Observations about the external environment and organizational potentials can be
brought together by means of
a. an alignment strategy.
b. the in-and-out assessment.
c. a SWOT analysis.
d. common sense critique.
Which of the following best defines a partnership?
a. A business owned and operated by one person
b. A voluntary association of two or more persons to carry on, as co-owners, a business
for profit
c. The governing body for corporate activity
d. An organization in which each owner has limited personal liability
An example of a business pattern is
a. an emphasis on a patriarchal family tradition.
b. the creation of a governance system in the company.
c. a firm’s system of beliefs and behaviors concerning quality.
d. the accepted practices of communication between family members.
Basic considerations that enter into the selection of a location for a manufacturing
business normally include
a. availability of raw materials.
b. customer accessibility.
c. neighborhood conditions.
d. federal income taxes.
A new business might best begin
a. in a foreign country.
b. in a business incubator.
c. in the classroom setting.
d. at the start of a tax year.
Small businesses are encouraged to view distribution costs as
a. prohibitive.
b. sunk costs.
c. an investment.
d. necessary evils.
The Internet provides an alternative to
a. bricks-and-mortar stores.
b. clicks-and-mortar strategies.
c. B2B businesses.
d. B2C businesses.
Harvesting refers to
a. starting a business.
b. managing the growth of a business.
c. exiting a business.
d. diversifying a business.
Failure to recognize the time value of money is a weakness of
a. the internal rate of return method.
b. the accounting return on investment technique.
c. the net present value method.
d. discounted cash flow techniques.
Every day, associates of Sewell Motors, a Dallas-based auto retailer, strive to exceed
the company’s expectations of treating the customer as its number one priority. Every
action, policy, and ultimate sale is conducted professionally, with consumers’ needs in
mind. Sewell Motors subscribes to the _____ marketing philosophy.
a. consumer-oriented
b. market-oriented
c. sales-oriented
d. product-oriented
Key-person disability insurance
a. is common in small firms.
b. protects the firm from losses due to the death of a key employee.
c. replaces revenue lost when a key employee is disabled.
d. is rarely recommended by advisors to small businesses.
A business owner tells her banker, “I’d like you to meet my little boy, Johnny, who is
going to help me take inventory.” This stage of succession is known as the
a. pre-business stage.
b. introductory stage.
c. advanced functional stage.
d. early succession stage.
Which of the following is not a part of managing working capital?
a. Capital budgeting
b. Cash flows
c. Accounts receivable analysis
d. Accounts payable analysis
The laws of motion economy are useful to managers in improving
a. under-used facilities
b. off-schedule arrivals
c. repetitive operations.
d. variations in shipping departures.
In addition to consulting an attorney, a potential franchisee should consider using the
services of
a. a trusted friend.
b. a financial advisor.
c. as many sources of help as would be practical.
d. an experienced administrator.
Setting prices for products or services using a particular competitor as a model of
reference is known as a
a. variable pricing strategy.
b. flexible pricing strategy.
c. follow-the-leader pricing strategy.
d. price lining strategy.
An example of a firm that would least likely be recognized as socially responsible is
a. a farm that specializes in organically grown produce.
b. a builder that constructs energy-efficient homes.
c. a manufacturer of pollution-control equipment.
d. a high fee, low return investment company.
The founder of a firm is most likely to be described as a
a. creative person.
b. good manager.
c. low risk taker.
d. good organization member.
Which of the following are always concerned about how to exit a business?
a. Investors
b. Entrepreneurs
c. Employees of the firm
d. Investment bankers
The total sales revenue of a small business is a direct reflection of
a. sales volume and credit terms.
b. price and credit terms.
c. price and expenses.
d. sales volume and price.
Amazon.com represents the classic ______ firm.
a. B2B
b. B2C
c. C2C
d. online auction
Small firms compete with large firms for qualified personnel, but they have several
potential advantages over large firms in attracting personnel, including which of the
following?
a. Recognizing individual contributions
b. Offering standardized work scheduling as a possible lure
c. Allowing any employee to influence the overall direction of the firm
d. Providing greater bonuses
Frequent and flagrant disregard of the chain of command undermines the position of the
a. founder.
b. operative employee.
c. staff specialist.
d. bypassed manager.
