Driving as safely as possible is an example of
a. loss prevention.
b. loss avoidance.
c. loss reduction.
d. loss control
Ideas Unlimited is a recently established consulting firm that specializes in providing
retailers with information about regional sales trends. Typically, retail establishments
are classified into three categories (specialty, niche, and general retailers). The current
CEO of Ideas Unlimited wants to know the estimated demand in the market for its
services. Accordingly, she instructs the firm’s marketing department to identify all
buyers in each category of retailers and derive a full demand assessment. The CEO is
requesting a market demand estimate based on the
a. breakdown forecasting process.
b. aggregate forecasting process.
c. buildup forecasting process.
d. indirect forecasting process.
Both investors and lenders use the business plan to better understand the
a. type of product or service offered by the new venture.
b. probability that interest rates will rise or fall in the future.
c. potential of other competitors in the same line of business.
d. range of business opportunities available at a given point in time.
A marketing campaign would be mostly likely financed by
a. a commercial bank.
b. an owner.
c. an outside investor.
d. the SBA.
Running a public company requires
a. accounting records that satisfy the founder’s personal accountant.
b. a board of directors that can keep the business out of bankruptcy.
c. managing the firm toward a track record of successful performance.
d. a focus on a long-term exit strategy.
With a foreign licensing strategy, the company granting the right to manufacture and
sell a product in overseas markets is called the
a. royalty receiver.
b. licensor.
c. licensee.
d. license initiator.
The owner of a small manufacturing plant wants inspectors to check the width and
length of a product (within specified tolerances) during the production process. This
calls for
a. an attribute inspection.
b. a work sampling inspection.
c. a 100 percent inspection plan.
d. a variable inspection.
The areas of marketing strategy that should be addressed within the marketing plan are
a. promotional, pricing, distribution, and product/service plans.
b. promotional and pricing plans.
c. promotional and distribution plans.
d. promotional, pricing, and distribution plans.
Site-related factors that should be taken into consideration when one is selecting a retail
location include
a. future advertising costs.
b. the labor supply.
c. raw material availability.
d. customer accessibility.
An example of special-purpose equipment is a
a. lathe.
b. bottling machine.
c. drill press.
d. ripsaw.
In the context of business planning, a prospectus is viewed as a
a. financial system.
b. way to guarantee that every employee in the startup knows his or her role in the
company.
c. marketing document used to solicit investors’ monies.
d. methodology that defines the way every aspect of the business is to be run.
The median percentage of ownership by a firm’s officers and directors ______ in the 10
years following an IPO.
a. declines
b. increases
c. remains steady
d. increases sharply, then steadily decreases
During the early days of e-commerce, the model of choice was based on
a. sales.
b. content.
c. advertising information.
d. market identification.
Trade integrations such as the North American Free Trade Agreement and the European
Union are established to
a. facilitate social integration of disparate countries.
b. reduce or eliminate tariffs and trade restrictions.
c. protect trade relationships with non-member nations.
d. satisfy the demands of organized labor.
Which of the following is true with respect to installment accounts?
a. A down payment is normally required.
b. Large purchases are usually not covered by this form of credit.
c. By law, finance charges cannot exceed 20 percent of the purchase price.
d. Short-term consumer credit is provided.
As described in the textbook, a Type B idea involves
a. a technically new process.
b. performing an old function in a new and improved way.
c. using prior work experience as a basis for starting a new business.
d. providing customers with a product or service absent in their market but available
elsewhere.
A corporation
a. is chartered under state laws.
b. is chartered under federal laws.
c. remains in existence only as long as its owners are alive.
d. shifts liability of its debts to its owners.
Quality Cars, an independent used-car dealership, utilizes long-term consumer credit in
its business. Typically, consumers are allowed to place a 15 percent down payment on
an automobile. Then, over a period of 48 months, the consumer is allowed to make
payments on the balance of the account, which includes compound interest of 2 percent
monthly on the unpaid portion. Quality Cars is employing _____ in its business.
a. open charge accounts
b. installment accounts
c. revolving accounts
d. selective accounts
The value of a business is determined by
a. what the owner believes the business is worth.
b. what a valuation formula determines its worth is to the owner.
c. what a valuation formula determines its worth is to the buyer.
d. what a buyer with the cash is prepared to pay.
