Entrepreneurship

_________ are resources that combine to allow a firm to do things better than its competitors. a. Capabilities b. Measurable goals c. Trade-outs d. Analytical tools

a. Capabilities

Which of the following laws prohibits discrimination in hiring, dismissal, or promotion on the basis of race, color, gender, religious beliefs, or national origins? a. Civil Rights Act b. Americans with Disabilities Act c. Age Discrimination Act d. Fair Labor Act

a. Civil Rights Act

A common form of debt for a small business can be classified as follows: a. all answers as listed are correct b. supplier credit c. loans d. credit cards

a. all answers as listed are correct

The potential entrepreneur needs to consider _________ when starting a new business. a. all answers as listed are correct b. personality orientation c. prior experience d. risk tolerance

a. all answers as listed are correct

Which of the following information should be obtained in the application/interview process? a. all answers as listed are correct b. Social Security number c. work history d. education and training

a. all answers as listed are correct

What are the critical elements that an entrepreneur must solve for success? a. all of these b. sustainable operating profit margins c. an effective sales generation model d. being properly financed

a. all of these

Which of the following is an example of the list of items that the entrepreneur should include while visiting and making comparisons to his/her potential competitors? a. all of these b. access from road c. size of the facility d. nearby attraction for customers

a. all of these Correct

What does LLP stand for? a. limited loan partnership b. limited liability partnership c. limited land partnership d. none of these

b. limited liability partnership

Which of the following are benefits paid for by the company, such as vacations, vehicles, gifts, and loans? a. exempt benefits b. perquisites c. bonuses plus d. benefits plus

b. perquisites

All of the following are ways to identify gaps or business opportunities EXCEPT: a. interview successful entrepreneurs b. read government documents c. examine trends d. discuss opportunities with family members

b. read government documents

A _________ analysis is the development of a chart (using a current cash flow statement, income statement, or balance sheet) to create pro forma projections of a dramatic increase in sales or a major complication that might be experienced by a business. a. financial b. sensitivity c. deviation d. leverage

b. sensitivity

Competitors will often _________ their knowledge if your business is not a potential direct competitor. a. hide b. share c. not share d. distort

b. share

_________ are the growth engine of the economy. a. medium-sized businesses b. small businesses c. large businesses d. Fortune 500 companies

b. small businesses

T/F A small business person can effectively operate an existing company, and pursue new opportunities at the same time.

False

T/F Chapter 17 bankruptcy allows a firm to be reorganized.

False

T/F In an interview an owner can ask an applicant if he or she has ever been arrested for a crime.

False

T/F The Civil Rights Act applies to firms with more than 10 employees.

False

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

False

True/False Large companies understand their customers more in the local area compared to a small firm.

False

True/False New business owners do not need to identify customers because they have already been identified by their competitors. All you have to do is copy your competitors.

False

T/F Pricing floor is the break-even point or the lowest amount that can be charged for a product or service while still making a minimum profit.

Pricing floor is the break-even point or the lowest amount that can be charged for a product or service while still making a minimum profit.

T/F A marketing plan should identify a company's market and determine a pricing policy.

True

T/F A root cause of many of the problems in a new business can be traced to the lack of development or implementation of its operational plan.

True

T/F A small business owner must understand what the customer values, and how much money the customer is willing to pay to obtain the firm's product or service.

True

T/F A strip shopping center is typically located along a major road.

True

T/F ADA stands for the Americans with Disabilities Act.

True

T/F After drawing a geographical radius around the business, the owner should define the customer base that resides within that radius.

True

T/F An industry is defined as a group of companies within a specified radius that will be in direct competition for the same customers.

True

T/F An owner must develop a paper trail regarding an employee's bad performance.

True

T/F As competitors begin to draw business in the surrounding area, a company's radius decreases.

True

T/F Attempting a turnaround is the best effort to reverse the decline of a business.

True

T/F Commercial real estate firms are a major source of information for a new business owner who is trying to decide where to locate the business.

True

T/F Efficient use of time is imperative for a new business owner.

True

T/F Every small business owner will eventually need or want to exit his or her business.

True

T/F Every state has a different unemployment compensation law.

True

T/F In a small business, the owner can hire the ideal person and still have problems.

