability of the target market.
b. decreases both the attractiveness and the profitability of the target market.
c. decreases the attractiveness and increases the profitability of the target market.
d. increases the attractiveness and decreases the profitability of the target market.
Milton Friedman argues that businesses
a. should avoid social responsibility whenever it is possible to do so.
b. should be required to use their resources meet their social responsibilities.
c. can only earn profits if they do so in a socially responsible manner.
d. are justified in being socially responsible only if doing so increases the firm’s value.
Personal reasons for choosing one’s hometown as a location for a new business venture
include the fact that
a. the entrepreneur knows the landmarks around his or her home community.
b. credit can be established more easily.
c. friends and relatives line up new customers.
d. this reduces the risk of operations.
Given their limited market scope and size, only three of Porter’s five forces are relevant
to small businesses.
An ownership interest does not automatically confer a right to act for or to share in the
management of a corporation.
A franchising strategy whereby a single franchisee owns more than one unit in a given
area is typically referred to as a multiple-unit ownership strategy.
Straight salaries are best for motivating salespeople because of the financial security
salaries provide.
Assets such as the quality of a firm’s employees are considered tangible in nature and
thus have substantial value as collateral.
There must be a company-wide commitment to CRM concept if CRM is to be
productive.
Small firms are able to share risks and pool resources by using international strategic
alliances.
Many entrepreneurs recognize the value of talking to local realtors to determine site
availability and appropriateness.
Intermediate supervision, which occurs in Stage 3 of small business growth, involves
the use of budgets, personnel policies, organizational charts, and computerization.
A disclosure documentis a detailed statement of such information as the franchisee’s
finances, experience, and involvement in litigation.
The bargaining power of suppliers is encouraging for small businesses attempting to
enter an industry.
More recently, the bust-up leveraged buyout was replaced with the build-up leveraged
buyout.
The most significant factors to consider when selecting a supplier are price and quality.
The net present value method takes the time value of money into account in evaluating
an investment.
Founders may fail to appreciate the value of good management practices.
Nonfamily employees in a family business may be caught in the crossfire between
feuding family members.
Small business firms have little opportunity to franchise in other countries.
Many entrepreneurs are innovators, individuals who are often better at identifying
improved ways of doing things.
You Make the CallSituation 3
In the late 1990s, entrepreneur Neil Peterson was traveling in Europe when he observed
what to him was a new way to own a car. It was called car sharing. Under this concept,
the customer doesn”t buy a car outright but uses the vehicle as a person would a
timeshare property. The concept isn”t totally new to the United States but hasn”t yet
caught on. Peterson has big plans. He wants to bring the car sharing concept to large
U.S. cities. His research, based on American Automobile Association data, showed that
the average cost of owning or leasing a new car, including insurance, is around $625 a
month. He believes the average car-sharing member will pay only $100 a month.
Source: Kortney Stringer, “How Do You Change Consumer Behavior?”
http://www.entrepreneur.com/Your_Business/YB_PrintArticle/ 0,2361,310457,00.html,
June 7, 2004.
Question 1 What sociological issues may have an impact on the success of this venture?
Question 2 In which consumer decision-making stage do you believe Peterson’s
potential customers will be located? Why?
Post-purchase dissonance has been shown to be unrelated to customer satisfaction
because it occurs after customers have satisfied their needs.