ELE 4030 Final Exam
What percentage of business have a production process? 100 75 50 25
100%
The legal means to protect intellectual property is _________. all of these trademark copyright patent
All of these
_________ have been a major source of funds for established firms, but are quite restrictive in their lending to start-up firms because the risk is perceived to be high. Families Suppliers Banks Investors
Banks
_________ are high-net-worth individuals who invest in business not as a business, but individually. Venture capitalists Equity investors Supplier capitalists Business angels
Business angels
_________ are resources that combine to allow a firm to do things better than its competitors. Analytical tools Measurable goals Trade-outs Capabilities
Capabilities
In production management the two most important elements are: charting and quality financing and quality charting and organization financing and organization
Charting; quality
A(n) _________ is an analytical tool to organize information about direct competitors on all points of competition. analysis gap completion map deficient map competitive map
Competitive map
Which of the following is NOT a personal motivator to start a business? defensive positioning driven proactive positioning practical advice
Defensive positioning
All of these are steps in identifying a sustainable competitive advantage EXCEPT: Evaluate the extraordinary resources. Develop a list of the business assets. Break the list of capability into standard and extraordinary. Develop a list of all potential customers.
Develop a list of all potential customers.
_________ is the analysis of the differences between the predicted and the actual performance of a business. Gap analysis Deviation analysis Margin analysis Profit analysis
Deviation analysis
Legitimacy is a term used by financial institutions interacting with new businesses, which indicates there are questionable areas of concern T/F
False
Liquidity, activity, marketing, and profitability are the four basic categories of performance ratios. True False
False
New business owners do not need to identify customers because they have already been identified by their competitors. All you have to do is copy your competitors. T/F
False
The unlimited theory suggests that individuals act to maximize their own individual benefit. T/F
False
There is one crucial person in a large organization: the chief executive officer. T/F
False
Time management is not an important aspect in the successful management of a business. Small business owners can set their own time schedules
False
John needs to know who his customers are and how to attract them. He needs a(n):
Marketing plan
According to the book, there are three elements of entrepreneurial orientation. Which of the following is NOT one of those elements? risk tolerance passionate about your product or service prior experience personality orientation
Passionate about your product or service
_________ is a financial statement that summarizes the revenue, costs, and expenses incurred during a specific period of time.
Profit and loss statement
A _________ analysis is the development of a chart (using a current cash flow statement, income statement, or balance sheet) to create pro forma projections of a dramatic increase in sales or a major complication that might be experienced by a business. deviation leverage financial sensitivity
Sensitivity
All of these are analytical methods focusing on financial data EXCEPT: deviation analysis ratios sensitivity analysis short survey
Short survey
_________ ties the firm to the supplier and usually stops the owner from shopping around for a lower price. Supplier grant Equity funding Supplier credit Non-equity credit
Supplier credit
According to the book, the greatest contributor to an owner's success is _________. opportunities not available in large company the owner doing something they enjoy spending less time at work no risk involved
The owner doing something they enjoy
A competitor's actions may change the opening date of a new business
True
A float reflects a setting where there is a difference between the money going out and the money coming in. T/F
True
A good way to generate new business ideas is to think about the things that frustrate you or cause you problems, and then to identify solutions. T/F
True
A sustainable competitive advantage is an advantage that other firms cannot immediately copy.
True
Approximately 66 percent of all net new jobs are added by small businesses. T/F
True
The fourth column in a gap analysis is used to list the resources required for the successful operation of the business. T/F
True
The rate of small business failure has declined. T/F
True
The third column in a gap analysis is where the potential owner should provide a realistic estimation of his or her present resources. T/F
True
Unusual or unique competitive factors are the means by which a business can differentiate itself from competitors. T/F
True
All of the following represent issues that need to be considered in sales management EXCEPT:
What would be the cost of the final product that is sold to the customers?
