MGMT 354 - Final Review

The manufacturing costs incurred by Fred's Prints, a firm selling custom designed T-shirts are $10 per T-shirt and the selling and distribution costs incurred are six dollars per T-shirt. To this total cost of $16, Fred adds a profit of four dollars on each T-shirt and sales on the T-shirt at $20. The markup here would be:

$4

For those businesses that do get started, the amount of expertise is what distinguishes the more successful from the less successful businesses.

...

Ivory Isles Resort sets a low base price of $250 for its rooms. This appears to be a great bargain for vacationers looking for results in the five-star segment. However, the customers have to pay additional charges for using services such as the casino, spa, hot pool, gym, and lounge. According to this information, which of the following price strategies is used by Ivory Isles?

Captive pricing

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

Customer profile

The energy and focus needed to bring a business into existence relates to which of the following competencies?

Determination

Entrepreneurs typically want to enter the industry at which stage of the life cycle?

Emergent and Growth Stage

___ businesses have diverse operations and three critical site selection considerations: traffic, customer ease, and competition.

High customer contact

What does a business model describe?

How a venture plans to make money

The proof of a CRM effort is seen in

More tracked prospects making initial purchases

What characterizes an emerging niche market?

No Customers are willing to try new products/services.

Gabriel has a product idea of a device, which he believes will help people manage their daily chores, hence making their lives easier. The description of the product is most likely to address which aspect of the I2P analysis?

The value add for customers.

What is a sales cycle?

Time from exposure to the customer to the customer order.

People should typically avoid businesses that advocate:

caveat emptor as the business principle

When attempting to understand target customers, it is crucially important to:

observe and speak with them in their places of use.

Closing the sale refers to:

obtaining a commitment to buy from the customer

The process of transforming materials, labor, and energy into goods or services is termed as:

operations

Successful start ups typically

target a specific industry segment or niche.

What does a 'use case' activity almost always have?

A "before," "during" and "after" use dimension.

Which of the following best describes a go-to-market approach?

A new venture's plan to engage and deliver products and services to customers.

Which of the following statements is true of non-direct distribution?

A product's final price is more than the manufacturing cost if intermediaries are involved

What is a niche within an industry?

A subdivision of an industry which includes a set of competitors that address particular customer groups

Which of the following is NOT an example of a business model approach for a new venture?

All of these ARE approaches to business modeling: licensing, manufacturing, creating services.

Which of the following should you NOT do during a detailed consumer interview?

Ask a yes or no question

How do you identify the customer needs your venture should address?

By observing and talking to customers.

___ refers to a method of selling in which catalogs, brochures, letters, videos, and other pieces of marketing materials are shipped straight to customers from which they can mail, call, or email and order.

Direct mail

Which of the following will cause the maximum damage to an organization's legitimacy?

Directing customer calls to answering machine or voice mail

What are considered internal factors affecting small business and entrepreneurship?

Educational background, work experience, family background and business experience.

Which of the following is an advantage of personal selling?

It allows business owners to find out the buyer's main concerns and address them.

Which of the following is true about a business model?

It drives financial strategies and outcomes.

What is NOT true about business models for ventures?

It is usually best for venture success to give away a service for free, convince users that it is worthwhile and then ask them to pay for it later.

Which of the following is an advantage of providing credit to customers

It reduces the cost of selling

What is the essential component in a new venture's go-to-market approach?

Its distribution channel

___ refers to having only sufficient amounts of products on the shelves to meet immediate purchases and usually requires frequent shipments from the suppliers

Just-in-time inventory

___ means that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors

Legitimacy

If you scored low on the LOT-R test, then you should:

Look for courses, mentors and work experiences that can help you develop an entrepreneurial mindset.

Which of the following terms refers to the amount of profit a small business owner or entrepreneur incurs, usually stated as a percentage of the total price?

Margin

What is a key caveat of using observation of customers'?

Observe as many customers as possible

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

Opportunity competencies

___ refers to the highest price of the product that will produce the desired level of sales in the intended market

Optimum price

In the case of existing customers, ___ gives the information on the dates and type of contact, since in many sales situations, it can take repeated contacts before a sale is made.

Performance data

In personal selling, this means cleaning up the list to remove potential clients that are unable or unlikely to buy a small business owner's product or service.

