ELE 4030 Mid Term

All of these are items that establish legitimacy EXCEPT: A) A land phone line B) A bank line of credit C) Professional business cards D) high-quality web page

A) A land phone line

An example of an idea for a new start-up from a hobby is_______ A) A sports card collector who bought and sold cards for a year to build a personal collection, deciding to become a sports card dealer B) A baker who tosses ingredients together to see what they taste like C) A purposeful exploration to find a new ida D) A computer salesperson seeing the possibility of opening a new electronic store in a different part of the city

A) A sports card collector who bought and sold cards for a year to build a personal collection, deciding to become a sports card dealer

A competitive map is used for the following reasons: A) All of these B) Knowledge about each competitor allows the entrepreneur to better position the new business. C) Insights will be developed regarding pricing. D) It's less expensive.

A) All of these

The legal means to protect intellectual property is A) all of these B) Trademark C) Copyright D) Patent

A) All of these

You should not use a cookie-cutter business plan program because: A) All of these B) A good plan is best developed by the individual contemplating the business, not a paid consultant C) Potential investors are often family members, which makes it critical that the entrepreneur seek to ensure the chances of success by doing thorough planning and thinking D) Each business plan should have its own voice, feel, and presentation

A) All of these

_____ are high-net-worth individuals who invest in business not as a business, but individually A) Business angels B) Venture capitalists C) Equity investors D) Supplier capitalists

A) Business angels

Effective Brainstorming has rules that should be followed in order to be most effective. Which of the following is NOT one of the rules of brainstorming? A) Carefully examine each possible option before considering another B) Avoid evaluating ideas that are contributed C) Generate ideas related to a specific topic or problem D) Include friends and family members in the group

A) Carefully examine each possible option before considering another

Which of the following statements about having a measurement focus is correct? A) Concentrate the analysis efforts on areas that are extraordinary B) Focus on orthodox factors C) Focus on unorthodox factors D) Concentrate the analysis efforts on areas that are ordinary

A) Concentrate the analysis efforts on the areas that are extraordinary

A ________ analysis is a chart tracking various performance measures from one time period to the next A) Deviation B) Leverage C) Financial D) Sensitivity

A) Deviation

James and Mary own a business. When they pay themselves an advance in salary or a bonus, it is called a(n) _________ A) Draw B) Expected outlay C) Cash out D) Payout

A) Draw

Mary has established a reasonable geographic radius for her flower shop. As a result, she should be able to: A) examine potential customers B) define normal or ordinary competitive factors C) predict her price point D) predict sale price

A) Examine potential customers

According to the book, new product ideas for small business start-ups originate from all of the following EXCEPT: A) Existing records of a business B) Personal interests and hobbies C) Educational background D) Prior work experience

A) Existing records of a business

_________ is the difference between when the money goes out and when it comes in A) Float B) Spending gap C) Difference gap D) Accounts payable

A) Float

All of these are harvest plan strategies EXCEPT: A) Franchising B) Selling it to a group of investors C) Participating in an IPO (public offering of stock) D) Selling the business to another firm

A) Franchising

Which of the following terms describes a plan to exit a small business? A) Harvest Plan B) Entrepreneurial Plan C) General Departure Plan D) Business Plan

A) Harvest Plan

A(n) _________ defines companies within a specified geographic radius that will be in direct competition for the same customers. A) Industry B) Tracking System C) Competitor's Files D) US Government Blue Book

A) Industry

The timing of opening up a new business is impacted by all the following EXCEPT: A) line of credit B) general environment C) competitor moves D) lifestyle issues

A) Line of credit

_________ is a series of ratios along four areas of company performance (liquidity, activity, leverage, and profitability) that provides a picture of the health of the company A) Ratio analysis B) Profitability analysis C) Sensitivity analysis D) Deviation analysis

A) Ratio analysis

All of the following are ways to identify gaps or business opportunities EXCEPT: A) Read government documents B) Examine Trends C) Discuss opportunities with family members D) Interview successful entrepreneurs

A) Read government documents

The advantage of factoring for a small business is: A) Receiving money from AR immediately B) Operating the company on minimal outlay C) Segmenting all the company's AR D) Not receiving the full amount of the bill due

A) Receiving money from AR immediately

What is the difference between venture capital companies and business angels? A) Venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses. B) Venture capital companies usually invest in small businesses, whereas business angels usually invest in big businesses. C) Venture capital companies make only small investments, whereas business angels make both small and big investments. D) Venture capital companies have a philanthropic attitude, whereas business angels have a profit-minded attitude.

