Prospective investors are most attracted by business plans showing
a. evidence of customer acceptance of the venture’s product or service.
b. expense projections that are far lower than normal industry ranges.
c. growth projections that are unbelievably strong.
d. detailed drawings and engineering details of the proposed product.
Which of the following is not one of the advantages B2C models have over
bricks-and-mortar retailing?
a. Speed of access
b. Speed of transaction
c. 24/7 service
d. Superior customer service
You Make the Call – Situation 2
Software piracy is rampant in China. As a result, a bootleg copy of the latest release of
Microsoft’s Windows, which normally sells for more than $100 when purchased
through a legitimate vendor, can be found on the streets of Shanghai for as little as $1.
An assistant manager working for the Chinese subsidiary of an American educational
services firm ponders the question of whether or not to buy 325 copies of pirated
software through a local source for $1 each. Purchasing through an authorized vendor
would cost about 100 times more. He recognizes that he is up against extremely strong
competitors that usually purchase pirated software to control costs, so paying the price
for legitimate copies could make it difficult for the subsidiary to stay in business.
Furthermore, social standards in China do not emphasize proprietary property rights.
Question 1 Is the assistant manager acting with integrity if he purchases unauthorized
copies of the software on the street?
Question 2 What might be the long-term effects of deciding to buy the pirated
software? Of insisting on buying only legitimate copies of the software?
Question 3 What course of action do you recommend? Why?
Long-term investments are the focus of
a. cash budgeting.
b. investment planning.
c. capital budgeting.
d. corporate planning.
The liquidity of a firm is
a. often measured by a ratio of current assets to current liabilities.
b. not important to a company’s financial health.
c. the ability of the firm to sell its products quickly.
d. a measurement of spontaneous financing.
Mary Adams, an independent sales contractor, recently expressed her concern about
having to travel extensively in her car each day to see clients. Specifically, Adams
realized that the time she spent in her car was hindering her ability to be in continuous
contact with important clients. She believes the purchase of a cellular phone would
allow her more freedom to conduct business outside of the office. Adams has just
proceeded through the _____ stage of consumer decision making.
a. purchase evaluation
b. evaluative categorization
c. problem recognition
d. cognitive dissonance
According to consumer information-processing theory, _____ is the final stage through
which consumers progress.
a. purchase decision
b. cognitive dissonance
c. post-purchase evaluation
d. evaluative categorization
Benefits of credit to sellers include all of the following except
a. creating a closer association with the customers.
b. smoothing out sales peaks and valleys.
c. providing a tool for competitive advantage.
d. sustaining long-term sales, even if these exceed the buying power of the customer.
The manager of a rapidly growing small business is unsure about where the business
will be in 3 to 5 years. She should focus on
a. business policies.
b. procedures.
c. budgets.
d. strategic plans.
In a recent study of small business ethics, entrepreneurs were more likely than other
business managers and professionals to be unethical with respect to issues that
a. were not visible to the community.
b. directly affected the environment.
c. directly affected profits.
d. were perceived as important to production operations.
Entrepreneurs can get management assistance from peers through
a. outside consultants.
b. SCORE advisors.
c. volunteer work in the community.
d. networking.
Large manufacturers have been known to form strategic alliances with small
manufacturers in order to benefit from the smaller firms’
a. financial resources.
b. operational expertise.
c. research and development.
d. creativity.
A(n) _____ exists when multiple resources are integrated and then deployed to the
firm’s advantage.
a. networked resource
b. common intangible
c. capability
d. industry edge
Marketing strategies for goods and services vary because of differences in all of the
following characteristics except
a. perishability.
b. standardization.
c. consumer appeal.
d. tangibility.
A prospective entrepreneur is 36 years old. She realizes that, other things being equal,
her age may affect her chances for success. She should
a. go for it-her age is ideal.
b. wait eight to ten years.
c. realize that prospects were much better when she was in her early 20s.
d. try entrepreneurship only if someone else in the family has an independent source of
income.
A restaurant owner wants to analyze the competition and adopt any competitive
practices that create superior quality. To accomplish this, the owner should use
a. control charts.
b. attribute inspection.
c. benchmarking.
d. ISO 9000.
The owner of a growing business wonders when to hire a human resource manager. The
most likely time would be when
a. labor turnover rate is low.
b. total employment exceeds 100.
c. employees are not unionized.
d. morale is high.
Competitive advantage in an industry is protected by
a. barriers to entry.
b. potential substitute products.
c. intra-industry competition
d. deregulation .
Which of the following does not indicate a focus strategy?
a. Strict concentration on a single subset of customers
b. Concentration on a single product
c. Concentration on multiple products for the total market
d. Restriction to a single geographical region
One of the essential elements of successful quality management is
a. customer focus.
b. a supportive organizational structure.
c. appropriate expectations.
d. a stable management team.
Max Baer chose to operate his production studio as a sole proprietorship even though
his attorney cautioned that he was
a. reducing its overall profit potential.
b. increasing his taxable income.
c. exposing himself to unlimited personal liability.
d. violating an existing partnership agreement.
