Small Business Management Exam 1

Which of the following is true about business-to-business (B2B) transactions?

B2B e-commerce is larger that B2C e-commerce

Gaining legitimacy in small business is especially difficult for entrepreneurs seen as "different" -women, minorities, home-based businesses, or businesses started by young people.

True

Intellectual property refers to original works like inventions, visual and performing art works, books, and computer programs.

True

Most entrepreneurs start out working part time on their new business.

True

One of the seven key strategies of the entrepreneurial way involves effectuation or an approach used to create alternatives in uncertain environments.

True

One of the ways to practice the business of innovation is to invite someone who was never included before in a meeting for solving a problem.

True

One way entrepreneurs display passion is by being persistently focused on the business.

True

Several models exists for the life cycle of the small business firm. Each divides the stages a bit differently.

True

Strategy is the idea and actions that explain how a firm will make its profits.

True

Succession plans deal with the people who will take over, what roles they fill, and what supports they will receive.

True

The feasibility of an idea is the extent to which it is viable and realistic.

True

The major ways you cope with competitive pressures is by undertaking some combination of strategic actions and tactical actions.

True

The three principles that are absolutely critical in the process of effectual reasoning are; loss, strategic partnerships, and leveraging contingencies.

True

Universalism is an ethical model that suggests people get their ideas of right and wrong from their family, religion, education, and community.

True

When considering how to organize the business you are creating, one consideration is permanence, which is related to legitimacy.

True

Innovation-driven economies

are focused on high-value-added manufacturing but are marked by a very large service sector.

Getting the business organized and registered is an example of ________ competency.

boundary

The life cycle stage in which a product or service is being invented is known as the

introduction stage.

A _______ is a legal agreement that grants the rights to use a particular piece of intellectual property.

license

For part-time businesses, _____ refers to the documented permission from the government to run a business and may be required for certain professions such as beauticians or home-based day-care providers.

licensing

Which of the following categories does the majority of small businesses fall under?

lifetime/part-time firms

_________ is the idea and actions that explains how a firm will make its profits.

Stategy

A license is a legal agreement that grants rights to use a particular piece of intellectual property. In return, you (the licensee) are required to pay the owner of the license (the licensor).

True

A situation that occurs when a person's values are in conflict, making it unclear whether a particular decision is the right thing to do is considered an ethical dilemma.

True

All entrepreneurs have at least four sets of resources: access to capital; their own skills and abilities; their own knowledge; and their network of friends and business associates.

True

An opportunity that makes it possible for a new business to gain a foothold in a market is called an entry wedge.

True

Big business often has trouble with innovations, but small, new, businesses are more likely to see new revenues in innovations.

True

Business plans are essential for external legitimacy and internal understanding.

True

Delegation is not for everyone and every situation.

True

Every business faces risks in the real world, so every business plan needs to spend some time addressing them.

True

For corporations, certification for business owned by women or minority is handled by organizations that are not affiliated with the government or big business.

True

Founders of small businesses often find it very difficult to give up decision-making authority to family members.

True

Which of the following statements is true of franchise?

A franchise is a prepackaged business bought, rented, or leased from a company.

Scenario: Connie's Corner Café Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. Which of the following statements is true of a vision statement?

A tagline or a slogan is a good way to present vision statements.

_________ means taking business away from one's employer.

Cannibalizing

Crowdsourcing is funding a business online through the collective involvement of others who provide donations, loans, or investments.

False

Differentiation strategies target a niche segment of the market.

False

For the successor of a family business, ownership transfer is best accomplished after the death of the founder.

False

In deciding whether to make the move from part-time to full-time entrepreneurship, the key question is usually government regulations.

False

In entrepreneurship, every good idea is a viable business opportunity.

False

In order to make profits from a small business, the company needs to make an actual product

False

In the context of a business plan, a firm's responsiveness to customers is a key concern of bankers.

False

Incremental innovation is also called a blue ocean strategy.

False

Key business functions are the abilities or skills of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise.

False

Selling your product or service in a limited area, for a limited time is known as parallel marketing.

False

Taking products and services made in your home country and selling them in other countries is called importing.

False

The absolute lowest price that a buyer would be willing to pay is called the "point of indifference" in the negotiation process.

False

The elevator pitch is much shorter than a vision statement or tagline.

False

The general environment is part of the internal environment.

False

There are two ways to think about opportunities and business creation - one way is the effectuation model of entrepreneurship where you think about what you need to do to cause you new product or service to come into existence.

False

When studying the business costs of ethical failures in large businesses, the more damaging costs received more executive attention.

False

One of the quickest and simplest ways to screen an idea for business potential is through the

IDEO screen.

_________ is the general name for the line of product or service being sold, or the firms in that line of business.

Industry

Which of the following is true of entrepreneurial alertness?

It allows entrepreneurs to notice things that have been overlooked.

_________ refers to working for 35 or fewer hours a week.

Part-time employment

_________ refers to the impression of a long-term continuity a business gives others.

Permanence

Which of the following statements is true of a high-growth venture?

The metastrategy for a high-growth venture is novelty.

The CEO at River Castle Inc. asked the employees to prepare a report on ways in which the company could become more environmental friendly. The reports revealed areas in which the company had been unnecessarily adding to its carbon footprint and consuming excessive energy due to faulty machines. As a corrective action, all the faulty and outdated equipment were replaced with efficient equipment. This is an example of

a green audit.

Which of the following is a way to start business with established customers?

a spin-off

A(n) ________ plan is a document designed to detail the major characteristics of a firm - its product or service, its industry, its market, its manner or operating and its financial outcomes with an emphasis on the firm's present and future.

business

The ______ of an organizations will be a part of its task environment.

competitors

In an imitative strategy, an entrepreneur

does more or less what others are already doing.

The motivations, cognitions, attitudes, aptitudes, and behaviors that lead to a propensity to create solutions to problems or seeking opportunities to do something new or better is called

entrepreneurial mindset

The sum total of forces outside of an entrepreneur and a firm is called the

environment

Which of the following is the primary goal for performing die diligence?

finding any inefficiencies, unnoticed opportunities, waste, and mismanagement

Which of the following is one of the ways to get into small business ownership?

franchising

Scenario: Connie's Corner Café Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. The ________ rate is the percentage of people who buy out of the total population of people approached.

hit

Access problems for women-and minority-owned small businesses crop up most often as discrimination

in financing.

Scenario: Connie's Corner Café Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. One variant of the traditional business plan is the ________ plan consisting of a company and organization sections, with revised cover letter, title page, executive summary, and table of contents to reflect the differences.

informational

Patents and trademarks are examples of

intangibles.

In the SCAMPER tool, "M" stands for

modify.

A ________ is a narrowly defined segment of the population that is likely to share interests or concerns.

niche market

Which of the following is a disadvantage of a start-up?

no revolving credit from suppliers or banks

The _______ is the most important element of social capital to customers and supporters of a business, such as bankers, lawyers, and suppliers.

owner

An entrepreneur's ________ is most likely to inspire key stakeholders like potential investors, employees, or subcontractors.

passion

Which of the following answer options is not a product-based legitimacy indicator?

physical setting

Scenario: Connie's Corner Café Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. Which of the following pitch deck categories is sometimes given in the form of a user's experience?

problem slide

This stage of the business life cycle occurs once the firm is established in its market.

success stage

At the tip of the high-growth ventures are firms called _______, like Uber and AirBnB with valuations of $1 billion or more.

unicorns

In an attempt to become more innovative, a major pitfall that business owners are most likely to become victim to is

using the first good idea as a business opportunity.