BUSG 115 FINAL Ch 7-15
1. The five basic types of consumers are listed below. Identify the order in which people adopt new goods by ranking the consumer types from 1 (first adopters) to 5 (last adopters). 2 Early adopters 3 Early majority 5 Laggards 1 Innovators 4 Late majority
2 Early adopters 3 Early majority 5 Laggards 1 Innovators 4 Late majority
A ____ is a system of distribution that enables a supplier to arrange for a dealer to handle a specific product or service under certain mutually agreed upon conditions. a. franchise b. franchisor c. franchisee d. franchiser
A. Franchise
The individual who buys the franchise is the a. franchisee. b. franchisette. c. franchatter. d. franchisor
A. Franchisee
There are two parts to a patent application, claims and a. specification. b. percentage. c. value. d. integration.
A. Specification
Which of the following statements is not true of venture capitalists? a. They are interested in trying to manage firms themselves. b. They take a long time to raise venture capital. c. They want the entrepreneur and the management to run the company. d. They expect high return on investments.
A. They are interested in trying to manage firms themselves.
An agreement not to compete is also known as a. a legal restraint of trade. b. a waiver of competition clause. c. a deferential sale of business clause. d. a trade restriction clause.
A. a legal restraint of trade
An additional consideration to keep in mind when negotiating to purchase an existing business includes requesting that the seller retain __________ in the firm. a. a minority interest b. a majority interest c. either a minority or majority interest d. none of these
A. a minority interest
Works created after January 1, 1978, have a copyright for the life of the author plus a. 14 years. b. 50 years. c. 10 months. d. 70 years.
D. 70 years
Which of the following is a type of equity financing? a. convertible debentures b. loan with warrants c. loan without warrants d. common stock
D. common stock
Which is not a key question to ask when buying a business? a. How many of the employees will remain? b. Why is the business being sold? c. What is the condition of the inventory? d. Is the building heated with gas or electricity?
D. is the building heated with gas or electricity?
One of the advantages of public offerings is a. cost. b. requirements. c. disclosure. d. liquidity
D. liquidity
"Why is the business being sold?" is not an important question to ask when analyzing the viability of buying a business. a. True b. False
FALSE
A business plan must illustrate the current status of the venture but not the projected results. a. True b. False
FALSE
After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity. a. True b. False
FALSE
An entrepreneurial successor is someone who is interested in efficiency and the effective use of resources. a. True b. False
FALSE
Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public. a. True b. False
FALSE
Chapter 7, Chapter 9, and Chapter 11 are the most common forms of bankruptcy. a. True b. False
FALSE
Contribution margin is the difference between the selling price and the fixed cost per unit. a. True b. False
FALSE
Emotional bias is not an underlying issue in valuing a business. a. True b. False
FALSE
It is usually more expensive to gather secondary data than primary data. a. True b. False
FALSE
Knowing a venture's pre-money valuation is not possible. a. True b. False
FALSE
Lack of expertise has never been considered a reason for the lack of strategic planning in new ventures. a. True b. False
FALSE
Once the decision is made to harvest the business, the way forward is easy. a. True b. False
FALSE
Only major strategic decisions need to be supported through marketing research. a. True b. False
FALSE
Participation by subordinates in a strategic plan is never appropriate. a. True b. False
FALSE
Pricing procedures are the same for all types of ventures. a. True b. False
FALSE
Pro forma statements show the firm's present financial position. a. True b. False
FALSE
Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals. a. True b. False
FALSE
Skimming is setting prices at such a low level that products are sold at a loss. a. True b. False
FALSE
The Federal Trade Commission does not provide information on franchise success. a. True b. False
FALSE
The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim. a. True b. False
FALSE
The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources. a. True b. False
FALSE
The first step in the preparation of the cash flow budget is the identification and timing of cash outflows. a. True b. False
FALSE
The price/earnings ratio (multiple of earnings) method is determined by dividing the market price of common stock by retained earnings. a. True b. False
FALSE
The pro forma balance sheet is used in the critical risk segment of the business plan. a. True b. False
FALSE
The set of assumptions on which financial projections are based have little meaning. a. True b. False
FALSE
The traditional accounting equation is: assets + liabilities = owner's equity. a. True b. False
FALSE
There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source. a. True b. False
FALSE
When one designs a unique good or service, the individual is said to have used a(n) ____ approach to starting the business.
