ELE 4030 Final Exam

What percentage of business have a production process? 100 75 50 25

100%

The legal means to protect intellectual property is _________. all of these trademark copyright patent

All of these

_________ have been a major source of funds for established firms, but are quite restrictive in their lending to start-up firms because the risk is perceived to be high. Families Suppliers Banks Investors

Banks

_________ are high-net-worth individuals who invest in business not as a business, but individually. Venture capitalists Equity investors Supplier capitalists Business angels

Business angels

_________ are resources that combine to allow a firm to do things better than its competitors. Analytical tools Measurable goals Trade-outs Capabilities

Capabilities

In production management the two most important elements are: charting and quality financing and quality charting and organization financing and organization

Charting; quality

A(n) _________ is an analytical tool to organize information about direct competitors on all points of competition. analysis gap completion map deficient map competitive map

Competitive map

Which of the following is NOT a personal motivator to start a business? defensive positioning driven proactive positioning practical advice

Defensive positioning

All of these are steps in identifying a sustainable competitive advantage EXCEPT: Evaluate the extraordinary resources. Develop a list of the business assets. Break the list of capability into standard and extraordinary. Develop a list of all potential customers.

Develop a list of all potential customers.

_________ is the analysis of the differences between the predicted and the actual performance of a business. Gap analysis Deviation analysis Margin analysis Profit analysis

Deviation analysis

Legitimacy is a term used by financial institutions interacting with new businesses, which indicates there are questionable areas of concern T/F

False

Liquidity, activity, marketing, and profitability are the four basic categories of performance ratios. True False

False

New business owners do not need to identify customers because they have already been identified by their competitors. All you have to do is copy your competitors. T/F

False

The unlimited theory suggests that individuals act to maximize their own individual benefit. T/F

False

There is one crucial person in a large organization: the chief executive officer. T/F

False

Time management is not an important aspect in the successful management of a business. Small business owners can set their own time schedules

False

John needs to know who his customers are and how to attract them. He needs a(n):

Marketing plan

According to the book, there are three elements of entrepreneurial orientation. Which of the following is NOT one of those elements? risk tolerance passionate about your product or service prior experience personality orientation

Passionate about your product or service

_________ is a financial statement that summarizes the revenue, costs, and expenses incurred during a specific period of time.

Profit and loss statement

A _________ analysis is the development of a chart (using a current cash flow statement, income statement, or balance sheet) to create pro forma projections of a dramatic increase in sales or a major complication that might be experienced by a business. deviation leverage financial sensitivity

Sensitivity

All of these are analytical methods focusing on financial data EXCEPT: deviation analysis ratios sensitivity analysis short survey

Short survey

_________ ties the firm to the supplier and usually stops the owner from shopping around for a lower price. Supplier grant Equity funding Supplier credit Non-equity credit

Supplier credit

According to the book, the greatest contributor to an owner's success is _________. opportunities not available in large company the owner doing something they enjoy spending less time at work no risk involved

The owner doing something they enjoy

A competitor's actions may change the opening date of a new business

True

A float reflects a setting where there is a difference between the money going out and the money coming in. T/F

True

A good way to generate new business ideas is to think about the things that frustrate you or cause you problems, and then to identify solutions. T/F

True

A sustainable competitive advantage is an advantage that other firms cannot immediately copy.

True

Approximately 66 percent of all net new jobs are added by small businesses. T/F

True

The fourth column in a gap analysis is used to list the resources required for the successful operation of the business. T/F

True

The rate of small business failure has declined. T/F

True

The third column in a gap analysis is where the potential owner should provide a realistic estimation of his or her present resources. T/F

True

Unusual or unique competitive factors are the means by which a business can differentiate itself from competitors. T/F

True

All of the following represent issues that need to be considered in sales management EXCEPT:

What would be the cost of the final product that is sold to the customers?

Which of the following is the definition of brainstorming? a simple process of systematically examining the difference between what is expected and what occurs a creative process whereby an individual is asked to develop ideas followed by evaluation of each potential idea rational decision making by a group of individuals an imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea

an imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea

A marketing effort that requires little capital is called Hybrid promotion Pure promotion Bootstrap marketing Mixed model promotion

bootstrap marketing

Effective brainstorming has rules that should be followed in order to be most effective. Which of the following is NOT one of the rules of brainstorming? include friends and family members in the group carefully examine each possible option before considering another generate ideas related to a specific topic or problem avoid evaluating ideas that are contributed

carefully examine each possible option before considering another

A substitute can assist in forming a(n) _________ on the price that can be charged for product or service. elastic demand ceiling schedule competitive map

ceiling

A _________ is an agreement between two parties to perform certain activities for some consideration. contract limited partnership warranty corporation

