MCQ’S of each chapter
Contents
Chapter 1: The Foundations of Entrepreneurship
Self-Study Quiz ............................................ 2
Chapter 2: Inside the Entrepreneurial Mind: From Ideas to Reality
Self-Study Quiz................ 4
Chapter 3: Designing a Competitive Business Model and Building a Solid Strategic Plan SelfStudy Quiz ...................................................................................................................................... 6
Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan Self-Study
Quiz ................................................................................................................................................. 8
Chapter 5: Form of ownership ...................................................................................................... 11
Chapter 6 : Franchising and entrepreneurship .............................................................................. 14
Chapter 7: Buying an existing business ........................................................................................ 16
Chapter 8: Guerilla marketing strategies ...................................................................................... 19
Chapter 9: E-Commerce and entrepreneur ................................................................................... 21
Chapter 10: Pricing strategies ....................................................................................................... 24
Chapter 11: Creating a successful financial plan ......................................................................... 26
Chapter 12: Managing cash flow .................................................................................................. 28
Chapter 13: Source of financing ................................................................................................... 31
Chapter 14: Choosing the right location ....................................................................................... 33
Chapter 15: Global Aspects of entrepreneurship .......................................................................... 35
Chapter 16: Building a new venture team and planning for next generation ............................... 38
Each activity contains 10 questions.
Chapter 1: The Foundations of Entrepreneurship Self-Study Quiz
1. Entrepreneurial activity is essential to a strong economy and a recent GEM study noted that
entrepreneurs are most likely to launch their businesses between the ages of:
a)
b)
c)
d)
e)
23–59
19–35
35–44
30–49
25–44
2. Economies that were state controlled and centrally planned are now fertile for growing small
businesses. The countries being part of this group include the following EXCEPT:
a)
b)
c)
d)
e)
Canada
China
Eastern European countries
Russia
Vietnam
3. Which of the following is NOT a common profile characteristic of a typical entrepreneur?
a)
b)
c)
d)
e)
Enjoy managing people
Deep sense of responsibility
High level of optimism and self confidence
Calculated risk taker
More energetic than the average person
4. The benefits of entrepreneurship include the following EXCEPT:
a)
b)
c)
d)
e)
Opportunity to create your own destiny
Opportunity to take significant risk with other's money
Opportunity to contribute to society
Opportunity to make a difference
Opportunity to reach your full potential
5. Which of the following is a commonly experienced drawback to being an entrepreneur?
a)
b)
c)
d)
e)
Lack of creativity and innovation
Lack of vacation
Long hours required
Ability to earn a large income
Lack of contribution to society
6. What factors and forces are encouraging the current trend in entrepreneurial activity?
a)
b)
c)
d)
e)
Availability of various franchises
Ability to acquire investors
Low entry investment to start a business
Cooperation of government with tax incentives
Growing number of colleges and students involved with entrepreneurial studies
7. Home-based businesses are increasing at a significant rate. Which one of the following is NOT
a factor in the home being the first choice location?
a)
b)
c)
d)
e)
Flexible lifestyle
Less inventory of product required
Minimal start-up and operating costs
Technology increases flexibility in type of business
Use of Internet for e-businesses
8. Small business creates 60 percent to 80 percent of all new jobs in the United States. The majority
of these businesses are involved in what type of industry?
a)
b)
c)
d)
e)
Construction
Manufacturing
Food
Service and Retail Industries
Financial
9. Ways to avoid becoming a failure statistic includes the following EXCEPT:
a)
b)
c)
d)
e)
Create a competitive edge
Borrow the total investment needed
Have a passion
Have adequate startup capital
Understand the company's financial statements
10. Setting your business apart from the competition can include ______, _____, _____, and
______.
a)
b)
c)
d)
e)
Customer service; convenience; speed; quality
Give away samples; low rent location; high volume traffic; quality
Customer service; taking credit cards; low inventory; speed
Inventory; increase credit availability; close store early; lack of focus on customer service
Low payroll; convenience; uniforms; appointments
Chapter 2: Inside the Entrepreneurial Mind: From Ideas to Reality
Study Quiz
Self-
1. What is the basic difference between creativity and innovation?
a) Creativity means coming up with a new product; innovation means coming up with a new
process.
b) Creativity is a more mentally straining exercise; innovation just comes naturally.
c) Creativity is having a new idea on how to look at a problem or opportunity, while
innovation is the ability to apply the creative idea.
d) Creativity is where the real money is made; innovations just usually stay in the lab.
e) Creativity is the same thing as innovation, except creativity refers to ideas outside the
business realm.
2. Why are creativity and innovation so critical to an entrepreneurs' survival?
a) Creativity and innovation allow small companies with limited resources to compete with
larger competitors.
b) Creativity and innovation keeps entrepreneurs focused on the initial business development
period.
c) Creativity and innovation help entrepreneurs to replicate current products on the market.
d) Creativity and innovation can substitute for a shaky business model.
e) Creativity and innovation help the entrepreneur to secure financing for start-up capital.
3. Entrepreneurs require what side of the brain to help them meet the requirements for
success?
a) Left side
b) Right side
c) Both right and left sides
d) Neither right nor left sides
e) The brain is not an important ingredient
4. Potential barriers to creativity are limitless. Which one of those listed below is NOT a
barrier?
a) Logical thinking
b) Fearing failure
c) Ambiguity
d) Following the rules
e) Being practical with a solution
5.
a)
b)
c)
d)
e)
Which of the following is a method for enhancing organizational creativity?
Initiate a controlling structure within the organization
Maintain the same location or scenery
Encourage curiosity among your employees
View issues as potential problems
Provide no support for creativity
6.
a)
b)
c)
d)
e)
Enhancing creativity includes the following EXCEPT:
Do something different everyday
Lay off those who aren't creative
Borrow ideas from others not involved with your industry
Develop an understanding of mistakes made
Listen to others outside the organization
7.
a)
b)
c)
d)
e)
What is one of the best ways to generate creative thinking while you are on the job?
Don't gain a formal education
Don't gain a total understanding of the problem
Don't think convergently and divergently
Don't schedule every minute of the day
Don't use simulations
8.
a)
b)
c)
d)
e)
Which of the following shows the proper order of select steps in the creative process?
Preparation, implementation, verification, illumination
Preparation, verification, implementation, illumination
Verification, preparation, implementation, illumination
Preparation, illumination, verification, implementation
Preparation, implementation, illumination, verification
9.
a)
b)
c)
d)
e)
What is a good recommendation for forming and conducting a brainstorming session?
Throw logic out the window
Distinguish good ideas from bad ideas during the session
Create an all-day retreat for the session
Restrict the guest list to only top management
Allow employees to prepare for the session ahead of time
10. Music writers would need to protect their songs by filing for which type of intellectual
property protection?
a) A patent
b) A trademark
c) A copyright
d) A trade secret
e) A service mark
Chapter 3: Designing a Competitive Business Model and Building a Solid
Strategic Plan Self-Study Quiz
1.
a)
b)
c)
d)
e)
Which of the following are types of intellectual capital?