New-New
A "SWOT" analysis refers to analyzing strengths, weaknesses, opportunities, and threats. a. True b. False
TRUE
A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service). a. True b. False
TRUE
A budget is one of the most powerful tools that an entrepreneur can use in planning business operations. a. True b. False
TRUE
A copyright provides exclusive rights to creative individuals for the protection of their artistic productions. a. True b. False
TRUE
A harvest plan defines how and when the owners and investors will realize an actual cash return on their investment. a. True b. False
TRUE
Adjusted tangible book value is a popular method of valuation. a. True b. False
TRUE
An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it. a. True b. False
TRUE
An exit strategy is defined as that component of the business plan where an entrepreneur describes a method by which investors can realize a tangible return on their investment. a. True b. False
TRUE
Break-even analysis is used to tell how many units must be sold in order to break even at a particular selling price. a. True b. False
TRUE
Business valuation is essential when attempting to buy out a partner. a. True b. False
TRUE
Buyers and sellers assign different values to a business. a. True b. False
TRUE
Check My Work The business plan is the entrepreneur's road map for a successful enterprise. a. True b. False
TRUE
During the growth stage of a venture, entrepreneurs shift into a managerial style. a. True b. False
TRUE
Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility. a. True b. False
TRUE
Financial information pulls together all the information presented in the other segments of the business. a. True b. False
TRUE
In administrative cultures, there is a need for clearly defined authority and responsibility. a. True b. False
TRUE
Many research studies suggest that strategic planning influences a venture's survival. a. True b. False
TRUE
Marketing information that has already been compiled is known as secondary data. a. True b. False
TRUE
Misunderstanding industry attractiveness can be a fatal flaw in strategic planning. a. True b. False
TRUE
Nonfamily members sometimes bring pressure on the owner-manager in an effort to protect their personal interests. a. True b. False
TRUE
One of the most common reasons for acquiring a business is developing more growth-phase products. a. True b. False
TRUE
Replacement value of a business is based upon the value of each asset if it had to be replaced at a certain cost. a. True b. False
TRUE
Research has shown a distinct lack of planning on the part of new ventures. a. True b. False
TRUE
Sophisticated investors are wealthy individuals who invest more or less regularly in new and/or early- and late-stage ventures. a. True b. False
TRUE
Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies. a. True b. False
TRUE
Tangible assets as well as intangible assets of a business need to be assessed for proper venture evaluation. a. True b. False
TRUE
The "best" strategic plan will be influenced by the abilities of the entrepreneur, the complexity of the venture, and the nature of the industry. a. True b. False
TRUE
The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions. a. True b. False
TRUE
The cash-flow budget provides an overview of cash inflows and outflows for the budget period. a. True b. False
TRUE
The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture. a. True b. False
TRUE
The entrepreneurial strategy matrix measures risk and innovation. a. True b. False
TRUE
The forcing events that require an entrepreneur to step aside and let someone direct the operation are usually unforeseen and create major problems for the business. a. True b. False
TRUE
The harvest decision may come when the venture has grown to a stage where an IPO is a possibility. a. True b. False
TRUE
The liquidity event stands for positioning the venture for the realization of a cash return for the owners and investors. a. True b. False
TRUE
The principal objective of capital budgeting is to maximize the value of the firm. a. True b. False
TRUE
The prospective investor should get as much information as possible on the franchisor. a. True b. False
TRUE
The steps in developing a succession strategy are understanding the contextual aspects, identifying successor qualities, and carrying out the succession plan. a. True b. False
TRUE
The terms upside gain and downside loss refer to the profits the business can make and the losses it can suffer. a. True b. False
TRUE
The two parts of a patent application are specification and claims. a. True b. False
TRUE
There are two types of succession pressures: family and nonfamily. a. True b. False
TRUE
Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money. a. True b. False
TRUE
When purchasing an existing business, the prospective owner should conduct an assessment of the business's current group of employees. a. True b. False
TRUE
Works created and copyrighted after January 1, 1978, are protected for the life of the author plus 70 years. a. True b. False
TRUE
Which of the following is not a key question a prospective buyer needs to ask in buying a business?
What is the owner's personal net worth?
