Question 1

Vernon runs Buzz,his own event management company,which frequently organizes large corporate events.He has built a good reputation for organizing corporate events with a fair degree of professionalism at reasonable costs.He works out of his old house with a staff of about 55 employees.Vernon's company can be categorized as a:

Accepted Answer

A)  multinational corporation.
B)  limited liability company.
C)  franchise.
D)  public sector holding.
E)  small business.F) C) and D)
G) A) and C)

Question 2

The most important source of funds for any new business is:

Accepted Answer

A)  the owner.
B)  the government.
C)  a financial institution.
D)  the Small Business Administration.
E)  a venture capitalist.F) A) and B)
G) C) and E)

Question 3

Which of the following statements accurately brings out the difference between franchising and building an independent business from scratch?

Accepted Answer

A)  The time required to set up an independent business is much lower than obtaining a franchise.
B)  A franchise outlet often reaches the break-even point faster than an independent business would.
C)  A franchisee would experience more flexibility in decision making than the owner of an independent business.
D)  The quality of goods and services needs to be more standardized and uniform in an independent business than in franchises.
E)  Access to managerial and financial assistance is more limited in franchises than in independent businesses.F) B) and E)
G) A) and C)

Question 4

Which of the following is considered as one of the major causes of small-business failure?

Accepted Answer

A)  Inability to take quick decisions
B)  Lack of flexibility to adapt to changing market demands
C)  High initial financing involved
D)  Lack of funds to operate the business
E)  Inability to focus on narrow nichesF) B) and C)
G) B) and E)

Question 5

Catalina opens a fashion boutique with the money she inherited from her parents.She is successful in creating a strong brand image and a loyal customer base.In order to meet the increasing demands of her business,she hires a store manager.However,she finds it hard to let the manager take important decisions about the store.She often finds herself disagreeing with the manager's decisions and in the process loses a lot of existing customers.Which of the following causes of small-business failure does this scenario best illustrate?

Accepted Answer

A)  Undercapitalization
B)  Inability to cope with growth
C)  Diseconomies of scale
D)  Debt financing
E)  Debt factoringF) A) and E)
G) All of the above

Question 6

_____ are often the Small Business Administration's principal means of providing direct management assistance to small businesses and entrepreneurs.

Accepted Answer

A)  Local Chambers of Commerce
B)  Small Business Development Centers
C)  Service Corps of Retired Executives
D)  Small Business Institutes
E)  Active Corps of ExecutivesF) B) and D)
G) A) and D)

Question 7

Gerald started a business using the savings from his previous job.He planned to run his business on the revenue generated from sales.However,a few months later,he found it difficult to pay his staff,rent,and other expenses.Seasonal sales and inability to secure sufficient credit from local banks made it difficult for Gerald to operate the business normally.Which of the following causes of small-business failure does this scenario best illustrate?

Accepted Answer

A)  Undercapitalization
B)  Trade credit
C)  Economies of scale
D)  Debt financing
E)  Debt factoringF) A) and D)
G) None of the above

Question 8

Which of the following would most likely be the principal immediate threat to a recently started small firm that contract manufactures for leading fashion brands in the United States?

Accepted Answer

A)  Rapidly advancing technology
B)  Rising entrepreneurial spirit
C)  Reducing imports
D)  Rising inflation
E)  Increasing exportsF) B) and D)
G) A) and D)

Question 9

_____ are persons or organizations that hope to purchase the stock of a small business at a low price and then sell the stock for a profit after the business has grown successful.

Accepted Answer

A)  Intrapreneurs
B)  Category captains
C)  Venture capitalists
D)  Trade debtors
E)  FranchisersF) B) and D)
G) B) and C)

Question 10

Many service providers are considered retailers because they:

Accepted Answer

A)  require a high initial start-up cost.
B)  provide their services directly to ultimate consumers.
C)  sell their services from a single store location.
D)  focus on large market segments and institutional buyers.
E)  employ only a small number of people.F) B) and E)
G) C) and E)

Question 11

One of the most significant drawbacks of small businesses is their inability to innovate and to bring significant benefits to customers.

Accepted Answer

A) True 
 B)False

Question 12

_____ is best described as the lack of funds to operate a business normally.

Accepted Answer

A)  Debt financing
B)  Trade credit
C)  Franchising
D)  Trade deficit
E)  UndercapitalizationF) A) and B)
G) B) and C)

Question 13

Lara,a single mother,borrowed some capital for her business from Women Progress Council at an extremely low rate of interest.Which of the following forms of funding a new small business does this scenario best illustrate?

Accepted Answer

A)  Trade credit
B)  Equity financing
C)  Venture capital
D)  Debt financing
E)  Crowd sourcingF) None of the above
G) A) and C)

Question 14

Which of the following is true about the role of small businesses in the American economy?

Accepted Answer

A)  They employ about 20 percent of private workers.
B)  They represent only 20 percent of U.S.exporters.
C)  They provide opportunities for women to succeed in business.
D)  They are always operated as subsidies of large companies.
E)  There has been a decline in the number of small businesses owned by minorities.F) C) and E)
G) A) and D)

Question 15

Banks and other financial institutions can grant a small business a _____,which is an agreement by which a financial institution promises to lend a business a predetermined sum on demand.

Accepted Answer

A)  line of credit
B)  trade credit
C)  mutual fund
D)  non-recourse loan
E)  trust fundF) A) and D)
G) A) and E)

Question 16

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as a(n) _____.

