MQM223 Final Exam

_____ is the idea and actions that explain how a firm will make its profits.

A. Strategy

Which of the following is a reason why more new businesses start on a part-time basis?

A. The cost of entry and exit is low.

Mandarin In Town, a Chinese restaurant, opened recently in Burnsville, Minnesota. People from all over the town flocked to Mandarin to find out how good it was. This gave a big boost to the restaurant's initial business, but it caused the other restaurants in the area to lose business temporarily. The way in which Mandarin in Town hurt existing restaurants in Burnsville is an example of:

A. creative destruction.

Jake is a small business owner of Macho Doors, a manufacturer and installer of garage doors. His business has earned the reputation as being reliable, trustworthy, and one that makes high quality, long-lasting doors. However, with rising gasoline and wood prices, Jake is finding it hard to maintain the existing quality standards. If he continues with the existing quality standard, his profit margins will go down and he will not be able to hike his employees' salaries; if he inserts panels of lower quality wood the reputation of his business will be lost. These are typically _____ legitimacy building features.

A. product-based

Ivan has recently started his new business venture, and he has been busy visiting trade exhibitions, business organizations, electronic business forums, and his previous colleagues in order to build contacts. This will help him use their expertise to the benefit of his business. Ivan is typically working on building a _____.

A. social network

As a new entrepreneur, Anthony's magic number for 2013 is $50,000. If the current tax rate for his business is 25 percent, calculate the amount that Anthony's firm would need to sell for him to get his magic number.

B. $66,666

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

B. Competitive advantage

A law firm needs to present a business plan to government officials. Which of the following is most likely to be expected by the officials in the business plan?

B. Compliance with regulations and laws

Which of the following is a traditional problem facing new ideas?

B. The idea cannot be economically made into a product or service.

Which of the following statements about Porter's Five-Forces is NOT true?

B. The model analyzes the resources of the firm

Which of the following statements is true about the task environment?

B. This part of the environment is made up of those people a firm deals with every day.

Which of the following ethical philosophies do questions like, "What if everyone did what I want to do and what kind of world would that be" best summarize?

B. Universalism

Market scope is important because:

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

Which of the following is essential to the success of all start-ups?

C. Building trust in one's "story"

Which of the following is most likely to increase the odds of successes for a start-up?

C. Choosing a business that produces high margins

Which of the following is true of a differentiation strategy?

C. It is aimed at mass markets.

Which of the following is a strategic action?

C. New product introductions

What is the goal of appendixes?

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

For part-time businesses, _____ refers to the documented permission from the government to run a business.

C. licensing

Rejecting existing ideas, and presenting a way to do things differently refers to the _____ strategy.

C. radical innovation

Exam 1

Chapters 1-4

Exam 2

Chapters 5-8

Which of the following best describes aggrandizing?

D. Cathy, who does computer repairs, lies to customers about having an office in a business park when she actually works part-time from her home.

Which of the following situations indicates that it makes better sense to first undertake a part-time business?

D. Damon wants to gain experience in the advertising industry.

According to the BRIE model, which of the following is true of a resource?

D. It includes the product or service to be offered.

A person's belief in his or her ability to achieve a goal is called:

D. self-efficacy

According to the SCAMPER tool, a feature that allows customers to order directly from a website rather than visiting a store is an example of:

D. substitution.

The questions on who will be hurt and how much, who will benefit and how much, what does the owner or the firm owe others, and what do others owe the owner and the firm are typically asked when:

D. the moral dimension of a problem is to be determined.

Which among the following is a critical-point planner?

A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance.

Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. In Connie's business plan, which of the following components is most likely to be of interest to Mr. Johnson?

A. Cash flow and cash cycle

Which of the following statements concerning cost strategies is NOT true?

A. Cost strategies are aimed at a small niche market.

Which of the following statements about industry, industry dynamics, and industry lifecycle is true?

A. Industry refers not only to your product or service, but also to all your competitors selling that product or service.

Which of the following is an advantage of the SCAMPER tool?

A. It helps entrepreneurs to come up with alternative solutions.

Which of the following is true of a blue ocean strategy?

A. It results in a new product or service.

Which of the following is the most effective approach for avoiding role conflict?

A. Keep family issues out of the family business

Born and raised in India, Rashmi has always enjoyed Indian cooking. As a matter of fact, cooking was her passion and she always enjoyed reading, learning, and experimenting with different ethnic cuisines. Ever since Rashmi's family moved to the United States, her cousins, friends, and other people at dinner gatherings have always commented that Rashmi should start a catering business. Realizing that her American friends may not be able to handle or like the Indian food because of its spiciness, Rashmi decided to make changes to the recipes to suit the local taste. Rashmi is seriously contemplating whether she should start a catering business—Tastes of India. Rashmi appears to be applying which element of the SCAMPER tool in her entrepreneurship ideas?

A. Modify

Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries?

