Chapter 5: Homework

(c) Many small firms need only a simple set of records.

Every business must keep records of sales, profits and losses, fixed assets, contacts, tax returns, customers, and a variety of other information that affects the growth and operability of the business. Which of the following is true about small business? (a) Record keeping does not vary much between large and small firms. (b) Record keeping for small firms requires greater exactness than large firms because even minute mistakes can throw the business into financial straits. (c) Many small firms need only a simple set of records. (d) Record keeping for large firms requires greater exactness than small firms because minute mistakes can have a cascading effect and cause the destruction of multiple business enterprises.

(a) A distributor franchises the channels of distribution to franchisees.

Franchising agreements fall into three general categories, which of the following is NOT one of those categories? (a) A distributor franchises the channels of distribution to franchisees. (b) A manufacturer franchises retail stores to see its products. (c) A producer licenses distributors to sell a given product to retailers. (d) A franchisor supplies brand names, techniques, or other services instead of a complete product.

(d) and a desire to determine one's own destiny

Several factors contribute to the entrepreneurial spirit in the United States, but the most important is the personal characteristics of the individuals who starts businesses. Studies have shown that personal factors in small-business success include family background, willingness to accept a challenge, ____________. (a) independence and social status (b) age and gender (c) and wealth (d) and a desire to determine one's own destiny

(b) the ability to adapt to change and simplified record keeping

Small businesses enjoy several unique benefits that larger firms may not have such as ______. (a) personal relationships with customers and international competition (b) the ability to adapt to change and simplified record keeping (c) independence and paid vacation time (d) higher profits and limited risk of failure

(a) poor management

Statistics show that most small business failures are related to ______. (a) poor management (b) lack of proper financing (c) the owner's lack of vision (d) in-fighting among the owners

A. (c) small B. (b) large

Studies show that the incidence of innovation among (A.) _____-business workers is significantly higher than among workers in (B.) _____ businesses. A. (a) limited liability (b) medium (c) small (d) large B. (a) incorporated (b) large (c) medium (d) small

(c) By the SBA's definition, the factors that determine the size of a business depend on the particular industry it is in.

The Small Business Administration (SBA) defines a small business as "one which is independently owned and operated for profit and is not dominant in its field." How small must a firm be to not dominate its field? (a) By the SBA's definition, a "small" business must have no more than 50 employees and have average annual sales of not more than $1.7 million. (b) By the SBA's definition, the factors that determine the size of a business depend on a number of factors including the average annual growth of the business. (c) By the SBA's definition, the factors that determine the size of a business depend on the particular industry it is in. (d) By the SBA's definition, a "small" business must have profits of no more than $250,000 per year.

(c) Special outreach programs designed to encourage franchisee diversity

The growth of women and minorities in franchising is attributable to which of the following activities? (a) Women and minorities having a greater work ethic than non-minority males. (b) Banks having loan programs target at women and minority business owners. (c) Special outreach programs designed to encourage franchisee diversity (d) More women and minorities graduating from business college

(b) Two franchisors offer their products together

What is meant by "dual-branded franchises"? (a) One product carries different brand logos in two different locations (b) Two franchisors offer their products together (c) Once franchisor offers its products to two different franchisees (d) Two franchisees interchange brands

(b) Over 90%

What percentage of home-based business have no employees? (a) Over 70% (b) Over 90% (c) Under 50% (d) Under 30%

(a) This section of the business plan gives the background of the company, explains the legal business form it ill take, provides information about the products or services to be offered, reviews potential customers, current competitors, and the business' future.

Having a good business plan causes a new business owner to think through all of the aspects of business ownership, costs, capital needed for start-up, and can be used to review company goals and benchmark when they are met. Which of the following is true about the company and industry portion of the business plan? (a) This section of the business plan gives the background of the company, explains the legal business form it ill take, provides information about the products or services to be offered, reviews potential customers, current competitors, and the business' future. (b) This section of the business plan provides the basic information such as the name, address, and phone number of business; the date the plan was issued; and a statement of confidentiality. (c) This section of the business plan explains what facilities will be needed and why, what the space requirements will be, how much capital equipment must be purchased and of what kinds and character, the size of the labor force, how inventory control will be maintained, and what the purchasing requirement will be. (d) This section of the business plan is a one-to two-page overview of the entire business plan, and explain why the business will succeed.

