CarePair, a small business specializing in making and distributing hospital gowns to
medical facilities, often sells its product on credit. The company maintains a ledger that
divides accounts receivable into age categories based on the length of time they have
been outstanding. Receivables 1-6 months old are deemed grade A (regular business);
7-12, grade B (overdue business); and 13-24, grade C (delinquent business); those
accounts receivable over 24 months old are turned over to a collection agency. CarePair
is relying on _____ to keep track of accounts receivable.
a. a collection categorization
b. an aging schedule
c. a delinquent adjustment schedule
d. a financial credit schedule
The _____ marketing philosophy is the preferred approach for all businesses.
a. product-oriented
b. market-oriented
c. sales-oriented
d. consumer-oriented
The initial stage in a formal product development process is the _____ stage.
a. business analysis
b. idea accumulation
c. product testing
d. total product development
Harold’s ownership of a moving van for use in his business represents which form of
risk?
a. Uninsurable risk
b. Pure risk
c. Insurable risk
d. Market risk
Higher turnover ratios for accounts receivable and inventories have implications for
a. overall employee retention.
b. long-term asset specificity.
c. reduced debt position.
d. increased firm liquidity and profitability.
An enduring opinion that is based on a combination of knowledge, feeling, and
behavioral tendency is referred to as
a. a motivation.
b. a perception.
c. an attitude.
d. a cognition.
To facilitate preparation of the financial portion of a business plan and the making of
changes in the plan, the writer should use
a. a sample plan.
b. a plan preparation manual.
c. an annuity table.
d. a computer.
Media publications, public records, and directories are sources of
a. impersonal referrals.
b. marketer-initiated contacts.
c. personal referrals.
d. customer-initiated contacts.
The owner of a hair-styling salon is studying quality management materials that refer to
outputs. He should understand that one example of an output in this business is the
a. process of washing and styling hair.
b. combs and scissors.
c. customer’s trimmed and styled hair.
d. labor of an employee in serving a customer.
Average annual after-tax profits per year divided by the average book value of the
investment equals
a. average investment capability.
b. average investment outlay.
c. accounting return on investment.
d. payback period.
Skimming is an unethical business practice involving
a. failure to report all income on tax returns.
b. employees taking cash from the cash register.
c. sales associates offering gifts and inducements to purchasers.
d. managers of competing firms agreeing to charge high prices.
A small business owner wishes to persuade a highly qualified applicant (a business
school graduate) to consider a position with his firm carefully, even though the
applicant has also had offers from large corporations. The owner should most strongly
emphasize the
a. family atmosphere.
b. retirement program.
c. potential for greater freedom of personnel to structure their job duties.
d. long history of the firm.
Which of the following is one of the three groups into which risk can be classified?
a. Substantive
b. Emerging
c. Critical
d. Reportable
When it comes to choosing between debt and equity financing,
a. there is always a right or wrong answer.
b. there is never a right or wrong answer.
c. there will never be a way to tell whether the small business owner made a wise
decision.
d. the decision should always be market-driven.
Uncertainties accompanying an impending sale of a business often
a. lead to lower employee morale.
b. attract the attention of the Securities and Exchange Commission.
c. cause the deal to fall through.
d. increase costs from added legal services.
The _____ stage of the product development process entails planning for branding,
packaging, and other supporting efforts such as pricing and promotion.
a. business analysis
b. idea accumulation
c. product conceptualization
d. total product development
Mary White, a sales representative for a small cleaning business, asks current customers
for names of friends, customers, and other businesses that might be interested in the
company’s cleaning services. White is relying on _____ to identify potential customers.
a. customer-initiated contacts
b. marketer-initiated contacts
c. impersonal referrals
d. personal referrals
Concerning the need for good management in the family business, which of the
following is one of the “best practices” identified by John L. Ward?
a. Resist preparing successors for leadership to avoid demoralizing those who are not
selected.
b. Maintain rigid guidelines based on family traditions to guide the company into the
future.
c. Emphasize the attraction and retention of family members.
d. Stimulate new thinking and fresh strategic insights.
Instead of borrowing money from suppliers to purchase equipment, an increasing
number of small businesses are
a. obtaining trade credit instead.
b. making these purchases outright.
c. choosing to lease the equipment.
d. opting to streamline assembly processes to reduce expenditures.
Jill’s best use of a financial ratio analysis of her company’s performance is to compare it
to
a. that of larger firms.
b. that of smaller firms.
c. that of firms that have been particularly successful.
d. industry norms.
The process of preparing a family successor for leadership in the family business often
takes
a. weeks.
b. months.
c. about one year.
d. a decade or longer.
