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MGT 320

The nation is rapidly moving from:

a) Industiral to Capitalism
b) Capitalism to Industrial
c) Industrial to knowledge based
d) None of the above

Answer: C
Which of the following corporate trends have contributed to the growth of entrepreneurship?

a) The acquisition and merging of mega corporations
b) The idea that “small is beautiful” in large companies, resulting in less hierarchy and layers of management.
c) The flood of venture capital being made available to small business.
d) The downturn in international markets forcing a focus on the domestic market.

Answer: B
Entrepreneurial education:

a) Has become extremely popular.
b) Universities are not able to meet the demand.
c) More courses are being offered in entrepreneurship.
d) All of the above.

Answer: A
Researchers who study entrepreneurs have discovered that:

a) successful entrepreneurs start with an idea, resources, and a small management team.
b) there is one key set of traits that mark a successful entrepreneur.
c) entrepreneurs desire responsibility and are willing to take moderate risks.
d) the most successful entrepreneurs are willing to take extreme risks and bet the farm in order to succeed.

Answer: C
Entrepreneurs seem to be characterized by:

a) a desire for money.
b) an inability to organize but strong conceptual skills.
c) a desire to work alone because of weak management skills and a need for control.
d) a high energy level.

Answer: D
Entrepreneurs start businesses for a number of reasons including:

a) an opportunity to make a difference.
b) having to deal with less government regulation than as an executive of a large company.
c) a much lower risk of career failure due to layoff or acquisition than working for a large company.
d) the opportunity to get rich much quicker than if they work for a large company

Answer: A
Surveys show that owners of small businesses believe that:

a) they work harder on thei r own than if they worked for someone else.
b) they earn less than if they worked for someone else.
c) they are less satisfied than if they worked for someone else.
d) venture capital is relatively easy to raise.

Answer: A
A significant benefit of starting your own company is:

a) more leisure time because there is less of a need to punch a time clock.
b) contributing to society and being recognized for your efforts.
c) to be able to choose who you work with or don’t work with.
d) more job security than worki ng for a large corporation

Answer: B
Kyoto has started an interior decoration business. Everything about the business, from its name to the color schemes used in the corporate letterhead, is an expression of her personality. She sees this business as her greatest personal achievement. Kyoto is experienci ng the opportunity of small business ownership.

a) to reap unlimited profits
b) to contribute to society
c) to make a difference
d) to reach her full potential

Answer: D
Mary and Ted are discussi ng starting a new business and are asking themselves a series of questions like; “What is the worst that could happen if we fail?” “How likely is that to happen?” They are assessi ng which potential drawback of small business ownership?

a) The long hours and hard work involved
b) The risk of losing their entire investment
c) The lower quality of life they’ll experience
d) The uncertainty of thei r income

Answer: B
Potential drawbacks of small business ownership include:

a) a relatively low guaranteed income.
b) a significantly freer personal schedule but less personal income and assets with which to enjoy the more relaxed schedule.
c) a high likelihood of a lower quality of life while starting and establishing the small business.
d) relatively limited potential for further personal development.

Answer: A
More businesses are started by individuals between than at any other age.

a) Under 25
b) 25-34
c) 35-44
d) 45-54

Answer: B
Which of the followi ng trends is feedi ng the growth of entrepreneurial activity?

a) A greater focus on professional advancement combined with the “flattening” of large corporati ons’ management hierarchies
b) The rapid growth of the need for low-technology products
c) A favorable attitude toward entrepreneurs in American society
d) Diminished wage increases in corporations and the desire for a better standard of ling

Answer: C
The growth of entrepreneurshi p is being fed by:

a) the return to a manufacturi ng-based economy.
b) technological advancements.
c) diminished opportunities in overseas markets for larger corporations.
d) the vilifying of large corporati ons in society

Answer: B
Minorities cite which of the followi ng as the primary barrier to their entrepreneurship?

a) skepticism
b) access to capital
c) discrimination
d) social pressure

Answer: C
Most of today’s immigrant entrepreneurs come into the U.S. with:

a) significant educational and financial resources.b) few skills, little education, and no financial resources.
c) few resources but lots of dedication and desi re.
d) little education but significant financial backing from their families in their home countries.

