Reference no: EM131183958

Q1. Porter defined the cost leadership strategy in terms of:
a. reaching buyers whose major purchase criterion is price.
b. establishing the industry's floor price.
c. winning a price war.
d. d. All of the above

Q2. By setting its products apart from those of competitors, Straus Family Creamery, a family business that produces organic, all-natural dairy products, is using which strategy?
a. low-cost
b. differentiation
c. focus
d. maintenance

Q3. A clearly defined vision:
a. provides meaningful direction for a company.
b. influences the decisions, both large and small, the people in an organization make.
c. motivates employees to higher levels of performance.
d. All of the above

Q4. Which of the following is a way to enhance organizational creativity?
a. Expecting creativity
b. Expecting and tolerating failure
c. Viewing problems as challenges
d. All of the above

Q5. The basis for the global economy today is __________ capital.
a. financial
b. manufacturing
c. intellectual
d. economic

Q6. A study by the Federal Trade Commission found that __________ percent of new franchisees sign their franchise contracts without reading them.
a. 10
b. 20
c. 40
d. 60

Q7. Which element of the strategic management process addresses the first question of any business venture: "What business am I in?"
a. vision
b. mission
c. SWOT analysis
d. Strategy

Q8. Most entrepreneurs work ______ hours per week.
a. 1-39
b. 40-50
c. 50-60
d. more than 60

Q9. The primary consideration in negotiating a purchase agreement is to ensure the deal:
a. does not jeopardize the future financial health or cash flows of the business.
b. provides the buyer a good value and the seller fair compensation.
c. guarantees a minimum level of profitability for the business to remain viable.
d. provides a money back guarantee and a no-fault cancellation clause.

Q10. Which of the following strategies works best when a company is appealing to price-sensitive customers and competes with firms that sell the same commodity products?
a. low-cost
b. differentiation
c. focus
d. maintenance

Q11. The key legal issue in the sale of an asset typically is the proper, lawful transfer of _______ from the seller to the buyer.
a. good title
b. liabilities
c. liens
d. contracts

Q12. A strategy that involves dividing a mass market into smaller, more homogeneous units and then attacking only certain of these units is called:
a. segmenting
b. positioning
c. contesting
d. None of the above.

Q13. __________ is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.
a. Innovation
b. Creativity
c. Entrepreneurship
d. Brainstorming

Q14. The primary motivating force behind entrepreneurs is:
a. money
b. fame.
c. achievement.
d. recognition.

Q15. The aggregation of factors that sets a small business apart from its competitors and gives it a unique position in the market is its:
a. mission
b. competitive advantage
c. SWOT
d. Strategy

Q16. In __________ franchising, a franchisee purchases the right to open more than one franchise outlet within a broad territory within a specified time period.
a. master
b. conversion
c. multiple-unit
d. piggyback

Q17. Which of the following factors acts as fuel to feed the nation's entrepreneurial fire?
a. Greater opportunities for entrepreneurial education
b. The shift from an industrial economy to a service economy
c. Increasingly powerful technological advancements that are available at affordable prices.
d. All of the above.

Q18. You are using the excess earnings approach to determine the value of a business you have determined to be a "normal risk" business. What "years of profit" figure should you use to estimate the value of the intangible assets?
a. 1 to 2
b. 3 to 4
c. 6 to 7
d. 10 to 12

Q19. The first rule of negotiating is never confuse price with value.
a. true
b. false

Q20. A company's __________ spell(s) out the ends toward which a company is moving; its __________spell(s) out how it plans to reach those ends
a. mission, goals, and objectives; core competencies
b. strategy; core competencies
c. mission, goals and objectives; strategy
d. core competencies; strategy

Q21. Studies of the small business failure rate suggest that after six years, about __________ percent of new businesses will have failed.
a. 33
b. 49
c. 63
d. 82

Q22. For years, a small, locally-owned pizza restaurant located near a university in a small town has focused on the university's students, offering them special student discounts and free on-campus delivery. Recently, Domino's Pizza announced its intention to open a new location in the same town so that it can sell pizza to the university students. To the locally-owned pizza restaurant, Domino's decision represents a:
a. strength
b. weakness
c. opportunity
d. threat

Q23. The essence of what a franchisee buys from a franchiser is ___________.
a. a steady source of capital.
b. the franchiser's experience
c. a marketing system.
d. an efficient building design.

Q24. Only businesses who have registered their product or service with the Library of Congress are allowed to use ®.
a. true
b. false

Q25. Which of the following statements about the human brain is true?
a. The brain is divided into two asymmetric hemispheres.
b. The right side of the brain processes information intuitively, relying heavily on images, and uses kaleidoscopic, lateral thinking.
c. The left side of the brain processes information in a step-by-step, logical fashion and uses linear, vertical thinking.
d. All of the above.

Q26. A valid copyright last for:
a. the life of the creator.
b. 20 years from the date of publication and can be renewed once.
c. 50 years.
d. the life of the creator plus 50 years.

Q27. Franchise experts consider the three most important factors in franchising to be:
a. training, advertising, and location.
b. management expertise, financial reserves, and customer traffic.
c. financing, timing, and location.
d. location, location, and location.