contract

A(n) _________ demonstrates how a set of activities are dependent on each other and which activities take the longest time Production pie chart Critical path chart activity setting chart pro forma chart

critical path chart

Liquidity ratios allow the owner the short-term ability to meet the firm's financial obligations. These obligations are _________ and _________. inventory; accounts receivable debt; accounts receivable inventory; accounts payable debt; accounts payable

debt; accounts payable

According to the book, new product ideas for small business start-ups originate from all of the following EXCEPT: existing records of a business prior work experience personal interests and hobbies brainstorming

existing records of a business

According to the book, there are four specific threats to achieving business success. Which of the following is NOT one of the threats mentioned in the chapter? operational financing sales generation scheme high degree of risk competitors

high degree of risk

When a small business owner pays a commission in addition to a basic salary, it is called a Hybrid compensation Bonus Salary Profit Sharing

hybrid compensation

When a corporation suffers losses, the founders will: be responsible for all debts of the company share equity investments lose only their investment in the business have unlimited liability

lose only their investment in the business

Marketing efforts need to based on the

mission statement

Fragmented markets have: clear dominant competitors few potential competitors no clear dominant competitors many potential customers

no clear dominant competitors

Pricing something that ends in 99 cents makes a big difference in the buying of a product. This is because of a consumers

perception

A(n) _________ exists if the service or product performs a similar function. elasticity of demand product/service flexibility trade-in substitute

substitute

Jane has developed a special Italian sauce for pizza. The sauce cannot be easily copied. This is a(n):

sustainable competitive advantage

Locations can be evaluated by

the amount of traffic that it draws

All of these are reasons why small business owners do not write job descriptions except:

wait till the employee gets hired

The largest group of new business owners is _________. Asians retired men women Hispanics

women

An employee cannot sue a small business owner for injury, if the individual accepts

workers' compensation

A _________ can easily be converted to cash, such as accounts receivable and notes receivable.

Current asset

A new businessperson should be guided by ________ to develop a critical path chart. Financial data marketing data operational data information data

Marketing data

As a result of conducting a gap analysis, the potential entrepreneur proved there was a need for the business. This is called doing the owner's _________. due diligence basic market plan operational financing business ideas generation

due diligence

Company analysis should proceed from the _________ and move toward the _________. general; specific specific; general lowest; highest negative; positive

general; specific

When forming a sole proprietorship or a partnership, the business debts are: paid the first day of the month responsibility of the owners accumulated paid by purchase order

responsibility of the owners

According to the book, which of the following sequences is correct when you want to start a new business? Determine who your potential customers might be, identify the exact competitors within that industry, define the industry that interests you Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry Identify the exact competitors within that industry, define the industry that interests you, determine who your potential customers might be Identify the exact competitors within that industry, determine who your potential customers might be, define the industry that interests you

Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry

All of these are criteria in deciding extraordinary resources in a company EXCEPT: valuable durable elastic rare

Elastic

_________ demonstrates how easy it is for a customer to switch to substitutes. Trade-in Competitive map Elasticity of demand Benchmarking

Elasticity of demand

which of the following laws states an employer cannot discriminate in pay to men and women who do the same job?

Equal pay act

_______ theory suggests that all individuals judge how we are treated relative to how we see others being treated

Equity

which of the following laws established a minimum wage for workers?

Fair Labor Standards Act

A business owner should never change its mission statement or strategy. T/F

False

A cash flow statement is the same as a budget. T/F

False

A cost leader is a product or service that is sold at a non-operating loss. T/F

False

A disadvantage of a sole proprietorship is that the business must involve more owners than just the founder. T/F

False

Cash flow in a business is the same as profit. T/F

False

Small companies can take advantage of economies of scale better than large firms. T/F

False

The process of generating new business ideas is something that occurs automatically. T/F

False

Small businesses deal with _________ regulations than large firms. fewer more same proportionate

Fewer

In a limited partnership, there must be a(n) _________. active investor unlimited liability general partner limited liability

General partner

_________ are special funds, neither equity nor debt, that do not require repayment and are designed to aid businesses in specific areas. No-pay loans Grants Small business loans Incubator equity

Grants

_________ measures the overall profits that are obtained from all sales during a given period. Gross profit margin Net profit margin Operating profit margin Return to equity

Gross profit margin

According to the book, _________ is(are) a source of valuable information for new business owners trying to choose a location for their business

Incubators

According to the book, which of the following is an example of circumstance motivators? People start their own company because they have a passion for their product or service. Individuals are laid off, are demoted, or are forced to take reduced pay by their prior employer. People start their own company because they want to be their own boss. Women, who are the fastest growing group of small business owners, who want to achieve their dreams.

Individuals are laid off, are demoted, or are forced to take reduced pay by their prior employer.

Which of the following terms is used by key stakeholders for acceptance of a company as a reputable ongoing business?