A) Venture capital companies usually invest in large businesses, whereas business angels usually invest in small businesses

Which of the following correctly depicts the typical cycle of the economy? A) boom, slowdown, recession, growth, and boom B) boom, growth, slowdown, recession, and boom C) boom, slowdown, recession, and growth D) growth, boom, slowdown, recession, and boom

A) boom, slowdown, recession, growth, and boom

According to the book, which of the following firms needs to pay special attention to OSHA guidelines? A) manufacturing firms B) family business forms C) IT firms D) none of these

A) manufacturing firms

An owner should establish the mission statement and strategies _________. A) prior to its inception B) at the 90-day review C) at the 30-day review D) at the first day of business

A) prior to its inception

According to W. Edwards Deming, rather than focusing on obtaining the lowest prices for supplies, firms should focus on: A) the quality of inputs B) none of these C) the quantity of inputs D) both of these

A) the quality of inputs

_________ stores are major retail stores in a mall. They serve as the foundation for the rest of the establishments.

Anchor

When completing a conceptual map, an entrepreneur needs to visit _________ of the potential competitors. A) 50% B) 100% C) 75% D) 60%

B) 100%

Potential generation of new business ideas occurs: A) Automatically B) Because of the process of identifying skills and opportunities in the market C) When copying existing business D) When dismissing a promising idea

B) Because of the process of identifying skills and opportunities in the market

_________ is working with and learning from a company outside of your industry that has a skill that is critical to the firm's operation. A) Fragmenting B) Benchmarking C) Tag lines D) Substitute-based

B) Benchmarking

What is the major difference between board of directors and board of advisors? A) Board of directors always direct large companies, whereas board of advisors are usually found in small firms B) Board of directors have fiduciary responsibility, whereas board of advisors advise the firm C) There is no difference between the two D) Boards of directors are individuals from outside the firm, whereas board of advisors are individuals from inside the firm

B) Board of directors have fiduciary responsibility, whereas board of advisors advise the firm

The first section of an external analysis is to: A) research potential substitutes B) determine in which industry the new business will compete C) identify potential customers D) develop a competitive edge

B) Determine in which industry the new business will compete

_____ is the analysis of the differences between the predicted and the actual performance of a business. A) Gap analysis B) Deviation analysis C) Profit analysis D) Margin analysis

B) Deviation analysis

A _________ exists when a firm finds an unique position in the market through product or service. A) sustainable competitive advantage approach B) differentiation approach C) low-cost approach D) first mover approach

B) Differentiation approach

Which term is used to describe Walmart's ability to purchase more advertising space at a lower cost per ad? A) Volume excess B) Economies of scale C) Buying bonus D) Advertising bonus

B) Economies of scale

Sally copies James's hamburger restaurant by starting her own hamburger restaurant on the other side of town. This is a form of _________. A) nonleader B) follower C) market mover D) second mover

B) Follower

Which term is used to describe the process of systematically examining the difference between what is expected and what occurs? A) Economic Analysis B) Gap Analysis C) Gap Slack Analysis D) Difference Analysis

B) Gap Analysis

All of the following are benefits of a Subchapter S Corporation EXCEPT: A) Limited Liability B) Limited number of shareholders C) Legitimacy in the market D) Easy formation

B) Limited number of shareholders

_______ is (are) a brief statement that summarizes how and where the firm will compete in the industry. A) Core values B) Mission statement C) Strategies D) Goal statements

B) Mission statement

When should a new business owner ensure there are sufficient financial resources to operate a business? A) After 6 month review B) Prior to the start C) First payroll D) Opening Day

B) Prior to the start

A _________ describes estimates by a small business owner of what the balance sheets and income statements will look like in the future. A) Cash Flow B) Pro Forma C) Balance Sheet D) Current Asset

