Management Chapter 5

Which of the following is NOT an advantage of franchising? a. Franchisees experience a great deal of independence in running the business. b. The franchisee does not have to be responsible for building a business from the ground up. c. Franchisers have the ability to grow rapidly. d. The franchiser may provide business strategy counseling.

a. Franchisees experience a great deal of independence in running the business.

Which of the following statements on small businesses is true? a. Small businesses sell consumers most of the products made by big manufacturers. b. All new start-ups are in the field of high-tech communication. c. Big companies are the first to lay off workers during economic downswings. d. More major innovations come from big businesses than small businesses.

a. Small businesses sell consumers most of the products made by big manufacturers.

Which of the following is true of most successful entrepreneurs? a. They carefully analyze market conditions. b. They succeed straight out of college. c. They launch their ventures in their spare time. d. They succeed alone.

a. They carefully analyze market conditions.

Miriam pools all her savings to open a bakery that specializes in wedding cakes. She bakes the cakes, runs the store, and creates a website that allows customers to place orders online. Miriam is a(n) _____. a. entrepreneur b. wholesaler c. venture capitalist d. small-business investor

a. entrepreneur

A small business: a. is owned by one individual or a small group. b. meaningfully influences its environment. c. is publicly owned. d. has only one retail outlet.

a. is owned by one individual or a small group.

Which of the following is an example of a business in the service industry? a. A department store b. A car rental agency c. A florist d. An automobile dealership

b. A car rental agency

Roughly how many of new "innovations" introduced to the market in a given year are supplied by small business? a. Practically all innovation occurs in small business b. A negligible amount c. 50 percent d. 80 percent

b. A negligible amount

What are a few reliable sources of management advice for small businesses? a. Wikipedia, family, and business books b. Advisory boards, consultants, and the Small Business Administration (SBA) c. Gurus, online business articles, and government agencies d. Competitors, employees, and college professors

b. Advisory boards, consultants, and the Small Business Administration (SBA)

Which statements best describes job creation in relation to small business and large corporations? a. Large corporations create more jobs than small businesses. b. Business success is the real driver of job creation, in both small and large businesses. c. Small businesses create more jobs than large corporations. d. All modern job creation is happening in the tech industry.

b. Business success is the real driver of job creation, in both small and large businesses.

Which of the following statements on job creation is true? a. Small firms are the last to hire in times of economic recovery. b. Large companies are the last to lay off workers during economic downswings. c. Business size, more than entrepreneurial business success, accounts for most new job creation. d. Larger firms hire at a faster rate than smaller firms.

b. Large companies are the last to lay off workers during economic downswings.

Due to the strong economies of scale, small businesses generally do not do as well as large businesses in the _____ segment. a. retailing b. manufacturing c. construction d. transportation

b. manufacturing

A retail business: a. sells directly to producers. b. sells products manufactured by other firms. c. requires fewer employees than wholesalers. d. offers products to wholesalers for sale.

b. sells products manufactured by other firms.

Small-business investment companies (SBICs): a. have strict eligibility guidelines. b. take a more balanced approach in their choices than venture capital companies. c. demand a representative on the board of directors of the business. d. have immediate participation loan programs.

b. take a more balanced approach in their choices than venture capital companies.

Which of the following is false about control systems? a. Weak control systems can lead to serious problems. b. Effective control systems alert entrepreneurs to serious problems. c. Control systems are not needed to keep a business on track. d. A business may not survive without a good control system

c. Control systems are not needed to keep a business on track.

Which of the following is required to help alert entrepreneurs to potential trouble? a. Sufficient capital b. A positive outlook on life c. Effective control systems d. Dedication

c. Effective control systems

Which of the following is true of SBA financial programs? a. They supply capital in return for stock. b. Managers need approval from the SBA before making major decisions. c. Eligible firms must be unable to get private financing at reasonable terms. d. They require a representative on the board of directors of a company.

c. Eligible firms must be unable to get private financing at reasonable terms.