Pre-qualifiying

___ refers to setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol

Premium pricing

In personal selling, ____ means finding out about clients before approaching them.

Preparation

Which of the following is NOT a latent need?

Price

Turquoise Innovations Inc. has introduced a unique software that has no competition in the market. The company has incurred huge revenue and development costs in order to commercialize the software. Several business firms have been waiting for the release of this product as it saves their cost of outsourcing finance functions. Hence, the best pricing strategy for this product will be:

Price skimming

In which of the following stages of personal selling does a small business owner or entrepreneur collect background information before selling the actual product or service?

Prospect and evaluate

Putting together a list of prospective clients is called

Prospecting

A(n) ___ is a middleman business which sales to consumers or end-users of a product, typically in single or small quantities.

Retailer

Which of the following statement with TRUE:

Revenue is not necessarily cash.

Which of the following is the best example for random discounting?

Sale of select merchandise

What is perhaps one of the most worth goals of a business?

Seeking profitability on the very first sale

A ____ must be paid in less than one (1) year from the date of the financial statement on which it is reported but can be sold to other investors at any time.

Short-term debt

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 us their expertise to the benefit of his business. Ivan is typically working on building a:

Social network

What is white space?

Space on a visual map that reveals a new market opportunity

What are customer attitudes?

Specific desires and frustrations

What are customer behaviors?

Specific desires and frustrations

What is a mandatory requirement for successfully creating a new venture?

Spending time with customers in a selected industry niche

In which of the following areas are latent needs often found?

Sustainability

Effective innovation is most often driven by:

Talking to consumers or business customers and finding their problems, frustrations, desires.

Which of the following is true of business locations?

Target market customers are essential factors for selecting business locations.

Which of the following is the key to customer relationship management (CRM)?

The data on current and prospective customers

What does a 'persona' of a target customer NOT contain?

The design of our product or service of the customer.

What is an "end-user?"

The person who uses your product/service.

If small-business owners track sales by the purchase basis

They can easily decide which marketing efforts to continue

Small business owners can figure out how to better target ads or promotions to particular types of customers if:

They link sales and the purchase basis to the type of customer

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

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

___ refer to other businesses that bring customers to a target market area

Traffic generators

Lily, a restaurant owner is planning to invest in a multipurpose ZS-13 baking oven. The oven cost $20,000 and will have a useful life of 10 years. The payback period each year is $8,000. Assuming that the money is received evenly across the year, what will the payback period be if she purchase the oven?

Two years and six months

What trend should you look for when determining the attractiveness of an industry sector?

Upward growth in customer demand for new products and services

What is perhaps the best way for entrepreneurs and small business owners to break into entrenched markets?

Use business model innovation

Which of the following questions in a typical I2P analysis provides information on competing products?

What is the market and what is its size?

Pilot test:

a preliminary run of a business, sales effort, program, or Website with the goal of assessing how well the overall approach works and what problems it might have.

The best example of a business model innovation is a:

change to the traditional way of making money.

The forms of a business-related expertise are called:

competencies

Consider, first and foremost, __________ to guide your product/service innovation.

customer needs, especially frustration

Identifying the unmet needs of customers in a target market allows you to:

determine if a market opportunity exists

Door to door sales and party sales are examples of

direct sales

Wholesalers and retailers who connect manufacturers to consumers are referred to as:

distribution channels

Jake is a sbo of Macho Doors, a manufacturer and installer of garage doors. His business has earned the reputation as a reliable, trustworthy business 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. The situation that Jake faces is typically described as a(n)

ethical dilemma

Latent needs are:

implied or hidden needs for which the customer does not know the solution.

Wholesalers, retailers, distributors, agents are commonly referred to as:

intermediaries

A jewelry store promises to deliver custom made wedding rings to a buyer within two weeks. However, it charges 10% of the sales price in advance. In this example, which of the following techniques is the story using to increase cash flows?

It is taking deposits and process payments.

Which of the following is a technique used by small businesses to increase cash inflows?

Offering discounts for prompt payment

The time required for business to acquire resources, convert them into a product or service, sell the product or service, and received cash from the sale is referred to as the ___ cycle of a business

Operating

The measure of how many visitors to a Website actually make a purchase is known as:

the conversion rate.

