ENTR 187 MIDTERM REVIEW

If Connie gets her family and friends involved as investors, which of the following is most likely to be their concern?

Amounts and schedules for returns

To treat family and nonfamily employees as similarly as possible in a business, it is important to:

create career ladders for nonfamily members.

The fourth step of a small business' strategic planning process involves:

determining the best strategic direction and strategy for the firm

Making ______ work requires giving employees permission to act, the knowledge to act, and the skill to act.

empowerment

Which of the following is true of a private placement memo?

It is a complex legal document and should be drafted by a lawyer.

Which of the following is true of a differentiation strategy?

It is aimed at mass markets.

Which of the following statements is true of an executive summary?

It is the single most widely distributed written description of a business.

**In _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings.

pass through taxation

**According to the IRS, to be an independent contractor the person must:

perform a service that is not central to the operation of the business

The first step of the strategic planning process for a small business is:

reviewing and confirming the goals that define the firm.

In evaluating potential employees, a small business owner:

should design interview questions such that "yes" or "no" answers are not applicable

Responsibility for the actions of another is referred to as:

vicarious liability.

The rule of thumb is that perks should take no more than _____ of the annual personnel budget.

3 percent of budget

Which of the following statements is true of a vision statement?

A tagline or a slogan is a good way to present vision statements.

Your magic number is the number of customers you can comfortably provide with your product or service. TRUE OR FALSE

FALSE, the magic number is the POST tax income that the entrepreneur personally seeks for the business

CHP 7- Small businesses typically use the strategy of innovativeness rather than imitativeness. TRUE OR FALSE

FALSE, they tend to imitate other products and make small changes

CHP 16- Everyone responds differently to risk. When it comes to business risk, small business owners are mostly risk seeking rather than risk averse. TRUE OR FALSE

FALSE, they would prefer to avoid risk if possible

Imitation minus one degree of similarity is the business equivalent of an innovative strategy. TRUE OR FALSE

FALSE, this is still imitation, innovation changes the products use or creates the idea of a product

Reviewing employees' performance is a one-time process done after the probationary period. TRUE OR FALSE

FALSE, this should be regularly done to ensure maintaining performance

It is preferable to hire a moderately qualified person if there is an immediate need for someone. TRUE OR FALSE

FLASE, wasted money if they are not fit for the position and are only temporary

Which of the following statements is true of the financial statements and reports found in a business plan?

For all types of business plans, a set of financial reports or projections are the central component of the Appendix

_____ are classic strategies for businesses of all types and they include differentiation, cost, and focus.

Generic Stategies

CHP 8- Which of the following statements is true of a business plan presentation?

Handouts are mailed or distributed when the business plan changes frequently

**Which of the following explains the difference between limited partnership and general partnership?

In general partnerships, no government permission is required for the setup and maintenance of business UNLIKE limited partnerships.

Which of the following is most likely to be the key information that joint venture partners seek in a business plan?

Intellectual property protection

A business plan that provides information to potential licensees is referred to as a(n) _____ plan.

Invention

Michael Porter identifies five different threats of competition for any business. Which of the following choices is NOT one of Michael Porter's five threats?

Investors The 5 threats are- 1. Competition in the industry 2. Potential of new entrants into the industry 3. Power of suppliers 4. Power of customers 5. Threat of substitute products

Which of the following is true of partnerships?

It does not allow one partner to obtain bonding protection against the acts of the other partner(s).

Which of the following statements is true of joint ventures?

It does not require its partners to lose more than what each partner has invested in it

Market scope is important because:

It helps business owners to decide where to focus their sales and advertising efforts.

Which of these is a disadvantage of a corporation?

It incurs relatively high incorporation fees and high taxes.

Which of the following is true about trade name?

Most states allow several firms to use the same trade name, as long as the firms are in different lines of business.

Axion Inc. is a small business started by Robert. As the business grew, he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion. Which of the following techniques should he adopt to achieve this?

Negotiate contracts with key employees that limit their freedom to go into competition

Which of the following is a tactical action?

New distribution channels Tactical Actions; price cutting, product/service enhancements, increased marketing, new distribution channels

Which of the following should be included in an employee contract for a key employee?

