Final Exam MQM 128

Starting a part-time business is a popular gateway to entrepreneurship T or F

True

The growth in the number of women entering the workforce is an example of a sociocultural change T or F

True

pure franchising involves a system of franchising in which a franchisor sells a franchisee a complete business format and system T or F

True

when buying a business, an entrepreneur can usually purchase equipment and fixtures at prices well below their book value T or F

True

Optional product pricing involves selling the base product at a. what may be a "standard" margin and selling the options or accessories at higher markup b. a high markup, with the accessories at a competitive price c. one price with deep discounts on accessories d. a high margin with the accessories offered as a part of the bundle

a

The most common form of business ownership that is also the simplest to create is the a. sole proprietorship b. partnership c. corporation d. S corporation

a

The represents a "snapshot" of a business, showing an estimate of its value on a given date, while the is a "moving picture" of the firm's profitability over time a. balance sheet; income statement b. income statement; balance sheet c. statement of cash flows; income statement d. balance sheet; statement of cash flows

a

The strongest of the five forces in most industries is a. rivalry among companies competing in the industry b. bargaining power of buyers c. threat of new entrants to the industry d. threat of substitute products or services

a

The three "tests" associated with a business plan are a. reality, competitive, and value b. competitive, profitability, and value c. value, reality and profitability d. reality, value and litmus

a

A major advantage of a franchise contract is the national advertising campaign that most franchisors provide free of charge for their franchisees T or F

False

Comparing a company's current income statement to those of prior accounting periods rarely reveals valuable info about key trends T or F

False

Creativity is the ability to apply creative solutions to problems and opportunities to enhance or enrich peoples lives T or F

False

Current competitive conditions favor large companies over smaller ones because of their flexibility combined with their ability to use their size to achieve efficiency and economies of scale T or F

False

Increased entrepreneurial activity is a phenomenon unique to the U.S. T or F

False

Research has isolated a set of characteristics that can predict who will succeed as an entrepreneur T or F

False

Research indicates that younger audiences do not take the time to seek product info before they make a purchase. T or F

False

The best way to survive a price war is to engage in the battle and emphasize the unique features, benefits, and value your company offers its customers T or F

False

The competitive test that a business plan must pass to attract financing for lenders and investors involves proving to them that the venture offers a high probability of repayment or an attractive rate of return T or F

False

The executive summary serves as the thesis statement for the entire business plan T or F

False

on the Web, service is not as important as it is in a traditional retail environment T or F

False

one of the closing documents required is the non-disclosure agreement (NDA) T or F

False

Companies quickly learn that setting up a Website is only the first investment required. the site leads to an ongoing investment of resources--time, money, energy and talent T or F

True

Contrary to conventional wisdom, people can be taught to be creative T or F

True

Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities T or F

True

If a company wants quick acceptance and extensive distribution when introducing a new product into a highly competitive market with a large number of similar products, a market penetration pricing is the best strategy T or F

True

In start-firms, one guideline is for the owner to draw a salary 25-30% below the market rate for a similar position T or F

True

Innovation must be a constant process because most ideas do not work and most innovations fail. T or F

True

Management is an example of a stakeholder T or F

True

Organizational policies and procedures include a broader definition of ethical standards that go beyond what is defined by law T or F

True

Some forms of ownership are much more costly and involved to create T or F

True

Which of the following is NOT a liquidity ratio? a. current ratio b. total asset turnover ratio c. quick ratio d. none of the above

b

One key to setting prices properly is based on understanding a company's: a. buying power b. competitive position c. target market d. cost structure

c

Products or services that may be sought as alternative solutions (purchasing tax planning software rather than paying a CPA to assist with preparing your taxes) are referred to as a. buyers products b. rivalry products c. substitute products d. competitive alternatives

c

The acceptable price range of a product or service is the area between the ________ defined by customers in the market and the ________ established by the company's cost structure. a. price floor; price ceiling b. image; quality c. price ceiling; price floor d. price floor; value

c

The failure rate for franchises is a. higher than the average rate for new businesses b. no different from the rate for new businesses c. lower than the average rate for new businesses d. indeterminable because of the Right to Privacy Act

c

There are levels of ethical standards a. 1 b. 2 c. 3 d. 4

c

The is also known as the "elevator pitch" and is written last, but is included as the first part of the business plan and should summarize all the relevant points in about two pages a. loan proposal b. business history c. business profile d. executive summary

d

The profile of an entrepreneur includes a. a desire for responsibility and moderate risk b. confidence in the ability to succeed and determination c. a high level of energy, a desire for immediate feedback and a future orientation d. all of the above

d

entrepreneurs should make sure they do not fall victim to any of the e-commerce myths. Which of the following is NOT an e-commerce myth? a. Setting up a business on the Web is easy and inexpensive b. if I launch a site, customers will flock to it c. making money on the Web is easy d. privacy and site security is an important issue on the Web

d

pricing strategies work best in markets where no "elite: segments exist or in highly competitive markets where similar products are trying to gain a foothold a. skimming b. sliding-down-the-demand-curve c. odd d. penetration

