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