Which one of the following is not a benefit of a business plan to the entrepreneur? a. Provides a comprehensive product-launch timetable. b. Provides a communication tool for outside financial sources. c. Quantifies objectives, providing benchmarks for comparing forecasts with actual results. d. Allows the entrepreneur to view the venture critically and objectively.
a. Provides a comprehensive product-launch timetable.
Which of the following describes advantages of the business plan for financial sources? a. The plan identifies critical risks. b. The plan helps assess the entrepreneur's family. c. the plan identifies sources of capital. d. all of these.
a. The plan identifies critical risks.
The concept of the net present value method works on the premise that a. a dollar today is worth more than a dollar in the future. b. a dollar today cannot be measured in future dollars. c. a dollar today is worth less than a dollar in the future. d. a dollar today is worth the same in the future.
a. a dollar today is worth more than a dollar in the future.
A market is a. a group of consumers who have purchasing power and unsatisfied needs. b. a segment of the economy. c. a group of known purchasers. d. a way of gaining consumer data.
a. a group of consumers who have purchasing power and unsatisfied needs.
A business plan is a. a written document that details the proposed venture. b. an instance of entrepreneurial passion. c. the result of the new business. d. a blueprint of the product.
a. a written document that details the proposed venture.
In the context of buying a business, a known commodity may command a higher price for what reason? a. avoiding start-up costs has value b. historical projections have intrinsic value c. the value of a founder's stock decreases over time d. property values are variable
a. avoiding start-up costs has value
Which of the following is a form of the pro forma statement? a. balance sheet b. cash flow statement c. costs of goods sold d. budget
a. balance sheet
All of the following are characteristic of entrepreneurial cultures except: a. hierarchy b. episodic use of required resources c. multiple informal networks d. action orientation
a. hiearchy
Which of the following is not a reason for the lack of planning in new ventures? a. lack of dominance b. time scarcity c. lack of knowledge d. lack of trust
a. lack of dominance
Research on family firms demonstrates which of the following facts? a. only 16 percent make it to a third generation b. only 3 percent make it to the next generation c. only nine out of ten make it to a second generation d. many family firms cease to exist after one month
a. only 16 percent make it to a third generation
A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an a. operating budget. b. entrepreneurial budget. c. expected results budget. d. anticipated budget.
a. operating budget
What hidden costs are involved when establishing the value of a firm? a. personal expenses b. travel expenses c. divergent expenses d. insufficient controls and costs
a. personal expenses
The discounted earnings method of valuation establishes a. potential earning power. b. an appropriate rate for replacement. c. expectancy of the business expenses. d. future profits.
a. potential earning power
Specific factors of a venture being offered for sale that should be examined include a. profits, sales, and operating ratios. b. age, trends, and future. c. profits, price, product. d. employees, suppliers, and competitors.
a. profits, sales, and operating ratios.
The entrepreneurial strategy matrix measures: a. risk and innovation. b. commitment and time. c. risk and security. d. opportunity and time.
a. risk and innovation
Contribution margin is the difference between a. selling price and variable cost per unit. b. selling price and fixed cost per unit. c. purchase price and variable cost per unit. d. purchase price and fixed cost per unit.
a. selling price and variable cost per unit
In the strategy matrix model, innovation is defined as a. something new and different. b. copying and improving on competitor's products. c. an invention. d. using practical milestones.
a. something new and different.
Formation of long-range plans for effective management in light of a venture's strengths and weaknesses is referred to as a. strategic planning. b. dimensional planning. c. operational planning. d. tactical planning
a. strategic planning
From where does an S corporation take its name? a. Subchapter S of the Internal Revenue Code b. Uniform Commercial Code c. state law d. S Lab
a. subchapter S of the Internal revenue code
The financial segment includes a. the pro forma balance sheet. b. the cost statement. c. the profit statement. d. the R & D statement.
a. the pro forma balance sheet.
An important guideline in putting the plan together is a. to identify the target market. b. to impress with excessive detail c. to over diversify. d. to not highlight critical risks.
a. to identify the target market.