Legitimacy

According to the book, the greatest source of sustainable advantage is: personal relationship with customer location relationship with vendors staffing

Personal relationship with customer

The focus of an income statement is on: profits liabilities assets cash

Profits

According to the book, the most dangerous situation for a new business is _________. uneven growth no growth slow growth rapid growth

Rapid growth

_________ aid(s), counsel(s), assist(s), and protect(s) the interests of small business concerns. Stakeholders The U.S. Small Business Administration Medium-sized businesses Fortune 500 companies

The U.S. Small Business Administration

What is the cost-plus pricing method?

The firm determines its cost and then adds some level of profit it determines to be appropriate.

An important concept in conducting a ratio analysis is to ensure the business is comparing their ratios with the ratios of other similar firms. In other words, a small business should compare their ratios with other similar small businesses in the same industry. False True

True

An industry is defined as a group of companies within a specified radius that will be in direct competition for the same customers. T/F

True

Dan asked Mike to invest in his Sports Shop. Mike gave $10,000.00 and wants 25 percent of the profits. This is a form of equity investment. T/F

True

Efficient use of time is imperative for a new business owner T/F

True

On a balance sheet, the assets minus the liabilities of a company reflected in the balance sheet should total zero. T/F

True

A bank provides John money for the necessary hamburger maker for his business. This is called _________. contractual assets necessary funding asset-based lending debt-asset lending

asset based lending

The pricing _______ is the lowest amount that can be charged for a product or service while still making a minimal profit

floor

All of the following are benefits of a Subchapter C Corporation EXCEPT: health benefits paid by the corporation owners being treated as employees of the company no limit to the number of shareholders fringe benefits being treated as income

fringe benefits being treated as income

Glass ceilings in large corporations involve _________. formal rules limits to the level of opportunity in the corporate hierarchy no particular pattern for advancement unblocked opportunities

limits to the level of opportunity in the corporate hierarchy

An owner should establish the mission statement and strategies _________. prior to its inception at the 90-day review at the first day of business at the 30-day review

prior to its inception

Human resources is defined in economics terms as the ______ and _____ of human effort directed toward producing goods and services

quantity; qualtity

According to the book, a small business typically has less than _______ employees. 100 125 75 50

500

_________ is(are) a form of non-equity funding. All of these Supplier credit Debt Credit cards

All of these

A quantitative measure is the corporate culture of an organization. T/F

False

A small business startup is typically oriented toward the personal goals of venture capitalists. T/F

False

A trademark cannot be renewed once it has been issued even when the firm or the product is active. False True

False

Brainstorming works best in formal groups. T/F

False

If a business drops below the lower bounds of its liquidity level, then their bank will likely increase the line of credit to the firm. T/F

False

In a small firm the cost of health insurance per employee will be equal to that of a large firm

False

In an external environment analysis, the first step is to research your customers. T/F

False

In the case of a company failing, debt does not need to be repaid. T/F

False

Large firms can fill market niches that small companies cannot afford to fill. T/F

False

OSHA stands for Office standards and health administration

False

_________ examine the performance of a business and its ability to make economic returns over and above its costs. Financial ratios Leverage ratios Activity ratios Profitability ratios

Profitability ratios

________ are strictly financial agreements in which a business pays for some outputs, such as TV advertisements

Pure promotions

Entrepreneurial businesses have the ability to make greater profits in markets that have been ignored by larger corporations. T/F

True

Facebook and Linked-in were founded as entrepreneurial businesses, but they are more accurately described as venture capital backed businesses. T/F

True

Which of the following is NOT a personality dimension of the Big Five test? agreeableness conscientiousness extroversion individualist

individualist

All of the following are triggers to start a new business EXCEPT: intolerable risk level experiencing a mid-life crisis very little to lose financially by a failure being laid off

intolerable risk level

When a small business owner is advertising a job, the company needs to attract the/a _____ pool of applicants to choose from

largest

The advantage of factoring for a small business is: not receiving the full amount of bill due receiving money from accounts receivable immediately operating the company on minimal outlay segmenting all the company's accounts receivable

receiving money from accounts receivable immediately

A mission statement is a long narrative used to summarize a business. T/F

False

A pro forma is a summary of the assets and liabilities. T/F

False

_________ are used to measure the level of indebtedness of a small business. Activity ratios Financial ratios Leverage ratios Profitability ratios

Leverage ratios

All of the following are benefits of a Subchapter S Corporation EXCEPT: limited number of shareholders limited liability legitimacy in the market easy formation

Limited number of shareholders

A _________ exists when a firm finds an unique position in the market through product or service. low-cost approach differentiation approach sustainable competitive advantage approach first mover approach

differentiation approach

The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is _________. small and medium-sized enterprises large businesses global trading higher tariffs

small and medium-sized enterprises