Answer: C
Part-time entrepreneurship has an additional advantage over starting up a company full- time in that:

a) it is a much lower risk for the entrepreneur.
b) it doesn’t require hang a business plan.
c) the entrepreneur can change products and markets more easily.
d) the entrepreneur doesn’t need to know the industry as well.

Answer: A
The strategic management process:

a) Is especially difficult for the small business because of its limited resources.
b) Divides mass markets into smaller, less homogeneous u nits.
c) Provides the small business owner with the tools for managing the uncontrollable elements in the external business environment.
d ) helps a small business develop the game plan that guides it in creating its mission, vision, goals, and objectives.

Answer: D
The primary output of the strategic management process should be:

a ) a matching of its strengths and weaknesses to the opportunities and threats in the environment.
b) An enticement to outside investors and lenders to put money into the business.
c) A complete explanation of the company’s product or service.
d) A description of the company’s competitive situation.

Answer: A
A small business’ “aggregation of factors that sets it apart from its competitors” is its:

a ) strategic plan.
b) Competitive adva ntage.
c) Vision.
d) Competitive strategy.

Answer: B
The strategic planning process for small businesses is:

a ) market-focused.
b) The same as it is for a large company.
c) Generally done by top management with little or no participation by employees.
d ) product-focused and similar to that for large companies.

Answer: B
How is the strategic planning process for small companies different from that for large companies?

a) The planning horizon should cover at least five years into the future.
b) The process should begin with setting objectives and conclude with competitive analysis.
c) The process should be informal and not overly structured-“a shirtsleeve approach.”
d ) It should be conducted by top management and provided to lower management.

Answer: A
focuses everyone’s attention and efforts on the same target market. It is an expression of what the owner believes in.

a) The mission statement
b) The company vision
c) The strategic plan
d) ) The operational pla n

Answer: B
Which of the following is true about successful entrepreneurs and their vision?

a ) It is created independently of their market or their customers.
b) It includes their understanding of the competition and their key market segments.
c) They are able to communicate it and their enthusiasm for it to all those around them .
d) They create it in cooperation with their em ployees.

Answer: A
Which of the followi ng best expresses the relationshi p of a company vision to its mission?

a) The company vision comes from the company mission.
b) The mission statement is the written expression of the company vision.
c) The company mission statement is the verbal expression of the written vision.
d) There is no relationship between the two.

Answer: B
A mission statement should answer which of the following questions?

a) What are the needs and wants of the target customers?
b) How will we finance our growth and expansion?
c) Who are our competitors?
d) How much money will we make?

Answer: A
Once the vision and mission are established, the entrepreneur needs to:

a) Select the target market.
b) Conduct market research.
c) Choose a competitive strategy.
d) Define the firm’s core competencies.

Answer: C
Are positive internal factors that contribute towards accomplishing the company’s objectives?

a) Strengths
b) Weaknesses
c) Opportuni ties
d) Threats

Answer: A
are negative internal factors that inhibit the accomplishment of a firm’s objectives.

a) Strengths
b) Weaknesses
c) Opportunities
d) Threats

Answer: B
When the small business owner assesses her company’s strengths and weaknesses, she is dealing with the business environment.

a) macro
b) external
c) competitive
d) internal

Answer: D
are negative external forces that inhibit the firm’s ability to achieve its objectives.

a) Strengths
b) Weaknesses
c) Opportunities
d) Threats

Answer: D
Corey notices a “backlash” against health food among people who eat out. He decides to open a restaurant that stresses “good home cooking,” heavy with gravies, breads, oils, etc. Corey has
identified and is trying to capitalize on a /an in the market environment.

a) strength
b) weakness
c) threat
d) opportunity

Answer: D
Every business is characterized by a set of controllable variables called that determines the relative success (or lack of it) of market participants:

a) distinctive competencies
b) key success factors
c) opportunities and threats
d ) competitive edge

Answer: B
In franchising, pay fees and royalties to a in return for the right to sell its products or services under the franchiser ‘s trade name and often to use its business format and system.

a) Franchiser, franchisee
b) Franchisee, franchiser
c) Franchise, business owner
d) Business owner, parent company

Answer: B
Franchising is currently dominated by:

a) auto dealers.
b) service-oriented franchises.
c) retail outlets.
d) fast food restaurants.