Succession pressure inside the firm exists a. when family members want to keep and manage the business. b. nonfamily employees don't want the business. c. when the founder wants to give up authority. d. competition-is hurting the business.
a. when family members want to keep and manage the business
Which of the following statements is not part of the "five-minute reading" by venture capitalists? a. Determine the characteristics of the venture and industry. b. Determine the strengths and weaknesses of the entrepreneur. c. Read the latest balance sheet. d. Determine the financial structure of the plan.
b. Determine the strengths and weaknesses of the entrepreneur
Which of the following statements would not be an appropriate guideline for successful business plan development? a. Highlight critical risks. b. Orient the plan to the present. c. Do not overdiversify. d. Avoid exaggeration.
b. Orient the plan to the present.
A variable cost a. changes in the opposite direction and in direct proportion to changes in operating activity. b. changes in the same direction and in direct proportion to changes in operation activity. c. is synonymous with labor costs d. changes in the same direction and in inverse proportion to changes in operating activity.
b. changes in the same direction and in direct proportion to changes in operation activity.
A typical example of a forcing event is a. a natural disaster. b. death. c. a slow business year. d. an IRS audit.
b. death
A harvest plan a. is similar to a will. b. defines when and how business owners will realize a cash return on investment. c. is simple to implement. d. leaves the business to the next generation.
b. defines when and how business owners will realize a cash return on investment.
Small business owners are often guarded about their businesses, which leads to a. misunderstanding of the economic environment. b. distrust of others when formulating a strategic plan. c. lack of attention to the competition. d. a myopic viewpoint.
b. distrust of others when formulating a strategic plan
A fixed cost a. changes in response to changes in activity for a given period of time. b. does not change in response to changes in activity for a given period of time. c. changes inversely to changes in activity for a given period of time. d. does not do any of these.
b. does not change in response to changes in activity for a given period of time.
Traditional valuation methods includes all of the following except: a. adjusted tangible book value b. high equity/low debt c. discounted earnings d. price/earnings ratio
b. high equity/low debt
Capital budgeting is designed to show a. which of several mutually exclusive projects should be selected b. how many projects, in total, should be selected. c. how to evaluate projects based on rates of return. d. which project is most profitable.
b. how many projects, in total, should be selected.
Emotional bias is likely to have what effect on a seller's valuation of a business? a. none of these b. increase the valuation c. have no net effect on the valuation d. decrease the valuation
b. increase the valuation
Financial information is important to entrepreneurs because it pulls together all the information presented in other segments of the business and: a. it justifies long term commitment to the business. b. it quantifies all the assumptions concerning business operations. c. it answers all questions about the business and the entrepreneur. d. it predicts the competitive environment in which the business operates.
b. it qualifies all the assumptions concerning business operations.
Which of the following factors would not be considered a key dimension that shapes the strategic management activities of a growing firm? a. environmental uncertainty b. lack of knowledge c. speed of decision making d. internal political problems
b. lack of knowledge
A type of successor who is interested in efficiency, internal control, and effective use of resources would be considered a(n) a. opportunistic successor. b. managerial successor. c. family successor. d. entrepreneurial successor.
b. managerial successor
Competitive analysis, advertising plan, and pricing policy are all part of the a. financial plan segment. b. marketing segment. c. milestone schedule segment. d. research, design, and development segment.
b. marketing segment.
Which of the following is a critical factor to be considered in the management segment? a. location of the plant b. organizational structure c. suppliers d. product design
b. organizational structure.
When considering management, the entrepreneur should be concerned about a. total number of employees. b. ownership positions. c. employee benefits. d. pension and profit sharing
b. ownership positions.
A "SWOT" analysis refers to a. small, weak, ordinary, tact. b. strength, weaknesses, opportunities, threats. c. none of these. d. sound warnings of takeovers.
b. strength, weakness, opportunities, threats
Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need a. to establish a pattern of subordinate participation. b. to formalize planning because there is a great deal of complexity. c. to evaluate company strengths and weaknesses. d. less formal planning because of constant changes.
b. to formalize planning because there is a great deal of complexity
When considering physical facilities, the entrepreneur should be concerned about a. whether adequate capital is maintained. b. which facilities are owned versus leased. c. which facilities are used for production. d. facility upkeep.
b. which facilities are owned versus leased.
When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to a. assets minus (liabilities plus owner's equity). b. zero. c. assets minus liabilities. d. assets minus owner's equity.
b. zero
Which of the following questions should an entrepreneur ask when a business plan is turned down? a. "That means you do not know how to evaluate a good plan?" b. "Can you identify friends who would like this kind of deal?" c. "If you were in my position, how would you proceed?" d. none of these.
c. "if you were in my position, how would you proceed?"