(c) small business firms

Sears, Roebuck & Co., and General Motors rely heavily on ______ to provide merchandise, parts, supplies, and other goods and services. Companies like these buy parts and assemblies for these businesses because it is less expensive than manufacturing them in their own factories. (a) international businesses (b) local businesses (c) small business firms (d) subsidiaries

(d) Free assistance in closing failed small businesses

Which of the following is NOT a management resource provided by the Small Business Administration? (a) Free technical assistance (b) Free publications (c) Counseling, courses, conferences, and workshops (d) Free assistance in closing failed small businesses

(b) A franchise is a license to operate an individually owned business as if it were part of a chain of outlets or stores.

Which of the following is a definition of "franchise"? (a) A franchise is an agreement between two parties to carry on a business for profit. (b) A franchise is a license to operate an individually owned business as if it were part of a chain of outlets or stores. (c) A franchise is a license to operate a unit of a business as if it were a part of a chain of outlets or stores. (d) A franchise is a large business that permits small businesses license to operate as if it were part of the larger business.

(a) According to the SBA, the most profitable companies in the United States are small firms that have been in business for more than ten years and employ fewer than 20 people.

Which of the following is an accurate statement about business profitability? (a) According to the SBA, the most profitable companies in the United States are small firms that have been in business for more than ten years and employ fewer than 20 people. (b) Large businesses and small businesses are about equal in their profitability. (c) According to the SBA, small businesses can retain all profits and have low costs associated with their operations which contributes to their profitability. (d) Large businesses are more profitable than small business and this increases with the number of employees hired.

A. franchisee B. franchisor

While the (A.)_____ owns the business, the (B.)_____ controls it. A. (a) franchisee (b) owner (c) corporation (d) partners B. (a) customers (b) lender (c) members (d) franchisor

(c) granting a franchise

A franchise arrangement includes a franchisor and a franchisee with the franchisor _____ to the franchisee. (a) supplying known and advertised management skills (b) providing required and capital (c) granting a franchise (d) providing management

(c) expanded too rapidly

According to the authors, franchises may become unsuccessful because the franchisor _____. (a) failed to maintain proper relationships with their lender (b) did not understand the market and failed to provide adequate trained to franchisees (c) expanded too rapidly (d) lacked the resources to properly plan the franchise operation

(d) is a guide for the person starting a business

A business plan is essential for starting a new business because it _____. (a) provides information to the Internal Revenue Service (b) helps the business owner track, monitor, and evaluate vendors (c) can serve as a communication tool for employees and investors (d) is a guide for the person starting a business

(c) Small business challenge larger, established firms in many ways, causing them to become more efficient ant more responsive to consumer needs.

Jeffrey Inc. is a large business that produces off-road vehicle parts. In addition to this market stream, Jeffrey produces auto parts, boat parts, and parts for machinery and equipment. Inventions, LLC is a small business that focuses only on the off-road vehicle market and has created lighter weight, stronger, and more efficient parts for off-road vehicles. Its primary market is off-road racing which it believes will serve the dual purposes of showcasing its product and filling the needs of its customers. Inventions has significantly increased its market share in the of-road vehicle parts market over the years causing Jeffrey to revamp its marketing techniques and reanalyze its customer's needs. Which of the following is true about the relationship of small businesses to large businesses? (a) Small businesses can only dominate in an area of business if many firms join together to offer the same goods or services. (b) When compared to large businesses, small businesses take more time to respond to customer's needs because they hesitate to invest in new product lines out of fear of having the fail and losing money as a result. (c) By the SBA's definition, the factors that determine the size of a business depend on the particular industry it is in. (d) Large businesses must create different departments that resemble businesses in order to effectively compete against small businesses.

(d) Small

_____ businesses are important to the U.S. economy because, among other things, they employ about half of all private sector employees, pay 42 percent of total U.S. private payroll, and hire 37 percent of high-tech workers (scientists, engineers, computer programmers, and others). (a) Incorporated (b) Large (c) Medium (d) Small