Question Details

MGT 190 QUIZ	
 	In a competitive profile matrix, a factor that represents a major strength to a company would receive a rating of: 				
	 
 
	a. 1 
 
	b. 2 
 
	c. 3 
 
	d. 4 
				
		
 	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 
				
		
 	Only businesses who have registered their product or service with the Library of Congress are allowed to use ®. 				
	 
 
True
 
False
				
		
 	Innovation is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. 				
	 
 
True
 
False
				
		
 	The unique components of a product's identity that a company uses to create a product's image and to promote it is called its: 				
	 
 
	a. trade costume 
 
	b. trade dress 
 
	c. trade wear 
 
	d. trademark 






				
		
 	Experts estimate that __________ percent of franchisers are dishonest. 				
	 
 
	a. 5 to 10 
 
	b. 15 to 20 
 
	c. 25 to 30 
 
	d. 45 to 50 
				
		
 	A process in which a small group of people interact with very little structure with the goal of producing a large number of ideas is called mind-mapping. 				
	 
 
True
 
False
				
		
 	Every partnership must have at least one __________ partner. 				
	 
 
	a. general 
 
	b. limited 
 
	c. silent 
 
	d. master 
				
		
 	In which of the following countries is entrepreneurial activity most prevalent? 				
	 
 
	a. Japan 
 
	b. Germany 
 
	c. Great Britain 
 
	d. United States 
				
		
 	Bizcomp found the average sale price for small businesses across the United States was ____ times earnings. 				
	 
 
	a. 15 
 
	b. 25 
 
	c. 0.05 to 0.10 
 
	d. 2.7 




				
		
 	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 
				
		
 	Which of the following is not a factor behind the current wave of entrepreneurial activity? 				
	 
 
	a. Changing competitive conditions that favor fleet-footed, agile, rapidly-responding, smaller companies. 
 
	b. Relaxed bankruptcy laws that have reduced the penalty for failing in business. 
 
	c. The shift in the nation's economy from an industrial base to a knowledge base. 
 
	d. The downsizing of corporate America that has all but destroyed the long-standing notion of job security in large corporations. 
				
		
 	Today, home-based businesses: 				
	 
 
	a. are confined primarily to the traditional areas of arts and crafts. 
 
	b. are booming because of their low start-up costs, flexibility, and ability to take advantage of modern technology. 
 
	c. are so small that they produce negligible incomes for their owners. 
 
	d. all of the above. 
				
		
 	Studies show that more than __________ percent of all business acquisitions fail to meet the buyer's expectations. 				
	 
 
	a. 10 
 
	b. 30 
 
	c. 50 
 
	d. 70 
				
		
 	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. 
				
		
 	__________ partners cannot take an active role in the operation of a business, but if the business fails, they stand to lose only what they have invested in the company. 				
	 
 
	a. General 
 
	b. Limited 
 
	c. Master 
 
	d. Insulated 
				
		
 	The broad, long-range attributes that a business seeks to accomplish are called: 				
	 
 
	a. goals 
 
	b. objectives 
 
	c. strategies 
 
	d. key success factors 
				
		
 	The basis for the global economy today is __________ capital. 				
	 
 
	a. financial 
 
	b. manufacturing 
 
	c. intellectual 
 
	d. economic 
				
		
 	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 
				
		
 	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. 
				

		
 	A family limited partnership can be used to transfer the vast majority (99%) of the shares in a business to family members (e.g., children) while enabling the entrepreneur to maintain absolute control over the business because of: 				
	 
 
	a. the IRS' rules for family limited partnerships. 
 
	b. state laws for the establishment of family limited partnerships. 
 
	c. the nature of the business. 
 
	d. the terms of the limited partnership agreement. 
				
		
 	Which of the following statements concerning family businesses is false? 				
	 
 
	a. Family businesses account for just 10 percent of all of the companies in the United States. 
 
	b. Family businesses employ 50 million people and account for over 55 percent of the nation's GDP. 
 
	c. A significant threat to family businesses comes from within: only about 30 percent of them survive to the second generation. 
 
	d. All of the above. 
				
		
 	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. 
				
		
 	A key success factor defines a relationship between a controllable variable and a critical factor affecting the firm's ability to compete. 				
	 