Financial capital, land capital, and labor capital
Human capital, creativity capital, and innovation capital
Human resources capital, economic capital, and creativity capital
Intelligence capital, innovation capital, and creativity capital
Human capital, structural capital, and customer capital
2.
a)
b)
c)
d)
e)
Which answer is NOT a competitive advantage?
A set of factors that gives a business a unique, superior position in the marketplace
Maintain a positive net profit margin
Create an image based on the lowest price
Identify unique benefits of your products
Produce reliable products
3.
a)
b)
c)
d)
e)
How can an entrepreneurial venture develop a sustainable competitive advantage?
By consistently offering lower prices on goods than its rivals
By developing core competencies that help it serve its customers better than its rivals
By offering more product selection than its rivals
By advertising in more media than its rivals
By having later business hours than its rivals
4. Which of the following is NOT a good recommendation for approaching strategic
management within a small business?
a) Stick to the established strategic plan, no matter what changes may occur in the
environment.
b) Use a relatively short planning horizon - two years or less.
c) Create a process that is informal and not overly structured.
d) Refrain from creating too many objectives in the beginning.
e) Make strategic thinking an ongoing process.
5. Which of the following is the best process for a portion of the strategic management
process?
a) Analyze competition, scan the environment, establish controls
b) Develop a clear vision, assess strengths and weaknesses, scan environment for
opportunities
c) Establish controls, create goals and objectives, identify key factors
d) Formulate strategic options, analyze the competition, create goals and objectives
e) Analyze competition, create goals and objectives, establish controls
6.
a)
b)
c)
d)
e)
Which is NOT an important ingredient for a mission statement?
Never change your mission statement
Get a number of people involved
Know what differentiates your organization
Reflect values and beliefs
Link statement with the future
7.
a)
b)
c)
d)
e)
What are the differences between goals and objectives?
Goals are where you want your company to arrive; objectives are how you will get there.
Goals are for top management to use; objectives are for front-line management to use.
Goals are more long-range than objectives.
Goals are broad in scope; objectives are specific and measurable.
Goals are not linked to monetary rewards; objectives are reinforced through monetary
rewards.
8. Which is the best strategy to use in an environment wherein sellers are trying to
differentiate themselves from the competition?
a) Do not focus on the customer
b) Increase price without improving the product
c) Focus on profit margins
d) Build customer loyalty
e) Produce products for many categories
9. When beginning the implementation phase of strategic management, the plan should be
divided into projects. Each project should be defined by ________.
a) The purpose of the project
b) The areas of the company to be involved
c) The project's contribution to the strategic plan
d) The resources needed to complete the project successfully
e) All of the above
10. Which is NOT a perspective to consider in using a balanced scorecard for performance?
a) Meeting responsibility to society
b) Financial standards do not contribute to the overall review of a strategy
c) Continue to innovate
d) Goals for productivity and cycle time
e) Goals for durability, service, and reliability
Chapter 4: Conducting a Feasibility Analysis and Crafting a Winning
Business Plan Self-Study Quiz
1. What is the purpose of conducting feasibility analysis?
a) The feasibility analysis helps you to discern whether you will be able to gather enough
capital to start the business.
b) The feasibility analysis will allow you to qualify for governmental loan programs.
c) The feasibility analysis helps you to determine whether your idea is a viable foundation
for a successful business.
d) The feasibility analysis allows you to know which firm will be best to use for
manufacturing your prototype.
e) The feasibility analysis determines whether there are governmental constraints that will
not allow you to start your business.
2. The five forces model ________.
a) helps an entrepreneur gauge the overall attractiveness of an industry
b) was originally designed to meet the needs of horse breeders to determine which of their
horses to keep and which to sell
c) has been replaced since with the nine forces model
d) can be used to gauge which competitor has the strongest position in the marketplace
e) allows for an understanding of the political-legal, sociocultural, economic, technological,
and global forces surrounding a firm
3. Which of the following conditions would make an industry more threatening to new
entrants?
a) Less presence of economies of scale
b) High capital requirements
c) Buyers with low brand loyalty
d) Laissez-faire governmental policies in the market
e) Few competitors within the industry
4. Which of the following, primary research or secondary research, is considered to be more
important in a feasibility analysis?
a) Secondary research
b) Primary research
c) Both primary research and secondary research
d) Neither has a large impact on a feasibility analysis
e) Feasibility analysis is over rated
5.
a)
b)
c)
d)
e)
A sound financial feasibility analysis includes a thorough investigation of ________.
market demand, product awareness, and monthly budgetary data
start-up capital requirements, estimated earnings, and return on investment
interest rates, angel investor interest, and monthly budgetary data
competitor earnings, interest rate data, and estimated earnings
previous years' earnings, estimated earnings, and monthly budgetary data
6.
a)
b)
c)
Why is it important to develop a business plan?
The business plan will be required by the landlord should you choose to lease office space.
The presence of a business plan virtually guarantees business success upon start-up.
The business plan will allow your employees to know what they are supposed to do on a
daily basis.
d) The business plan will help you chart out the company's course of action and devise a
strategy for success.
e) The business plan will guarantee the awarding of a Small Business Administration-backed
loan to your business.
7. Which of the following is true of the executive summary of a business plan?
a) Executive summaries should contain brief information about the firm's business model, its
target markets, its founding team, and its financial highlights.
b) Executive summaries should appear first, but should be written after the rest of the business
plan.
c) Executive summaries should be at least 5 pages long and provide information about the
strategy of the firm.
d) Executive summaries should contain information about the pricing and cost structure of
the firm.
e) A and B
8. When describing your firm's marketing strategy, which of the following is NOT a factor in
defining your target market?
a) Describing where potential customers live and work
b) Estimating the ages, income level, and other pertinent demographics
c) Estimating the number of goods that each customer would buy
d) Understanding needs and wants
e) Determining the basis of differentiation in the minds of the target market
9. What financial statements are necessary to include in a business plan for either an existing
business or startup?
a) Monthly sales forecast, income statement, balance sheet
b) Balance sheet, operating ratio statement, break even statement
c) Balance sheet, cash flow statement, sales statement
d) Ratio analysis, balance sheet, income statement
e) Balance sheet, income statement, cash flow statement
10. When delivering a business plan presentation to investors and creditors, it is a good idea to
________.
a) Be as detailed as possible, covering all of the points of the business plan
b) Keep it simple and use visual aids
c) Use technical terminology to emphasize your knowledge of the industry
d) Improvise as you present your speech to emphasize your personality
e) Allow all of the founders of the business an opportunity to present their contributions to
the venture
Chapter 5: Form of ownership
1. In general, what would cause a business owner to select one form of ownership over
another?
a) Image within the community
b) Tax, liability, and how big and profitable
c) Industry membership
d) Pressure from the business owner's advisory board
e) State governmental policy that dictates what forms are legal
2. What is a major advantage of a sole proprietorship?
a) A proprietorship can be started, for most entrepreneurs, in a single day.
b) A proprietorship protects the owner, should a disgruntled customer attempt to sue for
damages.
c) A proprietorship requires approval from government agencies to cease operations.
d) A proprietorship is more attractive from potential investors' perspective.
e) A proprietorship is looked upon more favorably, credit-wise, by lending institutions.