A widely dispersed market favors which of the promotional methods?
a. Personal selling
b. Sales promotion
c. Personal promotion
d. Advertising
Making decisions about family business matters quietly and secretly
a. avoids the embarrassment of airing “dirty linen” in public.
b. spares the feelings of less involved family members.
c. will help preserve harmony within family.
d. can conceal serious differences that become increasingly troublesome.
When it comes to expanding the market, an emerging motivation for going global is to
a. take advantage of unique features of the local market.
b. find buyers for highly specialized products.
c. obtain tariff reductions.
d. extend the product life cycle.
The _____ measures the rate of return on stockholders’ investments in the business.
a. return on total assets
b. profit margin on sales
c. return on equity
d. fixed asset turnover
Joe Kott has established a successful formed cement products business by developing
an inventory control method and delivery service that gets products to construction sites
faster than his rivals. If Kott continues to improve this system and stay ahead of his
competitors, it can be a source of
a. sustainable competitive advantage.
b. total quality management.
c. business process reengineering.
d. competitive adjustment.
Why is the sharing of profits a drawback to becoming a franchisor?
a. The franchisee will not share profits.
b. Only part of the profits from the franchise operation belongs to the franchisor.
c. There are usually no profits to share.
d. The sharing of profits reduces the franchisor’s control.
Fixed assets include
a. land.
b. copyrights.
c. contingency funds.
d. goodwill.
In which category of a customer profile would a customer’s shirt size most likely be
stored?
a. Customer contacts
b. Descriptive information
c. Responses to marketing stimuli
d. Transactions
Consider this quote: “If you can’t follow somebody else, don’t buy a franchise.” Which
characteristic of a franchise does this describe?
a. High success rate
b. Restrictions on growth
c. Loss of entrepreneurial independence
d. Location problems
Which event has contributed the least to the opening of foreign markets to U.S.
franchisors?
a. The formation of the European Economic Community
b. The collapse of the Soviet Union
c. The introduction of the Euro as the unit of currency throughout much of Europe
d. The passage of the North American Free Trade Agreement
Harry Ramirez wishes to create greater enthusiasm among employees in his industrial
distribution business. A widely used approach that he might take is
a. empowerment of employees.
b. formulating of policies.
c. establishment of control standards.
d. adoption of budgets.
Linda is considering several colleges at which to finish her engineering teaching degree.
She is in the ________ stage of the consumer decision making process.
a. information search and evaluation
b. problem recognition
c. post-purchase evaluation
d. purchase decision
In the family business, family considerations affect only members of the family.
A good business concept may be destroyed by writing that fails to communicate.
Identify the four primary motivations that encourage entrepreneurs to go global and
provide an example of a traditional motivation and an emerging motivation for each.
There are now several hundred incubators in the United States, but the popularity of
these facilities is decreasing.
Lack of in-house expertise is a major justification for using outside CRM services.
Internationalization is increasing among large firms, but this has not been the trend with
small businesses in recent years.
A firm’s financial statements should not be adjusted because they conform with
generally accepted accounting principles.
In Stage I of leadership succession, the pre-business stage, the child begins part-time
work in the business.
Product advertising is intended to keep the public conscious of the company and its
good reputation.
There are six categories of product strategy alternatives for small businesses.
The interest in international markets dates back at least as far as the 1200s when Marco
Polo traveled to China to trade western goods for Oriental silk and spices.
Nothing can be done to prevent losses from natural disasters.
You Make the CallSituation 2
A few years after successfully launching a new business, an entrepreneur found himself
spending 16-hour days running from one appointment to another, negotiating with
customers, drumming up new business, signing checks, and checking up as much as
possible on his six employees. The founder realized that his own strength was in selling,
but general managerial responsibilities were very time consuming and interfered with
his sales efforts. He even slept in the office two nights a week.
Despite his hard work, however, he knew that employees weren”t organized and that
many problems existed. He lacked the time to set personnel policies or to draw up job
descriptions for his six employees. One employee even took advantage of the laxity in
supervision to skip work sometimes. Invoices were sent to customers late, and delivery
schedules were sometimes missed. Fortunately, the business was profitable in spite of
the numerous problems.
Question 1 Is this founder’s problem one of time management or general managerial
ability? Would it be feasible to engage a management consultant to help solve the firm’s
problems?
Question 2 If this founder asked you to recommend some type of outside management
assistance, would you recommend a SCORE counselor, a student consulting team, a
CPA firm, a management consultant, or some other type of assistance? Why?
Question 3 If you were asked to improve this firm’s management system, what would
be the first steps you would take? What would be your initial goal?
Regular contacts with news media are required if publicity programs are to be effective.
Resources can be either tangible or intangible in nature.