Entrepreneurship and Innovation midterm

If you sell $2500 worth of product, pay COGS of $800 and other variable costs of $360, what is your profit? $1340 $1700 $2464 $2500

$1340

Carla sells hot coffee, cider and tea from a sidewalk cart near Wall St in NYC. Last month, she sold $4500 worth of product to 1000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: utilities = $100, Salary = $2000, advertising = $0, Insurance = $0, Interest = $0, Rent (cart) = $600, Depreciation = $0. What are Carla's fixed costs? $2000 $2100 $2600 $2700

$2600

If a business has total gross profit of $14,720 and total operating costs of $11,500, what is its total profit? $3000 $3220 $1150 $0

$3220

Carla sells hot coffee, cider and tea from a sidewalk cart near Wall St in NYC. Last month, she sold $4500 worth of product to 1000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: utilities = $100, Salary = $2000, advertising = $0, Insurance = $0, Interest = $0, Rent (cart) = $600, Depreciation = $0. Calculate Carla's average sale per customer $4.50 $4 $5 $0.80

$4.50

If a business sells 5000 units for a total profit of $200,000, what is its profit per unit? $50 $400 $40

$40

Using the information from the exercise above, what is Carla's monthly cost of goods sold? $800 $600 $450 $100

$800

For Girard's Law of ____ states that just a few unhappy customers can keep a great many other customers away from your business 250 sales 200 sales averages

250

If you decide to pay yourself a commission from your business, you will be earning ____ a percentage of your business profit a percentage of each sale a set salary a bonus

a percentage of each sale

Which of the following is NOT a strong method of identifying business opportunities? searching through a process of identification and selection beginning with sled-developed (or group-developed) ideas a person has a talent for making something and decides that he or she should go into business searching through a process of identification and selection with research on "hot" businesses or growth areas a person has an idea for a product or service and searches for a market

a person has a talent for making something and decides that he or she should go into business

Customer complaints should be carefully listened to, but not responded to (don't let the customer know you take the complaints seriously) acknowledge and respond politely politely ignore put in priority order

acknowledge and respond politely

What should you do when a customer raises objections during a sales call? ignore them; the customer will forget about them by the time the call is over acknowledge objections as they arise and respond to them shorten the sales call; don't waste time on a customer who has objections to your product or service say, "i'll get back to that in a moment."

acknowledge objections as they arise and respond to them

A factor to consider when selecting a physical location is ____ nearby university wage rates work force availability all of the above

all of the above

Business start-up cost information can be obtained from ____ competitors quotations from vendors industry data all of the above

all of the above

Entrepreneurs ____ constantly, not just to customers, but to investors, bankers, and people they want to hire. sell try to make a good impression attempt to be optimistic all of the above

all of the above

Entrepreneurs sell constantly to potential employees potential investors customers all of the above

all of the above

Fixed Operating Costs ____ are not included in COGS are not direct costs of creating each product include expenses like the DSL bill and rent all of the above

all of the above

In analyzing competitive advantage, you will need to ask three questions. Among these are: cost structure - are you at a cost advantage or disadvantage? what is your unique selling proposition? What do you have that competitors cannot or will not match? competitive offers - how do you compare with competitors on a feature by feature basis? all of the above

all of the above

Objectives during a sales call are to make the customer ____ want to buy the product or service from you aware of your product or service want to buy your product or service all of the above

all of the above

The best sales people ____ know their product or service keep good records and think positively know their customers and know their field all of the above

all of the above

Which of the following is a role of the marketing plan? convincing skeptical investors that your plan has merit identifying the target market for the organization detailing the advertising plan all of the above

all of the above

Dividing the market by purchase behaviors that have been observed is ____ segmentation demographic behavioral psychographic benefits-sought

behavioral

By teaching customers how to use its products, Home Depot is helping customers see the ____ of its products ramifications benefits features utility

benefits

The positioning statement for a business includes its name/brand, its competitive industry/category, ____, and audience/target market features and points of difference benefits or points of difference benefits and similarities pricing and distribution

benefits or points of difference

The first place to start researching your start-up costs is____ government publications business plan models in your industry a competent research company your own accounting records

business plan models in your industry

Using technology to sell ____ is not really necessary works for products but not services can be useful in helping you communicate your product to the customer and to stay in touch with the customer is too expensive for the average sales person

can be useful in helping you communicate your product to the customer and to stay in touch with the customer

