Small Business Management Chapters 3, 4, & 5

in which a single franchisee owns more than one unit of a franchised business, is becoming widely used. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

a

sells goods or services supplied by the franchisor or that meet the franchisor's quality standards. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

a

Taken every five years. A source of market data that explains where certain businesses are located. Compiled for each state and county, all communities with a population of 2500 or more. a. census of housing b. census of population c. census of manufacturing d. census of business

d

To sell another franchise location within the market area of an existing franchisee. a. expertise b. due diligence c. churning d. encroach

d

Which of the following is NOT a characteristic of a family business? a. A business that passes from one generation to the next b. A large publicly traded company c. Interdependence of management and family relationships d. Ownership and involvement is by a majority of non-members of the family

d

Which of these involves bringing two franchise brands together under one owner? a. Piggyback franchising b. Master licensee c. Elite entrepreneur d. Co-branding

d

is the operation of a retail franchised outlet within the physical facilities of a host store. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

d

is the right to sell the licensed company's goods or services in a particular area. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

d

Members of the succeeding generation in family firms may have emotional resistance to joining the firm which includes all of the following EXCEPT: a. fear of failure. b. fear of Success. c. fear of Commitment. d. fear of Affluence.

d

Of all the relationships in a family business, the _____ relationship is the most sensitive and troublesome. a. husband-wife b. in-law c. son-daughter d. parent-child

d

Which of the following is NOT considered an advantage of a family business? a. Family members are loyal to the business even in tough times. b. There is a greater level of trust between family members involved in the business. c. Questions of competency from non-family members of the business. d. Family businesses have a long-range plan for future generations.

c

A family business's primary function relates to the care and nurture of family members. a. True b. False

b

As a franchisee, costs involved in renting or building an outlet and stocking it with inventory and equipment are called a. franchise fees. b. investment costs. c. royalty payments. d. advertising costs.

b

Research finds that due to lack of control, franchising is more risky than starting a business from scratch. a. True b. False

b

Research finds that the general environment affects large businesses and not the small ones, regardless of the industry. a. True b. False

b

Research finds that, generally, the process of succession is usually very fast in a family business. a. True b. False

b

Startup ideas involving new or relatively new technology, centered around providing customers with a new product or service. a. new market ideas b. new technology ideas c. new benefit ideas

b

The basic features of the relationship between the franchisor and the franchisee are embodied in the broker contract. a. True b. False

b

A rule that requires the franchisor to disclose certain information to prospective franchisees.

Franchise Rule

Which of the following is NOT information contained in a disclosure document? a. franchisor's financial statements b. franchisor's selling price c. franchisor's financial obligations d. franchisor's involvement in litigation

b

Startup ideas centered around providing customers with an existing product or service not available in their market. a. new market ideas b. new technology ideas c. new benefit ideas

a

The broad environment, encompassing factors that influence most businesses in a society. a. general environment b. industry environment c. competitive environment

a

The primary source of information about a franchise opportunity is the ___________________ a. state governments b. federal governments c. International Franchise Association d. the franchisor

d

Which of the following is a consideration in the transfer of ownership in the family firm? a. tax laws b. fair treatment of community members c. delay of transfer of ownership until the death of the founder d. planning and discussion of taking the firm public

a

the main benefit for the franchisee is the privilege of using a widely recognized product or trademark. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

b

A buyer should seek the help of outside experts, especially ________________ and lawyers. a. friends b. franchisor c. accountant d. none of the above

c

A company markets an individual yogurt serving with a collapsible spoon attached to the cup. This firm is pursuing a _____ strategy. a. focus b. cost c. differentiation d. niche

c

is the legal agreement between a franchisor and franchisee.

franchise contract

The Franchise ____________________ Document (FDD) provides the accepted format for satisfying the franchise disclosure requirements of the FTC.

Disclosure

census of population is taken every _________ years

10

census of business is taken every ___________ years

5

__________________is the action by franchisors to void the contracts of franchisees in order to sell the franchised business to someone else and collect an additional fee.