3. Why do partnership agreements exist?
a) Partnership agreements detail the income requirements of each partner as an employee and
are negotiated before the business starts.
b) Partnership agreements exist to establish that both partners have put the same amount of
effort and capital into the new venture.
c) Partnership agreements show the willingness of each partner to absorb the other partner's
share of liabilities, should the other partner become financially insolvent.
d) Partnership agreements exist to lay out the structure for a successful organization and to
protect each partner's interest.
e) Partnership agreements are required by state governments as evidence that each partner
willingly and knowingly entered the partnership.
4.
a)
b)
c)
d)
What is one advantage of a partnership over a proprietorship?
A partnership is easier to establish than a sole proprietorship.
A partnership allows for more control over decision-making than a proprietorship.
A partnership allows for limited liability among its general partners.
A partnership allows for each partner's skills and abilities to complement each other,
whereas a sole proprietor is responsible for all functions.
e) A partnership is guaranteed more profit than a proprietorship.
5. The _____ legal structure allows investors to limit their liability to their personal
investment in the business.
a) Partnership
b) LLC
c) Corporation
d) Proprietorship
e) Partnership and LLC
6. What is this meaning of the phrase "piercing the corporate veil"?
a) Competitors occasionally come into your business and act as customers to elicit
competitive information.
b) Entrepreneurs occasionally see the benefits of sole proprietorship over corporate structure.
c) Courts will sometimes overturn the granting of a corporate legal structure to a new venture.
d) Entrepreneurs sometimes gain access to secret documents of their competitors.
e) Courts sometimes hold entrepreneurs personally liable for claims against the corporations
because they co-mingle personal and corporate assets.
7. In which of the following legal organization forms is ownership the most easily
transferable?
a) The corporation
b) The general partnership
c) The limited liability partnership (LLP)
d) The structured partnership (SP)
e) The proprietorship
8. What is a major advantage of the S corporation over the corporation or C corporation?
a) The S corporation may be publicly traded, and a C corporation may not.
b) The profits of an S corporation are passed through to the owners' personal income taxes
and are thus taxed only once.
c) The S corporation offers limited liability of its owners, limited to their personal investment
in the business, whereas a C corporation does not.
d) The S corporation allows for unlimited numbers of owners; a C corporation only allows
for up to 75 owners.
e) Ownership in an S corporation may be handed down through inheritance, whereas
ownership in a C corporation may not.
9. If an S corporation's owners choose to reinvest the company's net income back into the
business, ________.
a) the owners will not have to pay income taxes on that portion
b) the S corporation will have to pay income tax on that portion
c) the owners will have to pay income tax on that portion, regardless of the fact that they did
not receive the income
d) the S corporation will not have to pay sales tax on that portion
e) the organization will compensate the owners later in the next year for the money owed
them
10. Choosing an S corporation as a legal form is generally wise when ________.
a) the entrepreneur wants to "go public" by offering an IPO in the next five years
b) the organization wishes to do charity work as a nonprofit
c) the founding team of entrepreneurs wants to divide the profits variably according to the
amount of effort each has put into the venture
d) the business expects to see profits shortly after opening
e) the entrepreneur expects losses that can offset personal income in the first few years of
operation
Chapter 6: Franchising and entrepreneurship
1. Which of the following is an accurate description of a franchise system?
a. A franchise system is one in which a parent company purchases hundreds of smaller
companies, often started by entrepreneurs.
b. A franchise system is a scheme in which an individual at the top of a hierarchical structure
makes an income from residuals of the commissions of those beneath him.
c. In a franchise system, a semi-independent owner pays fees and royalties to a parent
company for the right to sell its products and/or services.
d. A franchise system is one in which the parent company builds many different locations of
an original successful business.
e. A franchise system is one in which an original company decides to open hundreds of
international locations.
2. ________ is where the franchisee purchases the right to use all of the elements of a fully
integrated business operation.
a. Pure franchising
b. Segment franchising
c. Trademark franchising
d. Multiple franchising
e. Product distribution franchising
3. Why is the purchase of a franchise sometimes considered to be a better option than starting
a business independently, from scratch?
a. The upfront costs are lower for the rights to a franchise than they are for a new independent
business.
b. The franchiser will absorb the first few years' losses as a part of the services provided.
c. The franchisee receives a business system, training, support, advice, and brand recognition
that an independent entrepreneur would not receive.
d. The franchisee receives a portion of the profits of the parent company, whereas the
independent entrepreneur would not.
e. The franchiser will come into the franchisee's company and operate it until it becomes
profitable, which would never be an option for the independent entrepreneur.
4. Since franchises are so widespread, often nationally and internationally interspersed, how
is advertising handled between the franchiser and franchisee?
a. The franchiser does all of the marketing for the franchisee, in return for royalties.
b. The franchisee pays the franchiser to arrange for all of the advertising that is to be
performed.
c. The franchiser puts national ads in the papers and on the television, and anything else is up
to the franchisee.
d. The franchisee pays a marketing fee to support company-wide advertising, and is also often
required to spend a predetermined amount on advertising in the local market to support her
location.
e. There is no prevalent pattern for how advertising is conducted within a franchise system.
It varies from franchise to franchise.
5. Which of the following is NOT considered to increase the success rate of franchisees when
included by the franchise, as noted in a recent survey.
a. Requires prior industry experience
b. A strong brand name
c. No absentee ownership
d. Offers training programs to improve knowledge and skills
e. Provides financial assistance
6. Where can an entrepreneur find the most accurate information about the total cost of
opening a certain franchise?
a. In the local newspaper
b. Franchise Disclosure Document
c. On the parent company's web site
d. From other entrepreneurs that have opened the franchise
e. From the government offices of the state wherein the parent company has incorporated
7.
a.
b.
c.
d.
e.
The following are all factors to consider whether you are franchise material.
Patience
General business skills
People skills
Leadership ability
All of the above
8. Which of the following is a factor that can signal that a franchiser does NOT have
underlying issues?
a. Reassurance that there is no need to read the contract - his word is as strong as oak
b. Reassurance that there is no need to go to the expense of hiring an attorney - her attorney
will help you through the confusing parts
c. Promises that you will earn your required rate of return, without documentation of this
outcome from other locations
d. A low franchisee turnover rate
e. Presentation of a one-time only, sign-today discount on franchise fees
9. Which of the following characteristics would suggest that a franchise might prove to be a
good business opportunity?
a. The franchise's business concept has already been proven by a number of established
competitors in the marketplace offering the same product.
b. The franchise offers a hot, trendy product that is unproven in the market.
c. The franchise is so new that it has not been covered by the media, and thus you will be one
of the first franchisees in the nation.
d. Favorable information from past franchisees
e. The franchise turnover rate is around 25%.
