Porter defined the cost leadership strategy in terms of:
esolutionsQ1. Porter defined the cost leadership strategy in terms of:
a. reaching buyers whose major purchase criterion is price.
b. establishing the industry's floor price.
c. winning a price war.
d. d. All of the above
Q2. By setting its products apart from those of competitors, Straus Family Creamery, a family business that produces organic, all-natural dairy products, is using which strategy?
a. low-cost
b. differentiation
c. focus
d. maintenance
Q3. A clearly defined vision:
a. provides meaningful direction for a company.
b. influences the decisions, both large and small, the people in an organization make.
c. motivates employees to higher levels of performance.
d. All of the above
Q4. Which of the following is a way to enhance organizational creativity?
a. Expecting creativity
b. Expecting and tolerating failure
c. Viewing problems as challenges
d. All of the above
Q5. The basis for the global economy today is __________ capital.
a. financial
b. manufacturing
c. intellectual
d. economic
Q6. A study by the Federal Trade Commission found that __________ percent of new franchisees sign their franchise contracts without reading them.
a. 10
b. 20
c. 40
d. 60
Q7. Which element of the strategic management process addresses the first question of any business venture: "What business am I in?"
a. vision
b. mission
c. SWOT analysis
d. Strategy
Q8. Most entrepreneurs work ______ hours per week.
a. 1-39
b. 40-50
c. 50-60
d. more than 60
Q9. The primary consideration in negotiating a purchase agreement is to ensure the deal:
a. does not jeopardize the future financial health or cash flows of the business.
b. provides the buyer a good value and the seller fair compensation.
c. guarantees a minimum level of profitability for the business to remain viable.
d. provides a money back guarantee and a no-fault cancellation clause.
Q10. Which of the following strategies works best when a company is appealing to price-sensitive customers and competes with firms that sell the same commodity products?
a. low-cost
b. differentiation
c. focus
d. maintenance
Q11. The key legal issue in the sale of an asset typically is the proper, lawful transfer of _______ from the seller to the buyer.
a. good title
b. liabilities
c. liens
d. contracts
Q12. A strategy that involves dividing a mass market into smaller, more homogeneous units and then attacking only certain of these units is called:
a. segmenting
b. positioning
c. contesting
d. None of the above.
Q13. __________ is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.
a. Innovation
b. Creativity
c. Entrepreneurship
d. Brainstorming
Q14. The primary motivating force behind entrepreneurs is:
a. money
b. fame.
c. achievement.
d. recognition.
Q15. The aggregation of factors that sets a small business apart from its competitors and gives it a unique position in the market is its:
a. mission
b. competitive advantage
c. SWOT
d. Strategy
Q16. In __________ franchising, a franchisee purchases the right to open more than one franchise outlet within a broad territory within a specified time period.
a. master
b. conversion
c. multiple-unit
d. piggyback
Q17. Which of the following factors acts as fuel to feed the nation's entrepreneurial fire?
a. Greater opportunities for entrepreneurial education
b. The shift from an industrial economy to a service economy
c. Increasingly powerful technological advancements that are available at affordable prices.
d. All of the above.
Q18. You are using the excess earnings approach to determine the value of a business you have determined to be a "normal risk" business. What "years of profit" figure should you use to estimate the value of the intangible assets?
a. 1 to 2
b. 3 to 4
c. 6 to 7
d. 10 to 12
Q19. The first rule of negotiating is never confuse price with value.
a. true
b. false
Q20. A company's __________ spell(s) out the ends toward which a company is moving; its __________spell(s) out how it plans to reach those ends
a. mission, goals, and objectives; core competencies
b. strategy; core competencies
c. mission, goals and objectives; strategy
d. core competencies; strategy
Q21. Studies of the small business failure rate suggest that after six years, about __________ percent of new businesses will have failed.
a. 33
b. 49
c. 63
d. 82
Q22. For years, a small, locally-owned pizza restaurant located near a university in a small town has focused on the university's students, offering them special student discounts and free on-campus delivery. Recently, Domino's Pizza announced its intention to open a new location in the same town so that it can sell pizza to the university students. To the locally-owned pizza restaurant, Domino's decision represents a:
a. strength
b. weakness
c. opportunity
d. threat
Q23. The essence of what a franchisee buys from a franchiser is ___________.
a. a steady source of capital.
b. the franchiser's experience
c. a marketing system.
d. an efficient building design.