True

T/F In marketing, the old axiom of "location, location, and location" is the key to business success.

True

T/F Legitimacy is the acceptance by key stakeholders such as customers and suppliers that you are a genuine business that will still be in operation next year.

True

T/F No matter where a business is located, its owner needs to establish legitimacy in the eyes of the customers and suppliers.

True

T/F Organizational slack allows large organizations flexibility that is not available to smaller companies.

True

T/F Prioritizing tasks is a critical aspect of time management.

True

T/F Procrastination can use up the resources and time of a new business.

True

T/F Quality is an assumed standard to be achieved in any business.

True

T/F Small businesses must use their resources efficiently, thus distinguishing them from large businesses.

True

T/F The true value of a business is the amount of money that a willing seller and buyer agree upon.

True

T/F When a potential business owner has several ideas for a business, he or she needs to perform a due diligence analysis.

True

T/F Worker's compensation is a law designed so that employees who are disabled or injured while on the job are provided with some type of compensation.

True

T/F A gap analysis identifies any differences between the demand by customers and the supply provided by firms currently in the market.

True

T/F The most important person in an entrepreneurial business is the founder.

True

True/False A business plan should be a tool to think through a wide range of issues related to starting and growing a business.

True

True/False A mission statement should be specific and establish measurable goals for the business to accomplish.

True

True/False Brainstorming is a creative process where individuals are brought together to come up with ideas about a specific topic.

True

True/False Elasticity of demand is the ease that exists when a customer can switch to a substitute.

True

True/False Entrepreneurial businesses have the ability to make greater profits in markets that have been ignored by larger corporations.

True

True/False Entrepreneurs who understand the industry can access market opportunities more than entrepreneurs who do not understand the industry.

True

True/False Fragmented markets are markets where no one competitor has a majority share of the industry.

True

True/False Future business owners need to understand how their own version of rationality affects their decision making.

True

True/False You should start a business doing something you have a passion for because you will spend more time starting and running the business than if you start a business that does not excite you.

True

_________ is a rational decision-making process that is constrained by our experiences, history, and culture. a. Bounded rationality b. Logic rationality c. Unbounded rationality d. Constrained rationality

a. Bounded rationality

A small business has _________ formal procedures as compared to a larger firm to operate the company. a. few b. many c. same d. proportionate

a. few

James has the benefit of gaining customer loyalty by being the first company to bring out a new gourmet burger. This is a form of _________. a. first mover advantage b. leader advantage c. tangible assets advantage d. sustainable competitive advantage

a. first mover advantage

What does OSHA stand for? a. Occupational Safety and Help Administration b. Occupational Safeguard and Health Administration c. Occupational Safety and Health Administration d. Occupational Shelter and Help Administration

c. Occupational Safety and Health Administration

Successful new business ideas can come from: a. books and magazines b. hobbies c. individual's background d. all of these

d. all of these

What is a marketing plan? a. plan developed by a business to specify who the customers are and how they will be attracted to the company b. plan developed by a business to specify the mission and strategy of the firm c. plan to hire qualified personnel who would develop a marketing plan d. plan developed by a business to specify who the competitors are and how the company will market its products

d. plan developed by a business to specify who the competitors are and how the company will market its products

Individual consumers are generally _________ to change the suppliers of the goods and services they want to buy. a. willing b. conscientious about c. agonize about d. unwilling

d. unwilling

An employee cannot sue a small business owner for injury, if the individual accepts _________. a. employment compensation b. unemployment compensation c. social security d. workers' compensation

d. workers' compensation

True/False A cash flow statement is the same as a budget.

False

True/False Accounts receivable are a form of fixed assets.

False

True/False A chart of accounts is a listing of each type of activity (such as expense items) and each type of asset within the company.

True

True/False A firm obtains profits when its sales revenue is higher than its expenses.

True

True/False A good way to generate new business ideas is to think about the things that frustrate you or cause you problems, and then to identify solutions.

True

True/False A new business owner could easily become frustrated if she has no passion for the business she has decided to start.

True

True/False A small business owner must understand when an opportunity for a new business is truly an opportunity.

True

True/False A small business start-up should be designed to take advantages of the skills of the founder or founders.

