Small Business Management Chapter 7

Which of the following questions can give a potential business owner insight on future and current demand? a. Does the idea solve a consumer's want or need? b. How much competition exists? c. Can the idea be turned into a profitable business? d. Does the business owner have the appropriate skills needed in order to be successful?

a. Does the idea solve a consumer's want or need?

A business that is more dependent on the services of people than on money and equipment is known as ______. a. a labor-intensive business b. a capital-intensive business c. a service-intensive business d. an asset-intensive business

a. a labor-intensive business

A period of time in which an opportunity is available is known as ______. a. a window of opportunity b. an idea c. the right time for a product d. the introductory stage

a. a window of opportunity

Which of the following has the qualities of being attractive, durable, and timely and is anchored in a product or service that creates or adds value for its buyer? a. an idea b. a business opportunity c. a new product d. an improved product

a. an idea

The business relationship with customers ______ with the sale of the product or service. a. begins b. ends c. ends unless there is a problem with the product/service d. begins and ends

a. begins

Most high-growth firms are in which industry? a. high-tech b. utilities c. health care d. entertainment

a. high-tech

Taxes on business income generally are due ______. a. in four annual installments b. twice per year c. every 30 days d. every 2 years

a. in four annual installments

During the ______ stage in the product life cycle, the window of opportunity is wide open because little or no competition exists. a. introduction b. growth c. maturity d. decline

a. introduction

Manufacturing businesses are more ______. a. labor intensive b. capital intensive c. service intensive d. asset intensive

a. labor intensive

Service businesses are more ______. a. labor intensive b. capital intensive c. service intensive d. asset intensive

a. labor intensive

A company that strives to offer good products at the lowest prices possible is operating with which competitive advantage? a. operational excellence b. product leadership c. customer intimacy d. best service method

a. operational excellence

Creating a competitive advantage by holding down costs to provide customers the lowest priced products is known as ______. a. operational excellence b. product leadership c. customer intimacy d. least cost pricing method

a. operational excellence

Before a new businessperson can develop a competitive edge, it must determine its own uniqueness by evaluating ______. a. the competition b. start-up costs c. its market d. assets

a. the competition

The stages that products in the marketplace go through are known as ______. a. the product life cycle b. the product growth stages c. the product timeline d. the product opportunity stages

a. the product life cycle

Ideas occur to small business owners almost ______ as often after the business is running than before the business began. a. twice b. three times c. four times d. ten times

a. twice

In the beginning of a new business, the only thing the new business person has is ______. a. vision b. capital c. assets d. a customer base

a. vision

E-commerce accounts for approximately what percentage of total retail sales? a. less than 1 percent b. 9 percent c. 15 percent d. over 20 percent

b. 9 percent

Which of the following is likely to be the most capital intensive? a. a Four Seasons Hotel b. a Ford manufacturing facility c. a Burger King Restaurant d. a medium-sized university

b. a Ford manufacturing facility

A business that depends greatly on equipment and capital for its operations is known as ______. a. a labor-intensive business b. a capital-intensive business c. a service-intensive business d. an asset-intensive business

b. a capital-intensive business

NARRBEGIN: 7-1 Scenario 7-1. Kelli is starting her new business in the mall in the coming weeks. She has finished her business plan and is now looking at planning her startup. Her business consists of a clothing store for young women who purchase medium-quality fashionable school and work clothes. She sees customer service as her strong point because she is currently in the same age group and is very clothes conscious herself. Her competitors, also located in the mall, are all older women who cater to older women who purchase fashion conscious clothes. Kelli has no business experience yet is willing to invest her entire inheritance in her new business venture. She is single, 21, and has no current debts. She has an opportunity to rent a space in the local mall if she signs the agreement next week. Kelli is excited about being able to pick the clothes on her racks herself and then sell those clothes to young women who would look fashionable in them. NARREND In Scenario 7-1, one of the overriding questions Kelli still has is exactly who is it that will be buying her clothes and what do these people have in common? Kelli needs to further look at ______. a. her competitive advantage b. a market analysis c. a marketing plan d. her location

b. a market analysis

Many ideas for new products or businesses do not add value for the customer or user and consequently are not ______. a. profitable b. business opportunities c. economically viable in the long run d. worthwhile investments

b. business opportunities

After running a small restaurant for two years, Pam and Jim realized that a greater opportunity existed in food distribution. They hired family members to run the restaurant while they focused their energy on starting a food distribution company. This is an example of the ______. a. distributive responsibility principle b. corridor principle c. experience curve d. bell curve

b. corridor principle

Jeff, an avid angler, decided to retire early to pursue a career of making and selling custom handmade fishing flies and lures. This is an example of identifying business ideas from ______. a. prior work experience b. hobbies and avocations c. serendipity d. ambition

b. hobbies and avocations

A person who provides services to a business but is not employed by that business is called a/an ______. a. dependent contractor b. independent contractor c. outcast d. insource

b. independent contractor

For the last 30 years, Mac has been mowing lawns for the Greenside County School System. Despite the close working relationship, he has with the school system, Mac is not officially on the school system's payroll. Mac can best be described as a/n ______. a. dependent contractor b. independent contractor c. outcast d. insource

b. independent contractor

Most fast-growth companies are started by ______. a. sole proprietorships b. partnerships c. corporations d. home-based businesses

b. partnerships

Creating a competitive advantage based on providing the highest quality products possible is known as ______. a. operational excellence b. product leadership c. customer intimacy d. Total quality management (TQM)