10. What current trends are impacting franchising?
a. Multiple units
b. International potential
c. Master franchising
d. Smaller non-traditional locations
e. All of the above
Chapter 7: Buying an existing business
1. Why might buying an existing business be advantageous to starting a new business?
a) Even an existing business with a negative image will have a better chance at success than
a new business with no image.
b) An existing business will have a better product concept than a new business.
c) An existing business can more easily adjust to the owner's values than a new business.
d) An existing business already has an established base of customers, employees, and
suppliers.
e) An existing business will have tax exemptions that a startup will not have.
2.
a)
b)
c)
d)
e)
What are some of the hidden dangers inherent in the purchase of an existing business?
Outdated inventory
A previous owner may have angered suppliers.
There may be a developing problem with the location of the business.
A and B
All of the above are correct.
3.
a)
b)
c)
d)
e)
To acquire a business, the following steps require consideration.
Consider financing options
Consider skills and interests
Consider potential opportunities
Investigate potential candidates
All of the above
4.
a)
b)
c)
d)
e)
The first step in buying a business is ________.
searching the market for a profitable business for sale
conducting a self-audit to determine the ideal business type for you
narrowing the list of businesses down to those in the best locations
talking to local bankers about businesses that may be for sale
looking on the Web for local businesses for sale
5. What are some of the easiest ways for easing the transition from the previous owner to the
new owner of an acquired business?
a) Be honest with employees about the changes to come.
b) Shake things up by laying-off the lowest-performing ten percent of your employee pool.
c) Keep your ideas for change to yourself for the first few months.
d) Keep to your initial schedule for any changes you were going to make. Employees will
protest, but remember, you are the boss.
e) Make the changes yourself - involving the previous owner in changes just complicates
things.
6. What does the term due diligence refer to?
a) The returns that the owner begins to see that are a part of his hard work after purchasing
an existing business
b) The hard work that the owner has to devote to turn around a newly purchased, struggling
business
c) The questioning that a previous owner will impose upon the new owner to ensure that his
values will be carried on through the sale of the business
d) The process an owner goes through to be qualified for a loan to purchase an existing
business
e) The investigation process that a new owner goes through to determine the strengths,
weaknesses, opportunities, and threats facing the existing business
7.
a)
b)
c)
Why do most owners want to sell their existing businesses?
They are retiring and moving.
They are failing as business owners.
They want to cash out their personal investment in the business and use it to diversify into
other types of assets.
d) They are tired of working in their business and want to go back to the corporate life.
e) They are in legal trouble and are looking to run.
8. What is the benefit of a bulk transfer?
a) A bulk transfer helps to lower the price of goods purchased from a supplier.
b) A bulk transfer protects the assets a buyer purchased with the business against creditor
claims to satisfy previous owner's business debts.
c) A bulk transfer allows for a one day turnover of the business from the previous owner to
the new owner.
d) A bulk transfer allows for the relocation of employees from the previous location to the
new location of the business.
e) A bulk transfer allows the new business owner to go back and sue the previous owner if
any new liability is discovered.
9. Why is it a good idea to make adjustments to the typical balance sheet technique of valuing
a business, wherein liabilities are subtracted from assets?
a) The unadjusted method will not prove useful if a business's liabilities outscore its assets.
b) Balance sheets are usually only available for the last year, and are therefore inaccurate
representations of what has occurred in the business this year.
c) Most business owners are not honest on their balance sheets, so their figures are
meaningless.
d) It is important to consider balance sheet increases or decreases in market value determined
by undervalued real estate or overvalued inventory.
e) The balance sheet will not include valuable credit that the owner has established with
suppliers.
10. Why do earnings-based approaches to valuing a business more accurately capture the value
of the business to the purchaser than balance sheet-based approaches?
a) Balance sheet-based approaches are past-oriented, and earnings-based approaches look to
the future potential of the business.
b) Balance sheet approaches are too mathematical; earnings-based approaches are qualitative
and descriptive.
c) Balance sheet approaches allow for too much adjustment on behalf of the evaluator;
earnings-based approaches are more exact.
d) Balance sheet approaches are not precise, being as figures on the balance sheet are only
estimates. Future earnings are more precise figures.
e) Earnings-based approaches to calculating the value of an existing business mathematically
incorporate important considerations such as opportunity cost and future earnings
potential.
Chapter 8: Guerilla marketing strategies
1. What are guerilla marketing strategies?
a) Guerilla marketing strategies are those pursued by entrepreneurs who dress in primate
costumes and motion customers into their store.
b) Guerilla marketing strategies are unconventional, low-cost, creative marketing techniques
pursued by entrepreneurs.
c) Guerilla marketing strategies are techniques that absorb all or most of a company's
marketing budget but that prove to be extremely beneficial.
d) Guerilla marketing strategies are used by large organizations to outpace the smaller, new
entrant entrepreneur competition.
e) Guerilla marketing strategies are strategies that may or may not attract the target market,
but are thrown out to the entire population to see who is attracted.
2. Which of the following is agreed upon by most marketing experts as the biggest marketing
mistake that small businesses make?
a) Carving out too narrow of a target niche
b) Spending too much on media advertising
c) Failing to come up with a memorable jingle for their advertising
d) Spending too much on marketing during the first year
e) Failing to clearly define the target market to be served
3. Why is market research so important for an entrepreneur?
a) It allows the entrepreneur's family to understand that he or she has put preparation into the
business before starting it.
b) It tests the entrepreneur's ability to stick to his idea, regardless of information that tells the
entrepreneur not to move forward.
c) It helps the entrepreneur to determine how to improve the current level of satisfaction and
find ways to attract new customers.
d) It gives the entrepreneur a head start on developing relationships later in the business's
development.
e) It gives the entrepreneur information on how much it will cost to start the business.
4. How can individualized marketing help a small company?
a) Affordable technology can assist an entrepreneur in gathering individuals' information to
develop a tailored marketing program for them.
b) The entrepreneur can use an individual's information to court its customers with appealing
special offers and products.
c) The small company can gather individuals' information and then sell it off to larger
businesses for a second stream of revenue.
d) Individualized marketing can allow for a variable price structure according to what each
customer is willing to pay.
e) Individualized marketing can allow for the entrepreneur to act like a different business for
each individual customer that comes along.
5. Which of the following would be a rigorous method of collecting primary data for market
research?
a) Looking at census data
b) Direct mail list purging
c) Reviewing industry consultant reports
d) Distributing customer surveys and questionnaires
e) Reading articles on customers in your industry
6.
a)
b)
c)
d)
e)
What types of marketing tactics work well for smaller businesses?
Competing based upon price
Dressing in crazy outfits and standing in traffic
Spending large amounts on television advertising
Focusing on the individualized needs of their customers
Piggybacking on the ads run by larger, related organizations
7.
a)
b)
c)
d)
e)
What is a unique selling point (USP)?
A short phrase that expresses what the business can do uniquely for its customers
A postal service organization that delivers packages
A public statement that reveals that the company is for sale
A price point that is agreed upon by customers and sellers
A phrase that describes how the business will sell its products
8.
a)
b)
c)
d)
e)
What is one competitive edge that small businesses can excel at, because of their size?
