Exam Final – Flashcards
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False
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Small and entrepreneurial firms cannot hold their own or gain an edge over successful, more powerful business
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False
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Small firms are at a great disadvantage when it comes to competing based on customer service
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False
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Although the timing may vary for individuals, the ideal age for starting a business appears to be between 40 and 50
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False
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Most entrepreneurs are high risk takers
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True
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New ventures are more often financed mostly with a founder's personal savings rather than a bank loan or money provided by a venture capitalist
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False
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Temptations and pressures to act unethically are thought to be greater in big business than in small business
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False
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Judeo-Christian values have been left in the churches and synagogues and have not entered the marketplace-False
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True
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Most entrepreneurs exercise great integrity, but some are particularly vulnerable with regard to ethical issues that directly affect profits-True
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True
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The goodwill gained from benefiting the community may be worth more than it costs-True
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False
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The Better Business Bureau (BBB) is a government agency that encourages ethical business practices-False
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False
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In most cases, the pressures of environmentalism have contributed to the profitability of small firms-False
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Which statement is an example of an economic trend?
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The Federal Reserve announces that it will decrease the interest rate charge to banks
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13.
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Substitute products
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Reduce the attractiveness and profitability of an industry
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A SWOT analysis can be described best as
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A concise overview of the firm's strategic situation
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15.
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Generally speaking, a strategy is
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An action plan that guides resources investments
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The two broad strategies for building a competitive advantage are the ____ strategies
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Cost-based and differentiation-based
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A differentiation-based strategy requires that a firm
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Emphasize the uniqueness of its product or services
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Focus strategy- a plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment
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Which action is a cause for erosion of a small firm's focus strategy?
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The focus strategy is imitated
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20.
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An entrepreneur would choose a franchise over an independent startup most likely because of the
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Probability of success
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The cost of a franchise may include
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Royalty payments
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An entity or individual granted the right to conduct business according to specified methods and terms of another party is known as a
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Franchisee
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A legal agreement between two parties in a franchise arrangement is referred to as a
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Franchise contract
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An entity or individual that grants another party the right to conduct business according to specified methods and terms is known as a
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Franchisor
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The rights conveyed by a franchising agreement are referred to as
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The franchise
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Products and trade name franchising is best illustrated by the system offered by
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Exxon Mobil
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Business format franchising is best illustrated by the system offered by
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Subway
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A Subway franchise located inside a Target store is called ____ franchising.
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Piggyback
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The disclosure statement provided to a perspective franchisee must contain all of the following information except
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Strategic plans for future expansion
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One of the most important features of the franchise contract is the provision related to
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Termination and transfer of the franchise
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31.
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A founder's core values may become part of the family business culture because
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Others in the firm absorb traditions and values established by the founder
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32.
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Patricia, a nonfamily employee of a family business, is concerned about competing with family members for future career opportunities. To protect her personal interests, she should
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Ask that the owner/manager clarify the extent of opportunities considering her skill set.
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Exam 3
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33.
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What are the 3 basic objectives of a Business Plan?
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a. To identify the nature and the context of the business opportunity=that is, why does such an opportunity exist?
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b. To outline the approach the entrepreneur plans to use to exploit the opportunity
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c. To recognize factors that will determine whether the venture will be successful
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34.
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Prospective investors have a single goal. What is it?
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Maximize return through cash flow while minimizing exposure to risk
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35.
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Are investors more product-oriented or market-oriented? Why?
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Market-oriented in meeting identifiable customer needs
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36.
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What is a Subscription/Membership revenue model? Give an example.
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Customers pay only a fraction of the true value of the product or service. Example would be a membership fee
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Definition of Small Business Marketing
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Business activities that direct the creation, development, and delivery of a bundle of satisfaction from the creator to the targeted user
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38.
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Describe the differences between Core Product, Actual Product, Augmented Product, using an example of your choice.
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Core product- fundamental benefit or solution sought by customers. Example: with a camera, the core would be the ability to take high quality photos quick and easy
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b.
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Actual product- basic physical product that delivers the benefits. Example: brand name or designer
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Augmented product- basic product plus extra or unsolicited benefits to the consumer. Example: manufacturer warranty with a car
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What are the 3 different marketing philosophies? Describe them.
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Product-oriented- emphasizes development of the product and production efficiencies over other activities
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Sales-oriented- favors product sales over product efficiencies and customer preferences
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Consumer-oriented-"the right choice"-all marketing efforts begin and end with customers
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40.
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What are two reasons that a new business might not want to pursue a "we have the lowest price" pricing strategy?
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Existing competitors probably have more resources than you. Should be in range of the competition. Build loyalty
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41.
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What is the definition of a "market"? What 3 elements must be present for a market to exist?
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A group of (1) customers or potential customers who have (2)purchasing power and (3) unsatisfied needs
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What are the 2 major segmentation variables? Give a description of both.