Elegant Writings, a small creator of high-quality fountain pens, segmented its market
into five distinct groups of consumers. The firm then decided to target only the segment
labeled “affluent business executives.” By doing so, the management hopes to establish
a small, viable market for its products while simultaneously avoiding direct competition
with larger competitors. Elegant Writings is following a ____________ strategy.
a. selective
b. market focus
c. focus
d. cost-based
Both the physical movement of products and the establishment of intermediary
relationships to guide and support the movement of the products are included in
a. distribution.
b. logistics.
c. middlemen.
d. channels.
_____ can provide firms with a fast, inexpensive, and convenient way to meet certain
accounting needs.
a. Tax accounting
b. Cost accounting
c. Mobile bookkeeping
d. Public accounting
If qualified walk-ins cannot be hired immediately, their applications should be
a. destroyed.
b. sent to other firms.
c. kept on file.
d. turned over to a private employment agency.
Fringe benefits include
a. hourly wages and overtime pay.
b. commissions and bonuses.
c. health insurance.
d. profit-sharing plans.
The residual assets of a sole proprietorship belong to the __________ after the owner’s
death.
a. owner’s heirs
b. primary investors
c. general partners
d. creditors
While unethical practices do exist, it is good that many small firms strive to achieve the
highest standards of ________ in their business relationships.
a. truthfulness
b. relativism
c. synchronous behavior
d. congruity
You Make the CallSituation 2
Alibek Iskakov has opened a small caf named Oasis in Kokshetau, a city in Kazakhstan.
In order to get primary data on the market for his caf, he conducted a survey of 100
people45 men and 55 women. Forty-eight respondents were between 18 and 24 years
old, 38 were between 25 and 50 years old, and 14 were over 50 years old. The survey
asked the following questions:
1) How often do you visit restaurants?
2) What is your favorite restaurant in Kokshetau? Why?
3) What is the most important factor for you in choosing a restaurant?
4) Would a small, neat caf with traditional food appeal to you?
a. (If no) Why not?
b. (If yes) When would you patronize it?
5) How much are you willing to pay for dinner?
Question 1 What are the strengths and weaknesses of the sample used in this survey?
Question 2 Evaluate the questions used in the survey.
According to Michael Porter, a focus strategy can erode when
a. the strategy is protected.
b. the target segment’s differences from other segments narrow.
c. new firms reconstruct the industry.
d. demand for the product grows and thus attracts new competitors.
A firm’s competitive advantage will never
a. last forever.
b. be duplicated by competitors.
c. lead to superior performance.
d. cost as much to develop as anticipated.
Quality management is concerned with all of the following except
a. machines.
b. materials and measurements.
c. human performance.
d. the architectural design of facilities.
Long production runs at Bayshore Industries have steadily reduced its unit costs,
indicating that it has benefited from
a. experience curve efficiencies.
b. learning effects.
c. economies of scale.
d. economies of scope.
The size standard for small business used in the textbook would exclude firms that
a. have more than 10 employees.
b. have more than 100 employees.
c. have more than two owners.
d. sell products of services outside the local community.
Most major accounting firms can guide the development of the written business plan.
The disadvantage of accounts receivable financing is its negative impact on cash flow.
Entrepreneurs should learn how to compute and interpret cash flows, because a business
can fail from lack of cash flows even if it is profitable.
Economic risk is very different from political risk; indeed, these forms of risk are
unrelated to one another.
Qualified small businesses that cannot obtain business loans through normal lending
channels can get loans directly from the SBA through its 7(a) Loan Guaranty
Program.
The death of the sole proprietor terminates the business entity.
With a private equity placement, the firm’s equity is sold in public equity markets, but
the transaction is handled by a private investment banker.
Investors are more product-oriented than market-oriented.
The industry forces identified by Michael Porter have very little impact on a small
firm’s success.
The failure rate for independent small businesses is comparable to that for franchised
businesses.
A small business can determine whether a market is adequate for its plans by checking
the sales forecast.
A business plan is a written document that sets out the basic idea underlying a business
and its related startup considerations.
The techniques used to measure work in an effort to set valid performance standards
include motion study and time study.
Business guru Peter Drucker believes entrepreneurs should consider no more than two
or three sources of opportunity to avoid being sidetracked as they prepare to launch or
grow their enterprises.
A differentiation-based strategy usually does not lead to a competitive advantage in
business.
A direct channel of distribution is one that involves no intermediaries.
Religious values and other deeply felt convictions strengthen a manager’s resolve to act
ethically in the face of temptation.
Burger King is an example of a company that uses business format franchising.
Discuss the features of business plans that make them attractive or unattractive to
prospective investors.
S corporations can have nonresident alien stockholders.