Churning

The party in a franchise contract that specifies the methods to be followed and the terms to be met by the other party is called a(n) a. franchisor. b. franchisee. c. local community. d. broker.

a

The price at which the property would change hands between a willing buyer and willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts refers to a. fair market value. b. nondisclosure agreement. c. churning price. d. encroachment value.

a

The primary advantage of franchising is its high probability of _______________ a. success b. profits c. branding

a

The primary source of new ideas is a. personal experience. b. personal interest. c. chance happening. d. deliberate search.

a

What is the highest cause of business failures a. economic b. financial c. experience & strategy d. neglect

a

When the franchisor sells another franchise location within the market area of an existing franchisee, it is called a. encroachment. b. churning. c. pivot. d. co-branding.

a

_____ refers to startup ideas centered on providing customers with an existing product or service not available in their market. a. New market ideas b. Old market ideas c. New technology ideas d. New benefit ideas

a

_____________________ factors in determining the value of a business for sale include the market, competition, future community development, legal commitments, union contracts, buildings, and product prices a. Nonquantitative b. Quantitative

a

A Franchise Disclosure Document (FDD) is a detailed statement of such information as the franchisor's finances, experience, size, and involvement in litigation. a. True b. False

a

A competitive advantage gives a startup or small business the upper hand by helping it to provide products or services that customers will choose over available alternatives. a. true b. false

a

A facility for making desirable discoveries by accident. a. serendipity b. pivot

a

A family _____ is a gathering of family members, usually at a remote location, to discuss family business matters. a. retreat b. council c. business d. picnic

a

A pattern of behaviors and beliefs that characterize a particular firm refers to its a. organizational culture. b. family council. c. family-based commitment. d. nepotism.

a

A popular tool for studying the industry environment is Porter's five factors. Which of the following is NOT considered part of the five factors? a. Federal government b. Substitute products and services c. New competitors d. Suppliers

a

A potential advantage of the husband-wife team known as co-preneurs is the opportunity to share more of their lives. a. True b. False

a

A(n) _____ business is a venture that is operated by a founding entrepreneur. a. owner-managed b. sibling partnership c. cousin consortium d. family council

a

Accounts & notes receivable is a tangible assets? a. true b. false

a

An example of a non-quantitative factor in buying a business is future community development. a. True b. False

a

Causes of failure that are considered external a. human resource planning, capital shortage, tax burdens, government regulations, consumerism b. lack of expertise, financial shortages, human resource management

a

Data useful for marketing research. A source of market data that keeps track of new home sales by region and/or the construction of new houses by region and specific area. a. census of housing b. census of population c. census of manufacturing d. census of business

a

Entrepreneurs who receive an entire marketing and management system are participating in a. business format franchising. b. multiple-unit ownership. c. piggyback franchising. d. product and trade name advertising

a

In _____ franchising, a franchisor owns the right to a name or trademark and sells that right to a franchisee and often provides a full range of services, including site selection, training, product supply, marketing plans, and even assistance in obtaining financing. a. business format b. multiple-unit ownership c. piggyback d. product and trade name

a

In a family business, the founder's core values may become part of both the business culture and the family code. a. True b. False

a

Is close communication among family members a positive or a negative of a family business? a. Positive b. Negative

a

Is trust among family members a positive or a negative of a family business? a. Positive b. Negative

a

New business ventures created "from scratch." a. startup b. entrepreneurial alertness c. opportunity recognition

a

New technology ideas involve unique technology that is better than others currently available, it is feasible to implement and is focused on a market need that is deep enough to generate sufficient sales. a. True b. False

a

Outside-in analysis should consider the general environment, or big picture, and the industry setting in which the venture might do business. a. True b. False

a

Relative to Coca-Cola, Pepsi Cola would be considered a _____ to/for Coca Cola under Porter's Five Forces model. a. rivalry b. new competitor c. substitute d. niche

a

Taken by federal government every ten years and provides information on age, sex, race, material status, family status, ethnic origin, migration, education, income, occupation, employment, and other characteristics of the population. a. census of housing b. census of population c. census of manufacturing d. census of business

a

The greatest advantage of buying a franchise is a. the probability of success. b. multiple-unit option. c. piggyback cost sharing. d. Little or no work on part of the franchisee.

