Entrepreneurship Midterm

The focus of the competitor analysis section of the business plan is on: A) demonstrating the existence of the market for your product. B) showing that your experienced management team is better than your competitors'. C) demonstrating your company's advantage over competitors. D) describing your overall product line.

C

Ultimately, the "right" price for a product or service depends on one factor: A) the lowest price possible. B) premium prices. C) the value that it provides for a customer. D) the most effective advertising campaign.

C

Which of the following is not one of the ways entrepreneurs can stimulate their own creativity and encourage it among their workers? A) Provide creativity training. B) Encourage curiosity. C) View challenges as problems. D) Develop a corporate culture that both fosters and rewards creativity.

C

________ involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives to keep it on its desired course. A) Competitive advantage B) Mission C) Strategic management D) Market segmentation

C

A ________ is an exclusive right that protects the creators of original works such as literary, dramatic, musical, and artistic works. A) trademark B) patent C) copyright D) service mark

D

A clearly defined vision helps a company in which of the following ways? A) Provides direction B) Determines decisions C) Motivates people D) All of the above

D

A recent study reports that the success rate of franchisees increases when a franchise system: A) requires franchisees to have prior industry experience. B) requires franchisees to actively manage their operations. C) has built a strong brand name with training programs to improve knowledge and skills. D) All of the above increase the rate of success.

D

A benefit is a descriptive fact about a product or service; a feature is what the customer gains from that product or service benefit.

F

The practice of taking money from sales without reporting it as income is called sliding.

F

The sole proprietorship is the best form of ownership for entrepreneurs launching their first businesses.

F

Conducting a SWOT analysis for her own business and for her key competitors allows an entrepreneur to gain a competitive edge by matching her company's strengths against her competitors' weaknesses.

T

Entrepreneurship requires both left- and right-brained thinking.

T

If a franchiser encourages you to sign without reading the agreement, or discourages you from "spending the money on an attorney," this is a warning sign that the franchiser might be dishonest.

T

If the owner of an existing business refuses to disclose the company's financial records, an entrepreneur who is considering buying it should walk away from the deal.

T

Intuition is based on the accumulated knowledge and experiences a person encounters over the course of a lifetime and resides in the subconscious.

T

Most stores find it most practical to use a flexible markup, which assigns various markup percentages to different types of products.

T

Objectives are short-term, specific targets that the small company plans to accomplish.

T

One key to building a successful differentiation strategy is to be better than competitors at sole characteristic that customers value.

T

The desired image for the business, the target market the owner is trying to reach, and the prices charged are all closely related to one another.

T

The franchise contract defines the rights and the obligations of both parties and sets the guidelines that govern the franchise relationship.

T

The mission statement addresses the first question of any business venture: "What business am I in?"

T

The most effective way for a small business to establish a competitive advantage is by offering lower prices.

T

The partnership, like the proprietorship, avoids the disadvantage of double taxation.

T

The right brain takes care of the body's emotional, intuitive, and spatial functions.

T

When a small business owner does not want to make a pricing decision, he can use a suggested retail pricing strategy.

T

When evaluating a business as a potential candidate for purchase, an entrepreneur should determine the real reason the current owner wants to sell.

T

With an existing business, the new owner can depend on employees to help him make money while he is learning the business.

T

Most marketing experts contend that the greatest marketing mistake small businesses make is: A) failing to identify the target market. B) spending too little on advertising. C) underpricing their products and services. D) spending too little on quality improvement.

A

The due diligence process of analyzing and evaluating an existing business: A) may be just as time consuming as the development of a comprehensive business plan for a start-up. B) guarantees that the company will generate sufficient cash to pay for itself and leave you with a suitable rate of return on your investment. C) includes a requirement that the seller maintain insurance coverage after the sale. D) All of the above

A

The most common form of business ownership that is also the simplest to create is the: A) sole proprietorship. B) partnership. C) corporation. D) S corporation.