Lower pricing strategies
Higher advertising spending
Innovation
Supplier relationships
Market research gathering
9.
a)
b)
c)
d)
e)
Time compression management includes the following principles EXCEPT:
Speed in which products are brought to market
Shortening customer response time in manufacturing
Reducing administrative time to fill an order
Shortening customer response time in delivery
Payment flexibility
10. What is the marketing mix?
a) The right mix of advertising and pricing to attract your target market
b) The major elements of a marketing strategy - product, place, price, and promotion
c) The mixture of advertising and public relations efforts that best suits your target market
d) The set of decisions that must be made before deciding upon which target market to address
e) The way that your customer sees themselves in the mixture of your entire marketplace
Chapter 9: E-Commerce and entrepreneur
1. Business owners need to consider which of the following issues before launching an ecommerce effort?
a) Methodology to exploit interconnectivity and the opportunities to transform relationships
with all stakeholders
b) A plan for integrating the Web into the overall strategy
c) How to give customers a reason to come back
d) Create a meaningful presence on the web
e) All of the above
2.
a)
b)
c)
d)
e)
The ten myths of E-commerce include the following EXCEPT:
Online customers are easy to please
Build the site and customers will come
Privacy is an important issue on the web
Customer service is not as important as in traditional establishments
Too late to get on the web
3.
a)
b)
c)
d)
e)
In E-commerce, what type of market is best to focus on?
Niche market
Mass Market
Delivery method market
A and B
None of the above
4. Which of the following is a good method to use to attract potential customers to your web
site?
a) Hijacking customers away from the sites they are really attempting to visit
b) Sending out mass emails to customers
c) Giving away something "free," such as information, in addition to the goods that you sell
on your site
d) Choosing a URL address that is similar to a competitor's address, in hopes that customers
will be confused or mistaken
e) Advertising through a pop-up window that will not close without deliberate consumer
effort
5.
a)
b)
c)
d)
e)
Small business opportunities to connect with customers online include?
RSS
Widgets
Phone
A and B
All of the above
6.
a)
b)
c)
d)
e)
What are the three types of search engine results?
Natural listings, categorical listings, and industry listings
Industry listings, product listings, and alphabetical listings
Alphabetical listings, geographic listings, and industry listings
Natural listings, alphabetical listings, and paid listings
Natural listings, paid listings, and paid inclusion
7.
a)
b)
c)
d)
e)
What elements should an entrepreneur incorporate into her business's web site?
Lists of product lines that make sense to the entrepreneur
Aesthetics and design that capture the personality of the entrepreneur
Text describing in detail and at length the items the customer is purchasing
An easy-to-remember URL
Elaborate, high-definition graphic displays and frames
8.
a)
b)
c)
What does the term "bounce rate" mean when it refers to e-commerce?
The number of times a customer clicks on an advertisement
The number of stores a customer visits each time she gets onto the Internet
The amount of time that has passed since the customer last purchased an item on the
Internet
d) The amount of time that has passed since the customer last logged onto the Internet
e) The percentage of visitors to a company's web site who view a single page and leave
without viewing other pages
9.
a)
b)
c)
What does conversion rate do for Internet merchants?
It looks at what sites individuals visited most over a day's time across the Internet.
It measures the proportion of visitors who actually make a purchase.
It does a quick credit report on the customer to gauge whether the customer's transaction
may be fraudulent.
d) It filters the blog for a given time period to determine what topics are most important to
site visitors.
e) It looks through the visitors' web browser history to determine if the visitor has gone to a
competitor's site.
10. How can an e-commerce small business protect itself from credit card fraud?
a) By verifying the purchase by asking for the 3-digit card verification value on the back of
the card
b) By setting up an inexpensive firewall
c) By offering high-end goods that no thief would attempt to purchase
d) By requiring the customer to send in a copy of the card and their driver's license before
being added to a customer list
e) By asking for the customer's checking account information as well as credit card
information
Chapter 10: Pricing strategies
1.
a)
b)
c)
d)
e)
The correct price of a company's product or service is ________.
a measure of the entrepreneur's costs and sales taxes on a good or service
less important to the customer than reductions in fixed or variable cost levels
a measure of what the customer must give up to obtain a good or service
similar across all target customers
the result of a simple mathematical equation
2. Why may demand remain low when a product is priced low?
a) because lower prices often convey to a customer that a product is of lower value and lower
quality
b) because customers enjoy using more of their disposable income to buy a similar good
c) because customers get a tax break from buying the higher priced good
d) because stores will not carry the lower priced goods
e) because competitors will use the low price to lure customers away
3. Which of the following is NOT a point of reference that consumers often use when
evaluating the fairness of a price?
a) The price they would charge if they were the entrepreneur
b) The price they have paid in the past for a product or service
c) The prices competitors charge for the same or similar products or services
d) The costs a company incurs to provide the product or service
e) The value they receive from the product
4.
a)
b)
c)
A market penetration pricing strategy is most appropriate to use when ________.
the company can clearly differentiate its products from competitors' offerings
the entrepreneur is trying to convey his product's clear superiority to competitors
it is difficult to differentiate your new product from other similar offerings in the
marketplace
d) the product is revolutionary and there is little competition
e) the consumer is willing to pay a premium for extra attention to detail
5.
a)
b)
c)
How can price lining help to generate sales?
Price lining helps to add an extra profit margin cushion from the higher price level.
Price lining complicates making goods available to a wide range of shoppers.
Price lining allows the customer to know what your competitors are charging for a similar
product.
d) Price lining allows the entrepreneur to capture many target markets with different needs
and income levels.
e) Price lining appeals to customers because the odd-priced product seems much cheaper to
them than a product priced at the higher even dollar level.
6. Why is a flexible markup preferred to a standard markup for products and services?
a) Because flexible markup allows for price increases in times of increased manufacturing
costs
b) Because the demand for products and services responds differently to price markup,
depending on the product type
c) Because standard markup can easily be discovered by wary customers
d) Because flexible markup allows the entrepreneur to negotiate pricing with customers
e) Because standard markup does not take into account the overhead that the firm incurs
7. What is the difference between absorption costing and variable costing?
a) Absorption costing does not include fixed costs in the costing of each manufactured item.
b) Absorption costing allows the entrepreneur to envision the effects of increases in supply
costs.
c) Variable costing allows the entrepreneur to determine how costs would increase if product
levels decline.
d) Absorption costing allows the entrepreneur to determine the direct effects of increases or
decreases in volume on the cost of the product.
e) In a variable costing structure, the fixed or overhead costs of the period are not included in
the costs of finished items.