A. Promotion focus

Erion Inc. is an e-commerce company that sells its food products under the brand name Heal Meal. Its business partners have planned to enter into a strategic alliance with a well-reputed retailer in the Asian market in order to expand its operations to the Asian continent. Which of the following is a reason for the company having a lack of organization-based legitimacy in the Asian market?

A. The absence of a physical location to conduct business

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

A. The length.

This stage of the business life cycle occurs once the firm is established in its market.

A. The success stage.

When deciding whether to take a business from part-time to full-time, the key question is usually ___________.

A. financial

Competencies are defined as:

A. forms of business-related expertise.

The most typical form of aggrandizement in part-time businesses is:

A. implying that a firm is a full-time one when it is only part time.

Connie decides to open "Connie's Corner Café" and finds the ideal location for her venture. However, it appears that Connie will have to approach investors or bankers for financial backing. When she talks to her local bank manager, Mr. Johnson, he immediately asks for Connie's business plan. Connie is in trouble because she does not know what a business plan looks like. Since the café is Connie's first business venture, which of the following risks is most likely to cause Mr. Johnson to evaluate her business plan negatively?

B. Experience deficit

Which of the following statements is true of business plans?

B. External legitimacy for a firm is best established by creating business plans.

Four aspects of part-time entrepreneurship are very different from full-time business. Gaining legitimacy and trust among customers is one. Which of the following is not one of the other three aspects?

B. Finding the suppliers most suited to your particular needs.

Which of the following is an advantage of using an imitative strategy?

B. It allows business owners to buy existing technologies.

Which of the following is true of the growth of a typical traditional small business?

B. It levels off after operations settle into a consistent, money-making pattern generating income to provide a living for the owner.

Which of the following best describes cannibalizing?

B. Mandy uses her employer's client list from her full-time job as a house painter to get customers for her own part-time house painting business.

Which of the following is most likely to be an advantage of buying an existing business?

B. Purchasing a business often requires less cash outlay than for creating a start-up.

The RBI screen consists of asking yourself five questions to help you screen entrepreneurial ideas. Which of the following is NOT one of those five questions?

B. Who are your competitors?

A perceptual map is:

B. a graphic display which positions products according to their scores on important strategic dimensions.

The minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market is known as:

B. affordable loss.

Tina runs her consultancy business from her home. Working from home allows her to set her own schedule and take time off at her convenience so that she can be with her family. The fact that Tina gets more time with her family can be categorized as ______ reward.

B. flexibility

A firm will be recognized for its industry leadership, a product-based legitimacy building characteristic, typically when:

B. its service standards are benchmarked by competitors.

The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as _____.

B. resource competencies

Adam owns a software development company. He and his team developed and licensed new software that could help many organizations strengthen their web security. Any organization that wishes to use Adam's licensed software would most likely have to pay him in the form of a _____.

B. royalty

A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as _____.

B. specialized business professionalization

A way to minimize the need for high-pressure ethical decision making situations in business is by:

B. using lapses in external relations as learning experiences for the rest of the firm by talking openly about the issues.

A McDonald's franchise includes the right to use McDonald's many trade names, specifications of the product to be sold, operating methods, marketing plan, and national advertising. Franchisees pay to the franchisor both an up-front fee to obtain the franchise rights and a percentage of gross sales. Which of the following types of franchising does this situation illustrate?

C. Business format franchising

_____ refers to a situation when what is best for one's part-time business is different from what is best for his or her full-time employer.

C. Conflict of interest

Which of the following best describes conflict of interest?

C. Jenson misses his deadlines at his full-time day job because he works late nights as a part-time music producer.

Sam used his management skills to start a loans advising website. He started seeing clients at his home before it grew into a well-established company in the next ten years. Which of the following entrepreneurial methods did he use in the beginning, to reduce the financial risk of his start-up?

C. Lean method

Which of the following is best avoided in handling a business crisis?

C. Mixing crisis management with the everyday management of a firm

Cathy has created a website for her shop of homemade chocolates and scented candles. Apart from traditional retailing, she sends e-mails to the people in her neighborhood. She also informs customers about various promotional offers through pamphlets. Which of the following techniques best describes Cathy's overall marketing method?

C. Multichannel marketing

_____ refers to searching and capturing new ideas that lead to business opportunities.

C. Opportunity recognition

Which of the following is a critical risk to a business?

C. Overlooked competition

Which of the following approaches yields better results in an established industry or a poor one?

C. Prevention focus

What would happen when a small business that is growing becomes too great to be handled alone by an individual owner?

C. Professional managers are hired to share the management load.

_____ refers to the size of the market, whereas _____ refers to the geographic range covered by the market.

C. Scale; scope

Which of the following statements is true of social capital?

C. Social capital is capital in the same sense that cash or land can be.

_____ is an approach to operating a firm or a line of business which identifies, creates, and exploits opportunities to make a profit in a manner that can minimize the depletion of natural resources, maximize the use of a recycled material, or improve the environment.

