BSAD 3000 Exam 1

The startup cost for a McDonald's franchise is:

$1-2 million

What is the contribution margin for a product that sells for $5 per unit and has total variable costs of $2.75 per unit?

$2.25

What is the break-even point in units of a company that sells widgets with a contribution margin of $3 and total fixed costs of $3000?

1000 units

Which of the following statements is the most accurate concerning personal factors in a business?

A business should align with its owner's personal goals.

The right to buy new shares of stock in a company in proportion to the number of shares already owned before the stock is offered for public sale is called:

A preemptive right.

Which of the following marketing philosophies is likely to lead to success in many areas, not just marketing?

Consumer-oriented

What refer/s to the behavioral patterns and values that characterize a particular group of customers?

Culture

What is a collection of information about individual customers that can help a company reach and serve people better

Customer database

A _____ _____ identifies the characteristics necessary to locate and describes potential customers.

Customer profile

Small companies are particularly adept at competing with larger companies when they focus on

Customer service

The factors that help a customer decide whether or not to purchase a product are called:

Evaluative criteria

The best description of business model risk is:

How changing circumstances may affect the business model can be adjusted to cope with them.

What occurs when a private firms sells its shares for the first time to the public?

Initial public offering (IPO)

______ is acting in ways that are congruent with the values you expouse.

Integrity

______ lies are those that are specifically designed to make a new business look bigger and busier than it really is.

Legitimacy

Businesses that do not attract investors, but allow their owners to live the way they want to live are called______ businesses

Lifestyle

A _____ _____ involves at least one general partner and one or more limited partners.

Limited partnership

Which of the following is NOT an element of SWOT analysis?

Obligations

The main difference between lifestyle business owners and entrepreneurs is the way they perceive_______

Opportunity

Pricing has a direct impact on the gross revenue equation and an indirect impact on demand. Which of the following best describes those effects?

Pricing has a dual effect on total sales revenue.

Which of the following is the most frequent source of new ideas for a business?

Prior work experience

Marcy is concerned about whether her company should add motorcycle accessories to her already established car accessory products. She is thinking about which aspect of her product strategy?

Product mix

A _____ corporation is set up in order to accommodate individuals whose profession requires licensure.

Professional

The _____ commitment of family members referee to ties that extend beyond the financial rewards of being in the business. They include things like solidarity, identification with the family, and a sense of history.

Socioemotional

The simplest and cheapest legal form of organization is a:

Sole proprietorship

Which of the following is most likely to result in increased self-confidence in grown children who are thinking about entering the family business?

Succeeding in another firm on one's own.

describes a firm's position when it uses its unique capabilities and resources to outperform its competitors over time.

Sustainable competitive advantage

Credit sales have what effect on a company's balance sheet?

They increase the amount of working capital needed by the business doing the selling

Enterprenures who start and lead small businesses contribute to the economy in which of the following ways?

They make up the overwhelming majority of all businesses They hire nearly half of all high-tech employees They are increasingly going global, representing 97 % of all exporters

The best guide to use when deciding how long and detailed a plan should be is:

Write the plan in accordance with what the particular audience will find helpful.

The court case involving Joe Hadeed, owner of a carpet-cleaning service and Yelp, an online business review forum can best be summarized as:

A complex case balancing free speech rights against a company's right to protect its reputation

Which of the following is NOT one of the desirable traits of entrepreneurs list by Spinelli and Adams?

A domineering attitude

A sales forecast can best described as:

A fact-based prediction of the best, worst, and most-likely sales levels of a business.

Integrity is best defined as

A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing, regardless of the circumstances.

Yongmei's company is the target of an acquisition by a larger company that will finance the deal primarily through taking on a large debt. This type of deal is called:

A leveraged buyout

Which of the following is NOT a cost normally associated with franchise ownership?

A personal vehicle

Which of the following is MOST descriptive of entrepreneurial passion?

An entrepreneur must have passion, but unchecked passion can be destructive

Perception can be best described as:

An individual process that gives meaning to stimuli experienced by the customer

A "touch point" can be best described as:

Any contact with the customer, including phone, mail, "live" visits, and online interaction.

Which of the following is foundational to a company's ability to satisfy stakeholders?

Being profitable

Which of the following is NOT a component of a business's brand?

Brand lifespan

Which of the following are advantages of buying a franchise as opposed to starting one's own from scratch?

Brand recognition Use of a recognized trademark The operations manual

Jacques has just taken a big step in growing his company. He has obtained angel financing and all are optimistic that the company can be harvested successfully in a few years through a sale or a stock offering. The best advice you can give Jacques about running the company is:

Build a solid company that will be successful in the long haul, but also think about harvest options as you build

_____ _____ bring together buyers and sellers of businesses.

Business brokers

A _____ _____ is a document that outlines the basic concept of a business and a course of action that will make that business a reality.

Business plan

Harvesting is best described as:

Capturing value in the form of cash flows, reducing risks, and creating future options

Choosing a focus strategy has its advantages, but it can also lead to:

Competition from other companies that decide to imitate the same strategy.

Problems with nepotism include:

Difficulty in disciplining wayward employee/family members. The perception by non-family members that re treated differently.

Tom took great care in investigating his purchase of an existing business. He was engaging in:

Due dilligence

A price-skimming strategy is best directed at what kind of customers?

Early adopters

What uses the retirement funds of people who work for the company to buy the company stock and hold it in trust until it is distributed to their retirement plans?