Offer rewards for providing adequate termination notice

Which of the following is a recommended fair personnel policy guideline across family and non-family members?

Owners should let family and nonfamily members pick and choose from a set of privileges or benefits

Which of the following is a type of informational plan that solicits information on customer interests?

Proof-of-concept website -an internet-based type of business plan providing information or demonstration of a product or service designed to solicit information of customer interest

Crux Inc. and Synapse Inc. are two competing businesses in the same city. They use the services of the same insurance company and have taken the same policy. Crux has a higher deductible than Synapse for the policy. Which of the following statements would be true in this case?

Synapse pays a higher premium than Crux

A niche market is a narrowly defined segment of the population that is likely to share interests or concerns. TRUE OR FALSE

TRUE

A sole proprietorship is not considered as a separate legal entity from its owner. TRUE OR FALSE

TRUE

Eventually, mature industries begin a decline stage. Some industries face death, while others find new life in a process called retrenchment. TRUE OR FALSE

TRUE

Risk from loss of key personnel and former employees setting up competition against your business can be managed by negotiating employment contracts with those key employees. TRUE OR FALSE

TRUE

The business-to-consumer (B2C) contract is an example of an Internet contract. TRUE OR FALSE

TRUE

If the business is a corporation or an LLC, the owner can only lose what he or she has invested in the business. TRUE OR FALSE

TRUE, LLC can only loose what they invested

CHP 17- Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer. TRUE OR FALSE

TRUE, must take those measures before court appeal

Which of the following is true of insurance?

The insurance company makes a profit by collecting premiums from many businesses for the same set of risks

_______ is collected by the IRS and state agencies as a percentage of tax upon payroll.

Unemployment insurance

Which of the following statements is NOT true of target customers?

Usually you only have one type of target customer

After determining an organization's compensation philosophy, the next step in developing a compensation plan is to:

find comparison factors for salary.

When your product or service already exists but your firm is the first of its kind in your market, it is considered a(n) _____ business.

new entrant

As a new entrepreneur, Anthony's magic number for 2013 is $42,000. If the current tax rate for his business is 30 percent, calculate the amount that Anthony's firm would need to sell for him to get his magic number.

$60,000

Strategic Planning Steps (1-4)

1. Define goals that define your firm, knowing the "magic number" 2. consider customers and potential received benefit 3. study dynamics and trends of industry using "perceptual mapping" 4. determining the best strategic direction and strategy for the firm * requires continuous refining o strategies and tactics to maintain competitive advantage

Ted, a 46-year-old IT professional, recently attended a job interview at Acton Org, he wasn't offered a job. He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college. Which of the following laws protect Ted from such discriminations?

ADEA, Age discrimination employment act

_____ is a strategic action.

Acquiring a competitor Strategic actions require major resources; entering new markets, new product introductions, changing product capacity, and mergers or alliances

According to the six factors most valuable to employees, which of the following is a reason employees leave a company?

Being denied professional development and learning opportunities to expand their job responsibility

In Connie's business plan, which of the following components is most likely to be of interest to Mr. Johnson?

Cash flow and cash cycle

Which among the following is an example of an on-the-job training method?

Coaching

_____ is the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the market

Competitive Advantage

A(n) _____ is a one-page document on letterhead that introduces the business plan and owner to the recipient and indicates why the recipient is being asked to read the plan.

Cover Letter

Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business?

Creating provisions for subcontracting work

Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for. Trent, the accounts manager, accepts fake bills and assists Jacob in deceiving the company. They split the profits made this way. This is an example of theft by:

Employee Collusion

Which of the following statements is true of business plans?

