Before your Web site can become the foundation of a successful e-business, you must
create it with your target audience in mind.
The most effective job interviews are unplanned, unstructured interactions between the
small business owner and the job applicant.
Effective interviewers skip the breaking-the-ice phase of a job interview and
immediately start asking candidates tough questions so they can see how the candidates
respond under stress.
A ‘shotgun approach” to marketing is the small business’ secret to competing
successfully with larger rivals and their bigger marketing budgets.
Assets represent what a business owns, while liabilities represent the claims creditors
have against a company’s assets.
Although many retailers must match competitors’ prices on identical items, maintaining
a ________ pricing policy may not be healthy for a small business because it robs the
company of the opportunity to create a distinctive image in its customers’ eyes.
A) markup
B) follow-the-leader
C) below-market
D) matching
All of the following are advantages of a partnership except ________.
A) partnerships are relatively easy and inexpensive to establish
B) partnerships avoid double taxation since the partnership itself is not subject to
federal taxation
C) partnerships have the greatest ability to accumulate capital of all of the forms of
ownership
D) partnerships offer the ability to combine the management and business skills of two
or more people in a complementary and powerful fashion
All of the following represent barriers to creativity that entrepreneurs impose upon
themselves except ________.
A) focusing on being too logical
B) being too practical
C) blindly following rules
D) searching for more than one answer
Which of the following statements is true?
A) Overall, Competitor 2 is the strongest of these three companies.
B) Your company’s most serious weakness is its poor quality.
C) Your company’s most vulnerable point against these two competitors is in the area of
on-time delivery.
D) The most important of the key success factors is location.
Domino’s Pizza and McDonald’s operating in Japan and Europe are examples of
________.
A) foreign management companies
B) joint venturing
C) foreign licensing
D) international franchising
A high debt ratio ________.
A) means that creditors provide a large percentage of the company’s total financing
B) gives a small business more borrowing capacity
C) decreases the chances that creditors will lose money if the business is liquidated
D) represents a lower risk to potential lenders and creditors
Franchises have experienced three major growth waves since beginning that include a
focus on ________.
A) rapid growth, the fast food, and specific market niches
B) stable growth, the service sector, and the food industry
C) rapid growth, the service sector, and specific market niches
D) predictable growth, the service sector, and specific market niches
Web sites have two conflicting goals regarding security. The first is to establish a
presence on the Web so that customers from across the globe can have access to its site,
and the second goal is to ________.
A) maintain a database system of customer information and preferences
B) have a system in place to prosecute hackers
C) maintain a high level of security so that the business, its site, and the information it
collects are safe from hackers and intruders intent on doing harm
D) develop an in-house payment processing system
In general, entrepreneurs should ________ head-to-head price competition with firms
that can more easily achieve lower prices through lower cost structures.
A) avoid
B) take on
C) meet
D) exit the market when faced with
One key to setting prices properly is based on understanding a company’s ________.
A) buying power
B) competitive position
C) target market
D) cost structure
The United States is moving toward a “minority ________.”
A) tsunami
B) shortfall
C) majority
D) crevice
Currently, minority workers make up more than ________ percent of the workforce.
A) 13
B) 23
C) 33
D) 43
Which of the following is true regarding the process of building a business plan?
A) It allows an entrepreneur to replace “I think” with “I know” and to make mistakes on
paper, which is cheaper than making them in reality.
B) It reduces the risk and uncertainty of launching a company by “teaching” the
entrepreneur more about the industry, the market and the proposed venture.
C) It requires an entrepreneur to subject the business idea to a more objective and
critical evaluation.
D) All of the above
The value test that a business plan must pass to attract financing from lenders and
investors involves proving ________.
A) that the company can gain a competitive advantage over its key competitors
B) that the business venture will provide lenders and investors a high probability of
repayment or an attractive rate of return
C) that a market for the company’s product or service actually does exist and that the
company can actually build it for the cost estimates included in the plan
D) that the industry in which the business will compete is growing faster than the
overall economy and has room for more competitors
A collection agency typically takes ________ percent of the amounts they collect on
past due accounts.
A) 5 to 10
B) 10 to 20
C) 25 to 30
D) 30 to 50
Mini-Case 11-1: Bowden Brake Service (Part A)
Jim Bowden, owner of Bowden Brake Service, is planning to expand his six-year-old
brake service to include tune-ups and tire services. Based on budget estimates for the
upcoming year, Jim expects net sales to be $825,000 with a cost of goods sold of
$530,000 and total operating expenses of $210,000. From the budget he created, Jim
computes fixed expenses to be $168,000, while variable expenses (including cost of
goods sold) are $572,000. Jim is concerned that the new cost structure may damage his
ability to produce a profit and he wants to perform a break-even analysis for the
upcoming year to gain insight.
If Jim were to reduce his fixed costs by 10 percent by reducing a middle management
position, what benefit would that be to him and the company? What would his new
contribution margin be?
C corporations, S corporations, and LLCs can be ________ to establish.
A) costly
B) easy
C) quick
D) cheap
Which one of the following is not a simple way by which small businesses can be
socially responsible?
A) Encourage reinventing
B) Support local fundraisers
C) Join in community service
D) Reduce energy usage
Which ratio would be most helpful to a business owner to measure the profit per dollar
of sales?
A) Net sales to total assets
B) Net sales to working capital
C) Net profit on sales
D) Net profit to equity
Geographic concentrations of interconnected companies, specialized suppliers, and
service providers that are present in a region are called ________.
A) zones
B) clusters
C) trading areas
D) variances
Mini-Case 15-1: The Grass Is Really Greener
It’s not usual for city people to be concerned about plants or grass – they see so little of
green space. Nevertheless, Martha Goldman has been interested in these things since
her first biology course in Brooklyn, New York. Martha won all the awards in the
science fairs and eventually was the recipient of a college scholarship. She chose to
major in botany and became fascinated with the creation of hybrid plants and grasses.
Martha was also concerned about the problem of hunger around the world. She knew
that improved plants and grains increased the productivity of American agriculture, and
hoped that someday she would find a way to play a small part in reducing world hunger.
After college with the help of her dad, she opened a small wholesale greenhouse. The
business was a modest success and allowed Martha to experiment with new growing
methods. Two years ago, Martha’s research paid off. She had been working on
developing a fast-growing grass that needed less water. One of the experiments
produced a grass that seemed to have real potential. She tested it with a local cattle
rancher. All tests so far have shown that the new hybrid grass is better for feeding cattle.
Martha may have realized her dream – a grass that will grow better in parts of the world
that could not previously support cattle. High protein beef cattle may now be able to
thrive in parts of the world where previously it was not possible.
How should Martha proceed to determine the best way to export her new grass seed?
How does a company such as Under Armour control the bargaining power of its
suppliers?
What are the advantages and disadvantages of the restaurant’s current location?
What steps can a small business owner take to minimize bad debt losses?
Identify the “big three” of cash management. As a small business consultant, what
would you recommend your clients do to control the “big three” more effectively?
What steps can a small business owner take to avoid the cash “crunch”?
List the steps an entrepreneur should follow to enhance his/her chances of receiving a
patent.