a

The industry environment is the environment that includes factors that directly impact a given firm and all of its competitors. a. true b. false

a

: A group of potential customers having purchasing power and unsatisfied needs. a. consumers b. market c. marketing d. advertising

b

A _____ analysis is a preliminary assessment of a business idea that gauges whether or not the venture envisioned is likely to succeed. a. SWOT b. feasibility c. new technology d. pivot

b

A formal organization in which family members discuss strategic planning and other issues pertaining to the family business is called a family _____. a. retreat b. council c. consortium d. enclave

b

A small firm that provides low prices due to cost efficiencies is using a a. revenue-based strategy. b. cost-based strategy. c. differentiation-based strategy. d. focus strategy

b

An outside-in analysis involves assessing the firm's a. general environment and internal capabilities. b. the general environment and industry environment. c. SWOT. d. resources and core competencies.

b

Core competencies are the same thing as competitive advantage. a. True b. False

b

If the children of the founder become the owners and managers of the business, that second generation is referred to as a(n) a. owner-managed venture. b. sibling partnership. c. cousin consortium. d. family council

b

Is a lack of loyalty to the firm by family members not directly involved in the business a positive or a negative of a family business? a. Positive b. Negative

b

Patents, copyrights and goodwill are tangible assets? a. true b. false

b

Readiness to act on existing, but previously unnoticed, business opportunities. a. startup b. entrepreneurial alertness c. opportunity recognition

b

The environment that includes factors that directly impact a given firm and all of its competitors. a. general environment b. industry environment c. competitive environment

b

The exercise of reasonable care in the evaluation of a business opportunity. a. expertise b. due diligence c. churning d. encroach

b

The general environment is defined more narrowly as the context for factors that directly impact a given firm and all of its competitors. a. True b. False

b

The overlap of family concerns and business interest in the family firm simplifies management of the business. a. True b. False

b

The practice of employing relatives is referred to as a. a family council. b. nepotism. c. co-preneurs. d. a transfer of ownership.

b

The process of planning and executing the development, pricing, promotion, and distribution of an organization's goods or services. a. retailing b. marketing c. manufacturing d. advertising

b

The statistical study of human populations with respect to their size and density, distribution, composition, and income a. market analysis b. demographics c. surveying

b

To refocus or recreate a startup if the initial concept turns out to be flawed. a. serendipity b. pivot

b

Under the restrictions of _____, the buyer promises the seller that he or she will not reveal confidential information or violate the trust that the seller has offered in providing the information. a. the Federal Trade Commission b. a nondisclosure agreement c. piggyback franchising d. a master licensee

b

Unfortunately, a cost-based strategy usually doesn't work for small companies because they don't have the capacity to produce high volumes. a. True b. False

b

Entrepreneur's Top 5 Franchises for 2017 include all of these EXCEPT: a. Dunkin' Donuts. b. Jimmy John's. c. The UPS Store. d. Starbucks.

d

Which of Michael Porter's five factors that determine the nature and degree of competition in an industry describes, "Can customers turn to other products or services to replace those that the industry offers?" a. Rivalry b. Substitute products and services c. New competitors d. Suppliers

b

Which of the following is a reason for buying an existing business? a. to eliminate risk b. to acquire an ongoing business at a bargain price c. to start from scratch d. to develop a new product

b

_____ refers to actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee. a. Multiple-unit ownership b. Churning c. Piggybacking d. Encroachment

b

________________ factors in valuing a business include state sales tax statements, supplier invoices, customer receipts, and the company's bank statements. a. Nonquantitative b. Quantitative

b

is an independent firm or individual acting as a middleman or sales agent with the responsibility of finding new franchisees within a specified territory. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

b

Marketing procedure includes all but a. demographics b. economic base c. population & income trends d. ethnicity of population e. competition f. social & business climate

d

A statement of principles intended to guide a family firm through times of crisis and change refers to a(n) a. organizational culture. b. cousin consortium. c. family business constitution. d. transfer of ownership.