b. product leadership

New Balance athletic shoes are known for their high quality and technical excellence rather than for low price or other factors. New Balance uses which method for obtaining competitive advantage? a. operational excellence b. product leadership c. customer intimacy d. inventory capacity

b. product leadership

The most common exit strategy for fast-growth businesses is ______. a. passing on to family owners b. selling to outside investors c. selling to employees d. ending in bankruptcy

b. selling to outside investors

Most states collect sales taxes on ______ sold. a. everything b. tangible property c. intangible property d. goodwill property

b. tangible property

NARRBEGIN: 7-1 Scenario 7-1. Kelli is starting her new business in the mall in the coming weeks. She has finished her business plan and is now looking at planning her startup. Her business consists of a clothing store for young women who purchase medium-quality fashionable school and work clothes. She sees customer service as her strong point because she is currently in the same age group and is very clothes conscious herself. Her competitors, also located in the mall, are all older women who cater to older women who purchase fashion conscious clothes. Kelli has no business experience yet is willing to invest her entire inheritance in her new business venture. She is single, 21, and has no current debts. She has an opportunity to rent a space in the local mall if she signs the agreement next week. Kelli is excited about being able to pick the clothes on her racks herself and then sell those clothes to young women who would look fashionable in them. NARREND In Scenario 7-1, Kelli is estimating her start-up costs. She has figured all of her expenses, her capital equipment purchases, deposits, insurance, etc. What amount should she now add to this total to cover expenses she did not plan on? a. 2 percent b. 7 percent c. 10 percent d. 15 percent

c. 10 percent

Go Computers is an example of ______. a. a business that was very profitable b. a business that would make a good investment c. an idea that was ahead of its market d. an idea that was behind its market

c. an idea that was ahead of its market

Computers, office equipment, and furniture are all examples of ______ that have a life of more than one year. a. current assets b. current liabilities c. capital equipment assets d. investments

c. capital equipment assets

Which of the following provides the greatest percentage of business ideas to prospective business owners? a. consultants b. conferences c. competitors d. social networking sites

c. competitors

Creating a competitive advantage by maintaining a long-term relationship with customers through superior service is known as ______. a. operational excellence b. product leadership c. customer intimacy d. best service method

c. customer intimacy

NARRBEGIN: 7-1 Scenario 7-1. Kelli is starting her new business in the mall in the coming weeks. She has finished her business plan and is now looking at planning her startup. Her business consists of a clothing store for young women who purchase medium-quality fashionable school and work clothes. She sees customer service as her strong point because she is currently in the same age group and is very clothes conscious herself. Her competitors, also located in the mall, are all older women who cater to older women who purchase fashion conscious clothes. Kelli has no business experience yet is willing to invest her entire inheritance in her new business venture. She is single, 21, and has no current debts. She has an opportunity to rent a space in the local mall if she signs the agreement next week. Kelli is excited about being able to pick the clothes on her racks herself and then sell those clothes to young women who would look fashionable in them. NARREND In Scenario 7-1, Kelli's competitive advantage would be which of the following? a. lower prices b. her location c. her customer service d. the fashionable clothes in her inventory

c. her customer service

A possibility that a person should consider when deciding upon an idea for a business is to focus on an idea provided through ______. a. research b. education c. hobbies d. a local banker

c. hobbies

Which of the following is a source for business ideas that results in avoiding many errors and establishing competitive advantages early on? a. hobbies b. personal interests c. prior work experience d. education

c. prior work experience

The final answer to whether an idea is an opportunity that should be followed will come from a combination of ______. a. research and a consultant's advice b. intuition and experience c. research and intuition d. the banker and the accountant

c. research and intuition

Which of the following increases when beginning a new business rather than buying an existing business? a. frustration b. income c. risk d. profit potential

c. risk

Finding something valuable that was not looked for is known as ______. a. accidental discovery b. stumbling upon a treasure c. serendipity d. surreptitiousness

c. serendipity

The risk of failure is greater with ______. a. existing businesses b. franchises c. startups d. existing family-owned businesses

c. startups

Opportunities that become available to a small business owner only after the small business owner has started a business are known as ______. a. windows of opportunity b. an idea whose time has come c. the corridor principle d. secondary opportunities

c. the corridor principle

When considering startup costs, there will be many expenses that are not expected. It is wise to add an additional ______ to help cover those unexpected expenses. a. 2 percent b. 4 percent c. 6 percent d. 10 percent

d. 10 percent

Which of the following questions addresses the most critical concern in beginning a new business? a. Can I find skilled employees to hire? b. Will I make a profit? c. Who is my target market? d. Is there a need for this business?

d. Is there a need for this business?

Wanda has dreams of opening her own pet shop called "Wanda's Aquarium". Aside from think of a name and how her store will look, she has done very little planning at this very early stage. All she currently has is ______. a. a strategy b. financial means c. an objective d. a vision

d. a vision

Years before the regular use of iPads and tablet computers, the concept of portable, pen-based computers was introduced. However, Go Computers sold only 20,000 units and lasted only three years. This is an example of an idea that ______. a. has a long product life cycle b. has passed its window of opportunity c. is in demand by consumers d. is too far ahead of the market

d. is too far ahead of the market

The primary advantages of operating a home-based business are which of the following? a. schedule flexibility and lack of commuting problems b. low overhead and an increase in creativity c. lack of commuting problems and less office expense d. schedule flexibility and low overhead

d. schedule flexibility and low overhead

A majority of high-growth CEOs had at least ______ years of experience in the industry. a. two b. five c. seven d. ten

d. ten

No matter what type of business a person is starting, the most important resource is ______. a. capital b. assets c. experience d. time

d. time