In writing the business plan, an entrepreneur should remember that
a. interested investors will commit the time necessary to fully understand the proposed
venture.
b. certain features will be appealing to investors, while others are distinctly
unappealing.
c. investors are too busy to read through the business plans that come across their desk.
d. the quality of this plan has little bearing on the potential for success in the startup.
The accounting return on investment technique is characterized by the fact that
a. it is simple to calculate.
b. it is based on actual cash flows received.
c. it takes into account the time value of money.
d. it is a relatively unpopular technique.
Faced with the challenge of recruiting, selecting, and compensating a growing number
of employees, a small business owner is planning to hire a human resource manager.
This owner is apparently going to establish
a. an informal organization.
b. a line-and-staff organization.
c. a Stage 2 organization.
d. a line organization.
In the event of corporate failure, which of the following types of stock can be treated as
an ordinary tax-deductible loss?
a. Section 1744 stock
b. Common stock
c. Preferred stock
d. Section 1244 stock
The franchising strategy whereby an individual or firm is granted the legal right to own
more than one unit of a franchised business is known as
a. development franchising.
b. multiple-unit ownership.
c. piggyback franchising.
d. aggregate ownership.
Which of the following is the most appropriate and useful role for the entrepreneur’s
spouse in maintaining good family relationships in a business?
a. Worrier
b. Listener
c. Evaluator
d. Appeals judge
Matt Townsend owns a car dealership that is very profitable. Since he plans to retire in
5-10 years, Townsend has decided to retain ownership for now, but without continuing
to grow the business. This change would also allow him to invest for retirement some of
the cash that the business is now generating. Which of the following harvesting
methods does this illustrate?
a. A delayed sellout
b. A strategy to release the firm’s free cash flows to the owners
c. Offering stock to the public through an IPO
d. Issuing a private placement of stock
Management of working capital focuses attention on
a. cash, accounts receivable, inventory, and accounts payable.
b. cash, accounts receivable, and fixed assets.
c. cash, fixed assets, and inventory.
d. accounts receivable, accounts payable, and long-term investments.
Business format franchising is best illustrated by the system offered by
a. Goodyear Tires.
b. Coca-Cola.
c. Burger King.
d. Dr. Pepper.
Which of the following is an insurance coverage that is required by law in most states?
a. Workers’ compensation
b. Employee bonding
c. Product liability insurance
d. Loss of key executive coverage
Your mother prompting you to “act your age” is the result of which sociological
influence?
a. culture
b. opinion leaders
c. reference groups
d. social class
Working out at the gym is most likely an attempt to satisfy which category of need?
a. physiological
b. psychological
c. spiritual
d. social
Small firms need to identify their distinctive advantages if they are to recruit
outstanding prospects successfully, especially those seeking technical positions.
A marketing philosophy that says everything originating with consumer needs is
market-oriented.
Focus strategies are very popular because they allow small firms to operate in the gap
that exists between larger competitors.
The laws of motion economy provide managers with the basic guidelines for increasing
efficiencies in the movement of physical goods.
An S corporation may have no more than 35 stockholders.
A common weakness in small business financing is the disproportionately small
investment in fixed assets relative to current assets.
You Make the CallSituation 5
Salvatore Indigo recently retired from a successful corporate career in information
technology. He is presently casting about for a business opportunity that will allow him
time to pursue his life-long gardening hobby. He has been in contact with a business
broker who has located what appears to be an ideal business opportunity. The owners of
a successful online home-based business selling premium-quality gardening
implements and supplies are interested in cashing out their investment. The broker has
indicated that the current owners are “motivated” to sell immediately.
Question 1 Why should Salvatore buy the company instead of starting his own firm?
Question 2 What are the pros and cons for Salvatore of buying this particular business?
You Make the CallSituation 3
Siblings Rob, 37, and Julie, 36, work in their family’s $15 million medical products
firm. Both are capable leaders and have experienced success in their respective areas of
responsibility. Compared to Julie, Rob is more introverted, more thorough in his
planning, and much better on detail and follow through. In contrast, Julie is more
creative, more extroverted, and stronger in interpersonal skills. Since childhood, they
have been rather competitive in their relationships. Their 62-year-old father is
contemplating retirement and considering the possibility of co-leadership, with each
child eventually holding a 50-percent ownership interest.
Question 1 If you were to choose one leader for the firm, based on the brief description
above, which sibling would you recommend? Why?
Question 2 What are the strengths and/or weaknesses of the co-leadership idea? Would
you favor it or reject it?
Question 3 How could the father secure practical advice to help with this decision?
A disadvantage of the accounting return on investment technique is that it ignores the
time value of money.
One of the goals of an accounting system is to provide an accurate, thorough picture of
operating results.
Self-insurance requires designating part of a firm’s earnings as a cushion against
possible future losses.
Both the debt ratio and the debt-to-equity ratio can be used to evaluate a firm’s financial
leverage.
Sellers often decide to offer credit to borrowers because it helps with the exchange of
purchased items.
The experience of Minnetonka, a small firm widely recognized as the first to introduce
liquid hand soap, is an example of how a focus strategy can be difficult to imitate.
Even a service firm has an operations process.
According to a recent survey, many small business owners experienced ethical
problems pertaining to the environment, but very few of them reported ethical problems
in relationships with customers.