Answer: D
franchising exists when a franchisee is licensed to sell specific products under the franchiser’s brand name through a selective distribution system.

a) Trade name
b) Pure
c) Conversion
d) Product distribution

In franchising, a franchisee purchases only the right to become identified with the franchiser’s trade name.

a) trade name
b) pure
c) conversion
d) product distribution

Answer: A
franchising involves providing the franchisee with a complete business system··the established name, the building layout and design, accounting systems, etc.

a) Product distribution
b) Trade name
c) Pure
d) Conversion

Answer: C
Most gasoline products are sold through the system of franchising.

a) product distribution
b) trade name
c) pure
d) conversion

Answer: A
McDonald’s is an example of a franchise.

a) conversion
b) trade name
c) product distribution
d) pure

Answer: D
The success of franchising is largely due to:

a) the economic growth of the United States and other developed nations, economies.
b) more college students choosing to go to work for themselves rather than for corporations
c) the mutual benefits it provides to the franchi ser and franchisee.
d) all of these factors.

Answer: D
McDonald’s worldwide success as a franchise can be attributed to a few simple strategies, including:

a) complete customization of the menu to fit local tastes.
b) ability to obtain prime locations in high-traffic areas.
c) using U.S. managers and employees whenever possible.
d) standardizing processes and closely managing workers.

Answer: D
A significant advantage a franchisee has over the independent small business owner is participation in the franchiser’s. _

a) centralized and large-volume buying power
b) social gatheri ngs
c) profits
d) policies

Answer: A
In view of the cause of most new business failures, probably the most valuable service provided franchisees by the franchiser is:

a) management training and experience.
b) national advertising.
c) financial assistance.
d) territorial protection.

Answer: A
The franchising boom spearheaded by in the late 1950s brought with it many prime investment opportunities.

a) Dunkin Donuts
b) McDonalds
c) Burger King
d) Subway

Answer: B
In franchising, the reputation of the franchiser is dependent on:

a) their locations and popularity with the local customer.
b) the brand name recognition and appeal.
c) the rate of growth and the number of national outlets.
d) the quality of the goods and services provided

Answer: D
Franchise advertising programs:

a) are organized by the franchi ser but controlled locally by the franchisee.
b) are an expense borne by the franchiser.
c) require franchi sees to spend a minimum amount on local advertising.
d) allow voluntary participation.

Answer: C
When it comes to financial assistance for franchisees, the franchiser often:

a) provides direct financing.
b) assists in finding financing and occasionally provides direct assistance in a specific area.
c) waives royalty fees for franchisees not making an adequate profit.
d) generally does nothing, as finding financing is a requirement for qualifying for a franchise.

Answer: A
The primary advantage of buying a franchise over starting your own company is:

a) in the purchase of the franchiser’s experience, expertise, and products.
b) the fact it is much less expensive than doing your own business start-up.
c) the extensive assistance offered in finding start-up capital.
d) the absolute territory protection offered by all franchisers

Answer: A
Most franchise experts consider the most important factor in the success of a franchise to be:

a ) the simplicity of the idea.
b) location.
c) territorial protection .
d ) financing.

Answer: C
Territorial protection in franchising:

a ) varies according to industry.
b) is basically every franchisee for him / herself.
c) is absolute and u niform across ind ustries.
d ) is no longer an issue for most fra nchisees.

Answer: B
The failure rate for franchises is:

a) ) higher tha n the rate for all new businesses.
b) no different from the rate for all new businesses.
c) lower than the rate for all new businesses.
d) ) indeterminable beca use of the Right to Privacy Act

Answer: C
When buying an existing business, the potential buyer should remember that:

a ) it is a long process and the buyer should be patient.
b) existing businesses often do not continue to be successful after a change in ownership.
c) it is often more difficult to find capital for an existing business than it is for a start-u p.
d ) he/she will likely have to make significant changes in the work force.