The average life expectancy of a privately held firm is a. 10 years. b. and indefinite number of years. c. 24 years. d. 50 years.
c. 24 years
Which of the following steps should be carried out third when deciding to sell a business? a. Finalize the prospective buyers. b. Time the sale appropriately. c. Value the business. d. Publicize the offer to sell.
c. Value the business
Unique managerial concerns of growing ventures encompass all of the following except: a. the one-man-band syndrome b. time-management issues c. agency problems d. community pressures
c. agency problems
The traditional accounting equation that verifies the accuracy of the entrepreneur's balance sheet is a. assets + owner's equity = liabilities. b. assets + liabilities = owner's equity. c. assets = liabilities + owner's equity. d. assets = liabilities - owner's equity.
c. assets = liabilities = owner's equity
If cash flow is deemed the most important consideration in buying a business, which valuation method is likely to be used? a. high equity/low debt b. price/earnings ratio c. discounted earnings d. adjusted tangible book value
c. discounted earnings
Inhibitors to marketing research include all of the following except: a. irrelevancy b. cost c. distribution d. complexity
c. distribution
A type of successor who is high in ingenuity, creativity, and drive would be considered a(n) a. managerial successor. b. all of these. c. entrepreneurial successor. d. opportunistic successor.
c. entrepreneurial successor
Secondary data consists of a. external data only. b. newly developed primary research. c. existing information. d. internal data only.
c. existing information
Break-even analysis is a technique commonly used to assess the a. total costs. b. rate of return on investment. c. expected product profitability. d. net present value.
c. expected product profitability
Which is an influencing factor in succession? a. the competition b. current economic conditions c. family and business cultural issues d. government regulation
c. family and business cultural issues
A key concept in developing an expense budget is that of a. labor costs. b. taxes. c. fixed costs. d. rent.
c. fixed costs.
Return on investment a. provides a replacement value. b. establishes a value for the business. c. is net profit divided by investment. d. is equal to the current prime rate.
c. is net profit divided by investment.
What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to plan for a liquidity event as an exit strategy. b. It is important for the entrepreneur to know how to buy up troubled companies. c. It is important for the entrepreneur to indicate how the business will increase in value. d. It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.
c. it is important for the entrepreneur to indicate how the business will increase in value.
The principle objective of capital budgeting is to a. maximize the assets of the firm. b. minimize the risks of the firm. c. maximize the value of the firm. d. optimize the number of project requests.
c. maximize the value of the firm
Which of the following would be considered fatal mistakes in strategic planning, according to researcher Michael E. Porter? a. compromising strategy for profits b. venture's strategy is too rigid c. no real competitive advantage d. pursuing a solid competitive position
c. no real competitive advantage
Which of the following is not an example of pressures or interests from within a firm that affect succession issues? a. employee wanting a percentage of the business in the owner's will b. rivalry among various branches of the family c. pressure from a family member to start his/her own business d. pressure on the owner/manager to designate an heir
c. pressure from a family member to start his/her own business
The comprehensive business plan should be the result of a. continuous operations of the venture. b. the entrepreneur's best guesses. c. reflections on the direction of the venture. d. investor's promises of capital.
c. reflections on the direction of the venture
What is penetration pricing? a. setting price to maximize profit b. setting price to match the competition c. setting price to maximize market share d. setting price to switch customers to new product lines
c. setting price to maxamize market share
Analysis of a firm's external and internal environments provides the firm with the information to develop a. a degree of uncertainty. b. competitive strengths. c. strategic intent and strategic mission. d. administrative experience.
c. strategic intent and strategic mission
Which of the following is not a contextual aspect to be considered in an effective succession plan? a. time b. environmental factors c. technology d. type of venture
c. technology
"Harvest" does not mean a. that any profits will be reaped. b. that the firm continues to exist. c. the challenges and responsibilities of the entrepreneur are over. d. family members agree about the business.
c. the challenges and responsibilities of the entrepreneur are over.