Which of the following is not a category of fixed costs? rent advertising capital depreciation

capital

Which of the following is NOT a characteristic that is helpful for an entrepreneur to have? self-confidence caution self-esteem drive

caution

Why is it best to pay expenses for your business with a check, not with cash? check can't be traced cash is easier to lose a check provides written proof of payment keeps the check printing business and banks in business

check provides written proof of payment

When you are starting out and cannot afford to pay sales representatives full-time salaries, you can offer ____instead incentives bonuses commissions bonuses and incentives

commissions

Why do consumers benefit from free trade and the resulting competition between businesses? competition drives away the entrepreneurs who use resources most wisely competition tends to drive down prices and improve quality competition offers consumers fewer choices and makes the marketplace less confusing competition reduces the choices to consumers

competition tends to drive down prices and improve quality

Other variable costs per unit subtracted from total COGS per unit equals ____ cost of goods sold per unit contribution margin per unit total other variable costs per unit ??

contribution margin per unit

When you start your business your ____ will guide the business operations and decisions. core beliefs track record guiding light competitive offers

core beliefs

There are two categories of variable costs ____ net variable costs and costs of goods sold gross costs and net variable costs cost of goods sold and other variable costs interest and taxes paid

cost of goods sold and other variable costs

Everything that a business does to keep its customers happy is called ____ customer service customer appreciation post-sales service customer satisfaction

customer service

Information suce as customers' email addresses and purchasing history can be stored in a simple computer ____ website program database software

database

The percentage of value of an asset subtracted each year until the value becomes zero; To reflect wear and tear on the asset is called ____ depreciation inventory deductible reduction

depreciation

Telemarketing is a form of ____ advertising publicity direct marketing none of the above

direct marketing

The bedrock principle of business is that it should ____ please its customers advertise better than its competitors earn a profit continually improve

earn a profit

It is best to wait to write a business plan until you find lenders or investors true false

false

The marketing plan is based on the marketing mix of product, price, place, and packaging. true false

false (product, price, promotion, place)

To determine the value of a business you can use asset valuation. It is a method that analyzes the underlying value of a business' sales and operating costs as a basis for negotiating a price true false

false (asset valuation = value of a business' assets)

Your company's vision defines the work environment true false

false (core value)

Some of the world's greatest entrepreneurs have overcome challenges from their childhood and youth, including all of these except one learning disabilities abuse extreme poverty financial prosperity

financial prosperity

Which two categories below are used for business costs? material and labor gross and net fixed and variable cost of goods sold and administrative

fixed and variable

Overhead is another term for ____ fixed operating costs net costs seed capital administrative costs

fixed operating costs

A nonprofit organization that uses donated money to help others is called a ____ philanthropy foundation tax exempt community organization

foundation

Here's a rule of thumb that sales people use; if a customer says "no" during a sales call ____ probably means it. four times three times two times once

four times

Telling the truth about any negative aspect of a product or service usually ____ means that you are dishonest annoys your customer gains your customer's trust makes a customer think you are up to something

gains your customer's trust

Entrepreneurs that participate in activities to avoid harm to the environment or help protect it in some ways are engaged in ____ venture philanthropy green entrepreneurship social entrepreneurship corporate responsibility

green entrepreneurship

Every sales call is an opportunity to ____ improve your selling skills talk and talk and talk to the customer none of the above exploit your customers

improve your selling skills

____ is the general rise in the price of goods and service in an economy recession deflation inflation hyperinflation

inflation

In the acronym USAIIRD, IRD stand for ____ interest, rent, depreciation interest, rent, delivery expense investment cost, ratios, depreciation inventory cost, repositioning cost, depletion

interest, rent, depreciation

What is a focus group? it is a method of market research that involves bringing together some people who might use a product and having a researcher question them about it it is a method of market research that focuses on how the industry is performing it is a method of market research that involves collecting statistics about a group of people who might use a product it is a method of research that uses unhappy customers

it is a method of market research that involves bringing together some people who might use a product and having a researcher question them about it

Which of the following is NOT an example of customer service? suggest a less expensive product that will meet the customer's needs provide free delivery keep a customer on hold indefinitely help customers carry their purchases to their vehicles

keep a customer on hold indefinitely

Resumes and position descriptions should be included in business plans for ____ all employees key managers both of these neither of these

key managers

Closing a business is nothing to be ashamed of if you ____ learn something from the experience are on vacation in jamaica have a partner are a corporation

learn something from the experience

The most important thing to do during a sales call is ____ listen, in order to learn what the customer needs keep talking so the customer doesn't lose interest ask questions to keep the customer engaged in the sales call push for the sale early and don't mention price until the end

listen, in order to learn what the customer needs

Your ____ is a concise communication of your strategy including your business definition, purpose, and your competitive advantage. target market analysis business plan value statement mission statement

