A company’s trade area can be influenced by intangible factors, such as physical and
political barriers.
An important guideline for companies wanting to successfully compete internationally
is to familiarize yourself with foreign customs, languages, and cultures, including their
lifestyles, values, customs, and business practices.
Since their stock offerings are small, most entrepreneurs are able to take their
companies public without the assistance of accountants, attorneys, and underwriters.
The conversion rate measures the proportion of visitors to a site who actually make a
purchase.
If a franchisor encourages you to sign without reading the agreement, or discourages
you from ‘spending the money on an attorney,” this is a warning sign that the franchisor
might be dishonest.
The most frequently encountered impediments to international trade for small and
medium-sized manufactures relates to U.S. regulations.
Organizational policies and procedures include a broader definition of ethical standards
that go beyond what is defined by the law.
Service companies spend the greatest percentage of their sales revenue on cost of goods
sold.
Small companies that spot demographic trends and act on them early can gain a
distinctive edge in the market.
Generally, an industry is more attractive to new entrants when the advantages of
economies of scale are present.
Among major industrialized nations, the United States spends the greatest amount per
capita to promote exports.
A company’s mission statement should be lengthy and use fancy jargon to impress
outsiders.
The times-interest-earned ratio tells how many times the company’s earnings cover the
interest payments on the debt it is carrying.
The North American Free Trade Agreement has which of the following provisions?
A) The immediate elimination of all tariff and quota barriers on all goods.
B) The elimination of tariffs on most goods.
C) A lowering of safety and air quality standards.
D) The formation of a North American Trade Organization.
The ability to apply creative solutions to problems and opportunities to enhance or to
enrich people’s lives is called ________.
A) entrepreneurship
B) innovation
C) creativity
D) creative thinking
A business that turns over its receivables 5.9 times a year would have an average
collection period of about ________.
A) 30 days
B) 2/10, net 30
C) 71 days
D) 62 days
The purchase funnel identifies ways to improve the online shopping experience. The
process begins with ________ and ends with ________.
A) promoting an online presence; a streamlined checkout process
B) making the site easy to find; a streamlined checkout process
C) promoting the URL; a purchase
D) creating customer confidence; the payment process
Chris Jaffe, the owner of a small independent doughnut shop, is worried that a large
doughnut franchise will open an outlet near her location and take away business. Taking
a proactive approach, Jaffe contacts the franchise, and after a few months of
negotiations, becomes a franchisee. Jaffe is an example of which trend in franchising?
A) Cobranding
B) Conversion
C) Master
D) Subfranchising
Porter’s five forces model assesses industry attractiveness by surveying these five
factors ________.
A) potential entrants, suppliers, buyers, substitutes, and rivalry among existing firms
B) potential entrants, suppliers, buyers, similar products, and rivalry among existing
firms
C) potential entrants, suppliers, raw materials, substitutes, and rivalry among existing
firms
D) potential entrants, competitors, buyers, substitutes, and rivalry among existing firms
The most common type of commercial bank loan granted to small businesses is
________.
A) the short-term loan
B) the line of credit agreement
C) floor planning
D) the unsecured term loan
Capital required to compete in an industry determines ________
A) bargaining power of buyers
B) bargaining power of suppliers
C) threat of substitutes
D) threat of new entrants
It has been reported that the use of credit cards increases the ________ of customer
spending.
A) probability
B) speed
C) magnitude
D) All of the above
Prototypes usually point out potential problems in a product’s ________.
A) price
B) marketing
C) design
D) color
________ is the process of influencing and inspiring others to work to achieve a
common goal and then giving them the power and the freedom to achieve it.
A) Management
B) Organizing
C) Leadership
D) Coordination
Which of the following trade intermediaries lowers the risk of exporting for a small
business?
A) Export management companies
B) Export trading companies
C) Resident buying offices
D) All of the above
Which of the following statements concerning small businesses and international
markets is false?
A) Although terrorism and global recession have slowed the growth of international
trade somewhat, global opportunities for small businesses have a long-term positive
outlook.
B) Although the U.S. is an attractive market, approximately 95 percent of the world’s
population lives outside its borders.
C) Because exporting is so complex and requires a company to have so many
international experts on staff, exporting is not feasible for small businesses.
D) Small companies comprise 97 percent of all businesses engaged in exporting, yet
they account for only 30 percent of the nation’s export sales.
Entrepreneurs are characterized by ________.
A) skill at organizing
B) desire for immediate feedback
C) high energy levels
D) All of the above
Entrepreneurship is a constant process that relies on ________.
A) creativity, innovation, and profit
B) the ability to win over the consumer
C) creativity, innovation, and application in the marketplace
D) intellectual property rights
Define what a pro forma financial statement is. What are the two types a small business
owner uses, and how are they created?
Mini-Case 11-5: A Projected Income Statement
You want to start your own retail furniture store, and you have already gathered a great
deal of information on location, layout, form of ownership, business failure rates, etc. In
applying for a loan, you notice that a projected income statement is required. Your
problem is to complete this projected “P&L,” given a desired income of $23,000 and
the following published statistics. Show and clearly label all of your work!
If a market survey indicates that your firm’s sales would be $620,000, what net profit
would you expect to earn?
How does primary research differ from secondary research?
What marketing potential does the Internet offer small business owners?
Explain the difference between absorption costing and variable (or direct) costing.
Which one is more useful when establishing prices? Why?
What are the advantages and the disadvantages of using break-even analysis?
Identify and discuss the domestic barriers to trade.
List and explain the main location criteria for retail and service businesses.