Q24. Only businesses who have registered their product or service with the Library of Congress are allowed to use ®.
a. true
b. false
Q25. Which of the following statements about the human brain is true?
a. The brain is divided into two asymmetric hemispheres.
b. The right side of the brain processes information intuitively, relying heavily on images, and uses kaleidoscopic, lateral thinking.
c. The left side of the brain processes information in a step-by-step, logical fashion and uses linear, vertical thinking.
d. All of the above.
Q26. A valid copyright last for:
a. the life of the creator.
b. 20 years from the date of publication and can be renewed once.
c. 50 years.
d. the life of the creator plus 50 years.
Q27. Franchise experts consider the three most important factors in franchising to be:
a. training, advertising, and location.
b. management expertise, financial reserves, and customer traffic.
c. financing, timing, and location.
d. location, location, and location.
Q28. Approximately __________ percent of the small companies that are up for sale ever get sold.
a. 25 to 33
b. 40 to 50
c. 65 to 73
d. 80 to 85
Q29. Experts estimate that __________ percent of franchisers are dishonest.
a. 5 to 10
b. 15 to 20
c. 25 to 30
d. 45 to 50
Q30. The primary reason most entrepreneurs choose to incorporate their businesses is:
a. to gain the benefit of limited liability for the corporation's stockholders.
b. the ability of the business to continue indefinitely.
c. the ability to avoid the disadvantage of double taxation.
d. that the corporation offers the least expensive and least complex process of business formation.
Q31. When evaluating the assets a company owns, a prospective buyer should be most interested in their __________ value.
a. book
b. par
c. market
d. stated
Q32. Small businesses:
a. account for about 99 percent of all businesses in the United States.
b. employ 53 percent of the nation's private sector work force.
c. create more jobs than do large companies
d. produce 51 percent of the U.S. GDP.
e. all of the above
Q33. Bennett is considering buying a business and has collected the following information: Projected net earnings for next year = $117,000; rate of return on a similar risk investment = 27%. Hoping to use the market approach, Bennett has located three similar companies, whose stock is publicly traded. Their price-earnings ratios are 2.84, 2. 95, and 3.12. Under the market approach, how much is the business worth?
a. $117,000
b. $433,333
c. $93,822
d. $347, 490
Q34. __________ is the practice of gathering, organizing, and disseminating the collective wisdom and experience of a company's employees for the purpose of strengthening its competitive position.
a. strategic management
b. differentiation
c. knowledge management
d. paradigm busting
Q35. ________ is the ability to see the similarities and connections among various data and events.
a. Vertical thinking
b. Lateral thinking
c. Convergent thinking
d. Divergent thinking
Q36. The QWERTYUIOP configuration so common on computer keyboards is an illustration of which barrier to creativity?
a. Searching for the one "right" answer
b. Blindly following the rules
c. Becoming overly specialized
d. Avoiding ambiguity
Q37. To validate an idea is accurate and useful, entrepreneurs may:
a. conduct experiments
b. run simulations
c. test market
d. build prototypes
e. All of the above.
Q38. Given the fact that most small companies lack the resources to reach a national or international market, many entrepreneurs choose to pursue a __________ strategy in which they specialize in meeting the needs of a specific target market segment.
a. low-cost
b. differentiation
c. focus
d. maintenance
Q39. The most common form of business ownership in the United States is the:
a. sole proprietorship
b. the partnership
c. the corporation
d. the S-corporation
Q40. A paradigm is:
a. a tool used for determining the value of a business that is for sale.
b. a preconceived idea of how the world should operate.
c. a rule for overcoming the barriers to creativity.
d. a tool entrepreneurs use to launch successful business ventures.