c

D.A source of market data that explains where certain manufacturers are located. a. census of housing b. census of population c. census of manufacturing d. census of business

c

Garden Hoses, Inc. (GHI) focuses on offering a product that are unique and different from competitors' products. GHI is engaging in the _____ strategy. a. price-based b. cost-based c. differentiation-based d. focus

c

Identification of potential new products or services that may lead to promising businesses. a. startup b. entrepreneurial alertness c. opportunity recognition

c

SWOT stands for a. strengths, weaknesses, options, and trade. b. strategies, weaknesses, options, and threats. c. strengths, weaknesses, opportunities, and threats. d. strategies, weaknesses, opportunities, and trade.

c

Startup ideas centered around providing customers with new or improved products and services or better ways of performing old functions. a. new market ideas b. new technology ideas c. new benefit ideas

c

The company's financial statements and tax returns for the past ___________________ (or longer) should always be examined a. 4-5 years b. 2-3 years c. 3-5 years d. year

c

The environment that focuses on the strength, position, and likely moves and countermoves of competitors in an industry. a. general environment b. industry environment c. competitive environment

c

What is the least cause of business failures a. economic b. financial c. experience & strategy d. neglect

c

When Subway operates a restaurant within a truck stop, it is an example of _____ franchising. a. business format b. multiple-unit ownership c. piggyback d. product and trade name

c

Which of the following is NOT a characteristic of a family council? a. sharing of achievements b. discussion of future direction c. small, select group of employees d. sharing of family history

c

Which of the following is NOT a potential problem in the succession of a family business? a. Reluctant parents b. Ambitious children c. The type of business conducted by the firm d. Lack of understanding between parent and child

c

_____ refers to fundamentally refocusing the startup as it unfolds or completely recreating it if the initial concept turns out to be seriously flawed, but already exists elsewhere. a. Serendipity b. Core competencies c. Pivot d. SWOT

c

entrepreneurs receive an entire marketing, management, and supply system. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

c

individuals or firms that obtain the legal right to open several outlets in a given area. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

c

A _____ assessment is focused less on whether industry conditions overall are suitable to launching a new business and more on the probability of a startup's success over the long run. a. new market b. general environment c. new technology ideas d. micro-level industry

d

Accidental discovery involves _____, the facility for making desirable discoveries by accident. a. search b. luck c. investigation d. serendipity

d

All of the following are factors to consider when buying a business except a. reason for selling the business b. profitability c. tangible assets d. intangible assets e. customer diversity

e

List four reasons for buying an existing business, and describe the process of evaluating an existing business. a. Buying an existing firm can reduce the uncertainties associated with a startup. b. In acquiring an existing firm, the entrepreneur can take advantage of the firm's ongoing operations and established relationships with customers and suppliers. c. An existing business may be available at a price below what it would cost to start a new business or buy a franchised business.. d. Another reason for buying an existing business is that an entrepreneur may be in a hurry to start an enterprise. e. all of the above

e

involves operating several franchised businesses within a single corporate structure. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

e

is a process for expanding a business and distributing goods or services through a licensing arrangement. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

e

Wealth produced in or near a community that provides employment and income to a local population

economic base

____________________ is the franchisor's selling of another franchise location within the market area of an existing franchisee.

encroachment

brings two or more franchise brands together within a single enterprise. a. multiple-unit ownership b. master licensee c. area developers d. piggyback franchising e. multibrand franchising f. co-branding

f

specifies the methods to be followed and the terms to be met by the franchisee. may also provide business expertise that otherwise would not be available to the franchisee. a. franchisee b. product & trade name franchising c. business format franchising d. franchise e. franchising f. franchisor

f

_____________________ is the process of locating and investigating Customers that have purchasing power and needs that can be satisfied with the product or service the entrepreneur can offer.

market analysis