The best pricing strategy for a small business owner to follow is to charge the
manufacturer’s suggested retail price.
Employee assistance programs (EAPs) are an effective weapon in the battle against
workplace substance abuse.
The Foreign Corrupt Practice Act, passed in 1977, considers bribing foreign officials to
be a criminal act.
For every 5,000 to 10,000 new drug discoveries, only about five make it to clinical
trials and only one typically gets to the market.
NAFTA is an agreement among the U.S., Canada, Mexico, Argentina, and Chile,
forming a free trade area among these countries.
When buying a business, an entrepreneur can usually purchase equipment and fixtures
at prices well below their book value.
The supervisor’s job in detecting substance-abusing workers is to play “cop” or
“therapist.”
Immoral management is the polar opposite of ethical management.
Successful entrepreneurs push technological and economic boundaries forward in
creative ways and sometimes make unconventional decisions.
One of the most important variables that determine whether employees deliver superior
service is the degree to which they perceive they have the permission to do so.
If a sole proprietor dies, retires, or becomes incapacitated, the business automatically
terminates.
Rather than build the current year’s budget on increases from the previous year’s budget,
zero-based budgeting starts from a budget of zero and evaluates the necessity of every
item.
Primary research is information that has already been complied and is available for use,
often at very reasonable costs or sometimes at no cost to the entrepreneur.
After an entrepreneur invests his own money for startup, she/he will typically seek
additional financing from friends and family next.
Which of the following is true about inventory management for the small business
owner?
A) Most small business owners have turned to technology and computer spreadsheets to
achieve maximum efficiency in managing it.
B) Inventory is the largest capital investment for most businesses, but few owners use
any formal means for managing it.
C) Inventory is generally highly liquid and can be easily mortgaged to a bank for
immediate cash if needed.
D) Inventory yields a return of about 25 percent for manufacturing firms but nothing for
service companies.
Responsible online merchants should make sure shipping and handling charges are
________.
A) reasonable
B) displayed early in the buying process
C) easy to find
D) All of the above
When acquiring a business, the buyer should ________.
A) conduct a self-analysis of skills, abilities, and interests
B) prepare a list of potential candidates
C) investigate potential candidates and carefully evaluate them
D) All of the above
The number of visitors to a company’s Web site who view a single page and leave
without viewing other pages is referred to as the ________.
A) stickiness of the site
B) click-stream
C) conversion ratio
D) bounce rate
The statement of cash flows ________.
A) compares costs and expenses against a firm’s net profits
B) is built on the basic accounting equation: Assets = Liabilities + Capital
C) shows what assets the business owns and what claims creditors and owners have
against those assets
D) shows changes in working capital by listing sources and uses of funds
The average inventory turnover ratio ________.
A) measures the number of times a company’s inventory is sold out during the
accounting period
B) tells a business owner whether she/he is managing the company’s inventory properly
C) tells a business owner how fast the merchandise is moving through the business
D) All of the above
You are provided this information about a retail store called “BoardSports:”
What can you reasonably assess about the current financial status of this company?
A) The company is in excellent financial condition with no changes required.
B) The company is in respectable financial condition with no changes required.
C) The company is in questionable financial condition with minor changes required.
D) The company is in poor financial condition with significant changes required.
The higher the ________ ratio, the lower the degree of protection afforded creditors,
and the closer creditors’ interest approaches the owner’s interest.
A) debt-to-net worth
B) quick
C) asset turnover
D) current
Superior service companies devote ________ percent of their employees’ work hours to
training, concentrating on how to meet, greet, and serve customers.
A) 2-7
B) 3-8
C) 1-5
D) 7-10
Consumer rights are governed by the ________.
A) company mission
B) company vision
C) Consumer Bill of Rights
D) U.S. constitution
Management consulting firm McKinsey and Company claims that ________ percent of
the pricing problems on new products are the result of companies setting prices that are
too low.
A) 10 to 20
B) 40 to 50
C) 60 to 70
D) 80 to 90
Successful e-tailers have discovered that these factors enhance their reputations for
online customer service ________.
A) comprehensive FAQ pages and e-mail order confirmation with shipment notices
B) visible telephone and e-mail contact information
C) quick responses to questions with meaningful information
D) All of these factors enhance a Web-based reputation.
Which of the following best represents the three phases of an effective job interview?
A) Breaking the ice, asking informative questions, and providing as much information
about the company (good and bad) as possible.
B) Breaking the ice, asking informative questions, and selling the candidate on the
company.
C) Breaking the ice, asking informative questions, and selling the candidate on the
company regardless of their potential fit.
D) Breaking the ice, asking questions in an interrogative manner, and selling the
candidate on the company.
Creativity often involves creating something from nothing. However, it is more likely to
result in ________.
A) elaborating on the present
B) putting old things together in new ways
C) taking something away to create something simpler or better
D) All of the above
What is a business incubator? What can an incubator offer an entrepreneur just starting
out?
What is an entrepreneur? Give a brief profile of a typical entrepreneur. What is the
primary motivation for the typical entrepreneur?
Mini Case 6-1: “Today, You Gotta’ Be a Corporation”
Duke has been a successful used car dealer for 25 years in the same location, operating
as a proprietorship. In those 25 years, he has expanded his operation and become the
largest independent car dealer in a city of 85,000 people. Few people in town can boast
of a business reputation better than Duke’s. As he says, “I’ve always done business in a
fair and honest fashion, and I’ve tried to give my customers an honest deal. The public
has responded well, and last year the business revenue increased to an all-time high of
$830,000.”
As the business has grown, so have Duke’s liabilities. On a given day, Duke will have
cars worth from $350,000 to $450,000 as inventory on the lot. “Twenty years ago, if I’d
asked the bank for a line of credit of $200,000, they’d have tossed me out the front door.
There is no question that today business is different.”
Duke’s only daughter recently married a garage mechanic who has worked in the area
for the past three years. Though Duke thinks the boy is certainly nice enough, he does
not believe he is very smart. “The kid sure knows how to fix a car, but that’s as far as it
goes,” says Duke. “On my last visit to the accountant, he suggested I consider
incorporating. I guess he knows what he’s talking about. That’s all you hear today – ‘you
gotta be a corporation.’ I guess he’s right. But, to tell you the truth, I don’t know.”
Would a limited liability corporation be any better for Duke? Why or why not?
Explain the different kinds of credit a small business can offer its customers and the
impact each has on pricing.
Briefly discuss the seven steps in acquiring a business.