Which of the following is not one of the critical startup tasks involved in the
preparation of the successful launch of a dot.com site?
a. Creating and registering a site name
b. Building a user-friendly site
c. Promoting the firm’s site
d. Identifying a target market
Amar V. Bhide considers the growth potential of marginal startups to be
a. poor at best.
b. moderate with great late-stage potential.
c. exceptionally fast.
d. exceptionally fast and large.
Within the context of a price lining strategy, the inventory level of the different lines
depends directly on the _______ of the store’s customers.
a. product awareness
b. personal demographics
c. credit worthiness
d. income level and buying desires
Cash budgets
a. treat income and expenses the same way they are treated on an income statement.
b. treat income and expenses differently from the way they are treated on an income
statement.
c. are relatively unimportant in the life of a small business.
d. are tools for managing revenue.
Recent estimates suggest that family firms generate more than ____ of the business
revenue in the United States and employ more than ____ of its workforce.
a. one quarter, half
b. half, one quarter
c. one quarter, three-quarters
d. half, half
The turnover ratios for accounts receivable and inventories have implications for
a. employee retention.
b. asset specificity.
c. debt position.
d. firm liquidity and profitability.
The two major steps in preparing for a sales presentation are
a. advertising and practicing.
b. prospecting and practicing.
c. publicity and prospecting.
d. exhibits and prospecting.
Compared to the general population, entrepreneurs tend to have
a. a passion for business.
b. an external locus of control.
c. an aversion to risk.
d. a high need for affiliation.
For small businesses, the ultimate incentive to go global is the following:
a. Purely domestic firms are less likely to stay in business over the long run.
b. Government programs are available to ensure success of global firms, but not
domestic ones.
c. If you fail to seize an international market opportunity, someone else will.
d. Research shows that global firms experience more consistent gains in profitability.
The major distinction between cash-basis and accrual-basis accounting is that the
a. cash method is easier to use.
b. cash method matches revenue and expenses better.
c. point of recognition of revenue and expenses is different.
d. cash method involves less record keeping.
The owner of a video rental business wishes to allow employees to own part of the
business. She can do this by using
a. a profit plan.
b. a Keogh plan.
c. an ESOP (employee stock ownership plan.)
d. a fully vested pension plan.
Using the boomerang technique to respond to a prospect’s objection involves
a. listening to the objection.
b. turning a valid objection into a valid reason to buy.
c. responding with “Yes, but.”
d. admitting faults and apologizing
Barry Ramirez demands that his employees immediately comply with his orders. His
leadership style is typical of ________ leaders.
a. authoritative
b. coercive
c. pacesetting
d. affiliative
The amount of time it takes to recover the original cost of an investment is computed
using
a. the payback period technique.
b. the periodic investment recovery technique.
c. the investment return technique.
d. the ratio analysis technique.
The mere fact that a firm is earning high rates of return on the firm’s asset indicates that
a. the firm is worth more as a going concern than as a dead one.
b. downsizing is likely to be an economically sound option for the business.
c. it is time to start growing the business again.
d. it might be wise to further limit the cash flows returned to investors.
When surveyed about transfers of ownership within a family-owned firm, most
entrepreneurs indicated that the transfer had been or would be financed by
a. seller financing.
b. third-party financing.
c. gift.
d. the acquirer’s personal financing.
Containers Etc. manufactures household containers. In contrast to traditional market
designs, all of Containers Etc.’s products are microwaveable and child-proof and come
in an assortment of 35 colors. Accordingly, Containers Etc. is pursuing a
_______________ strategy.
a. product-based
b. differentiation-based
c. concept-based
d. efficiency-based
Shirley Lessman is planning to launch a business and has been encouraged to start in a
business incubator. This will give her access to
a. bank loans.
b. free rent.
c. prepaid insurance.
d. management counsel.
When making a decision regarding the extent of planning, an entrepreneur should
consider the
a. preferences of employees.
b. complexity of the environment.
c. level of uncertainty of the venture.
d. competitiveness of the product.
A powerful workstation computer for 3-D graphical product design is an example of a
a. general-purpose machine.
b. operationally-induced machine.
c. highly specialized equipment.
d. short-lived asset.
Good relationships with suppliers is important, but they are especially important for
a. large businesses.
b. small businesses.
c. medium-sized business.
d. labor-intensive businesses.
Using the number of births in a historical record to predict the number of driver licenses
issued in subsequent years is an example of the use of a(n) _______ variable in
forecasting.
a. approximating
b. indirect
c. surrogate
d. terminating
As Benito’s business grows larger, which of the following accounting methods/systems
is he likely to adopt for use in his business?
a. Single-entry system
b. Double-entry system
c. Accrual method
d. Cash method
A strong partnership requires that partners who
a. are honest, healthy, capable, and contribute assets to the partnership.
b. honest, healthy, capable, and compatible with the other partners.
c. honest, healthy, capable, and legally unencumbered.
d. honest, healthy, capable, and willing to participate actively in the partnership.
