Contemporary Business Chapter 5

What percentage of American businesses is considered small businesses?

99.7 percent

With set-aside programs for small businesses, up to _____ of certain government contracts are designated for small businesses.

23 percent

What percentage of small businesses survives the first five years of operations?

50 percent

Most manufacturing businesses are considered small if they employ fewer than _____ workers

500

Which of the following is not a benefit to the franchisor in a franchise agreement?

A franchisor is in control of the daily operations of a much larger business.

Which of the following is most likely to be a cooperative business operation?

A group of neighboring farm owners

Which of the following is least likely to be a small business?

A nursing home

How does a partnership differ from a sole proprietorship?

A partnership is more difficult to dissolve than a sole proprietorship.

Which type of business is most likely to operate as a cooperative business?

Agricultural

_____ is an organization that provides temporary low-cost, shared facilities to small start-up ventures.

Business incubator

Why do home-based businesses often have lower costs?

Funds that are not being used for leasing or warehouse space can be directed into the business.

Which industry listed below is dominated by small businesses?

Hospitals

What characterizes a small business?

It is independently owned and operated and is not dominant in its field.

Which of the following is true of a franchisor?

It usually stipulates the purchase of certain ingredients or equipment, pricing, and marketing efforts.

Which of the following is an advantage of a corporation?

Limited liability for the owners Continuity Expanded financial capacity

Which of the following risks does the franchisor take on in a franchise agreement?

Loss of control over every aspect of the business

Which of the following is not one of the customary services of the Small Business Administration?

Providing direct loans

Which of the following does not grant direct loans to small businesses?

Small Business Administration

Which is the most common form of business ownership?

Sole proprietorship

Which of the following is a major draw-back of family-owned businesses?

Succession

Who owns the corporation?

The shareholders

Which of the following is an advantage of mergers?

They allow a company to diversify and increase customer base.

Which best describes the contribution of U.S. small businesses in world markets?

They export nearly a third of all U.S. products each year.

Which of the following is true of S Corporations?

They have fewer than 100 shareholders.

Which of the following is true of owners of common stock?

They have voting rights but only a residual claim on the firm's assets.

_____ out of every three new jobs are created by small business.

Two

A written document that provides a statement of a company's goals, methods for achieving goals, and standards for measurement is called:

a business plan.

A legal organization with assets and liabilities separate from those of the owner is called

a corporation.

Amtrak is an example of:

a partnership. a limited liability corporation. private ownership of a for-profit corporation.

A corporation that does business in states other than the state in which it filed incorporation papers is called a(n):

foreign corporation.

A(n) _____ combines firms in the same industry that wish to diversify, increase their customer base, cut costs, or offer expanded product lines.

horizontal merger

Small businesses often fail due to:

management shortcomings. difficulty dealing with government regulations. inadequate financing.

A(n) _____ consists of two or more firms combined to form one company.

merger

Small-business loans often used to buy equipment or operate a business are called:

microloans.

Cooperatives allow members to:

share equipment. benefit from group purchasing discounts. share in other efforts such as marketing

An effective business plan should include:

the vision of the founder(s) and its mission. a description of potential competitors. a description of what makes the company unique.

Small businesses are more likely than large ones to hire:

the youngest workers

The primary purpose for developing a business plan is:

to obtain financing for the business.

A merger between two companies in different levels of the production and marketing of a product is called a(n) _____ merger.

vertical