Small Business Management: Chapters 14-18

What is the contribution margin for a product that sells for $5 per unit and has total variable costs of $2.75 per unit?

$2.25

What is the break-even point in units of a company that sells widgets with a contribution margin of $3 and total fixed costs of $3000?

1000 units

The court case involving Joe Hadeed, owner of a carpet-cleaning service and Yelp, an online business review forum can best be summarized as:

A complex case balancing free speech rights against a company's right to protect its reputation.

Perception can best be described as:

An individual process that gives meaning to stimuli experienced by the customer.

A "touch point" can be best described as:

Any contact with the customer, including phone, mail, "live" visits, and online interaction.

Which of the following is NOT a component of a business's brand?

Brand lifespan

A price-skimming strategy is best directed at what kind of customers?

Early adopters

Ughmeh Inc. manufactures front loaders. In the last two years, the company's output doubled and its production cost per loader went down significantly. The company has realized:

Experience curve efficiencies

Sarah is concerned that her unique canvas purses are being copied and sold in another country. Which of the following strategies is most likely to gain her a champion in the problem country and expand her market at the same time?

Foreign licensing

Gyeong thinks that making people aware of her interior design business will help her sell more of her products. She is considering:

Institutional advertising

One method of determining how much to spend on promotions is to "see how much is left over" after other expenses have been paid. Which of the following is a potential drawback to this method?

It is not linked to a specific advertising objective

Personal selling is best described as:

Making a presentation and closing a sale face-to-face.

Your friend Eduardo asks your advice about distributing the shoes his company makes. He would like to reduce the risk he faces in marketing his products. Which of the following types of intermediaries would best help him do that?

Merchant middlemen

All purchase behavior begins with:

Perception of a need on the part of the customer.

Your friend Hans wants to promote his new smart phone app. It will sell for $2.99. Hans would probably NOT use which of the following types of promotion?

Personal selling

Pricing has a dual effect on total sales revenue. Which of the following best describes those effects?

Pricing has a direct impact on the gross revenue equation and an indirect impact on demand.

Marcy is concerned about whether her company should add motorcycle accessories to her already established car accessory products. She is thinking about which aspect of her product strategy?

Product mix

Having your business featured in a news story is an example of:

Publicity.

The primary purpose of trademarks and service marks is to:

Represent the way people identify your business.

Which of the following statements is most accurate?

Small entrepreneurial firms produce twice as many incremental innovations as large firms and ninety-five percent of radical innovations.

Web sites often fail to satisfy customer information needs because:

The designers build web sites based on what they think rather than asking customers what they want.

evaluative criteria

The factors that help a customer decide whether or not to purchase a product are called:

A growth trap is best described as:

The phenomenon wherein a business's need for cash grows faster than its profits.

Credit sales have what effect on a company's balance sheet?

They increase the amount of working capital needed by the business doing the selling

The function of an aging schedule is:

To categorize accounts receivable based on the length of time they have been outstanding.

Matilda is planning a visit to Ecuador to establish a market for her digeridoos. She is going on a:

Trade mission.

customer database

a collection of information about individual customers that can help a company reach and serve people better.

trade intermediary

a company that can tap its network contacts to help set up export contracts.

Which of the following are economic benefits of maintaining good relationships with customers?

all of the above

Which of the following statements are true concerning globalization by small businesses?

all of the above

sustainable competitive advantage

describes a firm's position when it uses its unique capabilities and resources to outperform its competitors over time.

represent the value of one country's currency relative to that of another country.

exchange rates

operating expenses

expenses that remain constant at different levels of quantity sold.

occur when the insight an employee gains from experience leads to improved work performance.

learning effects

Roberto has decided to do business in Central Africa. Since many countries in the region have unstable governments, he should take into account not only economic risk but:

political risk

The combination of promotional techniques and strategies a business chooses to use is called its

promotional mix

is the systematic process of continually looking for new customers

prospecting

culture

refer/s to the behavioral patterns and values that characterize a particular group of customers.

penetration pricing

strategy used when a firm wants to enter the market at a price lower than its normal, long-range market price in order to gain rapid market entry.

patent

the registered, exclusive right of an inventor to make, use, or sell an invention.