Individual processes that ultimately give meaning to stimuli that confront consumers
are known as
a. perceptions.
b. motivations.
c. attitudes.
d. opinions.
A nationwide survey showed that no pressure to act unethically was felt by what
proportion of individuals holding managerial and professional positions in small
business?
a. 0 (zero-None report pressure.)
b. 30.1%
c. 62.4%
d. 72.3%
One costly process that can often be performed more cheaply online is
a. management distribution.
b. providing information to customers in a timely fashion.
c. locating new employees.
d. identifying emerging technologies.
A variation of the content model is sometimes called the __________ model.
a. information
b. sales
c. advertising detail
d. market identification
Which of the following is not a recommended way to evaluate applicants for a position?
a. Have them fill out an application form
b. Conduct an interview
c. Check references
d. Hire a private investigator to follow the applicant and observe his or her behavior
The three considerations in building a channel of distribution are
a. cost, coverage, and control.
b. cost, coverage, and compatibility.
c. coverage, control, and compatibility.
d. cost, control, and compatibility.
Which of the following is incorrectly classified as a family business?
a. Levi Strauss and Company
b. Wal-Mart
c. Apple Computer
d. Ford Motor Company
Long-term transactional relationships with customers are fostered by
a. directed advertising.
b. focused discounts.
c. good information.
d. all of these.
The purchase price of a business is determined by negotiation between
a. lender and seller.
b. seller and broker.
c. buyer and seller.
d. lender and buyer.
Net working capital includes
a. accounts receivable.
b. leased property.
c. stockholders’ equity.
d. equipment.
A common weakness in small business financing is
a. too much owner financing.
b. too much debt financing.
c. too much investment in fixed assets.
d. too much investment in current assets.
Carol Weinstock, who runs Technographics, a company that designs greeting cards for
computer users, is employing
a. a focus strategy.
b. an unsegmented strategy.
c. a multisegmentation strategy.
d. a marketing mix strategy.
Most of the domain names that were once available for dot.coms have been taken.
The objective of developing sales forecasts for a break-even analysis is to determine the
quantity at which the product, with an assumed price, will generate enough revenue to
start earning a profit.
For every firm, there is a “right” answer to the question of balancing debt and equity,
and it is important that the small business owner find that balance.
A fidelity bond protects against loss from employee fraud.
A firm with potential for large profits has many more possible sources of financing than
does a firm that offer only unattractive returns, but high growth potential does not seem
to have a similar effect on financing options.
Small businesses typically conduct less marketing research than big businesses, partly
because they lack an understanding of the basic marketing research process.
A firm’s liquidity is defined as its ability to meet maturing debt obligations.
One of the disadvantages of the corporate form of organization is the limited liability of
its owners.
State and local governments are becoming less involved in financing new businesses.
You Make the Call – Situation 2
Nineteen-year-old Kiersten Berger, now in her second year at a local community
college, has begun to think about starting her own business. She has taken piano lessons
since she was seven years old and is regarded as a very good pianist. The thought has
occurred to her that she could establish a piano studio and offer lessons to children,
young people, and even adults. The prospect sounds more attractive than looking for a
salaried job when she graduates in a few months.
Question 1 If Kiersten Berger opens a piano studio, will she be an entrepreneur?
Question 2 Which type of reward(s) will be greatest in this venture?
Question 3 Even though she is an artisan, she will need to make decisions of a business
nature. What decisions or evaluations may be especially difficult for her?
Many entrepreneurs consider an initial public offering to be the “holy grail” of their
career, even though most do not really understand the process.
One risk that small businesses do not normally consider is loss due to the disability of a
partner or other key employee of the company.
Business publications such as The Wall Street Journal and Entrepreneur are excellent
sources of advertising from franchisors.
Ratio analysis is a useful approach to estimating asset requirements.
The site location is more important for a painting contractor than for a dress shop.
In conducting a break-even analysis, it is important for the entrepreneur to realize that
demand for a product always decreases as its price increases.
Evoked sets are features or characteristics of products or services that are used to
compare brands.
A single-entry system does not generate a balance sheet but does generate an income
statement.