A

The three "tests" associated with a business plan are: A) reality, competitive, and value. B) competitive, profitability, and value. C) value, reality, and profitability. D) reality, value and litmus.

A

When developing creative solutions to modern problems, entrepreneurs must: A) go beyond merely using whatever has worked in the past. B) limit the creative process to only profitable ventures. C) remember what has worked in the past. D) pay attention to limiting factors.

A

When done correctly, the due diligence process will: A) reveal both the positive and negative aspects of an existing business. B) be time consuming and expensive. C) most often result in the purchase of the business. D) rarely prove to be beneficial.

A

Which of the following businesses would be most likely to offer installment credit to its customers? A) A retailer of major appliances B) A convenience store C) A printer D) A clothing retailer

A

Which of the following is NOT one of the forces driving the entrepreneurial trend in our country? A) Shift away from a service economy B) Independent lifestyle C) International opportunities D) E-commerce and the World Wide Web

A

Which of the following issues would influence an entrepreneur's choice of a form of business ownership? A) Tax considerations B) The way your competitors do it C) The number of customers you have D) All of the above

A

Which of the following statements concerning a company's target market is false? A) Marketing experts contend that the greatest marketing mistake small companies make is failing to clearly define the target market to be served. B) A "shotgun approach" to marketing--trying to appeal to everyone rather than to only a small market segment, is the most effective way to compete with large companies and their bigger marketing budgets. C) Small companies are usually better suited to pinpointing target markets that their larger rivals overlook or consider too small to be attractive. D) Most successful small businesses have well-defined portraits of the customers they are trying to attract.

A

One common mechanism to attract international visitors is to include several: A) alternative forms of payment options. B) language buttons. C) images reflecting multiple cultures. D) colors and symbols reflective of international cultures.

B

Studies of shifting patterns in age, income, education, race, and other population characteristics are the subject of: A) psychographics. B) demographics. C) sociographics. D) paleontology.

B

The focus of a small company's marketing plan should be on: A) preparing accurate financial forecasts. B) the customer. C) describing how its products or services are superior to those of competitors. D) the competition.

B

Your local grocery store uses a pricing technique known as ________ on a weekly basis, in which they mark down the price of several popular items, sometimes well below their normal price, in an effort to increase customer traffic and to boost sales of other items. A) odd pricing B) leader pricing C) price lining D) suggested retail pricing

B

1) The ability to develop new ideas and to discover new ways of looking at problems and opportunities is called: A) entrepreneurship. B) innovation. C) creativity. D) synthesis.

C

A combination of hardware and software that allows employees to have access to the Internet but keeps unauthorized users from entering the company's network is called: A) virus detection software. B) intrusion detection software. C) a firewall. D) Web protection.

C

Maria Sanchez is the owner of the Main Street Café and a new restaurant opens a few blocks away. From Maria's perspective, this new restaurant constitutes a(n): A) strength. B) weakness. C) threat. D) opportunity.

C

Potential investors tend to believe that if an entrepreneur cannot develop a good plan, the entrepreneur: A) is probably the action-oriented sort of person they need running a business. B) needs to hire a consultant to write the plan for him. C) probably lacks the discipline to run a business. D) is just like the majority of entrepreneurs and will probably do quite well.

C

The Sound Shop buys a popular programmable telephone from a supplier for $12.19. If the desired markup of retail price on the telephone is 35 percent, the retail price should be: A) $34.83. B) $18.75. C) $16.46. D) $20.11.

C

The first step an entrepreneur should take when buying an existing business is to: A) explore financing options. B) prepare a list of potential candidates. C) analyze his or her skills, abilities, and interests in an honest self-audit. D) contact existing business owners in the area and ask if their companies are for sale.

C

The focal point of any company's strategy, whatever it may be, should be: A) its product or service. B) its competition. C) its customers. D) its strengths and weaknesses.

