SBM MGMT EXAM 2

What happens during the maturity stage of the product life cycle?

Promotion costs climb, and competitors cut prices to attract business.

In the context of franchising, the success of fast food restaurants is related to the increasing number of women working outside the home.

True

In the context of small businesses, franchises tend to fail because of unsuccessful marketing.

True

Income from sales is termed revenue.

True

Methods and procedures provide employees with standing instructions for performing their jobs.

True

One way to help avoid franchise scams is to carefully review the franchiser's disclosure document.

True

Planning to start one's own business begins with searching furor identifying a good or service to sell.

True

SWOT analysis is a useful tool to aid the process of strategic planning and can be organized into the form of a matrix.

True

Small businesses must strive for low overhead, use no-frills assets, and look for better real estate deals.

True

Small company offering registration (SCOR) is the sale of common stock to the public through a regulated board such as Nasdaq.

True

Small firms use debt financing because interest payments are tax-deductible expenses.

True

Strategic planning consists of two parts: a firms mission and objectives and its strategies.

True

The marketing concept emphasizes that the survival of any business depends pm providing service to customers

True

Watching people is a useful marketing research technique.

True

When customers walk out of the store without buying anything, it may be an indication that a business is in trouble.

True

When sales are made on credit, a firm must carry the costs of production itself for an extended period.

True

In the context of small businesses, which of the following statements is true of asset-based financing?

It accepts the assets of a firm as collateral in exchange for a loan.

What is meant by the term competitive edge?

It refers to a particular characteristic that makes one firm more attractive to customers than other firms.

In the context of small businesses, which of the following statements is true of preferred stock?

It usually conveys no voting rights to its holder.

A_____ is a contract that permits the use of someone else's property for a specified time period.

Lease

In the context of small businesses, which of the following is true of debt securities?

Small companies rely on loans from commercial banks.

Which of the following statements is true of the marketing concept?

Special consideration must be give to the needs, desires, and wishes of present and prospective customers.

Equity financing in a corporation is evidenced by shared of either common or preferred____.

Stock

While working in a fast food outlet, Harold observed that most of the customers were working in offices in the neighborhood. Sensing a profitable opportunity, he decided to open a catering business. He offered to deliver lunch directly to the offices so that the businesspeople would not have to interrupt their meetings to go out for lunch. In the context of the above scenario, which of the following was the reason for Harold to start his ow business?

To select a competitive environment

A small retailer provides an allowance to a customer upon the purchase of a washing machine. This is called a____.

Trade- in.

A competitive edge is a particular characteristic that makes a firm more attractive to customers than are its rivals.

True

A lease is a contract that permit use of someones else's property for a specified period of time

True

An advantage of buying a franchise is that it already has many of the requirements for success.

True

Consumerism involves performing product tests.

True

Debt financing comes from lenders who will be repaid at a specified interest rate within an agreed-on time span.

True

If a business has an operating history, its future needs can be estimated with relative accuracy, even with substantial growth.

True

In any small business, the competitive edge can be something as simple as courtesy, friendliness, and helpfulness.

True

In developing a business plan, one should consider the firms origin and background to attract investors.

True

Many "unsecured" loans that banks extend to small businesses require personal guarantees by the managers of the firms.

True

Questionnaires used for primary research should:

Use familiar jargon.

Which of the following is a strategy used by companies with a reputation for superior marketing?

Attention to packaging

Which of the following is part of a company financial resources?

Available equity

_____ is a form of debt security with a standard denomination, method of interest payment, and method of prinicipal repayment.

Bond

____ set the requirements needed to follow strategies and accomplish objectives.

Budgets

A franchisee owns a franchises name and distinctive elements and licenses others to sell its products.

False

A franchiser exercises complete control over a franchisees business operations.

False

A uniform marketing strategy is recommended for people of all age groups as it proves to be very beneficial.

False

Combination franchising is the ideal arrangement for big-name franchise operations to avoid cultural clashes

False

Deceptive or amplified advertising is an essential component of consumerism.

False

Due diligence is the concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independence efforts.

False

Employees are not a good source of information about customer preferences as they are usually just trying to sell a product.

False

Growing companies must be financed entirely with debt financing.

False

If a business is to reorganized and run by more than one person, preparing the business plan should be an individual effort.

False

In a SWOT analysis, strengths and weaknesses of a company are part of it external environment.

False

In the context of a business setting, operational planning involves developing strategies to meet competition.

False

Market research can be useful before starting a small firm, but it is not required once the firm is in operation.

False

Markup involves adding products that were initially unrelated to the present product line.

False

Net Profit is defined as the total amount of revenue generated.

False

One should buy an existing business even if the physical facilities of the firm are old or obsolete.

False

Small businesses in the United States are moving away from synergy as they are trying to reengineer themselves.

False

Small businesses' assets such as buildings should be financed with short-term loans.

