MGMT 421: Chapter 1

20. The occupation with the fastest growth overall is _____. A. professional service B. health care C. office and administrative support D. sales and related services

B. health care

24. _____ is a voluntary decision to terminate a business. A. Foreclosure B. Formal failure C. Discontinuance D. Bankruptcy

C. Discontinuance

13. _____ is the fundamental redesign of a business, often resulting in reduction in size and markets. A. Reinvention B. Incremental change C. Reengineering D. Acculturation

A. Reinvention

27. Which of the following statements is true about failure and small businesses? A. Personal failures typically end up in court with some kind of loss to the creditors. B. A discontinuance may result from the apparent advantages of working for someone else. C. Formal failures are far more numerous than personal ones. D. Discontinuance usually results when creditors file a lawsuit against a small business.

B. A discontinuance may result from the apparent advantages of working for someone else.

29. Which of the following does a business incubator do to help small business owners succeed? A. Find out the competition and make deals for cooperation B. Provide management assistance and shared office services C. Hire employees and train them D. Keep their financial records up to date

B. Provide management assistance and shared office services

14. _____ refers to the process of reducing the number of employees to increase efficiency. A. Freezing B. Rightsizing C. Procuring D. Resourcing

B. Rightsizing

12. Which of the following is a reason for the drastic changes in small business management trends? A. Accounting departments becoming independent of computer support B. Diverse shift away from people-related activities C. Improvements in communications and computer technology D. Excess supply of managerial talent

C. Improvements in communications and computer technology

17. A new small business owner's primary motive is usually _____. A. independence, that is, freedom from interference or control by superiors B. the need to obtain a second income for balancing the losses of other ventures C. the need to provide a niche product D. to seek security, place, power, prestige, high income, and benefits

A. independence, that is, freedom from interference or control by superiors

28. _____ nurture young firms and help them to survive and grow during the startup period when they are most vulnerable. A. Successful graduates B. Business incubators C. International trade organizations D. Conglomerates

B. Business incubators

Which of the following is a major reason for the increased interest in small business? A. There is no major fear of being impacted by recession. B. There is a growing trend toward self-employment. C. The rate of profit achieved by small businesses is higher than that of big corporations. D. There are very few government regulations and paperwork for small businesses.

B. There is a growing trend toward self-employment.

8. Smaller firms tend to: A. minimize innovation and flexibility. B. not provide a comprehensive learning experience to their employees. C. keep larger firms competitive. D. provide reduced employee job satisfaction.

C. keep larger firms competitive.

26. John opened All-for-Shop, a small retail outlet, in his neighborhood. He could not sustain it for more than a year because of huge losses and chose to shut it down. Fortunately, he did not have any creditors. Which of the following does the situation describe? A. Formal failure B. Foreclosure C. Bankruptcy D. Personal failure

D. Personal failure

15. Which of the following is the result of the trend in business to become more active globally? A. A growing number of large and small U.S. businesses are or are becoming foreign owned. B. The American consumer is increasingly noticing the change in managerial styles. C. The foreign-owned companies are increasingly adopting traditional managerial styles. D. A growing number of small business owners and managers are refraining from adapting to nontraditional managerial styles.

A. A growing number of large and small U.S. businesses are or are becoming foreign owned.

2. Which of the following statements is true about the impact of small businesses and entrepreneurship on educational institutions? A. Entrepreneurship and small business management are accepted as academically respected disciplines by many high schools, colleges, and universities. B. Community colleges are reluctant to offer courses for small business owners. C. Today more students think working for big corporations is a safer haven than self-employment. D. Educational institutions have discovered that by teaching entrepreneurship they will be able to put a restriction on free enterprise.

A. Entrepreneurship and small business management are accepted as academically respected disciplines by many high schools, colleges, and universities.

7. Which of the following is characteristic of a small business owner? A. Is innovative and focuses primarily on profitability and growth B. Perceives the business as being an extension of his or her personality C. Starts and manages a business for many reasons other than furthering personal goals D. Prefers a less relaxed and more aggressive approach to running the business

B. Perceives the business as being an extension of his or her personality

25. Mark opened a café in his neighborhood. Soon his café became very popular, and his revenues started increasing. Steve, the owner of a popular restaurant, saw Mark's success and asked him to join his restaurant. The financial incentive that Steve offered Mark was more than what he earned at his café. Moreover, Mark would not have to face the daily hassles of managing everything on his own. Mark decided to shut down his café and join the restaurant. This is an example of: A. foreclosure. B. formal failure. C. discontinuance. D. bankruptcy.