C

Which of the following statements concerning small businesses and international markets is false? A) Although terrorism and global recession have slowed the growth of international trade somewhat, global opportunities for small businesses have a long-term positive outlook. B) Although the U.S. is an attractive market, approximately 95 percent of the world's population lives outside its borders. C) Because exporting is so complex and requires a company to have so many international experts on staff, exporting is not feasible for small businesses. D) Small companies comprise 97 percent of all businesses engaged in exporting, yet they account for only 30 percent of the nation's export sales.

C

Benefits of involvement in a franchise experience include: A) management training and support. B) brand name appeal and standardization of goods and services. C) national advertising exposure and financial assistance. D) All of the above

D

Entrepreneurs can increase their chances for success if they: A) know their business in depth and develop a solid business plan. B) manage their financial resources and understand financial statements. C) learn to manage people and keep in touch with how they react to stress and balance their health needs with the needs of the business. D) All of the above

D

Hiring a diverse workforce: A) helps in enhancing organizational creativity. B) allows for different ideas and varying methods of problem solving. C) brings in people from different backgrounds, with different cultural experiences, hobbies, and interests. D) All of the above

D

Important factors to investigate regarding the business to be purchased include: A) assessing the physical assets of the business. B) reviewing accounts receivable and business records. C) reviewing contractual arrangements and assessing intangible assets. D) All of the above

D

In a business sale, a letter of intent: A) states that the buyer and the seller have reached a sufficient meeting of the minds to justify the time and expense of negotiating a final agreement. B) should contain a clause calling for "good faith negotiations" between the parties. C) addresses such issues as price, payment terms, a deadline for closing the deal, and others. D) All of the above

D

In a partnership, the ________ partner(s) has (have) unlimited liability for the partnership's debts. A) limited B) dormant C) nominal D) general

D

Strategies for successful e-commerce efforts should include all of the following except: A) focusing on a niche market. B) developing a community of customers. C) attracting visitors by giving away "freebies." D) adding value to recipients by sending spam e-mail.

D

The executive summary section of the business plan: A) should be a concise summary of the business venture. B) should be no more than two pages long. C) must capture the reader's attention and entice her to read the rest of the plan. D) All of the above

D

The process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business is known as a: A) business plan. B) strategic analysis. C) industry analysis. D) feasibility analysis.

D

Warren Cassell, owner of Just Books, a very small book store, makes special orders for customers at no extra charge, provides free gift-wrapping, conducts out-of-print book searches, offers autographed copies of books, hosts "Meet the Author" breakfasts, and publishes a newsletter for book lovers. By offering his customers lots of "extras" they do not get at larger bookstores, Cassell has won a growing base of loyal customers. Cassell is relying on which marketing strategy? A) Demographic marketing B) Transaction selling C) Individualized marketing D) Guerrilla marketing

D

Which of the following is a benefit of entrepreneurship? A) The opportunity to gain control over your own destiny B) The opportunity to reach your full potential C) The opportunity to do what you enjoy D) All of the above

D

Which of the following is true regarding the corporate form of ownership? A) Generally has the greatest ability to accumulate capital B) Most complex form of ownership C) Separate legal entity in the eyes of the law D) All of the above

D

Which of the following issues would a typical partnership agreement address? A) The contributions of each partner to the business B) How the partnership profits (or losses) will be distributed C) How a partner can sell her ownership in the business D) All of the above

D

A major advantage of a franchise contract is the national advertising campaign that most franchisers provide free of charge for their franchisees.

F

Business evaluation based on balance sheet methods offers one key advantage: it considers the future earning potential of the business.

F

Creativity and innovation are the signature of large, entrepreneurial businesses.

F

Creativity is the ability to apply creative solutions to problems and opportunities to enhance or enrich people's lives.

F

Current competitive conditions favor large companies over smaller ones because of their ability to use their size to achieve efficiency and economies of scale.

F

E-commerce is replacing traditional retailing.