False

Strategies are general statements that serve as short-term guides to managerial decision making.

False

Strategic planning helps a business set its____.

Missions

Which of the following statements is true of franchising?

A franchise is an agreement whereby an independent businessperson is given exclusive rights to sell a specified good or service

A penetration price refers to:

A price set relatively low to secure market acceptance

A(n) _____ is given to customers for accepting less of something or as an adjustment for variation in quality.

Allowance

_____ consists of two or more companies exchanging items of roughly equal value.

Barter

_____ involves prodding businesses to improve the quality of their products and to expand consumer knowledge.

Consumerism

____ is the process of setting standards, measuring performance against standards, and taking corrective action to see that planned performance is achieved.

Controlling

Which of the following is true of combination franchising?

Cultural clashes can lead to the breakup of this arrangement.

In the context of small businesses,______ comes from lenders who will be repaid at a specified interest rate within a specified time span

Debt Financing

While implementing a marketing strategy, ____ involves adding products that are unrelated to the present product line.

Diversification

Many consultants and advisers push small companies to give more emphasis to their:

External Environment

The Small Business Administration in the United States is a particulary effective source of local information for prospective business owners because it is familiar with an area's needs.

False

The industry group with the largest volume of sales in a business format franchising is automobile and truck dealerships.

False

The market concept states that a firm must put consumer needs first, even if it means foregoing satisfactory profits.

False

The marketing concept is opposed to the systems approach in managing a business

False

The mission statement of a business corporation should be revised frequently.

False

The purpose of business incubators is to shelter failing enterprises by providing financial services.

False

_____ are those capital requirements that are of a relatively permanent nature and are necessary for the functioning of a business.

Fixed Assets

Expenses that do not alter in value as sales volume rise or fall are called_____.

Fixed Expenses

Which of the following statements is true of market research in the context of small businesses?

Formal research programs are a valuable but an expensive way to obtain guidance.

Product and trademark franchising:

Grants the franchise the right to sell a widely recognized brand.

A unit pricing policy is most likely to be used by a_____.

Grocery Store

The sales of a product are rising rapidly and profits are peaking. This product is in the _____ stage of the product life cycle.

Growth

John, who needs funding for his small business, approaches a few lenders for funds. Which of the following will be true in this situation?

Lender(s) will typically look at the track record of his business because the money being borrowed is for an existing business.

_____ is the amount added to the cost of a product to determine selling price.

Mark-up

______ is the systematic gathering, recording, and analyzing of data about the merchandising of goods and services

Market Research

____ is the system of gathering, recording, classifying, analyzing, and interoperating data related to merchandising of goods and services.

Market research

Which of the following statements characterizes the growth stage of the product life cycle?

Marketing strategy in this stage typically encourages strong brand loyalty.

Matt plans to open a convince store. The startup cost is approximately $10,000. Since Matt has only $2,500 with him, he decides to invite two of his friends---- Brett and Brian--- to join him in his venture. In this scenario, who should be in charge of writing the business plan?

Matt, Brett, and Brian, since it is always a team effort

____ provide employees with standing instructions for performing their jobs, compromise detailed explanations of how to do the work properly, and inform in what order it should be done.

Methods and procedures

____ is the process of finding a small--but profitable----demand for something and producing a custom- made product for that market.

Niche marketing

____ give a short-term direction to a business and serve as benchmarks for measuring performance.

Objectives

The external environments of a SWOT analysis consists of:

Opportunities and threats

What does a franchiser do?

Owns the company name and licenses others to sell its products

John wants to start his own fruit juice and beverage company. He is aware of the large number of competitors in this industry and of the fact that his product should not be very costly. To differentiate his product from that of his competitors, he decided to sell his beverages in specially designed containers that keep the juice fresh for 7 days even without refrigeration. John is focusing on the ____ component of the marketing mix.

Packaging

____ should be the first management function performed by an effective business owner- manager.

Planning

Small business investment companies are:

Private firms licensed and regulated by the Small Business Administration to make "venture" investments in small firms.

Jane, who wants to start her own business, considers buying an internet cafe which is up for sale in her neighborhood. However, Jane discovers that Internet connectivity tends to be erratic in the store since she lives in a remote town and decides against it. Which of the following is most likely the reason for Janes refusal to buy the business.

Problems due to old and obsolete facilities.

The continuous fee paid by the franchise to the franchiser based on a percentage of the franchisees gross revenue is termed:

Royalty fee

A____ price is one which is set relatively high initially in order to obtain the " cream" of the target market before competitors enter.

Skimming

____ is the concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independent efforts.

Synergy

What is due diligence?

The research and analysis of the company that is done before a business transaction.

In the context of small businesses, which of the following is true of business incubators?

They nuture young firms and help them grow

Which of the following statements is true of venture capital firms?

They prefer to back small firms with opportunities for fast growth.

Financial planning involves:

estimating income and expenses