d

when the franchisor has the right to establish a semi-independent organization in a particular territory to recruit, sell, and support other franchises, it is known as a franchise a. multi-unit b. cobranding c. conversion d. master

d

The ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities a. current b. quick c. turnover d. net profit

b

The second essential purpose for creating a business plan is a. to guide the operation of the company by charting its future course and devising a strategy for following it b. to attract lenders and investors c. to file with the SEC before a public stock offering d. to attract potential managers and employees to run the new venture

b

The three parts of the triple bottom line are a. process, profits and people b. profit, people, planet c. processes, profit, and predominance d. profit, processes, and planet

b

The top business challenge that drives pricing decisions is the a. increased price transparency b. increased price sensitivity of customers c. need to protect the brand's image d. increased pricing aggressiveness from competitors

b

The various groups and individuals who affect and are affected by a business are called a. stockholders b. stakeholders c. owners d. managers

b

A process in which computer software that uses statistical analysis, database technology, and artificial intelligence finds hidden patters, trend and connections in data so that business owners can make better marketing decisions and predictions about customers' behavior is known as a. guerilla marketing b. data mining c. individualized marketing d. total quality management

b

All of the following are characteristics of the typical entrepreneur EXCEPT a. confidence in his/her ability to succeed b. value of money over achievement c. desire for immediate feedback d. a future orientation

b

Studies of shifting patterns in age, income, education, race, and other population characteristics are the subject of: a. psychographics b. demographics c. sociographics d. paleontology

b

A critical marketing step is to clearly define their target market T or F

True

A feasibility analysis consists of four interrelated components: an industry and market feasibility analysis, a product or service feasibility analysis, a financial feasibility analysis, and an entrepreneur feasibility analysis T or F

True

Accounts receivable are rarely worth face value and should be "aged" when evaluating a company's assets T or F

True

A common mistake entrepreneurs make is a. assuming that a market exists for their product or service b. taking too much time to conduct planning and research c. conducting informal research d. conducting online research, which is too impersonal and does not yield accurate info

a

Customers will typically welcome well-constructed permission e-mail that directs them to company sites for info or special deals, unlike unsolicited and universally despised e-mail known as a. spam b. electronic flyers c. voice mail d. clipboards

a

Entrepreneurs can stimulate their own creativity and encourage it among workers by a. expecting and tolerating failure b. avoiding problems c. limiting rewards d. not taking chances

a

Harvard's Ted Levitt says that creativity is ________ new things, and innovation is ________ new things. a. thinking;doing b. doing;thinking c. seeing;doing d. thinking;applying

a

Ideally, a business plan should be about pages in length a. 10 to 20 b. 20 to 40 c. 40 to 75 d. 75 to 100

a

On a projected income statement, a business owner's target income is a. the sum of reasonable salary for the time spent running the business and a normal return on the amount invested in it b. the income at which the company's total revenues and its total expenses are equal c. the income that will produce a 10% return on the owner's financial investment in the business d. the income that the owner could earn working for someone else

a

When done correctly, the due diligence process will, a. reveal both the positive and negative aspects of an existing business b. be time consuming and expensive c. most often result in the purchase of the business d. rarely prove to be beneficial

a

Which of the following should make potential franchisee suspicious about a franchisor's honesty? a. claims that the franchise contract is a standard agreement and that there is no need to read it or have an attorney look it over b. an offer of direct financing of a specific element of the franchise package c. not providing detailed operational info until 10 days before signing the contract d. requiring franchisees to spend a certain percentage of profits on advertising

a

are those items of value the business owns; are those things the business owes a. assets; liabilities b. liabilities; assets c. ratios; equities d. equities; liabilities

a

pricing is a technique that involves marking down the normal price of a popular item in an attempt to attract more customers who make incidental purchases of other items at regular prices a. leader b. markup c. markdown d. multiple unit

a

reasoning is the ability to create a multitude of original, diverse ideas a. divergent b. convergent c. asymmetrical d. logical

a

Which of the following is true about the preparation of a business plan? a. the format should follow a "cookie-cutter" approach to ensure uniformity and consistency with others and to promote ease of understanding b. The elements of the plan may be standard, but the content should reflect the unique aspects of a the business and the excitement of the entrepreneur c. the plan should cover every standard element in great detail and be at least 100 pages long to prove to potential lenders and investors that the entrepreneur has studied the business and the market opportunity d. the entrepreneur should avoid seeking the advice of professionals, such as accountants, business professors and attorneys

b

reasoning is the ability to evaluate multiple ideas and choose the best solution to a given problem a. divergent b. convergent c. lateral d. intuitive

b

the letter of intent is a document a. binding b. nonbinding c.transferable d. final

b

the principle of putting a franchise's products or services directly in the paths of potential customers with smaller, less expensive outlets is called a. cobranding b. intercept marketing c. are development d. master franchise

b

A franchise trend in which owners of independent businesses become franchisees to gain the advantage of name recognition is called a. area development b. master franchise c. conversion franchising d. cobranding