Which of the following is NOT a major businesses strategy that small businesses can use to strategically position themselves? a. Attain first-mover advantage by exploiting a unique opportunity before the rest of the industry. b. Identify a brand new market and take advantage of it accordingly. c. Pay all employees well above the industry average to attract only the best talent. d. Identify a niche in an established market through distinctive competencies.

c. Pay all employees well above the industry average to attract only the best talent.

Which source of funding has shown to be most significant and most important for financing a new business? a. Venture capital loans b. Strategic alliances c. Personal resources d. Small-business investment company (SBIC) loans

c. Personal resources

Which of the following is true of entrepreneurs? a. They run someone else's business. b. They assume the risk of the venture but are not actively involved in operating it. c. They take a personal stake in the success or failure of the business. d. They hire professional managers to run their businesses.

c. They take a personal stake in the success or failure of the business.

Which of the following statements is untrue regarding small business? a. The majority of new businesses fail within the first few years of being founded. b. Small businesses do not possess the sales and/or assets necessary to substantially impact its environment. c. Small businesses are owned by one individual or a small group of individuals. d. Entrepreneurs are unable to generate high incomes running small businesses.

d. Entrepreneurs are unable to generate high incomes running small businesses.

Which of the following is an advantage of a franchise? a. It allows a franchise to build a business from a scratch using its own business model. b. Its start-up costs are either very small or negligent. c. It allows each franchise outlet to be vastly different from other outlets. d. It lets franchisers grow by using the investment money provided by franchisees.

d. It lets franchisers grow by using the investment money provided by franchisees.

Which of the following is NOT a key factor in the success of small business? a. Managerial competence b. Luck c. Careful analysis of market conditions d. Paying business loans back as soon as possible

d. Paying business loans back as soon as possible

Which of the following is NOT a common reason for the failure of small business? a. Weak control systems b. Insufficient capital c. Managerial incompetence d. Presence of control systems

d. Presence of control systems

Which industry is home to the most small businesses in terms of a percentage of total companies? a. Transportation b. Services c. Manufacturing d. Wholesaling

b. Services

Which of the following statements is true of new businesses? a. Control systems are unimportant when starting a new business. b. Luck plays no role in the success of businesses. c. Insufficient capital can contribute to new business failure. d. A good outlook on life is irrelevant when starting a new business.

c. Insufficient capital can contribute to new business failure.

Which of the following statements is true regarding trends in small business? a. E-commerce plays only a small part in the success of many small businesses. b. The number of individuals who leave large corporations to start their own business is declining. c. Opportunities for women and minorities in small business continue to increase substantially. d. The failure rate among small businesses is increasing.

c. Opportunities for women and minorities in small business

A niche market is: a. a market in which customer needs are generic in nature. b. an area of organizational threat. c. a segment of a market that is not currently being exploited. d. a market in which several large firms compete.

c. a segment of a market that is not currently being exploited.

A two-person software development company with annual sales of $100,000 would be considered a: a. large business. b. joint venture. c. small business. d. franchise.

c. small business

Which of the following is true regarding international business? a. Expanding a small business into another country is easy. b. International markets are generally the same as domestic markets and do not present many new opportunities. c. Venturing into the international market is relatively void of risks. d. Small businesses are increasingly able to expand internationally.

d. Small businesses are increasingly able to expand internationally.

Which of the following is true of innovation? a. All successful software firms started out as large organizations. b. Innovations are less likely to come from small businesses than from big businesses. c. All successful new start-ups are innovative dot-com companies. d. Small businesses supply over half of all innovations in the U.S. marketplace each year.

d. Small businesses supply over half of all innovations in the U.S. marketplace each year.

Which of the following is true of small businesses? a. Jobs are created solely by small entrepreneurial companies. b. Small businesses have a weak presence in the economy. c. Small businesses have no impact on the world's mature economies. d. Small firms specializing in international business create many new jobs.

d. Small firms specializing in international business create many new jobs.

Steven is a polymer scientist with the motivation and expertise needed to start his own business. If he chooses to finance his business in the same way that most new businesspeople finance theirs, he will: a. borrow money from a lender. b. form a strategic alliance. c. approach a venture capital company. d. rely on personal resources.

d. rely on personal resources.