Employee Stock Ownership Plan (ESOP)

The most accurate statement concerning socially responsible actions and firm profitability is

Evidence concerning the link between social responsibility and profit is mixed.

A ____ ____ is meeting of family members held (usually off-premises) to discuss family business matters.

Family retreat

A ______ _______ is a preliminary look at how well a business might do if it were opened.

Feasibility analysis

A _____ is a business model that involves a business owner who license trademarks and methods to an independent entrepreneur.

Franchise

______ are entrepreneurs who make contractual arrangements with established business chains rather than doing everything themselves

Franchisers

Which of the following is NOT on of the "Big Three" stakeholders?

Government regulators

_____ _____ is the term used to describe specific knowledge and/or abilities that enable a firm to uniquely and exclusively offer a particular benefit to a customer.

Intellectual property

A good retirement plan for an entrepreneur:

Is diversified such that it includes both the harvest and other types of investments not tied to the company's success

What are economic benefits of maintaining good relationships with customers?

It costs more to acquire new customers than to nurture repeat customer relationships, happy customers are a good source of referrals, and current customers often buy without discounts whereas new customers may need to be enticed with sale price

Which of the following statements most accurately describes the financial liability of a corporate stockholders.

It is limited to the amount of money invested in the business unless the owner has signed personally for a corporate loan.

According to Frank Moyes, a successful entrepreneur and former teacher at the University of Colorado, the most important reason for business planning is that:

It requires the entrepreneur to get the answers to some difficult questions.

A corporation has a distinct advantage when raising new equity capital due to:

Its ease of transferring ownership and distributing shares.

The best definition of value creation by a company is:

Its return is greater than the investors' opportunity cost of funds

The aspect of partnership that involves each partners being held accountable for the decisions of the others even if they were not consulted is called:

Joint and several liability

_____ ______ _____ specify the hard assets and working capital a firm will need to achieve its mission

Key resource requirements

Entrepreneurs generally think differently about resources than do employee-managers in which of the following ways?

Managers want larger budgets; entrepreneurs work to do more with less.

_____ _____ involves taking the steps necessary to locate and describe potential customers.

Market analysis

Your friend Eduardo asks your advice about distributing the shoes his company makes. He would like to reduce the risk he faces in marketing his products. Which of the following types of intermediaries would best help him do that?

Merchant middlemen

The demise of Blockbuster Video stemmed from which of the following vulnerabilities?

New entrants changed the industry's way of doing things They stuck to an old, established way of doing business instead of innovating Management failed to take into account the increasing feasibility of delivering video online

Ideas based on selling existing products or services in a new context are called:

New market ideas

What is the rate of return that could be earned on an investment of similar risk?

Opportunity cost of funds

is the registered, exclusive right of an inventor to make, use, or sell an invention

Patent

The definition of a family used in the context of this chapter is:

People bound by a shared history who are committed to a future together.

All purchase behavior begins with:

Perception of a need on the part of the customer

Micheal opened a franchise resaurant within an existing business. He did what is known as:

Piggyback franchising

New Businesses often find it necessary to ______ when the original idea is found to have flaws.

Pivot

The culturally supported sense of obligation to repay in kind what another has done for us is called:

Reciprocation

The primary purpose of trademarks and service marks is to:

Represent the way people identify your business.

A _____ _____ identifies the nature and types of income expected to come into the firm from the sale of products and services.

Revenue model

Sally has opened five successful candy shops and wished to capitalize on the scalability of her business by franchising, Which of the following should she consider before firing that route?

She should determine whether her business systems are we'll-definied and replicable. She should see if she can get sufficient financing to deploy the franchise. She should research government regulations regarding her obligations to disclose certain information to potential franchises.

Which of the following statements is most accurate?

Small entrepreneurial firms produce twice as many incremental innovations as large firms and ninety-five percent of radical innovations

_____ _____ is advantage created by an individual's connections with a network of social relationships.

Social capital

The fundamental benefit a customer gains from a product or service is called:

The core product/service.

The predator/parasite conflict can best be described as:

The perception by family members who work in the firm that family members who do not work in the firm are benefiting unfairly and the perception by family members who work outside the firm that inside members are benefiting unfairly.

A growth trap is best described as:

The phenomenon wherein a business's need for cash grows faster than its profits.

Which of the following statements most accurately describes the relationship between planning and doing in a business?

They are both important and must be balanced intelligently.

Recent research findings suggest that companies that are successful in making the transition from one generation to the next are:

Those whose new leaders act on their own, take risks, and support innovation.

Spotting trends can come from all of the following EXCEPT:

Tinkering with products features alone

The function of an aging schedule is:

To categorize accounts receivable based on the length of time they have been outstanding.

The most effective strategy for a newcomer to sue when entering a market is:

To offer benefits that allow you to change a premium.

The chief benefit of a marketing plan is:

To reduce the number of costly errors you make in your marketing.

Social entrepreneurship is best defined as

applying already established principles of good business to social problems

Which of the following best describes the difference between integrity and ethics?

integrity is based on internal principles that guide behavior, ethics is based on external guides to behavior.

expenses that remain constant at different levels of quantity sold.

operating expenses

strategy used when a firm wants to enter the market at a price lower than its normal, long-range market price in order to gain rapid market entry.

penetration pricing

Family businesses are best described as:

those in which the strategic direction of the firm is influenced significantly by family members.