In terms of ethical behavior, the law merely establishes the minimum standard of
behavior.
A free trial offer is an example of non-price competitive factor.
Specialty advertising is an example of narrow casting in advertising.
Only 60% of a typical business’ inventory turns over quickly.
When using advertising, the small business owner should ask him/herself certain
questions such as “What business are we in?”, “What image do we want to project?”,
etc.
Magazines have a shorter closing time than newspapers, making them timely and highly
flexible.
The LLC operating agreement is similar to a corporation’s bylaws.
Goals indicate how the small firm’s resources will be allocated to specific ventures or
activities.
A master franchise gives the franchisee the right to combine two distinct franchises
under one roof.
A seasonal discount is a price reduction designed to encourage shoppers to purchase
merchandise before an upcoming season.
Disaster loans are made to small businesses devastated by some kind of financial or
physical losses.
Wall coverings are expensive but essential in almost any small business for employee
job satisfaction and customer enjoyment.
Nancy has owned her own hair salon for ten years. She’s recently signed an agreement
with Budget Cutters to become one of their outlets. This is an example of conversion
franchising.
Entrepreneurs tend to have a low tolerance for ambiguity.
A store’s external appearance plays an insignificant role in identifying its personality to
customers.
General requests for funds are likely to win approval.
The balanced scorecard looks at the small business from the perspectives of the
customer, the company itself, innovation, and finances.
The United States Supreme Court changed the nature of an employer’s liability for
sexual harassment, accepting the previous standard that the employer had to be
negligent somehow to be liable for a supervisor’s improper behavior toward employees.
A partner cannot legally bind the other partners to a business agreement.
Most dissatisfied customers complain about rude or discourteous service to the owner
or manager.
The IPO process requires costly compliance with federal regulations.
One of the most litigated subjects of a franchise agreement is the termination of the
contract by either party.
Content reports tell entrepreneurs which products customers are looking for and which
pages they view most often.
A danger of cost leadership is that a company may misunderstand what processes
actually drive its true costs.
One disadvantage of carrying too much inventory is controlling and managing the
inventory.
An executive summary highlights the critical aspects of the plan.
Most small businesses conduct a thorough credit investigation before selling to a new
customer.
Price lining, leader pricing, and odd pricing are three geographic pricing strategies that
can be used for established products.
If the corporation, rather than the business seller, signs a restrictive covenant, the seller
may not be bound by its terms.
A small business following a focus strategy attempts to serve its narrow target markets
more effectively and efficiently than competitors trying to appeal to the broad market.
Offering lower prices is the best method for a small business to establish its competitive
edge.
Common law requires that an acceptance of an offer be made by the means specified by
the offeror and it must reach the offeror in order to be effective.
The typical neighborhood shopping center contains from 3 to 12 stores, with a
supermarket or drug store as its “anchor.”
In this fiercely competitive, fast-faced, global economy, creativity is not only an
important source for building a competitive advantage but also a necessity for survival.
The normal cooperative advertising plan involves a united advertising effort by a group
of small businessmen in related businesses.
Entrepreneurs can do whatever they want and that conflictive action taken by
entrepreneurs against society’s ethical standards does not incur a price.
When implementing TQM, managers should remember that change and turmoil are
essential elements of the implementation.
The marketing approach that companies of all sizes strive to achieve is mass marketing.
Fixed expenses fluctuate according to production levels.
Under the UCC, a person is considered a professional merchant if he/she “deals in
goods of the kind” and has a special knowledge of the business or of the goods, uses a
merchant’s agent to conduct business, or presents him/herself as a merchant.
By their very nature, “C” items give a firm the opportunity to:
A) keep little safety stock.
B) use minimal inventory control procedures.
C) justify the latest POS or product bar coding systems.
D) use basic analytical tools like EOQ and reorder point analysis.
Teams can be helped to succeed by:
A) placing a few underperformers on the team to minimize internal conflict.
B) forming teams around natural work flows, giving them specific tasks.
C) keeping pay based on individual effort.
D) not permitting teams’ involvement in the assessment of their own performance.
A(n) ________ is a private, for-profit organization that purchases equity positions in
young businesses that will potentially produce returns of 300 to 500 percent over five to
seven years.
A) commercial bank
B) venture capital company
C) “angel”
D) SB-1 filing
When seeking suppliers, a small business owner shoulduse which of the following
sources?
A) Competitors
B) The local telephone directory
C) The industry trade association
D) All of these
Under a ________ agreement, the underwriter agrees to purchase all of the shares in a
company’s public offering and then resells them to investors.
A) best effort
B) lock-up
C) final price
D) firm commitment
The advertisement and resulting product, “A psychically energized weight loss
program,” which turned out to be a book on how to achieve a positive mental attitude,
violates which responsibility to the customer?
A) The right to know
B) The right to safety
C) The right to be heard
D) the right to choose
A ________ strategy works well when a company has a mature product, loyal
customers, a reputation for quality, and few competitors.
A) penetration
B) skimming
C) discount
D) price lining
When buying an existing business, the potential buyer should remember that:
A) it is a long process and the buyer should be patient.
B) existing businesses often do not continue to be successful after a change in
ownership.
C) it is often more difficult to find capital for an existing business than it is for a
start-up.
D) he/she will likely have to make significant changes in the work force.
Those who can most influence individual behavior within a small company and set the
moral and ethical tone of a company are its:
A) customers.
B) managers or owners.
C) employees.
D) human resource managers.
Nearly half of all shoplifters are:
A) professionals.
B) impulse shoplifters.
C) juveniles.
D) None of these
Venture capitalists look for ________ as the most important ingredient in the success of
any business.
A) innovation
B) a growth industry
C) a competitive edge
D) competent management
When a small business is faced with price competition from a much larger competitor, it
should consider:
A) going head-to-head on prices by lowering its cost structure.