B) Pro forma

What are the two measures used to evaluate whether a person or a firm is meeting its goals? A) actionable and nonactionable B) quantitative and qualitative C)tangible and intangible D) orthodox and unorthodox

B) Quantitative and qualitative

_________ aid(s), counsel(s), assist(s), and protect(s) the interests of small business concerns A) Stakeholders B) The U.S. Small Business Administration C) Fortune 500 Companies D) Medium-Sized Businesses

B) The U.S. Small Business Administration

According to the book, the greatest contributor to an owner's success is: A) Spending less time at work B) The owner doing something they enjoy C) No risk involved D) Opportunities not available in large company

B) The owner doing something they enjoy

All of the following represent issues that need to be considered in sales management EXCEPT: A) What image will the sales force represent? B) What would be the cost of the final product that is sold to the customers? C) How much information will be collected on each customer? D) What will the business do with the information collected about customers?

B) What would be the cost of the final product that is sold to the customers?

A small business determines the cost of providing a product or service, and then adds some level of profit determined to be appropriate. This is called: A) add-on cost B) cost-plus pricing method C) pricing ceiling D) price leader

B) cost-plus pricing method

When a small business owner is advertising a job, the company needs to attract the/a _________ pool of applicants to choose from. A) Diverse B) largest C) best qualified D) smallest

B) largest

What percentage of businesses have a production process? A) 25 B) 75 C) 100 D) 50

C) 100

What is the disadvantage of choosing a sole proprietorship? A) The law does not recognize other equity investors B) Liability is solely on the owner C) All of these D) It cannot have more than one founder

C) All of these

Which of the following is the definition of brainstorming? A) rational decision making by a group of individuals B) a simple process of systematically examining the difference between what is expected and what occurs C) An imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea D) A creative process whereby an individual is asked to develop ideas followed by evaluation of each potential idea

C) An imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea

________ let's individuals from outside an industry establish a new business in a way not previously considered A) Constricted rationality B) Logic rationality C) Bounded rationality D) Unconstricted rationality

C) Bounded Rationality

Mark brings his friends together to generate ideas on his new business. Mark will identify what his skills are, and then ask his friends to generate a list of business ideas that he might start. This is called ______ A) Focus Group B) Business Meeting C) Brainstorming D) Gap Analysis

C) Brainstorming

A _____ projects all the expenses incurred by a business over a specified period of time. A) Cash Flow Statement B) Financial Map C) Budget D) Float

C) Budget

A(n) _________ is an analytical tool to organize information about direct competitors on all points of competition A) analysis gap B) completion map C) competitive map D) deficient map

C) Competitive map

When defining potential customers, an owner must: A) use NAICS data B) visit all competitors C) define a specified radius around the business D) analyze normal or ordinary competitive factors

C) Define a specified radius around the business

According to the book, which of the following sequences is correct when you want to start a new business? A)Identify the exact competitors within that industry, determine who your potential customers might be, define the industry that interests you B) Identify the exact competitors within that industry, define the industry that interests you, determine who your potential customers might be C) Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry D) Determine who your potential customers might be, identify the exact competitors within that industry, define the industry that interests you

C) Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry

All of these are criteria in deciding extraordinary resources in a company EXCEPT: A) rare B) durable C) elastic D) valuable

C) Elastic

_________ demonstrates how easy it is for a customer to switch to substitutes. A) Trade-in B) Competitive map C) Elasticity of demand D) Benchmarking

C) Elasticity of demand

A small business has ________ formal procedures as compared to a larger firm to operate the company. A) Proportionate B) Same C) Few D) Many

C) Few

Small businesses deal with ______ regulations than large firms. A) More B) Proportionate C) Fewer D) Same

C) Fewer

Which of the following have well-established methods of operation? A) All of these B) Bankrupt firms C) Franchises D) New start-up firms

C) Franchises

Which of the following is NOT a characteristic of a high-growth venture? A) Have a well-developed organization structure B) Usually hire a relatively large number of employees C) Is designed to reflect the mission of the founder D) Often hire an experienced president to grow the company

C) Is designed to reflect the mission of the founder

Fragmented markets have: A) few potential competitors B) clear dominant competitors C) no clear dominant competitors D) many potential customers