Q41. The failure rate for franchises is __________ the failure rate for independent businesses.
a. lower than
b. higher than
c. the same as
d. cannot be determined
Q42. Which of the following factors plays a role in determining the rate of return used to value a business using one of the earnings approaches?
a. the basic, risk-free rate of return
b. an inflation premium
c. the risk allowance for investing in that particular business
d. all of the above
Q43. Increasingly, entrepreneurs are starting businesses because they see an opportunity to make a difference in a cause that is important to them.
a. true
b. false
Q44. Which of the following statements concerning entrepreneurship in the United States istrue?
a. A new business is born every 11 seconds in the United States
b. One out of every 12 Americans is actively involved in trying to start a new business.
c. A study found that 78 percent of influential Americans believe that entrepreneurship will be the defining trend of this century.
d. All of the above
Q45. About 85 percent of the companies that are available for sale are:
a. listed with business brokers.
b. advertised in the "Businesses for Sale" section of major newspapers.
c. found in the Internet.
d. tucked away in the "hidden market" of companies that are for sale but are not advertised as such.
Q46. The Uniform Franchise Offering Circular (UFOC):
a. is not required from franchisers with fewer than 10 franchised outlets.
b. must be checked, verified, and approved by the Federal Trade Commission before franchisers can use it.
c. is designed to provide franchisees with important information about a franchise and must be given to franchisees before they sign a franchise contract or pay any money to the franchiser.
d. All of the above.
Q47. A corporation doing business in a state other than the one in which it is incorporated is called a __________ corporation
a. domestic
b. alien
c. foreign
d. closely-held
Q48. The disclosure document that is designed to help prospective franchisees evaluate franchise opportunities and to protect themselves from unscrupulous franchisers is the:
a. Trade Regulation Rule
b. Federal Trade Commission Report
c. Franchisee Protection Prospectus
d. Uniform Franchise Offering Circular
Q49. Which of the following statements concerning franchise operations is true?
a. Franchisers may provide their franchisees with a business system, but they encourage franchisees to deviate significantly from the system to stimulate innovation.
b. Most franchisers provide extensive financial assistance, usually in the form of direct loans, to their franchisees.
c. One of the greatest sources of friction between franchisers and franchisees concerns the location of new franchises; existing franchisees are afraid that placing new outlets so close to their existing ones causes their sales and profits to be diluted.
d. The primary reason franchising has proved so popular is that franchisees are guaranteed that they will succeed.
e. All of the above.
Q50. Which form of ownership has the greatest ability to attract capital?
a. sole proprietorship
b. partnership
c. corporation
Q1. "What drives my customers' behavior? Why do they buy these goods and services? What values are most important to them?" Questions such as these address which type of marketing information?
a. geographic
b. demographic
c. psychographic
d. monolithic
Q2. The price range for a product or service is:
a. the final price a business owner establishes for a product or service, taking into account the company's desired image in the market.
b. a function of a single factor: the prices competitors set for similar goods and services.
c. the area between the price ceiling defined by customers in the market and the price floor defined by a company's cost structure.
d. the area between the price floor set by a company's cost structure and the price ceiling determined by the prices competitors set for similar goods and services.
Q3. To calculate the breakeven point, a business owner should use which of the following formulas?
a. total variable expenses / contribution margin as a percentage of sales
b. total fixed expenses / contribution margin as a percentage of sales
c. (total revenue - total expenses) / total revenue
d. contribution margin as a percentage of sales / total expenses
Q4. Proving that a profitable market exists involves two steps:
a. showing customers exist and documenting their buying power.
b. showing customers are interested and documenting market claims.
c. showing customer demographics and documenting the buying cycle.
d. showing customer locations and documenting their average income.
Q5. __________ ratios tell whether a small business will be able to meet its maturing obligations as they come due.
a. liquidity
b. leverage
c. operating
d. profitability
Q6. The worst mistake entrepreneurs make when defining the marketing strategy for their companies is:
a. being overly specific when defining the target customers at whom they are aiming their products and services.
b. budgeting an excessive amount of money for marketing and advertising.
c. overwhelming potential lenders and investors with an excessive amount of detail about their marketing targets and strategies.
d. failing to define their target market clearly and trying to make their businesses "everything to everybody."
Q7. In __________ advertising, a manufacturing company shares the cost of advertising with a small retailer if the retailer features its products in those ads.
a. cause
b. shared
c. cooperative
d. conjunctive
Q8. In the __________ stage of the product life cycle, sales volume continues to rise, but profit margins peak and then begin to decline as competitors enter the market.
a. growth and acceptance
b. maturity
c. saturation
d. decline
Q9. The "big three" of cash management are:
a. sales, accounts receivable, and accounts payable
b. sales, inventory, and net income
c. inventory, accounts payable, and accounts receivable
d. accounts payable, accounts receivable, and sales
Q10. An effective market analysis in a business plan should include:
a. a clear definition of the company's target market.
b. the types of advertising and promotional campaigns that will reach the intended audience most effectively and efficiently.
c. market size and trends.
d. all of the above.