c

A situation that occurs when a company pays for clicks that are generated by someone with no interest in or intent to purchase its products or services is called a. paid inclusion b. unpaid inclusion c. click fraud d. an unnatural listing

c

A(n) is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneurs ability to successfully turn the idea into a business a. business plan b. strategic analysis c. idea assessment d. feasibility analysis

c

Which of the following is NOT true of a limited liability partnership? a. all partners are limited partners b. most states restrict this form of ownership to certain types of professions such as attorneys, physicians, dentists, accountants, etc c. although LLPs have many of the characteristics of partnerships, they are taxed as a corporation d. it must involve a general partner, a limited partner, a silent partner and a dormant partner

c

entrepreneurs who repeatedly start businesses and grow toa sustainable size before striking out again are known a entrepreneurs a. opportunistic b. persistent c. serial d. classic

c

responsibility is how an organization responds to the needs of the many elements in society a. moral b. investor c. social d. ethical

c

sets behavioral boundaries for decision makers a. the strategic plan b. strategy c. ethics d. the financial plan

c

the due diligence process involves investigating four critical areas of the business, which are ,asset valuation, legal issues, and financial condition a.negotiation b. business valuation c. motivation d. planning

c

the first step an entrepreneur should take when buying an existing business is to a. explore financing options b. prepare a list of potential candidates c. analyze his or her skills, abilities and interests in an honest self-audit d. contact existing business owners in the area and ask if their companies are for sale

c

the method establishes the value of a company by computing the book value of its net worth, or owner's equity a. earnings b. market c. balance sheet d. multiples

c

The enactment of the Affordable Health Care Act in 2010 is an example of a ________ change. a. economic b. demographic c. technological d. political and legal

d

A is a company's "face" in the marketplace and communicates a key message to the target market a. blog b. logo c. unique selling proposition (USP) d. brand

d

A specific group of customers on whom an company aims its good or services is referred to as a a. market segmentation b. bootstrap marketing c. niche marketing d. target market

d

All of the following represent barriers to creativity that entrepreneurs impose upon themselves EXCEPT a. focusing on being too logical b. being too practical c. blindly following rules d. searching for more than one answer

d

An entrepreneur is on who a. understands the process of developing an idea and does not need to understand what it means to bring that idea to a viable business concept b. is willing to attempt to implement a business concept and then give up if it does not meet immediate expectations c. knows that the concept they are about to develop will result in a profitable business d. creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities

d

Companies with a customer focus typically ask their customers all but which of the following questions? a. What are we doing right? b. What have we done wrong? c. What can we do in the future? d. What have our competitors done wrong?

d

Crating projected (pro forma) financial statements would allow a business owner to answer which of the following questions? a. What profit can my business expect to achieve? b. what sales level must my business reach if our targeted profit is X dollars? c. what fixed and variable expenses can my business expect to incur at our targeted sales level? d. all of the above

d

Entrepreneurs are characterized by a. skill at organizing b. desire for immediate feedback c. high energy levels d. all of the above

d

For Under Armour, its top 10 suppliers manufacture less than half of its products. To Under Armour, supplier power is likely to be ________ a. high b. moderate c. significant d. low

d

For an entrepreneur, a business plan: a. is relatively little importance due to the dynamic nature of the marketplace b. is synonymous with the marketing plan c. tends to stress how entrepreneur will operate rather than detailing what s/he want to accomplish d. contains both a marketing plan and financial plan

d

In a partnership, the partner/s has/have unlimited liability for the partnerships debts a. limited b. dormant c. nominal d. general

d

In addition to reading the franchisor's UFDD, it would be wise for the potential franchisee to seek a franchise that offers which of the following? a. a unique concept or marketing approach b. a registered trademark c. a positive relationship with franchisees d. all of the above

d

The average inventory turnover ratio a. measures the number of times a company's inventory is sold out during the accounting period b. tells a business owner whether (s)he is managing the company's inventory properly c. tells a business owner how fast the merchandise is moving through the business d. all of the above

d

The while downloading a Web page is one of the most important determinants of its sales effectiveness a. visual stimuli b. "flash and show" c. memory required d. time required

d

To convince lenders and investors to put their money into the venture, a business plan must prove to them that it offers a high probability of repayment or an attractive rate of return. This is the ________ test. a. attractiveness b. competitive c. reality d. value

d

Which of the following bootstrap marketing tactic(s) allow a small company to utilize relationship marketing successfully? a. keep in close contact with customers with "thank you's" and other personal communication techniques b. organize and sponsor a service or community-oriented project c. launch a loyalty or frequent buyer program d. all of the above

d

Which of the following is NOT a macro force that creates change in industries? a. sociocultural b. economic c. technological d. entry barrier

d

Which of the following is an important issue that business owners should consider before launching an e-commerce effort? a. How to develop long-term relationships with customers b. How to exploit the interconnectivity and the opportunities it creates to transform relationships with its suppliers, customers, and external stakeholders c. How to measure the success of its Web-based sales effort d. all of the above

d

Which of the following issues would influence an entrepreneur's choice of a form of business ownership? a. tax considerations b. management succession plans c. liability exposure d. all of the above

d