Which of the following statements about observational methods is not true?
a. They can be very economical.
b. They avoid potential biases.
c. They can be conducted by a human or by mechanical devices.
d. They are a form of secondary data collection.
Manufacturing and service operations differ in which one of the following ways?
a. Productivity is harder to measure in manufacturing.
b. It is harder to build inventory in manufacturing.
c. It is harder to establish quality standards in services.
d. Service operations involve less contact with customers.
In a location decision, the raw materials availability factor is particularly important for
a
a. CPA.
b. manufacturer.
c. management consultant.
d. venture capitalist.
Why would a businessperson wish to become a franchisor?
a. Reduction of capital requirements
b. Reduction in control
c. Sharing of profits
d. Increase in operating support
A founder of a family business is contemplating turning the business over to his five
children. One possibility, the founder believes, is to divide ownership equally among
the children. This would
a. be impossible.
b. be inherently unfair to the children.
c. potentially hinder the future functioning of the business.
d. require an S corporation.
The disclosure statement provided to a prospective franchisee must contain all of the
following information Except:
a. franchisor’s finances.
b. experience in the market.
c. involvement in litigation.
d. strategic plans for future expansion.
According to an Inc. survey, how much time did CEOs who participated in public
offerings spend on those offerings (on average)?
a. 14 hours per week over 3 and a half months
b. 21 hours per week over 3 and a half months
c. 33 hours per week over 4 and a half months
d. 47 hours per week over 4 and a half months
Items covered in the new UFOC include all of the following except
a. litigation.
b. bankruptcy.
c. investment requirements.
d. marketing goals.
A promotional mix is influenced by the following three major factors:
a. Geography of the market, the size of the promotional budget, and product
characteristics.
b. Geography of the market, retailer market, and product characteristics.
c. The firm’s target customers, product characteristics, and budget requirements.
d. The firm’s target customers, market size, and product characteristics.
Prospective investors are likely to consider a new business proposal to be unfavorable if
it
a. focuses on the product or service and provides minimal analysis of marketplace
needs.
b. is brief, even if it touches on all of the critical details of the startup.
c. presents financial projections that show the startup will not exceed industry norms.
d. fails to call for custom or applications engineering.
A firm’s liquidity can be measured by its
a. liquidity ratio.
b. current ratio.
c. turnover ratio.
d. total asset turnover.
You Make the CallSituation 3
Paul Bowlin owns and operates a tree removal, pruning, and spraying business in a
large metropolitan area with a population of approximately 200,000. The business
started in 1975 and has grown to the point where Bowlin uses one and sometimes two
crews, with four or five employees on each crew. Pricing has always been an important
tool in gaining business, but Bowlin realizes that there are ways to entice customers
other than quoting the lowest price. For example, he provides careful cleanup of
branches and leaves, takes out stumps below ground level, and waits until a customer is
completely satisfied before taking payment. At the same time, he realizes his bids for
tree removal jobs must cover his costs. In this industry, Bowlin faces intense price
competition from operators with more sophisticated wood-processing equipment, such
as chip grinders. Therefore, he is always open to suggestions about pricing strategy.
Question 1 What would the nature of this industry suggest about the elasticity of
demand affecting Bowlin’s pricing?
Question 2 What types of costs should Bowlin evaluate when he is determining his
break-even point?
Question 3 What pricing strategies could Bowlin adopt to further his long-term success
in this market?
Question 4 How can the high quality of Bowlin’s work be used to justify somewhat
higher price quotes?
B2C startups offer only one main advantage over brick-and-mortar retailingtransaction
speed.
A partnership reports the income it earns to the Internal Revenue Service, but the
partnership itself does not pay any taxes.
To operate effectively, the leader of a family firm must concentrate on dealing with both
family members and in-laws within the business.
Post-purchase dissonance and consumer complaints are both directly related to
customer satisfaction.
The fee charged by a private employment agency is usually paid by the applicant.
Unlike employees in small firms, those who work for large corporations face pressure
from various sources to act in ways that conflict with their own sense of what is right
and wrong.
A firm’s working-capital cycle refers to the flow of cash to purchase and sell fixed
assets.
A firm may receive unsolicited applications from qualified applicants.
The limited liability company differs from the C corporation in that the former avoids
financial complications from double taxation.
The total amount of capital from various investors becomes the firm’s total assets.
Advertising is one type of personal selling technique.
Small firms should never need the services of an outside accountant.
Owner-managers of small businesses typically overdo the amount of planning.
According to Lisa D. Stein, vice president of Solomon Smith Barney, what are the most
important reasons for going public?
The date on which accounts receivable are collected affects the working-capital cycle.
A small business in competition with larger firms is seldom in a position to function as
a price leader.