Q11. Ohmae Tanuchi, owner of Times Past, a small company selling clocks, knows that one of her best-selling clocks cost her $93.75 each. If Ohmae wants a markup (of retail price) on this clock to be 55 percent, what final selling price should she establish?
a. $135.94
b. $145.31
c. $170.45
d. $208.33
Q12. The __________ ratio expresses the relationship between the capital contributions to a company from its creditors and those of its owners; it measures what a business "owes" to what it "owns."
a. current
b. debt
c. debt to net worth
d. times interest earned
Q13. __________ is any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor.
a. publicity
b. personal selling
c. advertising
d. promotion
Q14. A business plan:
a. should be at least 50 pages long to prove to potential lenders and investors that an entrepreneur has researched the business opportunity thoroughly.
b. should follow a standard format so that potential lenders and investors know where to find what they are looking for.
c. does not guarantee success, but it does improve the chance of succeeding.
d. all of the above
Q15. Approximately __________ percent of the average company's sales come from existing customers.
a. 20
b. 40
c. 50
d. 70
Q16. Stop 'N Shop, a small convenience store, is running a special sale on candy bars from a particular maker. The candy bars normally sell for 50 cents each, but Stop 'N Shop is pricing them at "4 for $1.75" for a limited time. Stop 'N Shop is using which pricing technique?
a. zone pricing
b. price lining
c. multiple pricing
d. cash discount
Q17. Paulette Sanchez has just received an invoice for merchandise she purchased from one of her company's suppliers. The invoice is for $1,892.78 and includes "2/10, net 30" terms, which mean that:
a. Paulette must pay the invoice within 30 days; otherwise, she will incur a 2 percent penalty for every 10 days the bill is past due.
b. Paulette must pay 2 percent of the invoice ($37.86) within 10 days and must pay the remaining balance within 30 days.
c. Paulette can pay just $1,854.92 if she pays the invoice within 10 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.
d. Paulette can pay just $1,703.50 if she pays the invoice within 2 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.
Q18. The __________ takes a "snapshot" of a business, giving the owner an estimate of the company's worth as of a given date.
a. income statement
b. balance sheet
c. statement of cash flows
d. debt ratio
Q19. Approximately __________ percent of industrial and wholesale sales are on credit
a. 40
b. 55
c. 70
d. 90
Q20. A company's contribution margin is:
a. the portion of total revenue that remains after covering fixed costs to contribute toward meeting variable expenses and earning a profit.
b. the difference between sales revenue and total fixed expenses.
c. the portion of total revenue that remains after covering variable costs to contribute toward meeting fixed expenses and earning a profit.
d. the difference between sales revenue and variable expenses.
Q21. Customers use credit cards to pay for __________ out of every $100 spent on consumable goods and services.
a. $12
b. $28
c. $41
d. $52
Q22. When a customer's account becomes past due, a business owner should:
a. not bother the customer over the past due bill, even if it is a sizeable one, for fear of alienating the customer and losing him or her forever.
b. take immediate action in the form of either a letter or a telephone call that serves as a polite reminder that the bill is due and asks for payment.
c. immediately turn the account over to a collection agency.
d. call the "deadbeat" customer and threaten to ruin his or her credit by telling the customer's other suppliers about the past due account.
Q23. To get external financing, every business plan must pass three tests. The __________ test revolves around proving that a market for the company's products or services actually does exist.
a. reality
b. competitive
c. value
d. financial
Q24. Cash is the most important but least productive asset the small business has.
a. true
b. false
Q25. The first and most important function a business plan serves is:
a. guiding a startup company's operations by charting its future course and devising a strategy for following it.
b. attracting money from lenders and investors.
c. convincing suppliers to sell to a startup company on credit.
d. to attract customers and clients who otherwise would not consider doing business with a startup company.