8. What is the firm's contribution margin for a product or service?
a) The amount remaining after variable costs have been taken from total revenues that is left
to cover profit and fixed costs
b) The amount that is left after variable and fixed costs have been taken from total revenues
to serve as profit
c) The amount that is left after variable and fixed costs have been taken from total revenue to
contribute to community causes
d) The amount that is left after variable costs, taxes, and interest have been taken out of total
revenues
e) The amount that is left after fixed costs have been taken from total revenue, that may be
allocated among the total number of units sold
9. Which of the following best represents the pricing equation for a break-even pricing
strategy?
a) Selling Price = Contribution Margin * Quantity Produced
b) Selling Price = Customer's Preferred Price - Desired Profit per Item
c) Selling Price = Variable Cost per Item + Fixed Costs
d) Selling Price = ((Variable costs × Quantity Produced) + Total Fixed Costs))/Quantity
Produced
e) Selling Price = Variable Costs + Quantity Produced
10. In the United States, credit card users typically spend ____ % more than if they used cash.
a) 10
b) 20
c) 12
d) 16
e) 0
Chapter 11: Creating a successful financial plan
1.
a)
b)
c)
d)
e)
What information does a balance sheet provide to an entrepreneur?
It provides owners with an estimate of the company's worth on a given date.
It provides owners with information on how profitable the company is.
It shows owners what the company needs in terms of cash for the remainder of the period.
It tells owners which products are selling more than others.
It allows owners to understand whether they need to bring in new investors to the business.
2. What is the firm's gross profit?
a) Gross profit is the excess of revenues over total expenses.
b) Gross profit is the amount left after cost of goods sold have been taken from net sales
revenue.
c) Gross profit is the amount of income that is taxable at the end of the year.
d) Gross profit is the amount that can be dispensed to shareholders.
e) Gross profit is the amount of income remaining after interest, taxes, depreciation, and
amortization have been taken out of sales revenue.
3.
a)
b)
c)
d)
e)
________ is the first step to creating a set of pro-forma financial statements.
Determining how many employees will be required for the business
Estimating the expected volume of sales
Determining a reasonable sales level
Researching competitors' cost levels
Listing the various start-up expenses
4.
a)
b)
c)
d)
e)
What information do liquidity ratios provide for the new venture?
Whether the firm is profitable in the short-term
Whether the firm will be able to sell all of its inventory
Whether a small business will be able to meet short term financial obligations
Whether a small business can meet its short-term obligations as they become due
Whether a business's competitors are outperforming it within the marketplace
5.
a)
b)
c)
d)
e)
What are the two most often used liquidity ratios?
Current ratio and profit margin
Inventory and asset turnover ratios
Gross profit and operating margin
Cash dispensary and current ratios
Current and quick ratio
6. Leverage ratios show ________.
a) the ability of a firm to use short-term versus long-term debt
b) the extent to which the company uses debt capital to finance operating expenses, capital
expenditures, and expansion costs
c) how efficiently assets are used to generate sales for the firm
d) how well the firm has been able to leverage its image to generate sales
e) how well the firm is performing in customer opinion relative to competitors
7. Why is a low average inventory turnover ratio less than ideal?
a) Because customers will shy away from patronizing companies with low inventory turnover
rates
b) Because inventory is valuable and could be converted immediately instead to cash
c) Because inventory turnover shows that a company's products are not valuable in their
current form
d) Because inventory cannot be sold without extra taxes
e) Because inventory is expensive to store and may not necessarily have value in the market
8. What is the point of profitability ratios?
a) The point at which the firm begins to operate profitably and has recovered its startup costs
b) The point at which the firm has to go to a bank to secure financing for a second stage of
growth
c) The success of the firm in using its available resources to generate a profit
d) The point at which the firm has earned enough to pay off its initial debt incurred upon
startup
e) The point at which the firm has acquired all of the plant, property, and equipment it needs
to being production
9.
a)
b)
c)
d)
e)
What are a firm's critical numbers?
The sales volume required to stay in business
The identification numbers that are used for tax and industry classification purposes
The measures that are most important on the income statement and balance sheet
Image ratings averaged for the firm across its customer bases
Unique measures of key financial and operating aspects of a company's performance
10. What information does the break-even point provide?
a) The amount of sales volume that must be sold to recoup start-up expenses
b) The minimum sales volume required to stay in business for the long term
c) The minimum sales volume that is required to cover payroll for the period
d) The minimum sales volume that allows the firm to surpass its competitors in revenue
e) The minimum sales volume that is required to cover fixed expenses
Chapter 12: Managing cash flow
1. What is a company's cash flow cycle?
a) The amount of cash that the company goes through in an average month.
b) The amount of time between the start of the business and the point at which it can support
its needs through sales generated.
c) The period between the receipt of cash from a customer and the outflow of that cash to
support the development of another unit.
d) The time between the payment for merchandise and materials from suppliers and the
receipt of payment from customers.
e) The period between the receipt of cash and its deposit into the bank.
2. What is the fallacy made by the entrepreneur who decides to generate more cash through
increasing sales levels?
a) The entrepreneur fails to consider that it takes cash to generate more sales, something he
does not have.
b) The entrepreneur fails to understand that more sales will not be profitable.
c) The entrepreneur fails to take into account the interest rate on the loan she will have to take
out to cover the sales increase.
d) The entrepreneur fails to take into consideration the backlash from customers upon
realizing that they have to cover his cash deficit.
e) The entrepreneur fails to take into account the price drop he will have to use to generate
the increase in sales.
3. Why is a cash budget useful to an entrepreneur?
a) A cash budget allows the entrepreneur to determine how many items need to be sold to
remain profitable.
b) A cash budget shows chronologically when inflows and outflows of cash can be expected.
c) A cash budget allows the entrepreneur to determine how the company will generate new
sales.
d) A cash budget does not take into account the employees' salaries, which can be removed
through layoffs.
e) The cash budget helps entrepreneurs determine when it would be a good idea to bring on
additional product lines.
4.
a)
b)
c)
d)
e)
What is the primary cause of cash flow problems cited by entrepreneurs?
Generating those first sales
Having to pay employee salaries
Collecting accounts receivable promptly
Excruciatingly high utility bills
Suppliers' hesitancy to extend credit to new buyers
5.
a)
b)
c)
d)
e)
The three primary areas of cash flow problems are ________.
employees, new products, and advertising
current assets, sales, and net income
unemployment insurance, workers' compensation, and severance pay
utility bills, sales tax, and income tax withholding
accounts receivable, accounts payable, and inventory
6.
a)
b)
c)
d)
e)
________ is the first line of defense against bad debt losses.
Hiring a collection agency
Screening customers carefully before granting them credit
Advertising your firm's willingness to extend credit
Setting a limit for the amount of credit you will extend to a new customer
Calling a customer's bank
7. What is the general approach that an entrepreneur should have toward his accounts
payable?
a) The entrepreneur should try to pay all accounts by the dates indicated on the invoices.
b) The entrepreneur should strive to pay accounts payable before even receiving an invoice.
c) The entrepreneur should lengthen the time he takes to pay accounts payable as long as
possible without damaging his company's credit rating.
d) The entrepreneur should try to leave at least two or three creditors unpaid each month to
lengthen the time in accounts payable.
e) The entrepreneur should pay off remaining balances with creditors, even if those creditors
have issued interest-free credit.
8.
a)
b)
c)
d)
e)
Why is carrying too much inventory a strain on the business?