A product concept includes:

the product/service description and the most important design points, primary use cases and customer benefits, the target customer

The goal of a feasibility study is:

to assess if a business idea can be profitably brought to a market.

____ is a schedule of amounts and timing of the cash coming into the business

Cash receipts budget

A(n) ___ refers to the sum of cash inflows and cash outflows recorded in a firm's accounting records.

Company book balance

While closing a sales call, when a sales personal says "I'll just need your credit card for payment," he or she is using the sales closing technique of ___.

Assumptive close

A(n) ___ identifies when, how, and why money is expected to come into the busiess and when, how and why it is expected to leave.

Cash budget

The ___ is a schedule of the amounts and timings of payments of cash out of a business.

Cash disbursements budget

Cash that can be obtained by selling the product and services of a business and collecting cash from customers is called

Cash flow from operations

___ is a method of borrowing against receivables

Factoring

____ refers to the contacts small business owners periodically make with customers in order to remind the customers about their business and their interest in the customer's business

Follow-up

A ___ will warehouse products, pack and ship them, and send an automated email to customers to let them know that the product is on its way.

Fulfillment center

Social capital is the major component of what accountants call ___, and it can be found on business's balance sheet

Goodwill

A crisis in which there is a shortage of cash for expanding a business after an exponential increase in sales is termed:

Growth trap

Which of the following is true of personal selling

It allows a business owner to be flexible in his or her presentation

According to the BRIE model, which of the following provides industry-specific knowledge to Martin?

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

What are examples of external factors affecting small business and entrepreneurship?

Market demand, Industry demands, Customer needs

___ is a price setting method where an amount is added to the cost of a product to set the retail price and provide a profit.

Markup pricing

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.

According to the BRIE model, which of the following is an example of Martin's resource competency?

Martin contracting with the mayor to help paint during reconstruction.

Scenario: Martin's Painting Company The following scenario applies to questions 1-4 of this quiz. Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously worked as a house painter in another company has good know-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 his demand and expand business, he hired more house painter. According to the BRIE model, which of the following is an example of Martin's basic business competency?

Martin getting his company registered.

Customer segmentation should be:

Meaningful, measurable, and actionable

The amount that revenues exceed expenses is termed:

Profit

Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan with in two weeks. The amount that Lucy owes Susan is termed:

Receivables

Which of the following terms refers to the accounting process that identifies the causes of all the differences between book and bank balances

Reconciling

Which of the following is a disadvantage of the leasing?

Renovation options are limited in a leased property

Mr. Hill, who runs a key chain manufacturing unit, buys raw materials from his supplier during the first week of every month. The supplier's policy states that all payments need to be cleared within 50 days of buying materials. This schedule ensures that Mr. Hill gets an extended period of time to make payments, thus controlling when the payment is made. Which of the following strategies is Mr. Hill using to control cash outflow?

Timing the purchase

The most common strategy employed by small businesses for handling money shortages is:

Using personal money

What is the true litmus test for a venture concept?

Whether or not customers are at least willing to try your product or service

Tammy is talented at crafts but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David -- a business major -- who would manage the budgets and expenses of the business. Tammy buys her craft materials on credit from her supplier; the amount that Tammy owes her supplier is referred to as:

chargebacks

In a business, accepting payments by credit card causes significant differences between the bank and the book balances because the credit card service provider:

deposits the sale amount in the businesses account after deducting a service fee

Feasibility:

means the extent to which an idea is viable and realistic, and the extent to which you are aware of internal and external forces that could affect your business.

The LOT-R test measures a person's:

optimistic attitude - the ability to deal with adversity of any kind.

Harry ordered a television online for $800. He was asked to pay $100 toward shipping charges, $50 as installation charges, and another $100 for extended warranty. This example best illustrates:

partitioned pricing

Giving of third-party legal rights to debts owed by the business in order to provide assurance that borrowed money will be repaid is called:

pledging receivables

A(n) ______ focus refers to an entrepreneur's attention to minimizing losses, with a bias toward inaction or protective action to avert loss.

prevention

A(n) ______ focus refers to an entrepreneur's attention on maximizing gains and pursuing opportunities likely to lead to gains.

promotion