One of the cautions with a niche strategy is that niches change.
Even though cost-plus pricing is simple, it does not encourage a small business to use
its resources efficiently.
Because installment credit absorbs a company’s cash, many small businesses rely on
financial institutions to provide it for their customers.
Generally, an industry is less attractive when the number of buyers in the industry is
large.
Foreign distributors offer exporting small businesses the benefit of knowledge of the
local markets in which they sell, the ability to cover a foreign sales territory thoroughly,
and the ability to handle all of the marketing, distribution, and service functions in
foreign markets.
State law requires that individuals creating a partnership file the Articles of Partnership
with the Secretary of State.
A resident buying office is ________.
A) a business that buys and sells products in many countries, either in its own name or
as an agent for its buyer-seller clients
B) a government-owned or business-owned facility set up in a foreign country to buy
products that are made there
C) a firm in an overseas distribution network selling noncompetitive products made by
other firms
D) formed by an agreement where a licenser gives a foreign licensee the right to use a
patent, trademark, copyright, technology, and products in return for a percentage of the
licensee’s sales or profits.
The location has far-reaching ramifications (such as high-tech companies) that need
________.
A) a highly-skilled work force
B) a high traffic site
C) easy access to shipping routes
D) a nearby retail district
Mini-Case 2-1: Doing “good” but not doing the “right” thing
Ed and Marci Buchanan are spouses and partners in a business called “Flags
Unlimited.” They made and sold a variety of national flags in various shapes. About 40
percent of their total revenues came from a single chain retailer, MegaMart USA that
owned 798 stores throughout the United States. When Ed and Daisy started their
company, their son’s classmate’s father was a senior buyer at MegaMart USA. The
buyer, Arturo Higuain, encouraged Ed and Daisy to submit a bid to MegaMart USA and
he helped the couple establish the relationship that led to subsequent recurring sales at
the retailer. Higuain’s wife, Lupe was the head of the school’s PTA and in charge for
fund raising. Without Arturo’s asking, the Buchanans started contributing significant
sums of money to the PTA. Arturo never discouraged them from contributing. In a cost
cutting move, Arturo was laid off from MegaMart USA and in his place, Cindy
Carmichael became the buyer who interacted with the Buchanans. Cindy hinted to the
Buchanans that there were other vendors willing to supply flags at a lower price than
the Buchanans but that if they would contribute to the rebuilding of her (Cindy’s)
community’s softball park, they would continue to sell their product at MegaMart USA.
Contributing to a PTA and donating to build a community park are civic actions. Could
they not be considered good actions because they indicate social responsibility?
Carmen is starting a childcare center. One location closed after a murder on the property
and is near a neighborhood where there are many single parents. What city site
selection factor might give Carmen problems with her childcare center?
A) Transportation
B) Police and fire protection
C) The reputation of the location
D) Compatibility with the community
Which of the following should make a potential franchisee suspicious about a
franchisor’s honesty?
A) Claims that the franchise contract is a standard agreement and that there is no need
to read it or have an attorney look it over.
B) An offer of direct financing of a specific element of the franchise package.
C) Not providing detailed operational information until 10 days before signing the
contract.
D) Requiring franchisees to spend a certain percentage of profits on advertising.
Any distinctive word, phrase, symbol, name, or logo a firm uses to distinguish itself or
its products is called a ________.
A) trademark
B) patent
C) copyright
D) service mark
The classic auto assembly line is based on which job design principle?
A) Job enlargement
B) Job enrichment
C) Job simplification
D) Job rotation
________ lateral thinking is somewhat unconventional and unstructured.
A) Left-brained
B) Right-brained
C) Systematic
D) Logical
Which of the following information is available from U.S. Census data?
A) The value of the homes in an area
B) The number of rooms in the homes in an area
C) Number of vehicles owned
D) All of the above
The second essential purpose for creating a business plan is ________.
A) to guide the operation of the company by charting its future course and devising a
strategy for following it
B) to attract lenders and investors
C) to file with the SEC before a public stock offering
D) to attract potential managers and employees to run the new venture
An arrangement under which employees work a normal number of hours with options
regarding when they start and stop work is ________.
A) hoteling
B) flextime
C) job sharing
D) flexspace
Women in business still experience ________ as they attempt to break the “glass
ceiling.”
A) success
B) opportunities
C) discrimination
D) ease of navigation
A tariff is ________.
A) a law that a government uses to regulate products that are imported into the country
B) the maximum amount of a product that can be imported or exported
C) a prohibition or suspension of foreign trade of specific imports or exports
D) a duty, or tax, that a government puts on products that are imported into the country
When the franchisor has the right to establish a semi-independent organization in a
particular territory to recruit, sell, and support other franchises, it is known as a
________ franchise.
A) multi-unit
B) cobranding
C) conversion
D) master
A cash budget reveals important clues about how well a company ________.
A) balances its accounts receivable and accounts payable
B) controls inventory
C) finances its growth
D) All of the above
A business with a 25 percent gross profit margin that reduces its price by 10 percent
would have to ________ its sales volume just to break even.
A) double
B) triple
C) quadruple
D) match