Q26. A(n) __________ is an arrangement with a company's bank in which the bank maintains a post office box near the company's key customers; several times each day, the bank collects payments those customers send to the post office box and deposit them immediately into an interest-bearing account for the company.
a. sweep account
b. zero balance account
c. lockbox
d. automatic stay
Q27. Vern Schlichter, owner of The Import Shop, a garage specializing in foreign auto repairs wants to make sure that the hourly price he charges for his company's repair service will cover his costs and generate the desired profit. Using his most recent income statement, Vern estimates that he and his employees spent 8,465 hours repairing cars at a total cost (excluding parts) of $281,461. If Vern's target net profit margin is 20 percent, what price per hour should he set for labor (excluding parts)?
a. $26.60
b. $39.89
c. $41.56
d. $166.25
Q28. What are the characteristics of my customers . . . their ages, education levels, income, gender, marital status, and other features?" Questions such as these address which type of marketing information?
a. geographic
b. demographic
c. psychographic
d. monolithic
Q29. One study found that __________ percent of small business owners analyzed their companies' financial statements as part of the managerial planning and decision making process.
a. 11
b. 21
c. 36
d. 48
Q30. The __________ is the first section in a business plan, but it is the last section to be written.
a. company history
b. list of goals and objectives
c. marketing strategy
d. executive summary
Q31. __________ define(s) where an entrepreneurs wants to take her business; __________ address(es) the question of how to get there.
a. Strategy; goals and objectives
b. Vision; goals and objectives
c. Goals and objectives; strategy
d. Strategy; vision
Q32. Annette Tosca is planning to launch a retail gift store and has been busy gathering financial information for her business plan. If Annette knows that the net profit margin for the typical gift store is 6.3 percent, what sales level must she achieve to reach her target net income of $28,000?
a. $29,882
b. $176,400
c. $204,400
d. $444,444
Q33. A typical manufacturing company pays __________ percent of the value of its inventory to cover the cost of borrowed money, warehouse space, materials handling, staff, lift-truck expenses, and fixed costs.
a. 10 to 15
b. 25 to 30
c. 35 to 40
d. 50 to 55
Q34. Which one of the "five C's of credit" is a synonym for cash flow?
a. capacity
b. collateral
c. conditions
d. capital
Q35. Many creditors look for a times interest earned ratio of at least _____ before pronouncing a company a good credit risk.
a. 1:1
b. 2.5:1
c. 4:1
d. 10:1
Q36. Studies show that businesses typically waste __________ percent of the time it takes to produce products and services without ever realizing it.
a. 10 to 20
b. 35 to 50
c. 65 to 80
d. 85 to 99
Q37. To get external financing, every business plan must pass three tests. The __________ test involves proving to lenders and investors that the business offers a high probability of repayment or an attractive rate of return.
a. reality
b. competitive
c. value
d. market
Q38. The __________ ratio measures the owners' rate of return on their investment in the business.
a. current
b. quick
c. net profit on sales
d. net profit to equity
Q39. A __________ pricing strategy for a new product or service maintains a relatively low profit margin so that a company can gain its quick acceptance into the market and quickly achieve a high volume of sales.
a. penetration
b. skimming
c. sliding down the demand curve
d. cyclical
Q40. Blending show business with the retail business, Golf Galaxy offers its customers a variety of fun features, including an in-store putting green, a driving range, and a golf simulator that lets golfers "play" any one of 32 world-famous courses, no matter what the weather outside is. Golf Galaxy is using which principle of guerrilla marketing?
a. demographic analysis
b. entertailing
c. data mining
d. time compression management
Q41. When describing the company's products or services in a business plan, entrepreneurs should focus on the product's or service's:
a. features
b. price
c. benefits
d. physical characteristics
Q42. The __________ ratio measures the percentage of a company's sales that remains as profit after paying all of its expenses.
a. current
b. quick
c. net profit on sales
d. net profit to equity
Q43. The Downtown Hobby Shop expects net daily sales of $1200, with the cost of goods sold at $750 and total expenses of $250. Variable expenses, including cost of goods sold, is estimated at $800, with fixed expenses of $200. What is the contribution margin?
a. 33%
b. 25%
c. 27%
d. 75%
Q44. A survey by the Yellow Pages Publishers Association found that _____ percent of businesses had received bogus bills for Yellow Pages advertising.