B) using non-price competition by offering value added service.
C) make rapid, continual price changes to keep the competition off balance.
D) move to a premium price strategy by offering higher scale goods and services.
When a firm sells goods or services on credit, the owner needs to remember that for
cash budgeting purposes:
A) the sale may be immediately posted as if it has been collected.
B) the sale should be recorded in the month it was made.
C) he/she must account for a delay between the sale and collection of proceeds.
D) such a transaction counts as a cash disbursement.
Some small businesses create innovations ________ by spotting opportunities on which
to capitalize.
A) responsibly
B) compassionately
C) reactively
D) proactively
Which of the following statements is true?
A) The useful life of the financed asset must be less than the maturity of the loan.
B) An entrepreneur should try to camouflage any weaknesses in the small business.
C) Projected financial statements should prove the company’s ability to repay the loan.
D) Officers’ personal assets that can be used as collateral must be included in the
financial statement.
The ethical standards test of ethical behavior in businesses that prioritizes acting in such
a way that the action taken under the circumstances could be a universal law or rule of
behavior is called:
A) the family test.
B) the professional ethic.
C) the Golden Rule.
D) Kant’s categorical imperative.
Once the owner determines an adequate minimum cash balance, what is the next step in
creating a cash budget?
A) Forecasting profits
B) Forecasting sales
C) Forecasting cash receipts
D) Forecasting cash disbursements
Both buyers and sellers must recognize that no one benefits without a(n):
A) low price.
B) high price.
C) agreement.
D) product.
The majority of loans provided by the SBA are:
A) direct.
B) preferred.
C) guaranteed.
D) immediate participation.
Most of today’s immigrant entrepreneurs come into the U.S. with:
A) significant educational and financial resources.
B) few skills, little education, and no financial resources.
C) few assets but lots of dedication and desire.
D) little education but significant financial backing from their families in their home
countries.
The most common type of commercial bank loan granted to small businesses is:
A) the short-term commercial loan.
B) the lines of credit agreement.
C) the floor plan.
D) the unsecured term loan.
In her partnership, Ana has unlimited liability for the partnership’s debts. She would be
the ________ partner.
A) limited
B) dormant
C) nominal
D) general
TQM is not a ________ or ________ program that can magically push a company to
world-class status overnight.
A) quick-fix; short-term
B) quick-fix; long-term
C) long fix; long-term
D) None of the above
The primary output of the strategic management process should be:
A) a matching of its strengths and weaknesses to the opportunities and threats in the
environment.
B) an enticement to outside investors and lenders to put money into the business.
C) a complete explanation of the company’s product or service.
D) a description of the company’s competitive situation.
Miguel and Jamie are talking. Miguel keeps using baseball metaphors as he is giving
instructions to Jamie. Not having any experience with baseball, Jamie is only
understanding about half of what Miguel is saying. Miguel and Jamie are experiencing
ineffective communication because of:
A) information overload.
B) Miguel not expressing his feelings.
C) ambiguity in the communication.
D) the conflicting verbal and nonverbal messages Jamie is giving to Miguel.
Before making a sales call, the salesperson sets three objectives. Which one is not an
objective?
A) The primary objective
B) The visionary objective
C) The maximum objective
D) The minimum objective
As the service economy has grown, a business location being used more and more by
service businesses is:
A) the industrial park.
B) home.
C) central business districts.
D) outlying areas.
An executive summary should be:
A) a snapshot of the entire plan.
B) 3 to 5 pages.
C) written first.
D) All of the above
A ________ is the traditional center of town.
A) hub
B) business area
C) central business district
D) community center
The higher the ________ ratio, the lower the degree of protection afforded creditors and
the closer creditors’ interest approaches the owner’s interest.
A) debt-to-net worth
B) quick
C) asset turnover
D) current
________ forces the salesperson to be open-minded and to shoot for the top.
A) The primary objective
B) The minimum objective
C) The visionary objective
D) The ultimate objective
When a company is forced into liquidation, owners are most likely to incur a loss when
selling:
A) accounts receivable.
B) inventory.
C) marketable securities.
D) real estate.
The business owner’s policy (BOP) typically includes only:
A) theft and crime.
B) pensions and annuities, and health.
C) property and casualty, and liability.
D) disability and hospitalization.
How could an entrepreneur use the Internet to advertise his/her business?
Briefly review the steps involved in the IPO process.
Although franchising is the fastest growing segment of small business, it has
drawbacks. Name and explain at least five drawbacks to franchising from the
franchisee’s perspective.
What characteristics do franchisees look for in a “good franchise”?
What are the primary causes of small business failure in the United States?
Identify the guidelines for following a simple design.
Why does the entrepreneur need to develop a business plan? What functions does it
fulfill?
Explain the concept of the “just-in-time” inventory control technique. Under what
circumstances would JIT be most appropriate?
Discuss pricing strategies for service firms.
What are the five Cs that creditors look for in the business plan? Name and explain
each.
Explain the benefits of franchising to the franchisee.
What are the pluses and minuses for the owners of a company in choosing to
incorporate their business?
Why it is important for small businesses to “go global?”
What clues should you look for that should arouse your suspicions regarding the
honesty and legitimacy of a franchise? Identify at least eight.
Name and outline the characteristics of five strategies for reducing estate taxes in a
family business.
What are local development companies and the small business innovation research
programs? How do they help small businesses?
What can a small business owner do to keep insurance costs under control?
How can the entrepreneur use cooperative and shared advertising to effectively
advertise his/her business and products while holding down promotional costs?
Name and explain the three basic pricing strategies a small business owner has in
establishing a new product’s price.
Discuss franchise contracts covering their current state, factors in their termination,
renewal, and transfer, and what the most common dispute tends to be.