C. Sustainable entrepreneurship

This stage of the business life cycle is characterized by a stable level of sales and profits over several years. The functional areas, the market, and the products or services are all being dealt with consistently and efficiently.

C. The resource maturity stage.

Which of the following would have a very short-term approach to planning?

D. Individuals who look for opportunities to achieve their goal, even if the opportunity isn't the one related to their original goal.

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?

D. Investors

Which of the following statements is true about the general environment?

D. It always needs to be considered in terms of its social supports and institutional supports.

Which of the following is essential to the success of all start-ups when one uses the "lean" entrepreneurial methods?

D. Keeping in touch with one's customers

Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following provides industry-specific knowledge to Martin?

D. Martin having worked in a house-painting company before starting his own business

Which of the following relates to the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business?

D. Opportunity competencies

Gabriel has a product idea of a device which he believes will help people manage their daily chores, hence making their lives easier. He is unsure if the device is actually a feasible product but shares the idea with his boss and coworkers anyway. Gabriel is positive his device will get a fair review. He has offered other ideas in the past and one was now a viable product for the company. Which of the four ideas for making a creative business culture best describes Gabriel's company?

D. Positively reinforce ideas.

Joe has an idea for a new mobile restaurant business. He wants to convert an antique bus into a sit-down restaurant with a service window allowing him to serve people within the bus and walk-ups who want to get their food and take it home. Joe takes his idea and looks at the people, the offerings, the customers, the value proposition, and his distinctive competencies. Joe is performing a(n) ____________.

D. RBI screen

According to literature and practioners, which of the following is the most frequently mentioned source of business ideas?

D. Work experience

Amy plans to open a laundromat with a gym. She got the idea from the laundromat with a bar and game rooms, which she visits regularly. She wants to test her idea by starting out in a small space with the focus on the laundromat and a small space allocated for gym equipments. Amy's idea is an example of _____.

D. an incremental innovation

Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n) _____.

D. comprehensive planner

Josh, an electronics retailer, noticed that the e-commerce business was booming. He started an online shopping website to take advantage of this surge in business. As a result, his business attracted more customers from all across the country. This reflects Josh's:

D. entrepreneurial alertness.

Justin is a sales executive at a manufacturing company. One of his clients who purchases products from him at a higher price than that quoted by competitors is facing financial problems. Since Justin's promotion depends on his achieving the sales target, he cannot decide whether he should inform his client about the lower prices its competitors are paying. Justin is facing a situation known as _____.

D. ethical dilemma

A research process that provides the entrepreneur with key information about other firms in the same line of business as his or her, the current situation and trends is known as:

D. industry analysis.

Sam intends to present a business plan to his potential key employees. The employees would most likely expect to know about the _____ during the presentation.

D. long-term prospects

Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's opportunity competency?

Martin contracting with the mayor to help paint during reconstruction

Which of the following is most likely to be an advantage of a start-up?

A. It begins with a clean slate.

Which of the following is most likely to be the best indicator of successful start-ups?

A. Level of experience of the founders

Which of the following is a tactical action?

A. New distribution channels

If a business owner assumes that he or she needs to do all the work, make all the sales calls, and solve everybody's problems, which major pitfall is the business owner becoming a victim to while trying to become more innovative?

A. Obeying rules that do not exist

Andrew initially worked with a travel website for few months and then became self-employed by starting a martial arts school, where he taught karate to teenagers. After a year, he closed the school and joined an advertising firm. After two years, he quit the advertising firm and became self-employed as a freelance music composer. Which of the following terms indicates the changes in Andrew's employment structure?

A. Volatility

In many franchises the franchiser oversees (or even manages) the selection of location, the construction of facilities, the acquisition and installation of necessary equipment, and the initial inventory with which to open business. Which of the following terms best represents this type of franchising?

B. Turnkey

Roller-Tell Inc., a major supplier of components to the automobile industry, has recently confronted a crisis as one of its manufacturing units has been forcefully shut down by the local union. As a result, the company has been unable to meet the customer demands appropriately. As the owner of the business, the most appropriate way for the firm to handle this crisis is to:

B. make the process of dealing with the problem as open as possible.

The extent to which a firm meets or exceeds the standard business practices for its industry is known as _____.

B. professionalization

Joe is planning a new mobile restaurant business. He wants to convert an antique bus into a sit-down restaurant with a service window allowing him to serve people within the bus and walk-ups who want to get their food and take it home. Joe is performing some research into his project and is looking at the overall business idea, the product/service, the industry and market, financial projections (profitability), and the plan for the future action. Joe is performing a(n) ___________.

C. feasibility study

Lisa runs a dog grooming business and is always looking for new trends, reading articles, keeping notes, and talking to customers and suppliers about what is needed in the industry. What important function is Lisa performing?

D. Lisa is scanning the environment.

In an attempt to become more innovative, a major pitfall that business owners are most likely to become victim to is:

D. using the first good idea as a business opportunity.