a. 20
b. 33
c. 50
d. 80
Q45. High prices and low perceived quality create a(n) ______ image.
a. contradictory
b. upscale
c. bargain
d. value
Q46. A small music store sets the prices of most of its CDs at three levels: $12.99, $14.99, and $16.99, even using brightly-colored labels to indicate each price level. This music store is using:
a. leader pricing
b. price lining
c. uniform delivered pricing
d. bundling
Q47. The two-thirds rule says that:
a. only two-thirds of the entrepreneurs with a viable business venture will find financial backing.
b. of those entrepreneurs who get financing will get just two-thirds of what they initially requested.
c. getting the financing to start a business will take entrepreneurs two-thirds longer than they expected.
d. all of the above
Q48. Small businesses should maintain a current ratio of at least:
a. 1:1
b. 2:1
c. 4:1
d. 10:1
Q49. The executive summary section of a business plan:
a. presents a synopsis of the business plan.
b. is a written version of the entrepreneur?s "elevator pitch."
c. must capture the reader's attention so that he or she will read the rest of the plan.
d. All of the above.
Q50. Quick assets include assets that can be converted into cash rapidly. The simplest formula for determining quick assets is:
a. current assets - current liabilities
b. current assets - inventory
c. total assets - total liabilities
d. total assets - fixed assets
Q1. This financing program spans 11 government agencies and is designed to encourage small companies to expand their research and development efforts in science and engineering and to develop new commercial products and services from those efforts.
a. Small Business Innovation Research Program
b. Small Business Technology Transfer Program
c. Certified Development Company Program
d. Urban Development Action Grant Program
Q2. A(n) __________ is a combination of hardware and software operating between the Internet and a company?s computer network that allows employees to have access to the Internet but keeps unauthorized users from entering the company?s network and the programs and the data it contains.
a. virus detection program
b. firewall
c. intrusion detection program
d. hacker block
Q3. __________ is a work arrangement in which employees who spend most of their time away from the office use the same office space at different times, which can greatly reduce the need for permanent offices that would sit idle much of the time.
a. Telecommuting
b. Hoteling
c. Job sharing
d. Flexplace
Q4. A business owner seeking money to purchase a building and the equipment needed to launch a welding shop would need which kind of capital?
a. Fixed
b. working
c. growth
d. disposable
Q5. A company must file a __________ describing both the company and the stock offering with the Securities and Exchange Commission (SEC) before making an initial public offering.
a. lockup agreement
b. letter of intent
c. statement of corporate standing
d. registration statement
Q6. Which of the following is an effort by the Small Business Administration (SBA) to speed up processing times and streamline the process for its loan applications?
a. Preferred Lender Program
b. Low Doc Loan Program
c. SBAExpress Program
d. All of the above
Q7. The most important ingredient in the recipe for a successful joint venture is:
a. negotiating an iron-clad contract that binds both parties.
b. choosing the right partner.
c. seeing the joint venture for what it really is: a chance for both parties to make large profits by joining forces.
d. to build a monopoly in the target country.
Q8. The best websites use a variety of fancy typefaces and varying font sizes.
a. true
b. false
Q9. A movie theater with 8 screens recently opened in Knoxville, Tennessee. A short time later, two restaurants, a coffee shop, and a frozen yogurt store opened within walking distance of the theater. These businesses are using the location principle of:
a. retail consolidation
b. retail complexity
c. retail compatibility
d. retail consortium
Q10. Domain names can be registered with the U.S. Patent and Trademark Office.
a. true
b. false
Q11. The first place entrepreneurs in search of startup funds should look is:
a. their own pockets.
b. relatives and friends.
c. venture capitalist firms.
d. angels.
Q12. A __________ is an exemption from the Security and Exchange Commission's full-blown registration process that is designed to make it easier and less expensive for small companies to make initial public offerings. The ceiling on this type of issue is $1 million, and the price of the shares must be at least $5.
a. Regulation S-B
b. Regulation A
c. Small Company Offering Registration (SCOR)
d. Direct Public Offering
Q13. Which of the following statements concerning the interview process is false?
a. To avoid the threat of lawsuits, business owners should ask only questions calling for "yes/no" answers.
b. Creating hypothetical situations candidates would be likely to encounter on the job and asking how they would handle them gives insight into their work habits and attitudes.
c. Develop a series of core questions and ask them of every candidate.
d. Business owners should ask candidates about a recent success and a recent failure and then look for those who describe them both with equal enthusiasm.
