The formula for calculating net profit margin is net profit/net sales (annual).
A recent study concluded that American firms with global operations grew faster and
earned more than purely domestic companies.
A focus strategy recognizes that all markets are homogeneous.
While there are numerous advantages to buying an existing business, there are also
some disadvantages, like the previous owner having created ill will rather than goodwill
with customers and suppliers.
Trade discounts are offered within the distribution channel and are on a graduated scale.
Effective personal selling can give the small company a definite advantage over its
larger competitors by creating a feeling of personal attention.
A feature is what a customer gains from a product.
Accounts receivable are rarely worth face value, and should be “aged” when evaluating
a company’s assets.
Family-owned businesses have a significant advantage over other forms of small
business, in that they have a very high survival rate when transitioning between
generations of leadership.
Market-changing, disruptive breakthroughs are examples of evolutionary innovations.
Developing a community via the company’s Web site is to increase customer loyalty by
giving customers the chance to interact with other like-minded visitors or with experts
to discuss and learn more about topics they are passionate about.
Because of its assumptions, the simplest reorder model is no longer valid or useful to
the small business owner in today’s dynamic business environment.
Lean startup is the process of rapidly developing simple prototypes to test key
assumptions by engaging real customers.
A well-conceived and defined vision can be a competitive weapon in the marketplace
by helping everyone understand and focus on the same target.
The small business owner should concentrate purchases at a single supplier.
Leadership is like management in that it maintains order and structure in the
accomplishment of goals.
The Farmers Home Administration only makes loans to small farms.
For cash planning purposes, it is better to underestimate cash disbursements than to
overestimate them.
Entrepreneurs should artificially inflate the amount of a loan request and expect the
loan officer to “talk them down.”
Self-insurance is entirely a large business phenomenon.
Geographic pricing is a technique that greatly simplifies the pricing function.
Ethical behavior is concerned with doing things “right.”
If a vendor offers a firm 2/10, net 30, and the firm doesn’t take it, the firm is paying an
interest rate of over 36% on an annual basis.
Newspaper circulation as a percentage of total households reached has climbed over the
past two decades, making it an excellent value for the advertising dollar.
While the sole proprietorship is the easiest type of business to get into, it is the most
heavily regulated.
To be enforceable, a contract must be written.
Approximately 75% of SBA-guaranteed loans go to small businesses start-ups.
In a competitive profile matrix, a major strength is given a ranking of 1.
The increasing diversity of our population is creating a marketing “threat” to small
businesses because they can’t profitably serve small niches.
For many businesses across the world, “going global” is now a matter of survival, not
preference.
AIDS is considered to be a “handicap,” and AIDS-infected employees are protected
against discrimination by the Americans with Disabilities Act.
In most business sales, the buyer bears the responsibility of determining whether or not
the business is a good value.
An entrepreneur seeking an SBA loan guarantee can cut out a tremendous amount of
time and paperwork by working with a bank that is either a certified or a preferred
lender.
A small company’s promotional goals may include creating a brand image, persuading
customers to buy, and/or to develop brand loyalty.
The risk behind self-insurance is that if there aren’t sufficient funds set aside, the
business will suffer losses.
One of the best ways to cultivate a culture of creativity is to hire a diverse workforce.
A ________ is a contract in which a business selling an asset on credit gets a security
interest in that asset, protecting the company’s legal rights in case the buyer fails to pay.
A) security agreement
B) lock box
C) cash on delivery agreement
D) None of the above
Common ownership interest in a business, sharing profits (or losses) of a business, and
the right to participate in managing the operations of the business are characteristics of
a(n):
A) corporation.
B) sole proprietorship.
C) partnership.
D) S-corporation.
Which of the following is true about avoiding business failure?
A) You must understand financial statements.
B) You need to learn how to manage others.
C) You must differentiate your product from the competition.
D) You must do all of these.
The consequences for the small business owner of a vendor certification program
include:
A) using one supplier for the majority of their inventory needs.
B) guaranteed quality and price for selected items.
C) that the vendor will not supply components to competitors.
D) less government scrutiny and regulation of their business.
An explanation of how the product will be distributed is contained within the:
A) description of the product line.
B) marketing strategy portion of the business plan.
C) competitive analysis.
D) business strategy section of the business plan.
________ are negative internal factors that inhibit the accomplishment of a firm’s
objectives.
A) Strengths
B) Weaknesses
C) Opportunities
D) Threats
Intellectual capital of a company is comprised of which components?
A) Talent and skills of its workforce
B) Software, patents, copyrights
C) Experience of the people in the company
D) Customer base, reputation and goodwill
There are three components in the rate of return used to value a business. The
component(s) are:
A) risk-free return.
B) an inflation premium.
C) the risk allowance for investing in the particular business.
D) All of the above
In a limited partnership, limited partners are treated as:
A) sole proprietors.
B) investors.
C) stakeholders.
D) directors.
A key determinant of ethical behavior is:
A) training.
B) law.
C) society.
D) All of the above
The typical Internet user in the United States spends an average of ________ hours a
month online.
A) 33
B) 125
C) 52
D) 104
In 1938, Congress passed the ________ creating an agency responsible for establishing
standards for drugs, inspecting food and drug manufacturers, performing food-and
drug-related research, etc.