Because inventory may make the back office area messy
Because inventory ties up cash and generates zero return
Because inventory takes up valuable space
Because inventory is taxed again at the end of the year if not sold
Because excess inventory can cause the business to believe that it is selling goods that it
really is not
9.
a)
b)
c)
d)
e)
Trading goods and services for other goods and services rather than cash is called _____.
Rummaging
Pilfering
Scraping
Masting
Bartering
10. How might leasing improve an entrepreneur's cash position?
a) The lessor gives the entrepreneur cash back on each payment the entrepreneur makes on
the piece of equipment.
b) Leasing allows entrepreneurs to gain access to needed equipment without the large down
payments that would normally be required to finance the purchase of the same equipment.
c) Leasing allows the entrepreneur to go for several months at a time without making a
payment on the equipment the entrepreneur is using.
d) Leasing allows entrepreneurs to pay only when they first begin turning a profit.
e) Leasing allows entrepreneurs a chance to profitably sublease the equipment.
Chapter 13: Source of financing
1.
a)
b)
c)
d)
e)
What does the term "layered financing" mean?
The use of matching sources for funds
The use of financing for various parts of the business
The use of many sources to finance the business
The dependence on debt funding for the first few years of the business
A financing arrangement in which the business must produce at a certain level to keep the
capital raised
2.
a)
b)
c)
d)
e)
_____ is any form of wealth employed to product more wealth.
Debt load
Personal wealth
Plant capacity
Financing
Capital
3.
a)
b)
c)
d)
e)
How much do the majority of entrepreneurs require in startup capital?
$500,000 - $750,000
Less than $100,000
More than $1,000,000
$750,000 - $1,000,000
More than $2,000,000
4. What is a disadvantage of debt capital when considered with equity capital?
a) Debt capital requires prearranged repayments of interest and principal.
b) Raising debt capital forces the entrepreneur to give up control of management and
operations.
c) Raising debt capital requires the entrepreneur to pay dividends to its creditors.
d) Using debt capital puts a firm at a disadvantage from a tax standpoint.
e) Using debt capital lowers a firm's image in the eyes of customers.
5.
a)
b)
c)
d)
e)
What is an angel investor?
An investor that can make an investment within a typical 48-hour turnaround time
A wealthy individual who invests in businesses for an equity stake
A small business that puts its extra income into other small businesses
An investor that puts her money into nonprofit organizations
An investor that leaves a majority interest of his estate to small businesses
6. Over the course of a year, a typical venture capital firm will fund _____ out of the roughly
1100 proposals it receives.
a) 1 to 5
b) 10 to 15
c) 15 to 20
d) 100 to 200
e) 200 to 250
7.
a)
b)
c)
d)
e)
Which of the following is NOT an advantage to taking the venture public?
More control over decision making
Ability to raise a great deal of capital
Improved corporate image
Improved access to future financing
Ability to attract and retain employees
8. What is the most important criterion, from a lender's perspective, of a firm that applies for
a loan?
a) The management team at the helm of the business
b) The profitability of the business
c) The ability of the business to produce cash through its business model
d) The industry that the business operates within
e) The market research that the organization has performed
9. How does the Small Business Administration (SBA) assist entrepreneurs in finding
financing?
a) The SBA writes business plans for small businesses to carry to creditors that they would
like to approach for a loan.
b) The SBA helps small businesses clear out their inventory so that they appear more
attractive to potential investors.
c) The SBA offers a free financial screening for entrepreneurs that are seeking loans.
d) The SBA loans out money directly to entrepreneurs.
e) The SBA backs a large percentage of each loan that qualified entrepreneurs receive from
affiliated lenders.
10. What is the purpose of state-backed capital access programs (CAPs)?
a) CAPs are programs in which the state lends money directly to the entrepreneur.
b) CAPs require upfront payments by the entrepreneur, matched by the state, that become
insurance against default on loans given to entrepreneurs.
c) CAPs are loan education programs that, once completed, qualify the entrepreneur for
special financing.
d) CAPs are programs that introduce entrepreneurs to the many options that are available
through lenders.
e) CAPs prequalify entrepreneurs for state-backed loans based on their personal background.
Chapter 14: Choosing the right location
1. Which of the following is NOT important when selecting the right region of the country in
which to
a) Growth rate of the population
b) Trends pertaining to income levels within the region examined
c) Whether the product is new to a region
d) Whether inflation is high or low in an area
e) Whether other businesses are moving into the regions examined
2.
a)
b)
c)
d)
e)
What data is NOT used in choosing a city to locate?
Population size
Education level
Interest rates
Growth trends
Religion
3. Why might it be beneficial for an entrepreneur to locate her business near a competitor?
a) It would help the entrepreneur learn from the competitor.
b) It would allow for increased profitability through reduced transportation costs for
distributors.
c) It would not be beneficial for an entrepreneur to locate her business near a competitor.
d) The offerings of both businesses may attract more customers to the vicinity.
e) It could help the entrepreneur improve her image by being associated with the competitor.
4.
a)
b)
c)
d)
e)
What is the concept of trade area size?
It is the size of the region from which a firm can reasonably expect to draw customers.
It is the size of the trading floor of the local area merchant exchange.
It is the distance between your firm and its nearest three competitors.
It is the size of the Metropolitan Statistical Area (MSA) that your firm operates within.
It is the distance between your firm and the nearest indoor or outdoor mall area.
5.
a)
b)
c)
d)
e)
What is one of the drawbacks to doing business in a central business district?
The foot traffic is not prevalent around the business.
High rental rates for retail space.
The business will have a lower image because of the downtown location.
The city will impose an extra sales tax on the business because of its central location.
It will be difficult to find employees that want to work at the business.
6.
a)
b)
c)
d)
e)
_____ percent of all small businesses are home-based businesses.
Ten
Twenty-five
Fifty-two
Seventy-one
Ninety
7.
a)
b)
c)
d)
e)
Why are incubators so helpful to small startups?
Incubators provide financing for startup firms that seek their assistance.
Incubators are high-traffic areas and bring a great number of customers to a startup.
Incubators write business plans for startups that they can present to investors.
Incubators allow for firms to reside at their offices indefinitely, eliminating rent expenses.
Incubators allow the startup to focus upon product development, manufacturing, and sales,
as opposed to directing resources into building firm operating infrastructure.
8. How does the Americans with Disabilities Act affect the design of business locations?
a) All businesses with more than 15 employees must make their facilities accessible to
physically-challenged customers and employees.
b) All businesses, regardless of size, must make their facilities accessible to physicallychallenged customers and employees.
c) All businesses must attempt to design products and services that can be used by physicallychallenged customers and employees.
d) Small businesses must create atmospheres that are attractive to physically challenged
customers and employees.
e) All businesses must pay a small tax on the size of their location to pay for assistance to
physically-challenged customers and employees.
