Family, Franchise and Small Business Management
Tangible resources include:
cash, technology, and raw materials.
Entrepreneurs often come up short on their tax commitments because of a single-minded focus on their product or service and/or _____
casual accounting systems
A sales forecast can best be described as:
A fact-based prediction of the best, worst, and most-likely sales levels of a business.
Jeff Bezos' original business plan involved taking orders for books and having the items shipped directly from the publisher to the customer. He modified the plan to include other products such as toys and decided to buy the toys from the producers and ship them from his own warehouse. This modification of the original plan is called:
A pivot
Generally speaking, a strategy is
an action plan that guides resource investments.
Ethical issues
are questions of right and wrong.
Individuals or firms that possess the legal right to open multiple outlets in a given area are referred to as
area developers.
Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise, but is unnecessary if acquiring a sole proprietorship.
False
In a family business, the family's primary function is to ensure the profitability and survival of the business.
False
One of the benefits of a franchise agreement for the franchisee is that the franchisor is solely responsible for advertising the franchise
False
The practice of putting one franchise right next to another is referred to as piggyback franchising.
False
The universally accepted definition of the term small business is based on the number of people employed by the firm.
False
To control costs when purchasing a business, an attorney at the closing can represent both sides
False
Using a focus strategy, a company would focus its attention on producing one product that satisfied the greatest number of customers.
False
When screening new business ideas, the entrepreneur need not focus on the size of the targeted market.
False
Which factor is a non-quantitative factor of valuing a business?
Future community development
_____________ 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
_____________ involves taking the steps necessary to locate and describe potential customers.
Market analysis
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 benefitting unfairly and the perception by family members who work outside the firm that inside members are benefiting unfairly.
Family businesses are best described as:
Those in which the strategic direction of the firm is influenced significantly by family members.
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.
The most effective strategy for a newcomer to use when entering a market is:
To offer benefits that allow you to charge a premium.
The chief benefit of a marketing plan is:
To reduce the number of costly errors you make in your marketing.
A family business' special patterns and beliefs comprise the firm's organizational culture.
True
A franchising strategy whereby a single franchisee owns more than one unit in a given area is typically referred to as an area developer strategy.
True
A primary reason for becoming an entrepreneur should be to create a product or service that improves the lives of customers.
True
According to the text, managers who buy out founders of existing firms may be classified as entrepreneurs.
True
By observing trends in the use of leisure time, technology, or other areas, an entrepreneur can discover possible business ideas.
True
During a feasibility analysis, an entrepreneur may discover a fatal flaw in the idea.
True
Financial statements can mislead a potential purchaser trying to develop an accurate business valuation.
True
Franchisees could be considered to be limited entrepreneurs because they have a contract with a franchising organization.
True
In many cases, a franchisor will receive payments in the form of royalties that are based on a percentage of the franchisee's gross income.
True
Jarrod is reading a detailed statement of the franchisor's finances, experience, size, and involvement in litigation. Jarrod is reading a Franchise Disclosure Document.
True
One drawback of becoming a franchisor relates to possible new restrictions as a requirement for contract renewal.
True
One of the advantages of buying a franchise is that the purchaser has access to a proven business system.
True
Two major factors involved in grooming a son or daughter to enter the family business are the child's aptitude and the right to choose a career.
True
When hiring non-family employees it is only fair to identify the positions, if any, that are reserved for family members.
True
What question is the least important when developing a franchise from an independent business?
Who will develop the operations manual?
A SWOT analysis can be described best as
a concise overview of the firm's strategic situation.
Skimming is an unethical business practice involving
failure to report all income on tax returns.
The offer and sale of a franchise are regulated by
both state and federal laws.
A _____________ is a meeting of family members held (usually off-premises) to discuss family business matters.
family retreat
A franchise is able to control costs because
franchise networks have greater buying power.
When conducting an outside-in analysis, one should consider the _____ environment followed by the _____ environment.
general; industry
Of all the concerns regarding Internet use, the greatest is:
how users' personal information is being protected.
Which of the following types of businesses makes up the largest sector of the US economy?
lifestyle business
According to a study by the National Federation of Independent Business, the most common source of new product ideas for small business startups is
prior work experience.
The __________ commitment of family members refers 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
One of the most important features of the franchise contract is the provision related to
termination and transfer of the franchise.
Of all the possible stakeholders, the three primary ones are:
the customers, the employees, and the owners.
In a small business, the most important key to ethical performance is
the personal integrity of the founder or owner.
After issues related to customers and competitors, the second most common category of ethical issues that challenge small businesses is concerned with
the treatment of employees.
Which of the following marketing philosophies is likely to lead to success in many areas, not just marketing?
Consumer-oriented
___________ identifies the characteristics necessary to locate and describe potential customers.
Customer profile
Problems with nepotism include:
Difficulty in disciplining wayward employee/family members AND The perception by non-family members that family members are treated differently. (A and B)
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.
Which of the following is NOT an area of strategy the marketing plan should address?
Production
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.
An increase in the bargaining power of suppliers
decreases both the attractiveness and the profitability of the target market.
Segmenting a market by age, gender, or income uses _________ variables for market segmentation.
demographic
A differentiation-based strategy requires that a firm
emphasize the uniqueness of its product or services.