C) No clear dominant competitors

_________ is an area of business that uses standards that are necessary for the business. A) Competitive map B) Unusual or unique competitive factor C) Normal or ordinary competitive factors D) Benchmarking

C) Normal or ordinary competitive factors

According to the book, the greatest source of sustainable advantage is: A) staffing B) location C) personal relationship with customer D) relationship with vendors

C) Personal relationship with customer

When forming a sole proprietorship or a partnership, the business debts are: A) Paid by purchase order B) Paid the first day of the month C) Responsibility of the owners D) Accumulated

C) Responsibility of the owners

The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is: A) Higher tariffs B) Global Trading C) Small and Medium-sized enterprises D) Large Businesses

C) Small and Medium-sized businesses

_________ is the simplest form of a business to establish; the person who owns it and the business itself are treated as the same entity A) Subchapter S Corporation B) Subchapter C C) Sole Proprietorship D) Limited partnership

C) Sole proprietorship

A(n) _________ exists if the service or product performs a similar function. A) Trade-in B) Elasticity of Demand C) Substitute D) Product/Service Flexibility

C) Substitute

The ADA includes all of the following except: A) Preventing dismissal of employees with disabilities B) Providing accessibility to people with physical disabilities C) Testing people with disabilities D) Managing people with disabilities

C) Testing people with disabilities

The evaluation of a firm starts with: A) Deviation analysis B) Ratio analysis C) The mission of the firm D) Short surveys

C) The mission of the firm

Small businesses act as a catalyst for social change because: A) Owners have a better understanding of how to operate their business B) They are often started when the economy is booming C) They have the ability to generate profits in markets ignored by large corporations D) Communities always want to have extra money that can be obtained from having small businesses

C) They have the ability to generate profits in markets ignored by large corporations

Web pages can be used as a: A) distribution channel B) means of promotion C) both of these D) none of these

C) both of these

In production management the two most important elements are: A) financing, organization B) financing, quality C) charting, quality D) charting, organization

C) charting, quality

Liquidity ratios allow the owner the short-term ability to meet the firm's financial obligations. These obligations are _______ and ______ A) inventory; accounts payable B) debt; accounts receivable C) debt; accounts payable D) inventory; accounts receivable

C) debt; accounts payable

In a limited partnership there must be a(n): A) Active investor B) unlimited liability C) general partner D) limited liability

C) general partner

A board of advisors should have both ________ and _______ to assist small business owners A) insight; legal experience B) money; legal experience C) insight; experience D) money; insight

C) insight; experience

An employee cannot sue a small business owner for injury, if the individual accepts _________ A) social security B) unemployment compensation C) workers' compensation D) employment compensation

C) workers' compensation

A _________ is a pay system where there is a salary with commission.

Commission

Mike sells $10,000.00 worth of product; the owner gives him $2,000.00. This is called a(n) _________.

Commission

_______ examines how fast a company turns credit sales into cash: A) Fixed asset turnover B) Total Asset turnover C) Inventory control turnover D) Account receivable turnover

D) Account receivable turnover

Which of the following items is an example of things that can be trademarked? A) name of the firm B) a symbol representing the firm C) names of the firm's products D) All of these

D) All of these

_________ are resources that combine to allow a firm to do things better than its competitors. A) Measurable goals B) Trade-outs C) Analytical tools D) Capabilities

D) Capabilities

An entrepreneur cannot leave his or her business due to the amount of money that was invested. This is called a(n) _________. A) harvest plan B) benchmarking C) exit strategy D) exit barrier

D) Exit barrier

Which of the following laws established a minimum wage for workers? A) Americans with Disabilities Act B) Sherman's Antitrust Act C) Civil Rights Act D) Fair Labor Standards Act

D) Fair Labor Standards Act

Company analysis should proceed from the _____ and move toward the ______. A) negative; positive B) lowest; highest C) specific; general D) general; specific

D) General; specific

_________ are the capabilities and skills of the founder or employees. A) Tangible assets B) Critical assets C) System assets D) Intangible assets

D) Intangible assets

Which of the following is NOT included in the second column of the labeled categories in gap analysis? A) Nonfinancial resources B) Time C) Finances D) Inventory Resources

