Effective Small Business Management: An Entrepreneurial Approach 9th Edition, 2009 ISBN-13: 9780136152705
Norman M. Scarborough, Douglas L. Wilson, and Thomas W. Zimmerer
19Multiple Choice Questions
- The location of the business is especially important for what type of start-up businesses?
- service
- manufacturing
- retail
- computer-based service
- The limited liability company is most like a/an:
- S-corporation
- master partnership
- sole proprietorship
- general partnership
- Which of the following is true about choosing a limited liability company form of ownership?
- It is inexpensive, easy to form, and covered by little regulation due to its newness.
- It has no disadvantages except its newness.
- It’s an excellent conversion vehicle for existing businesses that are suffering from double taxation but problematic for sole proprietorships.
- It is ideal for a new company but difficult to convert to with an existing company.
- Typically, the franchiser controls are very tight on what the franchisee:
- sets in terms of retail pricing and hours of operation.
- does in terms of who they hire as employees.
- sales in terms of the product or service they offer.
- does with his/her net profits after fees and taxes are paid.
- The recommended steps when buying a business are:
- analyze your skills and abilities
- explore a variety of financing options
- investigate the potential acquisitions
- all of the above
- Using the discounted future earnings approach, the buyer estimates
- the company’s net income for the several years
- the company’s net income for the next six months
- the company’s net income for several years and then discounted back to the present value
- the company’s net asset for several years and then discounted back to the present value
- Potential investors tend to believe that if an entrepreneur can’t develop a good plan:
- then the entrepreneur is just like the majority of entrepreneurs and will probably do quite well
- he/she probably lacks the discipline to run a business
- he/she is probably the action-oriented sort of person they need running a business
- he/she needs to hire a consultant to write the plan for him/her
- Defining the target market’s potential and describing its characteristics is part of the:
- marketing strategy portion of the business plan
- competitive analysis
- description of the product line
- business strategy section of the business plan
- An explanation of how the product will be distributed is contained within the:
- business strategy section of the business plan
- description of the product line
- marketing strategy portion of the business plan
- competitive analysis
Unit 2 Examination
- A description of the key factors that will dictate the success of your business quality, price competitiveness, etc. should be contained in the ________ section of the business plan.
- executive summary
- market analysis
- description of the business
- competitor analysis
- The marketing plan should include certain key objectives, such as:
- determining product costs through market research
- determining what costing strategies to use
- pinpointing the specific target markets a small business will serve
- discovering what the company’s ETDB index is
- A demographic trend is like a train for the small business owner in that:
- the small business will be “run over” if it doesn’t get out of the way and try to work with the “spin-offs” from the trend
- he/she needs to catch it and ride it to wherever it is going
- he/she needs to discover where it is going early and decide whether or not to get on board
- it is a slow process that is easily caught at several points, and the small business owner
has lots of time to consider his/her options
- To build an effective customer service program, it is important to:
- swiftly discipline employees who mistreat customers
- offer low prices
- train key employees to watch for and intervene when there are problems let managers wait on d. customers occasionally
- The cost of marketing a product is highest in the:
- saturation stage
- introductory stage
- growth and acceptance stages
- maturity stage
- The choice of advertising medium is primarily determined by:
- what media the competition uses
- the unique selling proposition and budget
- the target audience and the message
- what media the industry focuses on
- Radio:
- can reach nearly any target market
- is the one medium that customers spend the most time paying attention to
- is the most expensive advertising medium in terms of relative costs
- is very susceptible to “zapping”
- When pricing products, it is important to remember that:
- pricing is more an intuitive than a quantitative process
- a customer orientation in price setting is most important
- there is an ideal price that customers will pay for a given product or service
- once the acceptable price range is found, prices should not be changed again
- ABC manufactures computer hardware. The marketing executives, in order to increase the market share, forced a business to accept a suggested retail price and not to sell the items below the stated price. This is a violation of what?
- As long as the manufacturer offer rebates, they can do whatever they want.
- This practice violates the Fair Price Protection Act
- This practice violates the Sherman Antitrust Act.
- There is no violation. The manufacturer has the rights to tell a business at what price they
should resell the computer.
- In regards to strategies for E-success, which goal(s) of e-commerce are no different from traditional off-line businesses?
- boost profits
- improve efficiency
- to increase sales
- all of the above
7) A SCOR filing has a number of advantages to it, such as the fact that:
it can be used by partnerships
there is no requirement for an audited financial statement if the offering is under $500,000
a company may raise between $3 and $5 million per year
it is recognized in every state
13) When a small business is refused a loan because it is not profitable and deemed a poor credit risk, the owner can usually turn to ________ as a source of short-term funds.
- venture capital companies
- trade credit
- loans from insurance companies
- stockbrokers
14) A federally-sponsored program which offers loan guarantees to create and expand businesses in areas with below-average income and high unemployment is called:
- the Farmers Home Administration
- the Economic Development Administration c. SBIC
- the Small Business Administration
15) Grants to small businesses, made to strengthen the local economy in cities and towns that are considered economically distressed, are made by:
- the Farmers Home Administration
- a local development company
- the Economic Development Administration
- the Department of Housing and Urban Development
16) When a bank makes enough good SBA-guaranteed loans to become a ________ lender, the SBA promises a faster turnaround time for the loan decision–typically 3 to 10 business days.
- LDC
- certified c. preferred d. qualified
17) A Section 504 program has three types of lenders involved:
- a local development company, the SBA, and a commercial finance company. b. a bank, the SBA, and a certified development company.
- the SBA, a private placement, and an SBIC.
- HUD, a bank, and an economic development company.
18) The average interest rates on SBA-guaranteed loans is:
- prime-plus-2-percent
- 2 percent
- 7 percent
- prime-minus-2-percent
Unit 4 Examination
19) Factoring:
- places the risk of uncollected accounts receivable on the small business owner
- is a type of trade credit
- is best used as a long-term source of capital
- is a more expensive method of financing than borrowing from a bank
20) Which of the following characteristics for selecting a city would be of greatest interest to a retail store selling fine china and collectibles?
- Transportation
- Population trends
- Public services
- Zoning
21) One advantage to locating near competitors is found in the:
- localize all similar businesses close to each other
- the ability to in comparison shopping
- to keep an eye on the competitor
- make it easy for hiring
22) The best way to determine where to place merchandise, what a store’s “hot” and “cold” spots are, is to:
- simply observe customers in the store
- conduct focus groups with former customers
- hire a market research firm to study your business
- conduct a kinesiology study
23) The value of the floor space in a retail store depends upon:
- the merchandise in that area
- the number of salespeople servicing the area
- its proximity to aisles and entrances
- the type of store and customer
Unit 4 Examination
24) What are two distinct factors are important for entrepreneurs analyzing the labor supply in a potential location?
- Minimum wage in the area and the labor’s level of education, training and experience.
- Minimum wage and the number of workers available in the area.