F

Entrepreneurs should artificially inflate the amount of a loan request and expect the loan officer to "talk them down."

F

Establishing a policy of responding to all customer e-mails within 24 hours and sending customers order and shipping confirmations and "thank you for your order" e-mails are not very important to enhancing online customer service.

F

If a sole proprietorship fails, the owner is not liable for its debts since the business is a separate legal entity.

F

Measuring the success of its Web-based sales is not essential because customer tastes and preferences are always changing.

F

Most entrepreneurs have invested the time to develop a sound business plan.

F

One disadvantage of total quality management (TQM) is that its principles apply only to manufacturers.

F

Primary research is information that has already been complied and is available for use, often at very reasonable costs or sometimes at no cost to the entrepreneur.

F

The four Ps of marketing are product, place, profit, and promotion.

F

The most common form of business ownership in the United States is the partnership.

F

The right brain is guided by linear, vertical thinking.

F

There is concern over the future of entrepreneurship because so few high school and college students want to start their own companies.

F

To be useful, market research must be structured, formal, and highly sophisticated.

F

A marketing niche can be defined by customer profile, product, product usage, and many other ways.

T

A marketing plan should identify a small company's target customers and describe how the business will attract and keep them.

T

A method small businesses might use to achieve more of the brand and name recognition that larger, more established companies have is to form strategic alliances with bigger companies.

T

Before entering a franchise contract, a potential investor should ask, "What can a franchise do for me that I cannot do for myself?"

T

Before presenting a business plan to potential lenders and investors, an entrepreneur must be well informed and well prepared.

T

Businesses that publish privacy policies and then adhere to them build trust among their customers, an important facet of doing business on the Web.

T

Captive-product pricing is a technique that involves selling a product for a low price and charging a higher price for the accessories that accompany it.

T

Changing from one form of ownership to another once a business is up and running can be difficult, expensive, and complicated.

T

Secondary research data is less time consuming and less costly to gather than primary research data.

T

Small companies that spot demographic trends and act on them early can gain a distinctive edge in the market.

T

The most important is advisor to see first

T

One of the most valuable attributes of the Web is the ability to: A) track customers' online shopping habits allowing companies to further benefit from individualized marketing. B) enable the site to create an appearance that the organization is able to meet customer needs that, in fact, are not possible based on its actual resources. C) reduce advertising expenses and the amount of printed materials needed to facilitate promotional efforts. D) encourage the use of credit cards as a means of paying for the online transaction.

a

Entrepreneurs should make sure they do not fall victim to any of the e-commerce myths. Which of the following is not an e-commerce myth? A) Setting up a business on the Web is easy and inexpensive. B) If I launch a site, customers will flock to it. C) Making money on the Web is easy. D) Privacy and site security is an important issue on the Web.

d

The most significant ways online companies can bolster customer service include all of the following except: A) create a well-staffed and well-trained customer response team. B) offer a simple return policy. C) provide an easy order tracking process. D) make financing available.

d

Establishing a Baskin-Robbins franchise inside a Blimpee's franchise is an example of ________ franchising. A) multi-unit B) master C) Cobranding or piggyback D) diversionary

C

What are 4 things you can do to create a professional image?

1.Business Cards 2. Brand Consistency 3.Design a sign 4. Clean and organized work place

A ________ is a descriptive fact about a product or service; a ________ is what the customer gains from that characteristic. A) feature; benefit B) feature; trait C) benefit; feature D) benefit; trait

A

A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the: A) extra value, convenience, service, and quality they offer their customers. B) advantages they have due to their lower cost structure. C) complexities that larger competitors have to face. D) driving need that all customers have to find the lowest price possible.

A

A franchise myth is that: A) once the franchise is open, the franchisee has autonomy to run the business in what ever way he or she sees fit. B) the owner need to be hands on. C) the franchise will only expect to be paid when the franchisee is profitable. D) franchises fail at a rate higher that independently owned businesses.