D) Inventory Resources

When a corporation suffers losses, the founders will: A) Have unlimited liability B) Be responsible for all debts of the company C) Share equity investments D) Lose only their investment in the business

D) Lose only their investment in the business

What are the three means to view business strategy developed by Michael Porter? A) low cost, nonsuitable, and focus B) high cost, nonsuitable, and focus C) high cost, differentiation, and focus D) low cost, differentiation, and focus

D) Low cost, differentiation, and focus

Which of the following figures is also known as EBIT? A) Net profit margin B) Return to equity C) Gross Profit margin D) Operating Profit Margin

D) Operating Profit Margin

Compared to large corporations, entrepreneurial business: A) Are more visible B) Attract more attention in the media C) Have more resources at their disposal D) Play just as important a part in our economy

D) Play just as important a part in our economy

In an interview, an interviewer can ask questions about: A) religion B) disability C) arrest record D) prior conviction

D) Prior convictions

All of these are analytical methods focusing on financial data EXCEPT: A) Ratios B) Deviation Analysis C) Sensitivity Analysis D) Short Survey

D) Short Survey

________ is an organizational form that treats a firm as a unique entity (separate from the owners, and is responsible for its own taxes A) Subchapter X Corporation B) Subchapter A Corporation C) Subchapter B Corporation D) Subchapter C Corporation

D) Subchapter C Corporation

Jane has developed a special Italian sauce for pizza. The sauce cannot be easily copied. This is a(n): A) Orthodox practice B) Tangible asset C) Unorthodox practice D) Sustainable competitive advantage

D) Sustainable competitive advantage

Small companies have flourished for all of the following reasons EXCEPT: A) They operate more effectively B) They respond more quickly C) They employ more skilled people D) They often expand easily in mature industries

D) They often expand easily in mature industries

Deviation analysis is used to compare: A) This year's ratios with previous year's ratios B) This year's ratios with industry standard ratios C) none of these D) This year's ratios with both previous year's ratios and industry standard ratios

D) This year's ratios with both previous year's ratios and industry standard ratios

The assets minus the liabilities of a firm reflected on the balance sheet should total: A) one half of profits B) the number on the pro forma C) current liabilities D) zero

D) Zero

Marketing efforts need to be based on the: A) core values B) aligned marketing strategies C) focused strategies D) mission statement

D) mission statement

A _______ is a claim of intellectual property that is associated with a specific business A) copyright B) patent C) watermark D) trademark

D) trademark

T/F: A small business has less flexibility to respond to change than a large company

False

T/F: Choosing when to start a business is an important operational element. The book strongly suggests that starting business operations as quickly as possible is an effective strategy.

False

T/F: Forecasting sales is not guesswork if the sales manager knows who the customers are.

False

T/F: Large firms can fill market niches that small companies cannot afford to fill

False

T/F: There is one crucial person in a large organization: the chief executive officer.

False

T/F: When an owner calculates the floor cost of a product, he or she excludes marketing costs from the calculation

False

T/F: When developing a critical path chart, assessing responsibilities and estimated time of tasks is considered to be an intellectual activity

False

T/F: The unlimited theory suggests that individuals act to maximize their own individual benefit

False (Would be agency theory)

What does LLP stand for?

Limited liability partnership

T/F: Dan asked Mike to invest in his Sports Shop. Mike gave $10,000 and wants 25 percent of the profits. This is a form of equity investment

True

T/F: Having very little to lose financially by a failure could be a trigger for a new business

True

T/F: Large firms can absorb bad employees easier than small businesses because they have organizational slack.

True

T/F: Pricing a service requires a firm to identify and include the cost of overhead expenses and the cost for the owner's experience.

True

T/F: The first column in a gap analysis is devoted to various business ideas

True

T/F: The fourth column in a gap analysis is used to list the resources required for the successful operation of the business.

True

______ theory states that all individuals judge how we are treated relative to how we see others being treated

equity theory

The critical process for an internet-based business is _______ for a manufacturing business

somewhat simpler than

In a family business, the founder needs to choose a _________ and prepare that person to take over the business.

successor