Understanding Business Chapter 6

A small business advantage is ________. a) the ability to quickly adapt to customer needs b) friends can barter for goods and services the business needs c) colleges are more amenable to helping small businesses because they prefer working and writing about them than their larger counterparts d) they are more likely to employ part-time workers and use telecommuting

a

Reed Hastings created Netflix. His inspiration came from the fact that he had to pay a sizeable late fee for returning a DVD beyond the due date at a rental store. It took a few tries to develop the winning business model. Which statement accurately describes his key to success? a) His idea solved a problem. b) The government increased the charges on late fees to consumers. c) No other business had the capability to offer the same product. d) He obtained the only streaming video license available in the U.S.

a

Andre works for a company that promotes an entrepreneurial culture. Employees are encouraged to discuss new ideas. Development time is provided on the job for those ideas that float to the top. Employees who use their creative talents to generate ideas and create products within large companies are called ________. a) brainstormers b) intrapreneurs c) analyzers d) patent directors

b

Entrepreneurs emphasize the importance of believing in your own ideas because in the process of developing those ideas you are likely to hear from skeptics. Characteristically, they also know that success or failure is "on them." These attributes are described as _____________. a) action-oriented and highly energetic b) self-directed and self-nurturing c) self-contained and self-centered d) a high-stakes roller and highly energetic

b

For a market to exist there must be potential buyers: a) and a product that is safe and inexpensive. b) who have a willingness and the resources to buy. c) and retail stores which are willing to carry the product. d) who are looking for reasonable prices and financing.

b

Small businesses have an advantage over large business in international trade in all these ways except: a) they can begin shipping faster. b) their prices are usually lower due to low overhead. c) overseas buyers like dealing with individuals rather than large bureaucracies. d) they can provide a wide variety of services.

b

According to the textbook, one of the drawbacks of using venture capital is that: a) venture capital firms cannot give the small business owner any advice. b) they don't know your customers. c) venture capital firms may ask for a high stake in your business. d) the venture capital firm asks for very high interest rates on money loaned.

c

SCORE is ____________. a) a government agency that helps establish empowerment zones and incubators to assist small businesses during their initial start-up stage b) a program similar to CDIF, where private lenders provide start-up funds for small business c) an organization affiliated with the Small Business Administration where retired experts volunteer to provide free advice to small businesses that are just getting started d) a group of individuals or companies that invest in new businesses in exchange for partial ownership

c

The primary concerns when first starting your business are: a) marketing and accounting. b) planning and human resources. c) financing and planning. d) financing and marketing.

c

When Parker started his business, he knew he had to keep costs to a minimum and he worried about taxes. He planned to build and distribute safety goggles for construction workers and military personnel. He realized most of his business would not be through walk-in customers but rather large orders from companies. He chose to locate in a government-subsidized area called a(n) ________________, where he would receive tax breaks. a) affective designation b) immigration zone c) enterprise zone d) intrapreneurial territory

c

Which of the following is a false statement about small business? a) Small businesses account for more than 50 percent of GDP (Gross Domestic Product). b) The vast majority of nonfarm businesses in the U.S. are considered small. c) The first job for most Americans is unlikely to be in a small business. d) The majority of the country's new jobs are in small business.

c

Pam logged onto her Facebook account and noted that Sallie liked two different websites. Since Sallie is a good friend of Pam's and a reliable source of information, Pam checked out these websites and decided to purchase products from one of them. A common strategy for web-based business is _______________. a) strong-arm marketing b) strategic alliance marketing c) dendritic marketing d) affiliate marketing

d

Small businesses often have advantages in international markets. One advantage is: a) a greater expertise in managing the paperwork required to sell goods in international markets. b) a better understanding of the cultural differences involved. c) the ability to obtain financing through the International Monetary Fund. d) individualized customer service as opposed to impersonal corporate bureaucracies.

d

There are many reasons why small-business owners don't go international. Which of the following is not one of those reasons? a) They don't know how to get started. b) Financing is often difficult to find. c) Paperwork is often overwhelming. d) The market doesn't have great potential.

d

Leveling the playing field for home-based businesses, ___________ has (have) made starting a home-based business much more affordable. a) broadband Internet connections and other technologies b) cultural acceptance c) tax laws d) opportunities to export to China and other global markets

a

Miriam Njunge wants to start a small business importing some products from her native Kenya. Before she starts, some good advice to Miriam would be: a) talk to others who have been or are in the import business. b) get a loan from a bank right away. c) find a business to buy as soon as possible. d) incorporate the business immediately.

a

Organizations known as ________ have a significant role in the economic recovery. Some start-up businesses have successfully found sources of capital by going through one of these organizations. a) CDFIs (Community Development Financial Institutions) b) ARMs (Adjusted Rate Mortgage lenders) c) PACs (Personal Asset Collateral funds) d) Venture Capitalists

a

What are the primary sources of funding for entrepreneurs? a) Personal savings and individual investors such as family. b) Finance companies and banks. c) The Small Business Administration. d) Former employers and the State Economic Development Authority.

a

A small business: a) must have fewer than 100 employees to be considered small. b) is considered small relative to other businesses in its industry. c) cannot be a C or S corporation. d) should not have more than three locations in a region.

b

Although the business plan has a great amount of detail and requires thoroughness, a well-explained business idea will come to life almost immediately in which part of this document? a) The financial plan b) The executive summary c) The marketing plan d) The explanation of the management team

b

While cultural differences and bureaucratic paperwork for foreign governments make the prospect of global trade difficult for small businesses, there is one bright spot on the horizon that has brought global trade closer to home. Small businesses can now ________. a) buy health insurance for employees abroad that is much cheaper than in the U.S. b) avoid U.S. labor laws that do not permit them to employ child labor c) use technology such as PayPal to fulfill orders, which gives them some assurance of payment d) delegate the details of going global to U.S. government employees who are mandated to assure small businesses succeed abroad

c

A business plan for a new business does not need to include: a) a marketing plan. b) a discussion of the purpose of the business. c) a description of the company background. d) the names of the prospective lending companies.

d

Why do incubator facilities continue to remain very popular with start-up businesses? a) They are essentially loan offices that provide funding. b) They team up with large corporations who are willing to buy out the small businesses. c) They almost always provide strong visibility and walk-in customers. d) By providing essential services to entrepreneurs, they have a very strong success rate.

d