Chapter 5 Quiz_BASD 1113

Tom Lennon is in the business of providing entertainment for many audiences. Tom is self-employed and therefore, is considered to be a(n)

entrepreneur Explanation: Entrepreneurs are individuals that take the risk of starting their own business for the benefit of others in the hopes of making a profit.

Randy owns a personal computer and truck, which he plans to use for the business. In his business plan, Randy should classify these assets as a form of

equity financing Explanation: Using personal assets instead of purchasing new assets for the business is a form of equity financing.

E-commerce is not a big part of Auntie Anne's business because its consumers are?

impulse purchasers explanation: The internet is helping many small businesses gain a competitive advantage without a lot of additional costs

What is one disadvantage of sole proprietorship as a form of business ownership?

unlimited liability explanation: The sole proprietor has unlimited liability in meeting the debts of the business. In other words, if the business cannot pay its creditors, the owner may be forced to use personal holdings such as a car or a home to pay off the debts.

Darren is preparing to graduate college and has dreams of opening a pizza chain focused on healthy ingredients. Darren has no money, few possessions, little credit, and does not have family members in a position to loan him money. Darren should try to fund his business through

venture capitalists explanation: From this list, Darren's only option is to seek investment from an outside source, or venture capitalist. The other options rely on the personal wealth of Darren or family members, and Darren is described as someone who does not have an abundance of cash, possessions, or connections.

Which of the following does NOT represent a reason that the pizza business is a new opportunity for entrepreneurs?

As pizza continues to rise in popularity, entrepreneurs can open more stores. explanation: Explanation The case stated that pizza is decreasing in popularity, and indicates that entrepreneurs will need to do different things in order to continue to attract customers.

Which of the following is not an organization from which Randy should consider seeking advice and resources?

Better Business Bureau The Small Business Administration (SBA) is an independent agency of the federal government that offers managerial and financial assistance to small businesses. SCORE, ACE, and SBIs are all resources specifically for starting a small business.

Why would a person choose to buy a franchise?

Brand recognition explanation: Franchisees often report the following advantages: management training and support; brand-name appeal; standardized quality of goods and services; national advertising programs; financial assistance; proven products and business formats; centralized buying power; site selection and territorial protection; greater chance for success.

Darren decides to start his pizza business by purchasing a franchise from a larger chain. Which of the following is NOT an advantage Darren will likely experience?

Darren will have the freedom to create his own pizza style. explanation: As a franchise, Darren will not likely have the freedom to create his own pizza styles. The textbook describes a franchise as typically having its own standardized goods and services.

The case describes a shift in customer preference towards healthier and local options. This represents which of the following changing trends?

Demographic explanation: Of the items on the list, the trend of changing demographics offers the best explanation for a desire for healthier and local options. Both Boomers (due to wealth) and millenials (due to values) prefer local and healthy dining options.

Papa John's strategy to pursue breakfast pizza is an example of?

Intrapreneurship Explanation: Intrapreneurship is the creation of new ideas and initiatives within a large business. Especially as the initiative is described as starting with a few locations, this is an example of intrapreneurship.

How does JotBot increase productivity building?

It allows people who are less technologically savvy to create on-line spaces in which they can read, edit, and design with assistance. Explanation: JotBot allows individuals who are not tech savvy to create on-line spaces. The alternative answers listed are reasons that the cost of starting a technology firm is decreasing.

Why has Sonic experienced great business success over the past 60 years?

It chose the right form of business ownership over the years. Explanation: In order to be successful prospective business owners must identify the right type of business formation for their business/product/service. Sonic evolved from Troy Smith's sole proprietorship, to him taking on a partner, to awarding franchises, to incorporating, and eventually becoming a successful public company. The company has chosen the right form of ownership in every step of its evolution.

Which of the following is most likely a reason that Krause describes entrepreneurship as something he enjoys?

Kraus likes the freedom to choose with whom he works.

Kraus refers to Silicon Valley. Which of the following cities is located closest to Silicon Valley?

Manio Park, CA

Entrepreneurs take risks. What risk did Tom take to become a successful entrepreneur?

Possible failure

Which of the following is a likely consequence of Quimby's decision to sell the majority of shares of Burt's Bees to AEA Investors?

Quimby gained access to additional sources of capital to fund future growth of Burt's Bees.

What form of business ownership did Troy Smith select when he first made the decision to be an entrepreneur?

Sole proprietorship Explanation: A sole proprietorship is the simplest business form under which one can operate a business; it simply refers to a business that is owned, and usually managed, by one person. Troy Smith initially started his root beer stand "Top Hat" as a sole proprietorship.

The failure rate of franchises is ___ compared to other kinds of businesses

lower explanation: Franchisees often report the following advantages: management training and support; brand-name appeal; standardized quality of goods and services; national advertising programs; financial assistance; proven products and business formats; centralized buying power; site selection and territorial protection; greater chance for success.

Much like Tom, entrepreneurs may experience a high degree of flexibility and opportunity. However, entrepreneurs are challenged by the demands of the business environment. Which of the following is NOT one of the five elements of the business environment that can either help or hinder the development of a business?

the financial environment Explanation: There are five elements in the overall business environment: the economic and legal environment, the technological environment, the competitive environment, the social environment, and the global business environment.