mission statement

When is an entrepreneur done collecting market research for his/her business? when the business has been opened when the business has been operating or six months never when the minimum sales have been reached

never

Brian Tracy believes all objections fall into one of six categories. Which of the following is NOT one of the six? follow-up service and competition support, warranties, and assurances price and performance none of the above

none of the above

You should keep reserves of at least ___ 3 months of fixed operating costs 6 months of fixed operating costs one half of the start-up investment one year of fixed operating costs

one half of the start-up investment

Entrepreneurs tend to be ____ risk adverse negative optimistic dispassionate

optimistic

Which of the following is NOT needed in all business management teams? operations outside directors marketing accounting

outside directors

Advertising is ____ promotion through media outlets paid free discounted personal

paid

Which of the following is a way to use cause-related marketing in your business? pay employees to volunteer some time toward community service advertise that you support a social, political, or environmental cause, without actually giving any money or time to the cause donate a small percentage of your revenue to a cause, but don't tell anyone substitute it for publicity

pay employees to volunteer some time toward community service (the 5th P)

Expressing concern for social issues by giving money, time or advice is called ____ philanthropy cause-related marketing foundation social responsibility

philanthropy

According to author Jat Levinson, when consumers in the furniture industry rated factors affecting their purchase decision _____ price was the ninth most important variable price was not deemed to be a critical or relevant variable in the purchase decision price was by far the most important variable price was the second most important variable

price was the ninth most important variable

People you think might be receptive to your sales presentation are called ____ consumers customers prospects interested parties

prospects

A ____ is a model or pattern that serves as an example of how a product would look and operate if it were manufactured. prototype archetype typology model

prototype

The Thomas Register of American Manufacturers lists companies that specialize in creating ____ products prototypes copyrights services

prototypes

Successful businesses are built on ____ repeat business frequent sales big sales highly profitable sales

repeat business

An entrepreneur must strike an excellent balance between being a(n) ____ accountant and marketer president and vice president risk taker and someone who carefully evaluates a decision sales person and marketer

risk taker and someone who carefully evaluates a decision

An appointment with a potential customer to explain or demonstrate your product or service is called a ____ sales call pre-qualification product demonstration presentation

sales call

Start-up investment is the one-time expense of opening a business. It is also called ____ entry cost seed capital down payment beginning capital

seed capital

Total Revenue divided by ____ = units sold selling price profit total operating costs cost

selling price

Customer service after a sale is an investment of time, money, and energy ____ that can have a very high return on investment that 250 other people will share that has no return on investment that has a low return on investment

that can have a very high return on investment

How does the free-enterprise system discourage entrepreneurs who waste resources? the government penalizes them they run into regulations that make it too difficult for them to operate they can't make a profit and are forced out of business they limit competition

they can't make a profit and are forced out of business

When you sell, you should always listen carefully to customer complaints, because ____ it's better to have customers complain to you than to other people customers are happier when you listen to them they provide invaluable information about how to improve the product or service the "buck" stops here

they provide invaluable information about how to improve the product or service

The most important thing you should do before launching your product or service is ____ thoroughly research the market raise enough capital design your logo hire the right employees

thoroughly research the market

When starting a business, it is a good rule to expect to lose money for the first _____ before the business starts selling at a profit. three months six months one year three years

three months

A business plan is the key to raising capital true false

true

A feasibility analysis is a study to assist in making a go/no go decision based upon a close examination of product/service, market, industry, and financial data in a sufficient degree of detail to ensure confidence in the results true false

true

A solid business definition has three elements: 1) the offer 2) target market 3) production and delivery capability true false

true

The appendices will provide you with an opportunity to strengthen your business plan with examples and details that are not critical for inclusion in the main portions. true false

true

The six factors of competitive advantage are quality, price, location, selection, service and speed/turnaround. true false

true

the COGS and COSS are equivalent mathematically true false

true

The cost of material used to make a product and cost of labor used to make the product is associated specifically with a single ____ of sale unit hour dozen dollar

unit

The great economist Joel Schumpeter emphasized that innovation is the key to entrepreneurship. Which of the following is a basic way to create a new business? expand upon old technology develop current markets use new technology to produce a new product find a less expensive source of resources

use new technology to produce a new product

During each sales call you make, focus on this question how can i make the customer buy from me? what does the customer need? how can i convince the customer to ignore his/her objections? how do i handle the objections that will be raised?

what does the customer need?

Since time began, people have had to answer the same basic economic questions. Among these are ____? where will something be produced what should be produced how fast should something be produced what are the opportunity costs

what should be produced