Quiz 2 Intro to Business Chapters 4 and 5

When are limited partnerships generally used?

When the project is risky and the chance of loss is great

The legal documents that identify the basic agreements between partners are called

articles of partnership

A(n) ________ leadership style is best for stimulating unskilled or unmotivated employees.

autocratic

A license to sell another's products or to use another's name in business is called a

franchise

Since Eva Chang has the capital and decided to purchase the rights to own and operate a McDonald's fast-food restaurant rather than start her own operation, she is probably a(n)

franchisee

Which of the following is an advantage of a small business?

greater flexibility to change

Worries about new equipment, expanding inventory, rent increases, competition, changing market conditions, and the like may contribute to

high stress level

When firms that make and sell similar products to the same customers merge, it is known as a

horizontal merger

Individuals who take responsibility for the development of innovations of any kind within larger organizations are called

intrapreneurs

A private corporation is one that

is owned by only a few people and not traded on the open market

Which of the following is not part of the definition of a small business?

it employs more than 500 people

A sole proprietorship is a popular form of business because

it is easy to form

Thomas thinks that organizing as a partnership would be best because

it would allow them to rely on their own financial resources and talents

Joint ventures are popular in situations that call for

large investments

About three-quarters of all businesses in the United States are sole proprietorships, and they earn somewhere around 10 percent of total business income. We may conclude that

there are many sole proprietorships, but their average income is small

What are intrapreneurs?

they champion innovation from within organizations

Bryan thinks their plant resale company should be a corporation because

they would have limited liability and seem larger

The lack of funds to operate a business normally is called

undercapitalization

What is one thing Jack and Bruce know that a good startup company does not need?

undercapitalization

All of the following are advantages of a sole proprietorship except

unlimited liability

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called

venture capitalists

When companies operating at different, but related, levels of an industry merge, it is known as a(n)

vertical merger

Although some businesses are less risky than others, overall the financial risks of running a small business are

very high

Echo boomers

were born between 1977 and 1994

When a firm is facing a hostile takeover attempt, it may issue a poison pill, which is

when the firm allows stockholders to buy up shares of stock at lower than market value.

Of minority groups in the United States, ________ own the most small businesses.

Hispanics

Which segment of the population is one of the wealthiest in the U.S.?

Baby boomers

Recently, _________ have spawned many small businesses.

Deregulation of energy markets and demand for renewable energy

Some larger corporations have acted like small businesses from their inception with great success. Which airline is a famous example?

Southwest Airlines

Big City Financial is attempting to avoid a hostile takeover by a corporate raider by allowing stockholders to buy more shares of stock at prices lower than current market value. Which of the following methods is being used to avoid the takeover?

a poison pill

A small business's ability to focus on narrow niches can help it develop

an enviable reputation for quality and service

To start any business you must first have

an idea

One advantage that small businesses have over large businesses is that they

are better able to focus on a few key customers

One of the major reasons people want to own and operate their own business is to

be their own boss

The group of individuals elected by the stockholders to oversee the general operation of a corporation are known as the

board of directors

Many financial institutions decide whether to loan a small business money based on its

business plan

The money used to start a business and keep it running is also called

capital

Articles of partnership are required by many states for businesses that have two or more co-owners. The issues covered usually include all of the following except

classes of stock to be issued

According to the text, all of the following are skills needed by managers except

clerical

Which of the following organizational forms is most expensive to set up?

corporation

A corporation doing business outside the state in which it is chartered is known as a(n)

foreign corporation

A mortgage is an example of

debt financing

All of the following have helped to create new opportunities abroad for small businesses except

deregulation

Which of the following is a disadvantage of a partnership?

difficulty of selling ownership

Corporations distribute profits to their owners in the form of

dividends

Which of the following is not a common cause of small business failure?

entrepreneurial vision

In the context of starting a new business, a retailer differs from a manufacturer in that the retailer is less likely to make a heavy investment in

equipment and distribution systems

Companies of all sizes grow and improve profitability by

expanding their operations

Which of the following is not a disadvantage of forming a partnership?