Which of the following is the definition of brainstorming? a simple process of systematically examining the difference between what is expected and what occurs a creative process whereby an individual is asked to develop ideas followed by evaluation of each potential idea rational decision making by a group of individuals an imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea
an imaginative process whereby a group of individuals are brought together and asked to generate ideas with little or no effort made to evaluate the potential for each idea
A marketing effort that requires little capital is called Hybrid promotion Pure promotion Bootstrap marketing Mixed model promotion
bootstrap marketing
Effective brainstorming has rules that should be followed in order to be most effective. Which of the following is NOT one of the rules of brainstorming? include friends and family members in the group carefully examine each possible option before considering another generate ideas related to a specific topic or problem avoid evaluating ideas that are contributed
carefully examine each possible option before considering another
A substitute can assist in forming a(n) _________ on the price that can be charged for product or service. elastic demand ceiling schedule competitive map
ceiling
A _________ is an agreement between two parties to perform certain activities for some consideration. contract limited partnership warranty corporation
contract
A(n) _________ demonstrates how a set of activities are dependent on each other and which activities take the longest time Production pie chart Critical path chart activity setting chart pro forma chart
critical path chart
Liquidity ratios allow the owner the short-term ability to meet the firm's financial obligations. These obligations are _________ and _________. inventory; accounts receivable debt; accounts receivable inventory; accounts payable debt; accounts payable
debt; accounts payable
According to the book, new product ideas for small business start-ups originate from all of the following EXCEPT: existing records of a business prior work experience personal interests and hobbies brainstorming
existing records of a business
According to the book, there are four specific threats to achieving business success. Which of the following is NOT one of the threats mentioned in the chapter? operational financing sales generation scheme high degree of risk competitors
high degree of risk
When a small business owner pays a commission in addition to a basic salary, it is called a Hybrid compensation Bonus Salary Profit Sharing
hybrid compensation
When a corporation suffers losses, the founders will: be responsible for all debts of the company share equity investments lose only their investment in the business have unlimited liability
lose only their investment in the business
Marketing efforts need to based on the
mission statement
Fragmented markets have: clear dominant competitors few potential competitors no clear dominant competitors many potential customers
no clear dominant competitors
Pricing something that ends in 99 cents makes a big difference in the buying of a product. This is because of a consumers
perception
A(n) _________ exists if the service or product performs a similar function. elasticity of demand product/service flexibility trade-in substitute
substitute
Jane has developed a special Italian sauce for pizza. The sauce cannot be easily copied. This is a(n):
sustainable competitive advantage
Locations can be evaluated by
the amount of traffic that it draws
All of these are reasons why small business owners do not write job descriptions except:
wait till the employee gets hired
The largest group of new business owners is _________. Asians retired men women Hispanics
women
An employee cannot sue a small business owner for injury, if the individual accepts
workers' compensation
A _________ can easily be converted to cash, such as accounts receivable and notes receivable.
Current asset
A new businessperson should be guided by ________ to develop a critical path chart. Financial data marketing data operational data information data
Marketing data
As a result of conducting a gap analysis, the potential entrepreneur proved there was a need for the business. This is called doing the owner's _________. due diligence basic market plan operational financing business ideas generation
due diligence
Company analysis should proceed from the _________ and move toward the _________. general; specific specific; general lowest; highest negative; positive
general; specific
When forming a sole proprietorship or a partnership, the business debts are: paid the first day of the month responsibility of the owners accumulated paid by purchase order
responsibility of the owners
According to the book, which of the following sequences is correct when you want to start a new business? Determine who your potential customers might be, identify the exact competitors within that industry, define the industry that interests you Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry Identify the exact competitors within that industry, define the industry that interests you, determine who your potential customers might be Identify the exact competitors within that industry, determine who your potential customers might be, define the industry that interests you
Define the industry that interests you, determine who your potential customers might be, identify the exact competitors within that industry
All of these are criteria in deciding extraordinary resources in a company EXCEPT: valuable durable elastic rare
Elastic
_________ demonstrates how easy it is for a customer to switch to substitutes. Trade-in Competitive map Elasticity of demand Benchmarking
Elasticity of demand
which of the following laws states an employer cannot discriminate in pay to men and women who do the same job?
Equal pay act
_______ theory suggests that all individuals judge how we are treated relative to how we see others being treated
Equity
which of the following laws established a minimum wage for workers?
Fair Labor Standards Act
A business owner should never change its mission statement or strategy. T/F
False
A cash flow statement is the same as a budget. T/F
False
A cost leader is a product or service that is sold at a non-operating loss. T/F
False
A disadvantage of a sole proprietorship is that the business must involve more owners than just the founder. T/F
False
Cash flow in a business is the same as profit. T/F
False
Small companies can take advantage of economies of scale better than large firms. T/F
False
The process of generating new business ideas is something that occurs automatically. T/F
False
Small businesses deal with _________ regulations than large firms. fewer more same proportionate
Fewer
In a limited partnership, there must be a(n) _________. active investor unlimited liability general partner limited liability
General partner
_________ are special funds, neither equity nor debt, that do not require repayment and are designed to aid businesses in specific areas. No-pay loans Grants Small business loans Incubator equity
Grants
_________ measures the overall profits that are obtained from all sales during a given period. Gross profit margin Net profit margin Operating profit margin Return to equity
Gross profit margin
According to the book, _________ is(are) a source of valuable information for new business owners trying to choose a location for their business
Incubators
According to the book, which of the following is an example of circumstance motivators? People start their own company because they have a passion for their product or service. Individuals are laid off, are demoted, or are forced to take reduced pay by their prior employer. People start their own company because they want to be their own boss. Women, who are the fastest growing group of small business owners, who want to achieve their dreams.
Individuals are laid off, are demoted, or are forced to take reduced pay by their prior employer.
Which of the following terms is used by key stakeholders for acceptance of a company as a reputable ongoing business?