Q28. Approximately __________ percent of the small companies that are up for sale ever get sold.
a. 25 to 33
b. 40 to 50
c. 65 to 73
d. 80 to 85

Q29. Experts estimate that __________ percent of franchisers are dishonest.
a. 5 to 10
b. 15 to 20
c. 25 to 30
d. 45 to 50

Q30. The primary reason most entrepreneurs choose to incorporate their businesses is:
a. to gain the benefit of limited liability for the corporation's stockholders.
b. the ability of the business to continue indefinitely.
c. the ability to avoid the disadvantage of double taxation.
d. that the corporation offers the least expensive and least complex process of business formation.

Q31. When evaluating the assets a company owns, a prospective buyer should be most interested in their __________ value.
a. book
b. par
c. market
d. stated

Q32. Small businesses:
a. account for about 99 percent of all businesses in the United States.
b. employ 53 percent of the nation's private sector work force.
c. create more jobs than do large companies
d. produce 51 percent of the U.S. GDP.
e. all of the above

Q33. Bennett is considering buying a business and has collected the following information: Projected net earnings for next year = $117,000; rate of return on a similar risk investment = 27%. Hoping to use the market approach, Bennett has located three similar companies, whose stock is publicly traded. Their price-earnings ratios are 2.84, 2. 95, and 3.12. Under the market approach, how much is the business worth?
a. $117,000
b. $433,333
c. $93,822
d. $347, 490

Q34. __________ is the practice of gathering, organizing, and disseminating the collective wisdom and experience of a company's employees for the purpose of strengthening its competitive position.
a. strategic management
b. differentiation
c. knowledge management
d. paradigm busting

Q35. ________ is the ability to see the similarities and connections among various data and events.
a. Vertical thinking
b. Lateral thinking
c. Convergent thinking
d. Divergent thinking

Q36. The QWERTYUIOP configuration so common on computer keyboards is an illustration of which barrier to creativity?
a. Searching for the one "right" answer
b. Blindly following the rules
c. Becoming overly specialized
d. Avoiding ambiguity

Q37. To validate an idea is accurate and useful, entrepreneurs may:
a. conduct experiments
b. run simulations
c. test market
d. build prototypes
e. All of the above.

Q38. Given the fact that most small companies lack the resources to reach a national or international market, many entrepreneurs choose to pursue a __________ strategy in which they specialize in meeting the needs of a specific target market segment.
a. low-cost
b. differentiation
c. focus
d. maintenance

Q39. The most common form of business ownership in the United States is the:
a. sole proprietorship
b. the partnership
c. the corporation
d. the S-corporation

Q40. A paradigm is:
a. a tool used for determining the value of a business that is for sale.
b. a preconceived idea of how the world should operate.
c. a rule for overcoming the barriers to creativity.
d. a tool entrepreneurs use to launch successful business ventures.

Q41. The failure rate for franchises is __________ the failure rate for independent businesses.
a. lower than
b. higher than
c. the same as
d. cannot be determined

Q42. Which of the following factors plays a role in determining the rate of return used to value a business using one of the earnings approaches?
a. the basic, risk-free rate of return
b. an inflation premium
c. the risk allowance for investing in that particular business
d. all of the above

Q43. Increasingly, entrepreneurs are starting businesses because they see an opportunity to make a difference in a cause that is important to them.
a. true
b. false

Q44. Which of the following statements concerning entrepreneurship in the United States istrue?
a. A new business is born every 11 seconds in the United States
b. One out of every 12 Americans is actively involved in trying to start a new business.
c. A study found that 78 percent of influential Americans believe that entrepreneurship will be the defining trend of this century.
d. All of the above

Q45. About 85 percent of the companies that are available for sale are:
a. listed with business brokers.
b. advertised in the "Businesses for Sale" section of major newspapers.
c. found in the Internet.
d. tucked away in the "hidden market" of companies that are for sale but are not advertised as such.

Q46. The Uniform Franchise Offering Circular (UFOC):
a. is not required from franchisers with fewer than 10 franchised outlets.
b. must be checked, verified, and approved by the Federal Trade Commission before franchisers can use it.
c. is designed to provide franchisees with important information about a franchise and must be given to franchisees before they sign a franchise contract or pay any money to the franchiser.
d. All of the above.

Q47. A corporation doing business in a state other than the one in which it is incorporated is called a __________ corporation
a. domestic
b. alien
c. foreign
d. closely-held

Q48. The disclosure document that is designed to help prospective franchisees evaluate franchise opportunities and to protect themselves from unscrupulous franchisers is the:
a. Trade Regulation Rule
b. Federal Trade Commission Report
c. Franchisee Protection Prospectus
d. Uniform Franchise Offering Circular

Q49. Which of the following statements concerning franchise operations is true?
a. Franchisers may provide their franchisees with a business system, but they encourage franchisees to deviate significantly from the system to stimulate innovation.
b. Most franchisers provide extensive financial assistance, usually in the form of direct loans, to their franchisees.
c. One of the greatest sources of friction between franchisers and franchisees concerns the location of new franchises; existing franchisees are afraid that placing new outlets so close to their existing ones causes their sales and profits to be diluted.
d. The primary reason franchising has proved so popular is that franchisees are guaranteed that they will succeed.
e. All of the above.

Q50. Which form of ownership has the greatest ability to attract capital?
a. sole proprietorship
b. partnership
c. corporation