Closely held ventures usually suffer from which of the following shortcomings? a. insufficient controls b. overcapitalization c. internal conflict d. a lack of management depth
d. a lack of management depth
One advantage of the delayed-entry strategy for the younger generation succeeding the older generation of a family business is that a. normal mistakes are viewed as incompetence. b. strong relationships are readily established. c. knowledge of the environment is limited. d. a successor's skills are judged with greater objectivity.
d. a successor's skills are judged with greater objectivity.
The completed business plan provides the entrepreneur with a. a product-launch timetable. b. a sense of well-being. c. a nicely designed booklet. d. a tool for communicating with financial sources.
d. a tool for communicating with financial sources
The cash flow budget describes a. cash outflows/accounts receivables. b. interest income/interest expense. c. profits/costs. d. cash inflows/cash outflows.
d. cash inflows/cash outflows
The Oakland Scavenger case is profound to owners of family businesses in that a. conceivably, the owner can be sued for not giving equal treatment to a son as to a daughter. b. conceivably, the owner can be sued for not declaring a family member his or her successor. c. the owner can be fined for not declaring his or her first son the heir to the business. d. conceivably, the owner can be sued by an employee of a different ethnic origin based upon not being accorded the same treatment as a son or daughter
d. conceivably, the owner can be sued by an employee of a different ethnic origin based upon not being accorded the same treatment as a son or daughter.
The textbook recommends that social media marketers consider three aspects of social media when using social media tools for marketing purposes. What are they? a. cost, complexity, and relevancy b. resource management, context, and content c. control, contribution, and distribution d. creating something of value, enabling customer promotion, and encouraging participation
d. creating something of value, enabling customer promotion, and encouraging participation
The price/earnings ratio is determined by a. goodwill. b. deferred financing costs. c. patents. d. dividing market price of common stock by earnings per share
d. dividing market price of common stock by earnings per share.
__________ refers to conducting a thorough analysis of every facet of an existing business. a. Industry capitalization b. Risk assessment c. Knowledge acquisition d. Due diligence
d. due diligence
What is the one-person-band syndrome? a. following a competitor's lead b. an invention c. effective time management d. failure to delegate
d. failure to delegate
Because of the _____ doctrine, it is sometimes difficult to establish infringement. a. right to publish b. acquisition c. freedom of information d. fair use
d. fair use
Sales and earnings of a venture are projected from a. property values. b. data on start-ups. c. historical projections. d. historical financials.
d. historical financials
A reason for lack of strategic planning has been found to be a. time sharing. b. lack of dominance. c. lack of preference. d. lack of expertise.
d. lack of expertise
An indicator of the planning pitfall of "failure to anticipate roadblocks" is a. recognition of future problems. b. having a contingency or alternative plan. c. pursuing a good work force. d. making no admission of possible flaws in the plan
d. making no admission of possible flaws in the plan.
Of the following, which does the textbook identify as critical to the marketing planning process? a. marketing myopia b. market niche c. market segmentation d. marketing research
d. marketing research
Comparing financial numbers in order to make decisions is referred to as: a. comparable fractions. b. descriptive statistics. c. debt reduction. d. ratio analysis.
d. ratio analysis
One advantage of an early-entry strategy for the younger generation succeeding the older generation of a family business is a. perspective of the environment is broadened. b. normal mistakes are viewed as incompetence. c. successor's skills are judged with more objectivity. d. skills specifically required by the business are developed
d. skills specifically required by the business are developed.
Which of the following statements may be the most important in new venture creation? a. the profit statement b. the income statement c. the pro forma balance sheet d. the cash flow statement
d. the cash flow statement
A reason new venture managers lack knowledge in the strategic planning process is because a. they attempt to implement actions too quickly. b. they are overconfident. c. they refuse to learn new things. d. they have minimal exposure to the planning process.
d. they have minimal exposure to the planning process
Which of the following is an intangible asset?
goodwill
A trademark is a distinctive name, mark, or symbol that is identified with a company's product. a. True b. False
TRUE
Informal risk capitalists are often referred to as "business angels." a. True b. False
TRUE
Private placement is a method of raising capital through the private placement of securities. a. True b. False
TRUE
An advantage to buying an ongoing business is a. reduced concern over future operations. b. time and effort are reduced c. it may be purchased at a bargain price. d. all of these.
all of these
Which of the following falls under Chapter 7 bankruptcy? a. The debtor fails to file income taxes. b. The debtor is relieved of obligations. c. The debtor is arrested. d. The debtor surrenders most property to a court trustee.