Legitimacy
According to the book, the greatest source of sustainable advantage is: personal relationship with customer location relationship with vendors staffing
Personal relationship with customer
The focus of an income statement is on: profits liabilities assets cash
Profits
According to the book, the most dangerous situation for a new business is _________. uneven growth no growth slow growth rapid growth
Rapid growth
_________ aid(s), counsel(s), assist(s), and protect(s) the interests of small business concerns. Stakeholders The U.S. Small Business Administration Medium-sized businesses Fortune 500 companies
The U.S. Small Business Administration
What is the cost-plus pricing method?
The firm determines its cost and then adds some level of profit it determines to be appropriate.
An important concept in conducting a ratio analysis is to ensure the business is comparing their ratios with the ratios of other similar firms. In other words, a small business should compare their ratios with other similar small businesses in the same industry. False True
True
An industry is defined as a group of companies within a specified radius that will be in direct competition for the same customers. T/F
True
Dan asked Mike to invest in his Sports Shop. Mike gave $10,000.00 and wants 25 percent of the profits. This is a form of equity investment. T/F
True
Efficient use of time is imperative for a new business owner T/F
True
On a balance sheet, the assets minus the liabilities of a company reflected in the balance sheet should total zero. T/F
True
A bank provides John money for the necessary hamburger maker for his business. This is called _________. contractual assets necessary funding asset-based lending debt-asset lending
asset based lending
The pricing _______ is the lowest amount that can be charged for a product or service while still making a minimal profit
floor
All of the following are benefits of a Subchapter C Corporation EXCEPT: health benefits paid by the corporation owners being treated as employees of the company no limit to the number of shareholders fringe benefits being treated as income
fringe benefits being treated as income
Glass ceilings in large corporations involve _________. formal rules limits to the level of opportunity in the corporate hierarchy no particular pattern for advancement unblocked opportunities
limits to the level of opportunity in the corporate hierarchy
An owner should establish the mission statement and strategies _________. prior to its inception at the 90-day review at the first day of business at the 30-day review
prior to its inception
Human resources is defined in economics terms as the ______ and _____ of human effort directed toward producing goods and services
quantity; qualtity
According to the book, a small business typically has less than _______ employees. 100 125 75 50
500
_________ is(are) a form of non-equity funding. All of these Supplier credit Debt Credit cards
All of these
A quantitative measure is the corporate culture of an organization. T/F
False
A small business startup is typically oriented toward the personal goals of venture capitalists. T/F
False
A trademark cannot be renewed once it has been issued even when the firm or the product is active. False True
False
Brainstorming works best in formal groups. T/F
False
If a business drops below the lower bounds of its liquidity level, then their bank will likely increase the line of credit to the firm. T/F
False
In a small firm the cost of health insurance per employee will be equal to that of a large firm
False
In an external environment analysis, the first step is to research your customers. T/F
False
In the case of a company failing, debt does not need to be repaid. T/F
False
Large firms can fill market niches that small companies cannot afford to fill. T/F
False
OSHA stands for Office standards and health administration
False
_________ examine the performance of a business and its ability to make economic returns over and above its costs. Financial ratios Leverage ratios Activity ratios Profitability ratios
Profitability ratios
________ are strictly financial agreements in which a business pays for some outputs, such as TV advertisements
Pure promotions
Entrepreneurial businesses have the ability to make greater profits in markets that have been ignored by larger corporations. T/F
True
Facebook and Linked-in were founded as entrepreneurial businesses, but they are more accurately described as venture capital backed businesses. T/F
True
Which of the following is NOT a personality dimension of the Big Five test? agreeableness conscientiousness extroversion individualist
individualist
All of the following are triggers to start a new business EXCEPT: intolerable risk level experiencing a mid-life crisis very little to lose financially by a failure being laid off
intolerable risk level
When a small business owner is advertising a job, the company needs to attract the/a _____ pool of applicants to choose from
largest
The advantage of factoring for a small business is: not receiving the full amount of bill due receiving money from accounts receivable immediately operating the company on minimal outlay segmenting all the company's accounts receivable
receiving money from accounts receivable immediately
A mission statement is a long narrative used to summarize a business. T/F
False
A pro forma is a summary of the assets and liabilities. T/F
False
_________ are used to measure the level of indebtedness of a small business. Activity ratios Financial ratios Leverage ratios Profitability ratios
Leverage ratios
All of the following are benefits of a Subchapter S Corporation EXCEPT: limited number of shareholders limited liability legitimacy in the market easy formation
Limited number of shareholders
A _________ exists when a firm finds an unique position in the market through product or service. low-cost approach differentiation approach sustainable competitive advantage approach first mover approach
differentiation approach
The World Bank estimates that one of the strongest factors in the growth of any nation's GNP (gross national product) is _________. small and medium-sized enterprises large businesses global trading higher tariffs
small and medium-sized enterprises