 
True
 
False






	
				
		
 	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 
				
		
 	Which of the following statements concerning core competencies is false? 				
	 
 
	a. Core competencies are a unique set of capabilities that a company develops in key operational areas that allow it to vault past competitors. 
 
	b. Small companies' core competencies often originate from the advantages their size offers.
 
	c. Entrepreneurs must constantly change their core competencies. 
 
	d. Developing core competencies does not necessarily require a company to spend a great deal of money. 
				
		
 	__________ 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 
				
		
 	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 






				
		
 	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. 
				
		
 	Which of the following statements concerning entrepreneurship in the United States is true? 				
	 
 
	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 
				
		
 	Locating franchised outlets in high-traffic, non-traditional locations such as airports, hospitals, zoos, sports arenas, and others is based on the principle of: 				
	 
 
	a. conversion franchising 
 
	b. intercept marketing 
 
	c. master franchising 
 
	d. piggyback franchising 
				
		
 	Which of the following requirements must an S-corporation meet? 				
	 	
 
	a. It must be a domestic corporation. 
 
	b. It can issue only one class of common stock, but it can issue voting and nonvoting shares of common stock. 
 
	c. It cannot have more than 75 shareholders. 
 
	d. All of the above. 




				
		
 	The most valuable financial resource any small business can have is: 				
	 
 
	a. cash 
 
	b. accounts receivable 
 
	c. bank line of credit 
 
	d. retained earnings 
				
		
 	Self-employed business owners make up about __________ of the millionaires in the United States. 				
	 
 
	a. one-fourth 
 
	b. one-half 
 
	c. two-thirds 
 
	d. three-fourths 
				
		
 	Which of the following activities comes first in the strategic management process? 				
	 
 
	a. Formulate a meaningful mission statement 
 
	b. Identify the company's strengths, weaknesses, opportunities, and threats. 
 
	c. Identify the key factors for success in the business 
 
	d. Develop a clear vision for the business. 
				
		
 	Building a company's strategy around it core competencies enables a business to gain a sustainable competitive advantage. 				
	 
 
True
 
False
				
		
 	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 
		
				
		
 	Which of the following statements about choosing a form of ownership is false? 				
	 
 
	a. The choice of a form of ownership can have far-reaching effects on almost every aspect of a business and its owner. 
 
	b. Each form of ownership has its own unique set of advantages and disadvantages 
 
	c. The S-corporation is the best form of ownership for entrepreneurs. 
 
	d. All of the above. 
				
		
 	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 
				
		
 	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. 
				
		
 	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 
				
		
 	Porter defined the price-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. None of the above 


				
		
 	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. 
				
		
 	Which of the following is not a characteristic of a well-written objective 				
	 
 
	a. specific 
 
	b. measurable 
 
	c. easy to achieve 
 
	d. timely 
				
		
 	How many of the following characteristics may a limited liability company (LLC) have: 1) limited liability, 2) continuity of life, 3) free transferability of interest, and 4) centralized management? 				
	 
 
	a. only 1 
 
	b. no more than 2 
 
	c. no more than 3 
 
	d. all 4, if the owners choose 
				
		
 	The primary motivating force behind entrepreneurs is: 				
	 
 
	a. money 
 
	b. fame. 
 
	c. achievement. 
 
	d. recognition. 
				
		
 	Perhaps the best source of financing the purchase of a business is: 				
	 
 
	a. a commercial bank. 
 
	b. a venture capital company. 
 
	c. the seller. 
 
	d. an initial public offering (IPO). 
				
		
 	According to VR Business Brokers, the average selling price of a small company is: 				
	 
 
	a. $55,000 
 
	b. $160,000 
 
	c. $575,000 
 
	d. $1,050,000 
				
		
 	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 
				
		
 	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 
				
		
 	Bennett is considering buying an existing business and has collected the following information: Projected net earnings for next year = $117,000; owner's salary = $34,000; rate of return on a similar risk investment = 27%. Using the capitalized earnings approach, how much is the business worth? 				
	 
 
	a. $151,000 
 
	b. $433,333 
 
	c. $307,407 
 
	d. $40,770 








		
				
		
 	__________ franchising is a system in which a franchiser provides franchisees with a complete business system, including a license for the trade name, the products or services to be sold, the physical plant, the methods of operation, a marketing plan, and other necessary business services. 				
	 
 
	a. tradename 
 
	b. product distribution 
 
	c. pure (or business format) 
 
	d. process 
				
		
 	If a business buyer purchases assets that, unknown to him, have liens against them, who has financial responsibility for them? 				
	 
 
	a. the buyer 
 
	b. the seller 
 
	c. the business broker 
 
	d. none of the above 
				
		
 	A plant patent can be obtained: 				
	 
 
	a. for the layout of a new manufacturing facility. 
 
	b. extends for 20 years from the date of filing. 
 
	c. only if the plant can be reproduced asexually 
 
	d. None of the above. 
				