Q14. When searching for a location, a company that develops computer software for the entertainment industry would be interested in studying which of the following factors about the labor supply in a particular area?
a. the number of workers available
b. the level of education, training, and experience of the workforce
c. the prevailing wage rate in the area
d. All of the above
Q15. The most popular loan program sponsored by the Small Business Administration (SBA) is:
a. Low Doc Program
b. Export Working Capital Program
c. 7(a) Loan Guaranty Program
d. All of the above
Q16. Online newsletters should be kept to about:
a. 600 words
b. 2000 words
c. 6 pages
d. 20 pages
Q17. To finance her inventory of cars, auto dealer Sarah Ann Lopez would most likely rely on which type of loan?
a. commercial bank loan
b. line of credit
c. floor plan
d. installment loan
Q18. A(n) __________ is a tax or a duty that a government imposes on goods and services shipped into that country.
a. tariff
b. quota
c. embargo
d. lateral agreement
Q19. The primary foreign market for U.S. franchisers is:
a. Canada.
b. Japan
c. Australia
d. England
Q20. Empowerment works best when a manager:
a. trusts workers to do their jobs well.
b. trains workers continuously to upgrade their skills.
c. listens when workers have ideas, solutions, or suggestions.
d. All of the above.
Q21. Which of the following statements concerning financing a small business is true?
a. Choosing the right sources of capital for a business can be just as important as choosing the right form of ownership or the right location because of the long-term impact it has on a company.
b. When it comes to attracting capital for launching or expanding a business, creativity counts; entrepreneurs must use as much ingenuity in financing their businesses as they do in generating their product or service ideas.
c. Before accepting startup money, entrepreneurs must take into account the "chemistry" between themselves, their companies, and their funding sources, making sure that the match is a good one.
d. All of the above.
Q22. A foreign sales company is a shell company created in an approved U.S. territory or a foreign country that allows a business to reduce its U.S. income tax liability by _____ on earnings from foreign trade.
a. 5% to 15%
b. 15% to 30%
c. 30% to 50%
d. More than 30%
Q23. Which of the following statements about an initial public offering (IPO) is true?
a. Although an IPO can generate large amounts of capital for a company, it can be an expensive, time-consuming process filled with lots of regulatory "red tape."
b. An IPO is an excellent source of funds for an entrepreneur searching for the capital needed to launch a new business.
c. For the typical small business, the cost of making an initial public offering is just 2 percent of the capital raised.
d. All of the above
Q24. The ideal domain name for a company's Web site should be:
a. short.
b. indicative of the company's business or business name.
c. easy to spell.
d. all of the above.
Q25. Small businesses on the Web are better able to compete if they focus on a niche market.
a. true
b. false
Q26. Which area of a retail store would be least valuable?
a. the main floor in a multistory building
b. the intersection of two primary aisles
c. the right rear corner of a store
d. the right front corner of a store
Q27. When evaluating a potential business investment, venture capital companies look for:
a. a competent management team.
b. a company with a competitive edge in the marketplace.
c. a growth industry.
d. All of the above
Q28. "Cool" companies:
a. demonstrate a respect for work and life balance.
b. value diversity in the work force.
c. create and support a learning environment among employees.
d. All of the above.
Q29. Small companies can attract and retain high-quality workers by:
a. looking inside the company first with a promotion-from-within policy.
b. making their employment advertisements stand out.
c. forging relationships with schools, colleges, and other sources of workers.
d. all of the above.
Q30. When a speaker sends conflicting verbal and nonverbal messages, listeners are most likely to believe
a. the verbal message
b. the nonverbal message
c. neither one
d. none of the above.
Q31. Studies show that __________ percent of first-generation family businesses fail to survive into the second generation, and of those that do survive, __________ make it to the third generation.
a. 20; 81
b. 40; 75
c. 70; 12
d. 90; 24
Q32. Which of the following questions is illegal in an interview?
a. Do you drink alcohol?
b. Why should we hire you?
c. Have you ever been arrested?
d. Is there any limit to your ability to work overtime or to travel?