A

The ability to see the similarities and the connections among various data and events is called: A) convergent thinking. B) divergent thinking. C) transformational thinking. D) illumination.

A

Which of the following statements about valuing a business is true? A) The balance sheet technique is the best way to value a business. B) Business valuation is partly art and partly science. C) Buyers should rely on the seller's industry expertise and years of experience to determine what his company is worth. D) Business valuation processes are consistently misleading regarding the future earning potential of a business.

A

________ is the difference between the cost of a product or service and its selling price. A) Markup B) Break-even price C) Contribution margin D) Absorption costing

A

________ is the process of creating and delivering desired goods and services to customers and involves all of the activities associated with winning and retaining loyal customers. A) Marketing B) Personal selling C) Promotion D) Customer service

A

A method of franchising that gives the right to create a semi-independent organization in a particular territory is a: A) piggyback franchise. B) master franchise. C) product distribution franchise. D) conversion franchise.

B

All of the following are characteristics of the typical entrepreneur except: A) confidence in his/her ability to succeed. B) value of money over achievement. C) desire for immediate feedback. D) a future orientation.

B

Franchisers generally do which of the following regarding financial assistance to franchisees? A) Provide direct financing. B) Assist in finding financing and occasionally provide direct assistance in a specific area. C) Waive royalty fees for franchisees not making an adequate profit. D) Franchisers provide no assistance because having or finding financing is a requirement for qualifying for a franchise.

B

Skatell's, a small jewelry store with three locations, designs and manufactures much of its own jewelry while its competitors (many of them large department stores) sell standard, "off-the-shelf" jewelry. As a result, Skatell's has developed a loyal customer base of people who seek unique pieces of jewelry. Skatell's reputation for selling unique and custom-designed jewelry allows them to benefit from a: A) cost-leadership strategy. B) differentiation strategy. C) focus strategy. D) competitive strategy.

B

Socioeconomic forces that are driving the positive entrepreneurial trend in the U.S. economy include: A) America's emerging view that business is evil. B) entrepreneurship education has increased. C) an abundance of financing alternatives for start-up companies. D) All of the above

B

The aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market superior to its competition is its: A) mission statement. B) competitive advantage. C) competitive profile. D) strategic plan.

B

Which form of ownership generally has the least ability to accumulate capital? A) Partnership B) Sole proprietorship C) Corporation D) S corporation

B

What is an Entrepreneur?

One who Assumes risk, owns, and operates a business

Characteristics of a Entrepreneur

Overachiever, risk taker, hard worker, goal setter, innovative, self confident, long term commuter, persevere, dreamers, ability to predict to future, resourceful, and enthusiastic

A common pricing mistake entrepreneurs often make is failing to recognize the extra value, convenience, service, and quality they offer their customers-all of which customers are willing to pay for.

T

A franchise is an arrangement in which semi-independent business owners pay fees and royalties to a parent company in return for the right to sell its products or services and often to use its business format and system.

T

A major advantage of launching a business part-time is the lower risk it offers in case the business fails.

T

A multi-unit franchise gives the franchisee the right to open more than one franchise outlet in a territory within a specific time frame.

T

A small business owner can collect a great deal of information about competitors through a number of low-cost competitive intelligence methods.

T

A strategy is a road map of action for fulfilling a firm's mission, goals, and objectives.

T

A well-prepared business plan forces an entrepreneur to assess the venture's chances of success more objectively.

T

Accounts receivable are rarely worth face value and should be "aged" when evaluating a company's assets.

T

An S corporation maintains the advantages of the corporate form of ownership while having the ability to be taxed as a partnership.

T

An important factor helping to drive the entrepreneurial trend in our economy is the favorable attitude Americans have towards entrepreneurs.

T

An often fatal error made by many small business owners is to open their businesses on a "shoestring," causing them to be undercapitalized.

T

Because installment credit absorbs a company's cash, many small businesses rely on financial institutions to provide it for their customers.

T