		
 	The first rule of negotiating is never confusing price with value. 				
	 
 
True
 
False
				
		
 	Start-up companies can expect to outgrow their capital base each time sales increase by _____ percent. 				
	 
 
	a. 10-20 
 
	b. 20-30 
 
	c. 30-40 
 
	d. 40-50 
				
		
 	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 
				
		
 	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 
				
		
 	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. 
				
		
 	Most entrepreneurs work ______ hours per week. 				
	 
 
	a. 1-39 
 
	b. 40-50 
 
	c. 50-60 
 
	d. more than 60 
				
		
 	Small business strategic management should include each of the following except: 				
	 
 
	a. setting objectives 
 
	b. using a short planning horizon 
 
	c. thinking strategically 
 
	d. encouraging employee participation 

		
				
		
 	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 
				
		
 	_________ is the difference between an established, successful business and one that has yet to prove itself. 				
	 
 
	a. Goodwill 
 
	b. Opportunity cost 
 
	c. Equity 
 
	d. Consideration 
				
		
 	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 
				
		
 	The limited liability company (LLC) offers entrepreneurs 				
	 
 
	a. the tax advantages of a partnership. 
 
	b. the legal protection of a corporation. 
 
	c. maximum flexibility in the way it operates. 
 
	d. all of the above 






				
		
 	Inventory is valuable only if it: 				
	 
 
	a. is in good condition. 
 
	b. is of the highest quality. 
 
	c. embodies the best technology available. 
 
	d. is salable. 
				
		
 	Polaroid's Creativity and Innovation Lab reports that out of every 3,000 new product ideas, __________ are actually launched, and __________ become(s) successful in the market. 				
	 
 
	a. 1000; 500 
 
	b. 500; 250 
 
	c. 10; 3 
 
	d. 2; 1 
				
		
 	Which form of ownership has the greatest ability to attract capital? 				
	 
 
	a. sole proprietorship 
 
	b. partnership 
 
	c. corporation 
 
	d. S-corporation 
				
		
 	Which of the following should alert a potential franchisee that a franchiser is dishonest? 				
	 
 
	a. Claims that the franchise contract is a standard one and that "you don't need to read it." 
 
	b. No written documentation to support claims and promises the franchiser makes about the franchise, its operation, and its performance. 
 
	c. Reluctance to provide a list of existing franchisees to talk to. 
 
	d. All of the above. 
				
		
 	__________ are entrepreneurial couples who work together as co-owners of their business. 				
	 
 
	a. Dropouts 
 
	b. Copreneurs 
 
	c. Castoffs 
 
	d. Angels 

		
				
		
 	To form a limited liability company (LLC), an entrepreneur must file articles of organization and by-laws with the state corporation commission or secretary of state. 				
	 
 
True
 
False
				
		
 	The first step a person considering buying a business should take is to: 				
	 
 
	a. Develop a list of criteria that a potential business acquisition must meet 
 
	b. Take a self-inventory to determine his or her skills, abilities, and interests. 
 
	c. Prepare a list of potential acquisition candidates. 
 
	d. Contact a business broker. 
				
		
 	A ________ gives one the right to exclude others from making, using, or selling something. 				
	 
 
	a. trade secret 
 
	b. trademark 
 
	c. copyright 
 
	d. patent 
				
		
 	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 
				
		
 	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 


		
				
		
 	An effective strategy makes the customer its focus. 				
	 
 
True
 
False
				
		
 	Which of the following is not a barrier to creativity? 				
	 
 
	a. Blindly following the rules 
 
	b. Searching for more than one "right" answer 
 
	c. Viewing play as frivolous 
 
	d. Becoming overly specialized 
				
		
 	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 
				
		
 	Which of the following statements concerning franchising is true? 				
	 
 
	a. Franchise sales total more than $1 trillion. 
 
	b. Franchises account for 44 percent of all retail sales. 
 
	c. A new franchise opens somewhere in the world every six-and-a-half minutes 
 
	d. All of the above. 
				
		
 	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. 
				


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