Q33. Which of the following countries represents the top market for U.S. small business exporters?
a. Japan
b. Mexico
c. Canada
d. Germany
Q34. __________ capital represents a company's temporary funds and the need for it is created by the uneven flow of cash into and out of the business due to normal seasonal fluctuations.
a. Fixed
b. Working
c. Growth
d. Disposable
Q35. __________ are domestic wholesalers who do business in foreign markets, buying goods from many domestic manufacturers (often competitors) and then marketing them in foreign countries.
a. Export trading companies (ETCs)
b. Export management companies (EMCs)
c. Export merchants
d. Resident buying offices
Q36. Retail customers on the Web demand:
a. good product selection at competitive prices
b. well-designed product presentations
c. easy ordering with fast and reliable shipping and handling
d. All of the above.
Q37. For which of the following businesses would clustering be an effective location strategy?
a. a car dealership
b. a flower shop
c. a sporting goods store
d. a dry cleaner
Q38. __________ items are best suited for selling on the World Wide Web.
a. high-volume
b. low-margin
c. commodity
d. all of the above.
Q39. Which of the following statements about shopping malls is true?
a. The average length of shoppers' mall visits has climbed steadily over the past decade.
b. To keep shoppers coming back, malls are adding a mix of entertainment attractions and a fresh mix of specialty shops to their retail mix.
c. Nearly half of the malls in the United States are less than five years old.
d. All of the above.
Q40. Research by BizRate.com found that __________ percent of Web shoppers who fill their online shopping carts become frustrated and leave the site before checking out.
a. 15
b. 25
c. 55
d. 75
Q41. Experts draw an analogy between today's successful small business leader and:
a. the conductor of a symphony orchestra.
b. the leader of a jazz band.
c. a member of a rock and roll band.
d. a chamber music concert group.
Q42. Which of the following statements concerning global trade is true?
a. Today, the global marketplace is as much the territory of small, upstart companies as it is that of giant multinational corporations.
b. Ninety-six percent of the world's population and 67 percent of the world's purchasing power lie outside the borders of the United States.
c. Small companies that export grow more rapidly than those that operate domestically only.
d. All of the above.
Q43. Which of the following statements concerning asset-based loans is false?
a. The most common types of asset-based loans are discounting accounts receivable and inventory financing.
b. Because of its efficiency and low cost, asset-based loans are an ideal source of long-term financing.
c. A small company that qualifies for a $1 million line of credit would be able to borrow as much as $3 million using asset-based loans.
d. All of the above
Q44. Web-based businesses invest ____ percent of revenue in marketing, compared to _____ percent for off-line businesses.
a. 65, 4
b. 55, 8
c. 45, 16
d. 35, 32
Q45. Which of the following statements concerning e-commerce is true?
a. Once an entrepreneur launches a Web site, customers typically flock to it even without advertising and promoting the site.
b. More than 90 percent of all commercial Web sites are profitable.
c. Web retailers invest more of their revenues in marketing and advertising than traditional, "off-line" retailers do.
d. Because of the security precautions modern technology provides, customer privacy is not an important issue on the Web.
Q46. Companies that make the best candidates for direct public offerings (DPOs):
a. have the ability to meet the same requirements as companies making stock offerings using more traditional methods.
b. have high name recognition and a loyal customer base.
c. usually are simple, one-product companies.
d. All of the above.
Q47. A __________ layout arranges displays in a rectangular fashion so that aisles are parallel; it is a formal layout that controls the traffic flow through the store and is often used in supermarkets and drugstores.
a. Grid
b. free-form
c. boutique
d. spiral
Q48. __________ are privately-owned financial institutions that are licensed and regulated by the Small Business Administration; they use a combination of private and federally-guaranteed debt to provide long-term capital to small businesses.
a. SBICs
b. SBDCs
c. LDCs
d. UDAGs
Q49. Created in 1947, this became the first global tariff agreement, and, today, it includes 124 countries that account for nearly 90 percent of world trade.
a. NAFTA
b. WTO
c. GATT
d. NATO
Q50. Genuine leaders:
a. are self-appointed.
b. know that their success is determined by their employees' success.
c. treat their employees severely to earn their respect.
d. know that what they say to employees is more important than what they actually do.
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