MGMT Practice Quiz 5-9

An advantage of an innovative strategy is that it allows entrepreneurs to:

make their businesses precisely fit their ideas

Which of the following statements is most likely to be true regarding a new entrant business?

When your product or service already exists but your firm is the first of its kind in your market, it is considered a new entrant business.

The last stage of the new product development process is _____.

commercialization

Which of the following is the first step of the strategic planning process for small businesses?

confirming the goals that define the firm

_____ is an agreement that provides an organization through which independent businesses may combine resources.

conversion franchising

_____ refers to the economic idea that the market's demand for a product or service is sensitive to changes in its price.

elasticity

_____ is an estimation of what a price should be based on information from competitive advertisements, comparison shopping, friends, or any other outside sources.

external reference price

The first step of the strategic planning process for a small business is industry analysis.

false

The point of indifference is the lowest price at which the seller is willing to sell the business.

false

The pricing technique of penetration pricing involves charging the absolute highest possible price due to inelastic demand.

false

In the maturity stage of an industry's life cycle:

firms in the industry stabilize profits through cost strategies

Which of the following terms refers to a narrowly defined segment of the population that is likely to share interests or concerns?

niche market

_____ refers to contracting with people or companies outside your business to do work for your business.

outsourcing

_____ involves setting the price for a base item and then charging extra for each additional component.

partitioned pricing

If a service is not used when offered, it cannot be saved for later use. This demonstrates the _____ quality of a service.

perishability

Which of the following involves introducing a product to potential customers and taking orders for later delivery?

preselling

The practice of setting different price points in an attempt to appeal to several different markets is called _____.

price lining

A(n) _____ is a specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.

private placement memorandum

Which of the following terms refers to a part of a business or a business plan that exposes the firm to any kind of loss—profits, sales, reputation, assets, and customers?

risk

_____ is used to rank a Web site high when listed in sites like Google, Yahoo, etc.

search engine optimization

Jason owns a retail store in a small town in Tennessee. He knows all his patrons by name. Even though he has five employees, he goes the extra mile by helping customers pick their choices. Which of the following value benefit does Jason give his customers?

service

A _____ is one of the most ancient forms of small business.

stand retail

A(n) _____ plan provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

summary

"Bookz Galore: Ohio's Only Green Bookstore" is an example of a(n) _____.

tagline

Which of the following is true of franchising?

the franchise comes with a complete business system

Small businesses often use a combination strategy that can use aspects of differentiation or cost approaches that are reformulated for the niche market.

true

When a product or service is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark, it is termed as proprietary technology.

true

_____ franchisees are required to open a minimum number of stores within a specified time period

master

A(n) _____ refers to permission from a government organization to act differently than the stated laws.

variance

_____ refers to a quality of a service in which each time the service is provided, it will be slightly different from the previous time.

heterogeneity

_____ is a documented permission from the government to run your business.

licensing

A(n) _____ is a paragraph that describes the firm's goals and competitive advantages.

mission statement

Which of the following is considered a tactical action?

price cutting

Which of the following statements is true of a family business succession?

inheritance is not restricted to parent-child or grandparent-grandchild.

Accounts receivable, patents, licenses, and liabilities are examples of:

intangibles

Which of the following statements is true about buyouts?

it is restricted to businesses that have a formal legal form of organization

Deliberately keeping a start-up small is most likely to help in:

limiting the magnitude of possible losses.

A strategy that targets a portion of the market, called a segment or niche, is referred to as a _____.

focus strategy

A _____ is a rule of thumb commonly used to estimate firm value in relation to some easily observable characteristic of the business.

heuristic

Charging an outrageously high price for a product or service is termed as _____.

price gouging

_____ refers to the post-tax income that an entrepreneur personally seeks from the business.

magic number

_____ refers to working on your own part time after your regular job.

moonlighting

Delegation refers to contracting with people or companies outside your business to do work for your business.

False

Network marketing is an approach to selling products through a system of networked computers.

False

Part-time self-employment refers to working for oneself for more than 35 hours a week.

False

The sale of cell phones and music products from a store to an individual customer is an example of business-to-business e-commerce

False

Which of the following statements best defines external legitimacy?

It is the extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family.

Which of the following is a technique used to attract users to a Web site, by using a listed, live connection to a different Web site, which in turn displays a similar link to the first Web site?

Reciprocal links

Which of the following statements is Fred Kiesner's suggestion for striking a balance between work and family for people engaged in part-time businesses?

Schedule and protect quality time with family

Zoning laws and covenants are restrictions that impose limitations on the acceptable use of land and buildings.

True

Parallel competition is defined as:

an imitative business that competes locally with others in the same industry

A _____ is the difference between the original acquisition cost and the amount of accumulated depreciation.

book value

An advantage of an imitative strategy is that it allows entrepreneurs to:

buy existing businesses

A summary plan is also known as a(n) _____ plan.

concept

_____ is the process of investigating to determine the full and complete implications of buying a business.

due diligence

Creating a negative impression among employers' customers is called _____.

poisoning the well

A business incubator is an organization that provides financial, technical, and managerial help to start-up businesses.

true

A passion for the business and the expertise about the business and the plan are essential for a business plan presentation.

true

A proof-of-concept Web site is an Internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest.

true

Imitation is the most widely used small business strategy.

true

Me-too products are essentially similar to existing products on the market.

true

Which of the following is an example of a price that is based on the technique of odd-even pricing?

$9.99

A core product is an augmented product with features that tend to differentiate it from the competition.

false

An asset is a legal debt or obligation.

false

A niche market generally involves large portions of the population

false

An executive summary is an action-oriented description of a business designed to sell the idea of the business to another.

false

Random discounting refers to the sales that are conducted at predictable intervals.

false

Start-ups are always deliberate, well planned, and financed.

false

The 5-M model comprises five areas to structure a business plan: mantra, mission, modes, method, and memos.

false

The retrenchment stage of the industry life cycle is an industry lifecycle stage in which a product or service is being invented and initially developed.

false

At an auto service center, an oil change costs $49 and tire rotation costs $69, but if you do them both, it will only cost $99. Which of the following pricing techniques is being used in this case?

bundling

Which of the following best represents a document designed to detail the major characteristics of a firm—its product or service, its industry, its market, its manner of operating, and its financial outcomes with an emphasis on the firm's present and future?

business plan

_____ refers to using low-cost or free techniques to minimize your cost of doing business.

bootstrapping

Most new products and services fail to gain acceptance.

true

Optimum price is the highest price that will produce the desired level of sales in the intended market.

true