b. The debtor is relieved of obligations
All of the following techniques are used in gathering primary data except a. surveys b. analysis of financial records c. observational methods d. experimentation
b. analysis of financial records
Venture capitalists, surprisingly, require little information before they make an investment. a. True b. False
FALSE
Perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, is that the franchisor will usually provide both training and guidance to the franchisee. a. True b. False
TRUE
Pricing in the social media age is sometimes based on a model that offers basic levels of service for free. a. True b. False
TRUE
Social media marketing is the application of online collaborative media for marketing purposes. a. True b. False
TRUE
Three primary legal forms of organization are the sole proprietorship, the partnership, and the corporation. a. True b. False
TRUE
That part of a patent application which identifies the features that are protected is known as the a. claim. b. identification. c. essence. d. particular.
a. claim
The 4Ps of marketing include all the following except: a. principle b. promotion c. product d. price
a. principle
All of the following are ways of invalidating a trademark except a. clearing-out proceedings. b. cleaning-out proceedings. c. abandonment. d. generic meaning.
A. clearing-out proceedings
The main objective of Regulation D is to a. make it easier and less expensive for small ventures to sell stock. b. reduce debt financing by small enterprises. c. regulate new small-business investment. d. increase investment in private placement.
A. make it easier and less expensive for small ventures to sell stock.
A key question to ask when buying an on-going small business is which of the following? a. How old is the business? b. Where should you retire someday? c. How many personnel are going to remain? d. Can you become a millionaire by buying this business?
C. How many personnel are going to remain?
Which is an important question for the entrepreneur to ask when evaluating the venture capitalist? a. Is the person wealthy? b. Is the person a close relative? c. Is the person someone with whom the entrepreneur can work? d. Is the person a college graduate?
C. Is the person someone with whom the entrepreneur can work?
Major trends in the venture capital field today include all of the following except a. global reach b. decrease in start-up investment amounts c. less specialized and more homogenous funds d. emerging feeder funds
C. less specialized and more homogeneous funds
Specific forms of partnership include which of the following? a. limited partnerships and S partnerships b. S partnerships and limited liability companies c. limited partnerships and limited liability partnerships d. limited partnerships
C. limited partnerships and limited liability parternships
Which of the following is not a type of debt financing? a. trade credits b. finance companies c. private placement d. accounts receivable
C. private placement
Of the following, which is not associated with entrepreneurial tactics in market research? a. in-person interviews b. guerrilla marketing c. blog monitoring d. lead user research
a. in-person interviews
All of the following are recognized as advantages of partnerships except: a. possible tax advantages b. ease of formation c. lack of continuity d. direct rewards
c. lack of continuity
Laws governing intellectual property rights include copyrights, trademarks, and leases. a. True b. False
FALSE
The registration of a trademark lasts for 40 years, with continuous renewal every 10 years. a. True b. False
FALSE
Mobile social media applications can be differentiated based on location-sensitivity as well as on time-sensitivity. a. True b. False
TRUE
One of the principal advantages of a corporate form of ownership is that liability (the most money a person can lose) is limited to an individual's investment. a. True b. False
TRUE
Equity financing is money invested in the venture with legal obligations to repay the principal amount of interest or interest rate on it. a. True b. False
B. FALSE
Which of the following does not represent a category of angel investors? a. entrepreneurial angels b. amateur angels c. micromanagement angels d. corporate angels
B. amateur angels
The entrepreneur should ask the venture capitalist _____ questions. a. at most ten b. an unlimited number of c. no d. exactly twenty
B. an unlimited number of
When considering bankruptcy, entrepreneurs as sole proprietors normally prefer a. Chapter 7. b. Chapter 5. c. Chapter 11. d. Chapter 13.
D. Chapter 13
An informal risk capitalist is referred to as: a. your neighbor. b. a retiree. c. someone with extra money to invest but who is not interested becoming an entrepreneur. d. a business angel.