C. discontinuance.

4. Which of the following features must a business have to be classified as small? A. Management is independent, and the area of operation is primarily local. B. It is dominant in its field of operation, and it employs 100-200 people. C. Ownership is held by a large group of people, and the market is primarily local. D. Capital is provided by a federal institution, and the objectives are non-profitability and service to the government.

A. Management is independent, and the area of operation is primarily local.

3. Which of the following statements is true about small businesses? A. The manager usually owns the business. B. The area of operations is not necessarily local, although the market is primarily local. C. Capital is supplied and ownership is held by a large number of individuals. D. Management of small businesses is highly dependent, because the businesses are owned by a group of people.

A. The manager usually owns the business.

9. Which of the following best describes one of the contributions of small businesses? A. They are sources of new ideas or services that larger businesses may be unable to provide. B. They provide large capital gains to the owners. C. Their products and services are sold at prices that are lower than large businesses' prices. D. They provide economies of scale that large businesses cannot match.

A. They are sources of new ideas or services that larger businesses may be unable to provide.

10. Which of the following statements is true about small businesses? A. They get easy financing that leads to too many choices for funding. B. Small businesses provide low employee job satisfaction owing to a lower volume of transactions. C. They are not subject to burdensome government regulations and paperwork. D. Inadequate management in small businesses creates problems for small business owners and entrepreneurs.

D. Inadequate management in small businesses creates problems for small business owners and entrepreneurs.

30. Which of the following is the main goal of an incubation program? A. Provide financial assistance B. Exempt small businesses from interest on loans C. Procure equipment D. Produce businesses that are financially viable and freestanding

D. Produce businesses that are financially viable and freestanding

23. Which of the following statements is true about the typical growth pattern of a small business? A. Owners do not need to give managers a financial interest in the business to hold them. B. The length of service of professional managers (as opposed to owner-managers) in small businesses tends to be relatively long. C. Owners typically hire professional managers as soon as they start their business. D. Professional managers who work in small companies move from one company to another as they progress upward in rank and earnings.

D. Professional managers who work in small companies move from one company to another as they progress upward in rank and earnings.

16. Which of the following is a reason for starting a small business? A. To get a chance to act like automatons B. To get freedom from decision-making responsibility C. To focus on selling the same products that are available in the market D. To satisfy personal objectives

D. To satisfy personal objectives

11. Which of the following is a problem faced by small businesses today? A. Lack of advertising B. Lack of risk takers C. No training at colleges and universities D. Unexpected growth and financing issues

D. Unexpected growth and financing issues

22. Which of the following is true about the final stage of the typical growth pattern that small businesses tend to follow? A. Owners manage the business and do all the work. B. Owners manage their companies but hire employees to help with routine and/or management activities. C. Owners hire managers to run the firms. D. Owners outsource much of the supervisory work.

C. Owners hire managers to run the firms

18. Which of the following refers to an introspective personal analysis that can help a small business owner determine whether the combination of qualities he or she has will help him or her succeed as a small business owner? A. Analysis of one's attitude B. Analysis of one's financial status C. Analysis of the value of the products to be sold D. Analysis of the capacity of the facility to be used

A. Analysis of one's attitude

21. Which of the following is true about the first stage of the typical growth pattern that small businesses tend to follow? A. Owners manage the business and do all the work. B. Owners manage their companies but hire employees to help with routine and/or management activities. C. Owners hire managers to run the firms. D. Owners outsource much of the supervisory work.

A. Owners manage the business and do all the work.

6. An entrepreneurial venture is characterized by: A. innovative strategic practices and/or products. B. independent ownership and operation and no desire for dominance in its field. C. no scope of growing large, and the owners may not want it to. D. normal sales, profits, and growth as opposed to rapid growth and a quick sellout.

A. innovative strategic practices and/or products.

19. According to the Small Business Administration's (SBA) Office of Advocacy (www.sba.gov), only _____ tend to be dominated by larger businesses. A. specialized delivery and catering services B. social assistance and educational services C. construction and personnel/supply services D. management, business, and financial services

C. construction and personnel/supply services

5. A _____ is any business that is independently owned and operated and is not dominant in its field of operation. A. monopolistic organization B. public enterprise C. close corporation D. small business

D. small business