9.
a)
b)
c)
d)
e)
For retailers, merchandise purchased through impulse buying should be located ________.
near the back of the store
in areas that will be frequented by women shoppers
in the front of the store
near items that are not impulsively bought
near the restrooms
10. What is NOT a factor in a manufacturing layout?
a) Economic considerations
b) Cost of moving executives
c) Type of product
d) Type of production process
e) Space availability
Chapter 15: Global Aspects of entrepreneurship
1.
a)
b)
c)
d)
e)
Which of the following is a reason for a small business to go global?
To stop production in the local market
To develop new products for outside markets
To experience tariffs and higher transportation costs
To extend available markets
To be able to sell lower quality products in other markets
2.
a)
b)
c)
d)
e)
What types of services do export management companies offer entrepreneurs?
Management services in foreign markets
Education and training on exporting
Product and service innovation for foreign markets
Provision of a foreign distribution channel through which they may sell goods
Negotiation with foreign governments to allow the firm's products to be sold
3.
a)
b)
c)
d)
e)
What do foreign partners bring to a foreign joint venture?
Relief from domestic tax burdens
Knowledge of the local market targeted for expansion
Product innovation
Relief from competitors in the domestic market
Provision of a better management team for the domestic market
4. What is the downside to developing a master franchise design for foreign expansion of
your service business?
a) Because the firm turns over the management of franchises in a country to a master
franchiser, the company has the least control in this arrangement.
b) Because the contracts that bind international franchises to the parent company cannot be
upheld in an international court, the master franchiser could take the business model and
develop it as his own business.
c) Many countries do not allow the master franchise design to be used within their borders,
so the design is only applicable to a handful of markets.
d) Many governments see the high profitability of the master franchise model and nationalize
the business, taking all profits for the local government.
e) Many customers see the master franchise design as cultural imperialism by U.S.
companies, and therefore boycott the franchise businesses.
5.
a)
b)
c)
d)
e)
Small business in the U.S. represents nearly _____ percent of export sales from the country.
1
10
20
65
90
6. What agency can assist entrepreneurs in securing financing to support their export
strategies?
a) the Securities and Exchange Commission
b) the Export Banking Association
c) the U. S. Chamber of Commerce
d) the Central Intelligence Agency
e) the Federal Trade Commission
7. How can outsourcing operational functions to foreign businesses assist entrepreneurs?
a) Outsourcing can make governments more favorable to entrepreneurs who desire to open a
foreign office.
b) Outsourcing can make an entrepreneur's products more visible in a foreign market.
c) Outsourcing improves the quality of the services provided in the domestic market.
d) Outsourcing can improve the image of a small firm in the domestic market.
e) Outsourcing can allow firms to reduce the cost of goods sold.
8. What domestic barriers exist that hinder entrepreneurs from expanding internationally?
a) Domestic customers dislike having to share the attention of the business with foreign
customers.
b) Tariffs imposed by domestic governments make the price of goods too high.
c) The domestic government has policies that bar entrepreneurs from exporting.
d) Entrepreneurs often do not know where to get information about how to start an export
effort.
e) Domestic transportation systems make it difficult to ship outside of the country.
9. What are some of the political barriers entrepreneurs encounter when expanding into
foreign markets?
a) Military action against the United States
b) Violent acts against their businesses
c) Customer disdain for international products
d) Transportation difficulties overseas
e) Entrepreneurial ignorance of the local market
10. Why is the World Trade Organization (WTO) so important to international business?
a) The WTO negotiates and polices trade agreements between its 153 member countries.
b) The WTO allows for tariff-free trade between its member countries.
c) The WTO decides trade policy for its member nations.
d) The WTO acts as an export management company, assisting entrepreneurs from all of its
member nations.
e) The WTO monitors human working conditions in businesses around the world.
Chapter 16: Building a new venture team and planning for next
generation
1.
a.
b.
c.
d.
e.
Which of the following is a behavior exhibited by an effective leader?
Empower employees to act in the best interest of the company
Management of small details of others' positions
Insistence that all decisions within the business be made by that leader
Firm adherence to one original plan without amendment
Resistance to altering leadership style simply because employees dislike it
2.
a.
b.
c.
d.
e.
Which of the following characteristics are typical of effective leaders?
Adaptable
Passionate
Willing to take risks
Innovative
All of the above are characteristics of effective leaders.
3.
a.
b.
c.
d.
e.
Why is it difficult for entrepreneurs to find great employees?
Because good employees do not want to work for risky entrepreneurs
Because more women are staying home to take care of their children
Because the available labor pool is shrinking, due to retirement of baby boomers
Because foreign companies are taking away the U.S. labor force
Because more work is being done by computers and machines
4.
a.
b.
c.
d.
e.
What can be equally as important as salary levels to a young worker in today's workforce?
A matched retirement fund
A flexible work schedule
Three weeks' vacation pay
Stock options
An award program
5. What are the three phases of an effective interview?
a. Greeting the candidate, touring the facility, and getting right down to the desired salary
b. Reviewing the candidate's resume, asking them about their successes and failures, and
introducing them to employees
c. Calling the candidate to schedule the interview, interviewing, and calling them to let them
know they earned the position
d. Interviewing the candidate, taking them to lunch, and touring the facility
e. Breaking the ice, asking the right questions, and selling the company
6.
a.
b.
c.
d.
e.
What elements do entrepreneurs need to incorporate for job enrichment?
Skill variety
Task significance
Autonomy
Feedback
All of the above
7. Luckily enough for small businesses, the best long-term motivation for employees is
________.
a. stock options
b. recognition, praise, encouragement, feedback, and promotions
c. continued employment
d. a raise in salary
e. a trip to an exotic locale
8. Which of the following should be included in an effective management succession plan?
a. A list of two or three great candidates who could take over in the event that the founder
dies
b. An air of secrecy about who will take over the business after the leader departs
c. A turnover plan for employees that need to leave in the event that the leader departs the
business
d. A survival kit to be left to the successor that contains critical information to keep a business
going
e. An insurance plan that will immediately pay all creditors their balances owed
9. Why does an entrepreneur need to consider estate planning with regard to his or her
business?
a. Because his family might argue over who should receive the benefits of the business
b. Because the ownership of the business will otherwise go into probate, and no one will be
able to make decisions until the estate is resolved
c. Because estate taxes on business assets can be as high as 45%
d. Because attorneys might wind up receiving most of the assets from extended estate court
battles
e. Because competitors will otherwise pressure the bank to sell them portions of the business
when an entrepreneur passes away
10. How do employee stock ownership plans (ESOPs) help entrepreneurs exit from their
businesses?
a. Employees earn stock options instead of salary, saving the entrepreneur cash in the shortrun, and transferring ownership over to employees from the owner in the long-run.
b. Employees who work at an organization long enough have the option of choosing either a
retirement plan or up to 5% ownership in the company, which the owner grants them for
their continued loyalty.
c. Employees buy stock in other companies and use the dividends and gains to leverage a
buyout from the owner.
d. Employees or managers gradually purchase the owner's share of stock through salary
contributions until they either own the company outright or can leverage a buyout of the
remaining equity.
e. Employees, upon reaching twenty years' tenure with the company, have the option of
purchasing the company at a value the owner sets.