A) Miller-Tydings Act
B) Consumer Product Safety Act
C) Agricultural Marketing Act
D) Food, Drug, and Cosmetics Act
________ franchising exists when a franchisee is licensed to sell specific products
under the franchiser’s brand name through a selective distribution system.
A) Trade name
B) Pure
C) Conversion
D) Product distribution
Which one of the following is not a “test” that an entrepreneur’s business plan must
pass?
A) The reality test
B) The competitive test
C) The value test
D) The ability test
In a(n) ________, managers and/or employees borrow money from a financial
institution and pay the owner the total agreed-upon price at closing; they then use the
cash generated from the company’s operations to pay off the debt.
A) irrevocable trust
B) buy/sell agreement
C) LBO
D) estate freeze
________ is the ability to apply creative solutions to problems and opportunities to
enhance or to enrich people’s lives.
A) Showboating
B) Commoditizing
C) Creativity
D) Innovation
________ is when owners of independent businesses become franchisees to gain the
advantage of name recognition.
A) Conversion franchising
B) Multiple-unit franchising
C) Master franchising
D) Combination franchising
E-mail lists and ________ are powerful tools for building a community of visitors at a
site.
A) toll-free numbers
B) discussion boards
C) chat rooms
D) broadcast advertising
A number of things can be done in order to integrate ethical principles into a company,
such as:
A) limiting diversity in their hiring.
B) establishing a legalistic and rigid set of rules and ensuring obedience to them.
C) creating a one-way communication culture, clearly communicating expectations.
D) the conduct of top managers setting impeccable ethical examples.
In international franchising, ________ is a “hot spot” for U.S. franchisers.
A) China
B) India
C) Europe
D) Both A and B
Which of the following would be a potential source of information for a sales forecast?
A) Past records
B) Trade associations and the Chamber of Commerce
C) Similar firms
D) All of these
The worst marketing catastrophe to befall any business would be to:
A) encourage customers to complain and have employees give management feedback
on the complaints.
B) have great advertising and poor quality products.
C) have poor customer service and a highly effective promotional campaign.
D) have a great product and an inaccessible location.
At the broadest level of the location decision, entrepreneurs usually identify regions of
the country that:
A) have many professional sports teams.
B) are experiencing substantial population growth.
C) contain many car drivers.
D) consist of the most employed inhabitants.
Tyson Foods’ practice of adding value to its chicken products by deboning, skinning,
bite-sizing, or pre-cooking them is an example of a:
A) cost leadership strategy.
B) differentiation strategy.
C) focus strategy.
D) concentration strategy.
A successful direct mail ad is characterized by:
A) text written as if it were being spoken.
B) thorough text descriptions of the benefit.
C) making statements rather than asking questions.
D) minimal use of pictures and color, to reduce costs.
The computerization of cash registers has:
A) completely eliminated the need for perpetual inventory systems.
B) eliminated the need for physical inventories.
C) overcome the disadvantages of ABC inventory systems but is too expensive for most
small businesses.
D) overcome many of the disadvantages of perpetual inventory systems.
Which of the following refers to demographic/physical environment when screening a
country?
A) Population size, growth and density
B) System of government
C) Economic growth
D) Balance of payment
________ tells what portion of the total revenues remains after covering variable costs
to contribute toward meeting fixed expenses and earning a profit.
A) The full-absorption statement
B) The break-even selling price
C) The contribution percentage
D) Cost-plus pricing
As a general rule, financial analysts suggest that a small business maintain a(n)
________ ratio of at least 2:1.
A) debt-to-net worth
B) current
C) inventory turnover
D) quick
Numerous surveys have concluded that the most important element of service is:
A) the personal touch.
B) convenient business hours.
C) speedy transactions.
D) innovative product design.
How can managers establish and maintain ethical principles into their companies?
Why is it important for a business owner to monitor the competition? Explain how a
business owner could use a competitive profile matrix to do that. Include in the review
what its value is, what information it contains, and how a small business owner would
create it.
What impact has the Americans with Disabilities Act had on small businesses in terms
of building location and layout?
Explain the different SBA loan programs. Explain how a typical SBA loan guarantee
works. What interest rates do such loans normally carry?
What is the Franchise Disclosure Document? Offer several examples of what type of
information is required in the FDD.
Explain the “balanced scorecard,” reviewing its strengths and the five perspectives it
takes in evaluating a business.
What is the importance of positioning for the small business?
Your authors suggest a five-step process for developing an ethical framework. Identify
and explain each of the five steps.
What factors influence the choice of location for a manufacturer?
What is the role of empowerment in motivating workers? What does the small business
owner need to do to help empowerment to work in his/her company?
What is a perpetual inventory control system? Explain its advantages and
disadvantages.
Describe what operating ratios are. Identify the five operating ratios covered in your
text, explaining how each of the five helps the small business owner manage his/her
business.
What does a break-even analysis tell the small business owner?
Identify the four common channels of distribution, briefly explaining their use by small
businesses in moving their product to the customer.
Briefly outline the key characteristics of a typical entrepreneur.
Outline the major types of insurance protection the typical small business needs.
How do the EDA and HUD lend money to small businesses?
What are the primary steps to proving that a market exists in the market strategy
section? What should an effective market analysis include?
If you were having difficulty getting your customers to pay in a timely manner, what
could you do to speed payment?