Answer: A
One advantage of buying an existing business is:

a ) you always get t he best location.
b) the opportunity to participate in a national advertising campaign.
c) equipment is installed and production capacity is known.
d ) easy implementation of innovations and changes from past policies

Answer: C
When it comes to buyi ng an existing business, it is not uncommon to find it:

a ) overpriced.
b) difficult to finance.
c) with accounts receivable worth more than face value.
d ) bargain priced.

Answer: A
When buying an existing business, one should remember that:

a) ) it is generally not important to independently evaluate the inventory.
b) you are always buying goodwill with the tangible assets of the business.
c) it is as easy to make change in an existing business as it is in a start-up.
d ) the real reason for selling is seldom stated honestly.

Answer: D
The inventory in an existing business:

a ) is always current and salable.
b) usually a ppreciate overtime, making the business a bargain.
c) needs to be checked for age and salability.
d) ) is usually stated honestly and does not need independent auditing.

Answer: C
The first step an entrepreneur should take when acquiring an existing business is to:

a) explore financing options.
b) prepare a list of potential candidates.
c) analyze his / her skills, a bilities, and interests in an honest self -audit.
d ) contact existing business owners in the area and ask if their companies are for sale.

Answer: C
Once an entrepreneur has evaluated him / herself , the next step in the acquisition process would be to:

a) ) explore financing options.
b) prepare a list of potential candidates and investigate them.
c) work on a smootht ransition.
d) ) evaluate the physical condition of the business.

Answer: B
When conducting a self -evaluation , it is important to consider:

a ) what kind of business you want to have and want to avoid.
b) how much money you have to invest.
c) what kind of people you like to work with.
d) ) how good are your sales and negotiating skills.

Answer: A
The biggest source for the best companies to buy is:
a ) business brokers
b) commercial bankers.
c) trade associations.
d) the hidden market
Answer: D
The process of gathering information about the company, valuing the company, and performing a detailed review of all records, agreements, and compliance is called:

a) a letter of intent.
b) nondisclosure.
c) valuation.
d) due diligence.

Answer: C
When negotiating the deal, the most important thing to remember is:

a) terms are more important than the price paid.
b) to negotiate the lowest possible price.
c) often the difference in available funds can be made up by collecting accounts payable.
d) the owner of the business always asks 14-22% more than he/she is willing to take.

Answer: A
Perhaps the ideal source of financing the purchase of an existing business is:

a) the seller.
b) the Small Business Administration.
c) a venture banker.
d) your local bank.

Answer: A
Which of the following statements concerning the financing of a business purchase is true?

a) Often, the business seller is a poor source of financing.
b) The buyer should be able to make the payments on the loans out of the company’s cash flow.
c) The buyer should begin arranging financing late in the purchasing process, to avoid the processing expenses if the deal falls through.
d) Traditional lenders tend to be more eager to lend on an existing business than they are with a start-up.

Answer: B
Which of the following is a way to smooth the transition of leadership/management from the seller of a business to the buyer?

a) Focus on the customer, offer new incentives, improve customer service.
b) Focus on the employees, listen to them, keep them informed.
c) Concentrate on operations, updating equipment and changing processes.
d) Visit your competitors and introduce yourself and get to know them.

Answer: A
During the acquisition process, the potential buyer must sign a which is an agreement to keep all conversations and information secret and legally binds the buyer from telling anyone any
information the seller shares with him/her.

a) no compete covenant
b) nondisclosure statement
c) letter of intent
d) purchase agreement

Answer: B
In evaluating an existing business, entrepreneurs should seek to answer several questions, including:

a) can financing be arranged?
b) what business broker should I use?
c) what industries will be “hot” in the future and is this business in one of them?
d) what legal aspects should be considered

Answer: D
The most common reasons owners of small- and medium-sized businesses give for selling their businesses are:

a) need for money and low return on investment
b) boredom and burnout.
c) low return on investment and burnout.
d) poor location and low return on investment

Answer: C
Answering the question “What business am I in?” defines the company’s:

a ) mission.
b) assessment of its own strengths and weaknesses.
c) external opportunities and threats.
d) goals and objectives

Answer: A

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