Accepted Answer

A)  promissory note
B)  article of incorporation
C)  business plan
D)  business agreement
E)  article of partnershipF) A) and E)
G) A) and B)

Question 17

Which of the following statements is true of downsizing?

Accepted Answer

A)  It is an effective method to increase the management layers in an organization.
B)  It is an effective strategy to adopt when a small business is growing.
C)  It reduces work tasks in order to make a firm more flexible.
D)  It reduces the innovativeness of a firm.
E)  It is a useful method to gain employee trust and loyalty.F) D) and E)
G) A) and B)

Question 18

Red Carpet Inc.is a small apparel store started by an aspiring designer.The store needs to compete against larger,well-established multinational brands.Which of the following strategies will most help Red Carpet Inc.avoid competition from larger firms?

Accepted Answer

A)  Red Carpet Inc.should have multiple levels of management like the larger firms.
B)  Red Carpet Inc.should target large market segments that the competitors serve.
C)  Red Carpet Inc.should expand the scale of production to enjoy greater economies of scale.
D)  Red Carpet Inc.should start to work with customers only when the products are ready for sale.
E)  Red Carpet Inc.should focus on and target small market niches or product needs.F) D) and E)
G) All of the above

Question 19

A drawback of franchising is the need for franchisees to strictly adhere to standardized operations.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is the shortest path to failure in business?

Accepted Answer

A)  Inflexibility
B)  Undercapitalization
C)  Rent increases
D)  Competition
E)  Changing market demandF) B) and E)
G) A) and B)

Exam 5: Small Business,entrepreneurship,and Franchising

One of the most significant drawbacks of small businesses is their inability to innovate and to bring significant benefits to customers.

Correct Answer
verified

The most important source of funds for any new business is:

Correct Answer
verified

Correct Answer
verified

Which of the following is true about the role of small businesses in the American economy?

Correct Answer
verified

Which of the following is considered as one of the major causes of small-business failure?

Correct Answer
verified

Lara,a single mother,borrowed some capital for her business from Women Progress Council at an extremely low rate of interest.Which of the following forms of funding a new small business does this scenario best illustrate?

Correct Answer
verified

A drawback of franchising is the need for franchisees to strictly adhere to standardized operations.

Correct Answer
verified

_____ is best described as the lack of funds to operate a business normally.

Correct Answer
verified

Correct Answer
verified

Which of the following statements accurately brings out the difference between franchising and building an independent business from scratch?

Correct Answer
verified

Correct Answer
verified

_____ are persons or organizations that hope to purchase the stock of a small business at a low price and then sell the stock for a profit after the business has grown successful.

Correct Answer
verified

Many service providers are considered retailers because they:

Correct Answer
verified

_____ are often the Small Business Administration's principal means of providing direct management assistance to small businesses and entrepreneurs.

Correct Answer
verified

Which of the following is the shortest path to failure in business?

Correct Answer
verified

Banks and other financial institutions can grant a small business a _____,which is an agreement by which a financial institution promises to lend a business a predetermined sum on demand.

Correct Answer
verified

Which of the following statements is true of downsizing?

Correct Answer
verified

Which of the following would most likely be the principal immediate threat to a recently started small firm that contract manufactures for leading fashion brands in the United States?

Correct Answer
verified

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as a(n) _____.

Correct Answer
verified

Red Carpet Inc.is a small apparel store started by an aspiring designer.The store needs to compete against larger,well-established multinational brands.Which of the following strategies will most help Red Carpet Inc.avoid competition from larger firms?

Correct Answer
verified

Exam 5: Small Business,entrepreneurship,and Franchising

One of the most significant drawbacks of small businesses is their inability to innovate and to bring significant benefits to customers.

Correct AnswerverifiedShow Answer

The most important source of funds for any new business is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true about the role of small businesses in the American economy?

Correct AnswerverifiedShow Answer

Which of the following is considered as one of the major causes of small-business failure?

Correct AnswerverifiedShow Answer

Lara,a single mother,borrowed some capital for her business from Women Progress Council at an extremely low rate of interest.Which of the following forms of funding a new small business does this scenario best illustrate?

Correct AnswerverifiedShow Answer

A drawback of franchising is the need for franchisees to strictly adhere to standardized operations.

Correct AnswerverifiedShow Answer

_____ is best described as the lack of funds to operate a business normally.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements accurately brings out the difference between franchising and building an independent business from scratch?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

_____ are persons or organizations that hope to purchase the stock of a small business at a low price and then sell the stock for a profit after the business has grown successful.

Correct AnswerverifiedShow Answer

Many service providers are considered retailers because they:

Correct AnswerverifiedShow Answer

_____ are often the Small Business Administration's principal means of providing direct management assistance to small businesses and entrepreneurs.

Correct AnswerverifiedShow Answer

Which of the following is the shortest path to failure in business?

Correct AnswerverifiedShow Answer

Banks and other financial institutions can grant a small business a _____,which is an agreement by which a financial institution promises to lend a business a predetermined sum on demand.

Correct AnswerverifiedShow Answer

Which of the following statements is true of downsizing?

Correct AnswerverifiedShow Answer

Which of the following would most likely be the principal immediate threat to a recently started small firm that contract manufactures for leading fashion brands in the United States?

Correct AnswerverifiedShow Answer

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is known as a(n) _____.

Correct AnswerverifiedShow Answer

Red Carpet Inc.is a small apparel store started by an aspiring designer.The store needs to compete against larger,well-established multinational brands.Which of the following strategies will most help Red Carpet Inc.avoid competition from larger firms?

Correct AnswerverifiedShow Answer

Correct Answer
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