True

True/False A substitute exists if the service or product performs a similar function

True

True/False Accepting supplier credit limits a company's ability to shop around for a cheaper source of goods.

True

True/False Accrual-based accounting is expenses and revenues being recorded when they apply.

True

True/False As a business grows, it gets progressively more difficult to change its direction.

True

True/False In a proposed new business, financial analysis focuses exclusively on its ability to generate positive cash flow.

True

True/False It is critical for a new business to conserve its resources and focus on areas that have the potential to maximize the firm's success.

True

True/False Leverage ratios are used to examine the level of indebtedness of an entrepreneurial business.

True

True/False Talking with retired business executives can generate new business ideas for start-ups.

True

True/False The easiest way to locate the NAICS (North American Industry Classification System) code is to use the Internet.

True

True/False Two triggers for staring a new business are talking to successful entrepreneurs and being laid off from your job.

True

Which of the following valuation methods simply totals the value of all of the hard assets of an organization and adds in some value for goodwill? a. asset-based valuation b. capitalization of earnings valuation c. market estimation valuation d. price/earnings valuation

a. asset-based valuation

What is the term used to describe a new business that has reached a level where revenue coming into the firm is sufficient to cover expenses? a. break-even point b. no risk level c. equal financial ratio d. risk tolerance

a. break-even point

When a small business owner pays an individual a percentage of sales, this is called a _________. a. commission b. paycheck c. bonus d. salary

a. commission

A tool to better understand competitors and their capabilities is: a. competitive map b. benchmarking c. resource-based analysis d. deficit analysis

a. competitive map

Performance review includes all of the following EXCEPT: a. future pay raises b. outcomes over a given period c. review of an employee's goals d. achievements for a given period

a. future pay raises

Pricing something that ends in 99 cents makes a big difference in the buying of a product. This is because of a consumer's: a. perception b. pocketbook c. values d. ethics

a. perception

An owner should establish the mission statement and strategies _________. a. prior to its inception b. at the 30-day review c. at the 90-day review d. at the first day of business

a. prior to its inception

When using a time management system, a new owner must _________ his or her tasks. a. prioritize b. alphabetize c. analyze d. study

a. prioritize

A _________ describes estimates by a small business owner of what the balance sheets and income statements will look like in the future. a. pro forma b. current asset c. balance sheet d. cash flow

a. pro forma

A business plan for a small business is developed with certain goals in mind. Which of the following is NOT one of these goals? a. share critical information with competitors b. provide an opportunity for self-evaluation c. keep it relatively short (25 to 30 pages) d. act as a guide to managers of the firm

a. share critical information with competitors

Universal Studios, who made the Indiana Jones movies, forms a relationship with Burger King to put advertisements for the movie on drink cups. This is a form of _________. a. strategic alliance b. promotional alliance c. compact alliance d. none of the answers as listed are correct

a. strategic alliance

Jane has developed a special Italian sauce for pizza. The sauce cannot be easily copied. This is a(n): a. sustainable competitive advantage b. unorthodox practice c. tangible asset d. orthodox practice

a. sustainable competitive advantage

A _________ is a claim of intellectual property that is associated with a specific business. a. trademark b. watermark c. copyright d. patent

a. trademark

Compared to large corporations, entrepreneurial businesses: a. are more visible b. play just as important a part in our economy c. have more resources at their disposal d. attract more attention in the media

b. play just as important a part in our economy

All of the following are questions to ask when looking at additional skills EXCEPT: a. What are the magazines and books you read? I b. All of these c. What are your top three personal skills? d. What things do you like doing best each day, each week?