D. a business angel
The advantages of franchising include: a. training and guidance. b. brand-name appeal. c. proven track record. d. all of these
D. all of these
The registration of a trademark has a lifetime of a. 10 years plus 10-year renewable periods. b. 20 years plus 5-year renewable periods. c. 25 years. d. the lifetime of the owner.
a. 10 years plus 10-year renewable periods
Which of the following are not trademarks? a. symbols b. generic words c. mottos d. names
b. generic words
What is meant by pricing for the life cycle? a. that pricing of new products needs to start out high and end low b. that pricing needs to be adjusted at each stage in a product's life cycle c. that pricing of new products needs to start out low and end high d. that pricing needs to be increased at each stage in a product's life cycle
b. that pricing needs to be adjusted at each stage in a product's life cycle
The 4Cs of marketing include all the following except: a. continuity b. communities c. cocreation d. choice
A. continuity
The owner of a copyright may do all of the following except a. deduct the intrinsic value of the rights from one's taxes. b. display the work publicly. c. reproduce the work. d. perform the work publicly.
A. deduct the intrinsic value of the rights from one's taxes.
To effectively pursue a patent violation, experts recommend that the entrepreneur a. prepare a realistic budget for infringement. b. fill out a preprinted form obtained from a patent office. c. handle all matters personally. d. sue as quickly as possible.
A. prepare a realistic budget for infringement
A disadvantage of debt financing is a. regular interest payments. b. possible cash flow enhancement. c. inhibition of growth and development due to equity investments. d. relinquishment of ownership.
A. regular interest payments
Advantages of debt financing include all of the following except: a. regular interest payments. b. low interest rates that justify the opportunity cost. c. no relinquishment of ownership. d. potential greater return on equity.
A. regular interest payments
When should a potential franchisee receive the FDD (Franchise Disclosure Document)? a. two days before signing a contract b. at least ten days before signing a contract or paying any money c. two days before signing a contract or paying any money d. at least ten days before paying any money
B. at least ten days before signing a contract or paying any money
Who must negotiate a final deal to purchase a business? a. A lawyer b. A CPA c. The potential buyer d. All of these
C. The potential buyer
Which is one of the most important questions for entrepreneurs to ask regarding venture capitalists? a. Are they wealthy? b. Are they good communicators? c. What is it like to work with their firm? d. Are they good at financial computation?
C. What is it like to work with their firm?
The person who sells the franchise is usually required to do all of the following except: a. provide continuing aid and a guidance to the person buying the franchise. b. provide professional management training to the unit's staff. c. pay a fee. d. help out with financial assistance.
C. pay a fee
Franchisees have the option of using the logo and symbols of the franchisor. a. True b. False
FALSE
Check My Work Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach. a. True b. False
TRUE
In negotiating a deal to purchase an existing business, it is possible to request that the seller retain a minority interest in the firm. a. True b. False
TRUE
In the marketing shift from the 4Ps to the 4Cs, price shifts to choice and promotion shifts to communities. a. True b. False
TRUE
Informal risk capitalists are those who have already made their money and now seek to help new ventures. a. True b. False
TRUE
Marketing research involves the gathering of information about a particular market, followed by analysis of the information. a. True b. False
TRUE
Market segmentation is a. the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest b. the process of segmenting the sales force c. the process of categorizing products into different segments d. heavily psychographic in nature
a. the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest
When a trademark becomes the name of a general group of products or services, the trademark protection may be lost because of a. cancellation proceedings. b. abandonment. c. generic meaning. d. cleaning-out procedure
c. generic meaning
When developing a survey, you should consider a. giving concise but incomplete instructions. b. ask leading and biased questions. c. including questions only pertaining to the study. d. the personality of the respondents.
c. including questions only pertaining to the study.
What is skimming? a. setting price to switch customers to new product lines b. setting price to maximize market share c. setting price to match the competition d. setting price to maximize profit
d. setting price to maxamize profit
Which of the following terms is not synonymous with social lending? a. peer-to-peer (P2P) lending b. banking 2.0 c. commercially viable lending d. crowdfunding
C. commercially viable lending
Of the following pricing models, which is not indicative of pricing in the social media age? a. the growth stage model b. the subscription model c. the freemium model d. the affiliate model
a. the growth stage model
The inventory should be examined for which of the following? a. salability b. correspondence between the physical count and the book count c. up-to-datedness d. all of these.
D. all of these
The most common source of debt financing is a. finance companies. b. factoring. c. trade credit. d. commercial banks.
D. commercial banks
It often is possible to obtain more capital and a better range of skills in a sole proprietorship than in a partnership. a. True b. False
FALSE