External legitimacy for a firm is best established by creation of business plan

In the context of employee rewards, if entrepreneurs work based on an open-book policy and the company hits a downturn and promises cannot be met, employees are more likely to react badly since they have little or no understanding of the firm's situation. TRUE OR FALSE

FALSE

***On-the-job techniques include orientations, job instruction training, lectures, and case studies. TRUE OR FALSE

FALSE On the Job training includes: orientations, instruction training, apprenticeships, internships and assistantships, job rotation, and coaching

The ADA Technical Assistance Program provides inspection and affirmation services to help small businesses. TRUE OR FALSE

FALSE, ADA is Americans with disabilities act *SMALL BUS ADMIN helps small businesses

The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act. TRUE OR FALSE

FALSE, OSHA is Occupational Safety and Health Administration

CHP 18- The Family and Medical Leave Act applies to all employers. TRUE OR FALSE

FALSE, company must have more than 50 employees

The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights. TRUE OR FALSE

FALSE, little government protection for intellectual rights

** In a negotiation process, proposing solutions that provide value and balance for all parties involved is considered the easiest step. TRUE OR FALSE

FALSE, proposing solutions is often the HARDEST part

In employee leasing, the leased employees actually work for the hiring company rather than the leasing company. TRUE OR FALSE

FALSE, the employee is employed through the leasing company

The first step of the strategic planning process for small businesses is considering your customers and the benefits you want to offer them. TRUE OR FALSE

FALSE, the first step is developing a product

Standard industrial classification system (SIC) codes have _____ digits

FOUR

Which of the following is true of the entry wedge of second sourcing?

It provides a competitive pressure to ensure that suppliers keep providing the best service and prices. - since the customer already had a provider available they can go right back Entry Wedge opportunity; second sourcing when customers of another firm are sought out and given a second option

Which of the following is true of the ADA Technical Assistance Program?

It provides specific advice to a business concerning how to comply with the pertinent requirements

**Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case?

It will dissolve the corporation into a sole partnership under Bradham

Which of the following statements is true of an elevator pitch?

Its goal is to sell the idea of a business to another

Which of the following would implicate employee empowerment?

Letting employees make on-the-spot decisions for the companies' best interest

_____ means having a way for the person who has failed to meet a metric, or made a mistake, or is facing firing to have their side of the story heard.

Line of appeal

Which of the following is a management philosophy of selecting and promoting people based solely on their being the most capable person for the job?

Meritocracy, based off employee merit

Which of the following concepts is based on the perception that promises have been made in exchange for certain employee obligations such as giving of their energy, time, and technical skills?

Psychological contract

Which of the following statements is NOT true of psychological contracts?

Putting a psychological contract in writing is unnecessary and ill-advised.

Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations?

Reconcile the cash register tape to the cash register contents every day

Martin, an employee at a boutique store, is required to handle store displays and also ensure that all the sales records tally at the end of each business day. However, he committed fraud by recording fake sales and then keeping the products to himself. Which of the following managerial concepts would have helped the store avoid this deception?

Separation of duties

Which of the following forms of business requires no government permission to set up?

Sole proprietorship

A _____ is an agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements.

Surety Bond

When writing your elevator pitch, remember that elevator pitches have four success factors. Which of the following is NOT one of those success factors?

The length 1. the hook 2. purpose of product or service serves for customer 3. tell the business situation 4. become versed

There are two points in the presentation where your listeners will be giving you value. Which of the following are those two points?

The questions they ask and the feedback they give.

Which of the following is true of insuring the property of a business?

The value of the historical significance of a building often cannot be insured.

Which of the following represents the problem with legal protection methods for intellectual property?

There is no governmental agency that will assist small business owners in maintaining their legal rights

Which of the following is true of 401(k) plans?

They are typically easier to administer and are less expensive than traditional pension plans.

What is the goal of appendixes?

To provide supporting information that helps detail the key selling points of a plan

Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____.

articles of partnership

**A(n) _____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain action

exculpatory clause

Arbitration differs from mediation in that arbitration:

has limited appeal possibilities.

Most small businesses are more _____ than _____.

imitative than innovative

Industry analysis is defined as the technique used to: *3rd step to strategic planning

study the dynamics and trends of an industry

A(n) _____ is a type of contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform.

subcontract

There are three elements to most aspects of business law - finding the right information, negotiating the specific outcome you want, and:

taking care of the correct paperwork associated

The sales plan of a marketing strategy focuses on:

the day-to-day specifics of how sales are achieved.

A _____ is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive.

trade secret