b. All of these

_________ are events established around a particular theme where businesses are allowed to set up booths in order to promote their goods or services. a. Opportunity fairs b. Trade shows c. Television shows d. Marketing fairs

b. Trade shows

A small business can promote itself by sponsoring: a. sports activities b. all answers as listed are correct c. school activities d. fundraising activities

b. all answers as listed are correct

One reason to hire a certified public accountant (CPA) firm is to: a. develop procedures for the accounting of all activities b. all answers as listed are correct c. audits last year's financial statements d. put all of the statements into a standardized format

b. all answers as listed are correct

A small business owner should examine the _________ supports before starting a business. Select one: a. family b. all of these c. community d. social networks

b. all of these

A _________ can easily be converted to cash, such as accounts receivable and notes receivable. a. cash flow b. current asset c. balance sheet d. pro forma

b. current asset

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

_________ examine the performance of a business and its ability to make economic returns over and above its costs. a. Activity ratios b. Financial ratios c. Profitability ratios d. Leverage ratios

c. Profitability ratios

_________ insurance covers liability for workers who are injured on the job. a. Bonding b. Limited liability c. Workers compensation d. Unlimited liability

c. Workers compensation

A financial consideration in choosing a location for a new business owner is(are): a. initial supplies b. licenses and inspections c. all answers as listed are correct d. security deposit

c. all answers as listed are correct

Founders of a small business need to be involved with which one of the following tasks in the start-up of a business? a. operating b. design c. all answers as listed are correct d. funding

c. all answers as listed are correct

Human resource management includes _________ the employees. a. hiring b. inspiring c. all answers as listed are correct d. managing

c. all answers as listed are correct

Investors can be: a. a minority b. active c. all answers as listed are correct d. passive

c. all answers as listed are correct

A marketing effort that requires little capital is called _________. a. pure promotion b. hybrid promotion c. bootstrap marketing d. mixed model promotion

c. bootstrap marketing

A critical path chart should be updated _________. a. every other month b. yearly c. constantly d. end of every quarter

c. constantly

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. price leader b. pricing ceiling c. cost-plus pricing method d. add-on cost

c. cost-plus pricing method

All of these are advantages for a small business EXCEPT: a. respond quickly to changes b. greater flexibility c. economies of scale d. owned and run by the same person

c. economies of scale

An investment in a firm by the owner is called _________. a. receivables b. profit c. equity d. margin

c. equity

When a small business owner pays a commission in addition to a basic salary, it is called a _________. a. salary b. profit sharing c. hybrid compensation d. bonus

c. hybrid compensation

An effective industry analysis identifies: a. substitutes b. product pricing c. potential customers d. unusual or unique competitive factors

c. potential customers

Small companies have flourished for all the following reasons EXCEPT: a. they operate more effectively b. they employ more skilled people c. they often expand easily in mature industries d. they respond more quickly

c. they often expand easily in mature industries

Small businesses act as a catalyst for social change because: Select one: a. owners have a better understanding of how to operate their business b. communities always want to have extra money that can be obtained from having small businesses c. they are often started when the economy is booming d. they have the ability to generate profits in markets ignored by large corporations

d. they have the ability to generate profits in markets ignored by large corporations

Which popular personality test assumes there are five components or types of an individual's personality? a. Myers-Briggs b. Enneagram c. Insights d. Big Five

d. Big Five

_________ funds are received by a business in exchange for a percentage ownership of the company. a. Venture capital b. Tangible c. Asset-based d. Equity

d. Equity

_________ are strictly financial agreements in which a business pays for some outputs, such as TV advertisements. a. Mixed promotions b. Hybrid promotions c. Free promotions d. Pure promotions

d. Pure promotions

_________ is an analysis by a small business owner of the best and worst case financial scenarios. a. Gap analysis b. Forecast analysis c. Deficit analysis d. Sensitivity analysis

d. Sensitivity analysis

_________ are items that include equipment or location. a. System assets b. Critical assets c. Intangible assets d. Tangible assets

d. Tangible assets

A competitive advantage in a business could be _________. a. activity of the firm b. product selection c. location d. all of these

d. all of these

In developing a competitive map, an owner should review: a. household income b. average spending per product or service c. population of the area d. all of these

d. all of these

Development and implementation of a new business is part _________ and part _________. a.luck; skill b. genius; hard work c. resources; hard work d. art; science

d. art; science

A _________ is an agreement between two parties to perform certain activities for some consideration. a. warranty b. corporation c. limited partnership d. contract

d. contract

A _________ is a contract where a business will be physically located. a. warranty b. premise c. pro forma d. lease

d. lease

A _________ is a claim of intellectual property that covers a specific invention. a. watermark b. copyright c. trademark d. patent

d. patent