fewer regulatory controls than in a corporation

When market conditions change rapidly, a small business usually has fewer layers of management to work through in making decisions. This advantage of small business is

flexibility

Small businesses usually only have one layer of management, making them more ______ and able to adapt to market demands.

flexible

When a group of investors borrows money to buy a company or division, using the company's assets to guarantee the loan, it is called a(n)

leveraged buyout

An important advantage of a corporation is its

limited liability

The organizational form that many consider to be a blend of the best characteristics of corporations, partnerships, and sole proprietorships is the

limited liability company (LLC)

Anand has been asked to join a new partnership that is developing wind energy technologies. Because the business is high risk, he does not want to be liable for the firm's debts if the project should fail. He could still participate as a

limited partner

Which of the following is an advantage of small-business ownership?

lower cost of formation

All of the following are advantages of a corporation except

lower frequency of taxation

_____ make decisions about the use of an organization's resources and are concerned with planning, organizing, leading, and controlling the organization's activities.

managers

Which of the following organizational forms is most likely to be complex and expensive?

matrix structure

The first step in the control process is to

measure actual performance

When two companies combine to form a new company, it is called a(n)

merger

Downsizing helps firms to become

more flexible

It is easier to raise funds in a partnership than in a sole proprietorship because

more people means greater earning power and credit.

When superiors and subordinates are not in close proximity and the manager has many responsibilities in addition to supervision, the appropriate span of management would be

narrow

Which of the following is not a source of funds for a sole proprietorship?

not personal funds

Diagonal communication

occurs when individuals from different units and departments within an organization communicate

Dividing work into small units and assigning it to individuals are tasks related to

organizing

Which of the following is not an advantage of small-business ownership?

over-optimism

According to the Internal Revenue Service

partners report their share of profits as personal income

Which form of business organization is the least used in the U.S.?

partnership

If a manager is organizing equipment within a factory setting, he is mainly involved in which of the following resources?

physical

Forecasting is most closely associated with

planning

The right of common stockholders to have the opportunity to purchase new shares of stock is called a

preemptive right

A written authorization assigning a stockholder's voting privilege to another is a

proxy

The type of ownership that has the ability to raise capital most easily is a

public corporation

Common stockholders do not have the right to

receive dividends before preferred stockholders

Which of the following is not a reason why small businesses choose to become retailers?

retailing requires a large capital investment

Which of the following forms of business organization restricts the number and type of shareholder?

s-corporation

Many service businesses are considered retailers because they

sell their services to consumers

The ______ sector accounts for the majority of jobs in the United States.

service

The decision-making process in a partnership tends to be faster when the partnership is

small

The majority of all new jobs created in the United States in recent years were generated by

small businesses

One of the most popular and easiest to establish forms of business in the United States is the

sole proprietorship

Ruji has realized that she does not like working for others. She wants to open a business in which she will have maximum control and the least interference from government regulation. Which business form might be best for her to use?

sole proprietorship

Which of the following requires owners to perform many functions and possess diverse skills to make decisions?

sole proprietorship

Barber shops, dog kennels, and independent grocery stores are typically

sole proprietorships

A temporary group of employees responsible for bringing about a particular change is a

task force

Which characteristic of a sole proprietorship can be considered both an advantage and a disadvantage?

taxation

The income earned by sole proprietorships is

taxed as personal income

To train employees, answer questions, and provide guidance in doing a task, managers need

technical expertise

Advances in _____ have opened many new markets for small businesses, allowing them to more effectively expand their businesses and marketing efforts into new markets.

technology

________ has helped small businesses compete with larger businesses.

technology

When a company offers to buy some or all of another company's stock at a premium price, it is a(n)

tender offer

What is not a decision that Jack and Bruce have to make before starting their business?

the general idea for their business

echo boomers

the generation of Americans born between 1977 and 1994

Joe is a copywriter in his company's marketing department. The copy for an ad placed in Time magazine for his company spelled the company's name wrong. Who is ultimately responsible for the mistake?

the marketing vice president

The most important source of funds for any new business is

the owner

Perhaps one of the most significant strengths of small businesses is

their ability to innovate and bring significant changes and benefits to customers