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Benefit variable- specific characteristics that distinguish market segments according to the benefits sought by customers
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b.
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Demographic variable- specific characteristics that describe customers and their purchasing power
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Describe a company following a "multi-segment market strategy".
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A strategy that recognizes different preferences of individual market segments and unique marketing mix for each. Have multiple marketing mixes.
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Describe a company following a "single-segment market strategy".
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A strategy that recognizes that existence of several distinct market segments but focuses on only the most profitable segment.
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45.
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How does a sole proprietorship pay taxes?
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Must report all business income or losses on personal income tax return
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What is "joint and several liability"?
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The liability of each partner resulting from any one partner's ability to legally bind the other partners
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What is a corporation?
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A business organization that exists as a legal entity and provides limited liability to its owners
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What is the advantage of incorporation over sole proprietorship?
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A with the incorporation, your personal assets are separate from the business. If ever you run into an issue with the law and owe money, with a sole proprietorship they can come after your personal assets if your business isn't enough.
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Describe the features of an S Corporation and how it differs from a C Corp.
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S corporation- a type of corporation that offers limited liability to its owners but is taxed by the federal government as a partnership. Does not pay corporate income taxes and instead passes taxable income or losses on to the stockholders. Must meet requirements:
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No more than 100 stockholders
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ii.
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All stockholders must be individuals or certain qualifying estates and trusts
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Only one class of stock can be outstanding
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iv.
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Fiscally, the corporation must operate on a calendar-year basis
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Shareholders may not include nonresident aliens
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What are the advantages of a Limited Liability Company?
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They have liability protection it affords. Owners are protected with respect to their personal assets
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What are some of the key factors in selecting a good physical location? Name at least 3.
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Customer accessibility
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b.
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Resource availability
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Site availability and costs
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Business environment conditions
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e.
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Entrepreneur's personal preference
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What types of businesses must put "customer access" as a priority?
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Any business that serves the end user of a product. A retail shoe store would need to be close to the people who wear the shoes. A factory that makes shoes would not.
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What is a "business incubator"?
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A facility that provides shared space, services, and management assistance to new businesses
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54.
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Describe the differences between "special-purpose" and "general purpose" equipment. Be able to give examples of each.
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a.
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General- machines that serve many functions in the production process
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b.
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Specific-machines designed to serve specialized functions in the production process
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55.
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What are the differences between an information-based model and a transaction-based model of an e-commerce website?
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a.
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Informational- the website provides information about a business, its products, and other related matters but doesn't change for its use
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b.
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Transaction- website provides a mechanism for buying or selling products or services
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Exam 4
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56.
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Why aren't a firm's cash flows equal to its profits?
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Profit is calculated by using accrual basis accounting, under which income is recorded when it is earned, whether or not the income has been received, and expenses are recorded when they are incurred. Also profit is not affected by changed in the firm's assets and financial structure.
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What is the basic equation for a balance sheet?
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Total assets = debt + ownership equity
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As sales increase, what else will typically increase?
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Asset requirements
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59.
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What is a term loan? Give an example.
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A term loan is for a certain period of time until the loan is paid back. Example would be bank giving a company a certain time period to payback their loan.
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What is a Loan Covenant?
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Loan covenant is bank-imposed restrictions on a borrower that enhances the chance of timely payment
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What is the difference between a strategic buyer and a financial buyer?
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a.
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Strategic buyer purchases based on both the firm's sand-alone characteristics and synergies that the buyer thinks can be created by the strategic fit of the firm and potential buyer.
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b.
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Financial buyer purchases based on the stand-alone cash generating potential of the firm being acquired
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What is an LBO?
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Leveraged buyout- a purchases heavily financed with debt, where the future cash flows of the target company are expected to be sufficient to meet debt repayments
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63.
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Describe a "bust-up" LBO
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a.
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a leveraged buyout involving the purchase of a company with the intent of selling off its assets
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Exam 5
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What are the 2 building blocks of a successful CRM Program?
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a.
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Outstanding relationships with customers
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b.
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Knowledge of consumer behavior
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65.
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What are the four options available to a customer who is dissatisfied?
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a.
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Publicly obtain legal action against business
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b.
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Privately complain to business
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c.
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Stop buying product or service
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Take no action
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66.
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Describe the data that should be found in a Customer Profile.
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Demographics, purchase history, responses to market stimuli, background info
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67.
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List the four stages, in the correct order, of the consumer decision-making process.
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Need recognition
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Information search and evaluation
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The purchase decision
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Post-purchase evaluation
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68.
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What are the two basic influences on consumer behavior?
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Psychological influences-needs, perceptions, motivations, and attitudes
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Sociological influences- cultures, social classes, reference groups, and opinion leaders
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What are the 4 Sociological Influences on customer behavior?
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Cultures
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Social classes
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Reference groups
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Opinion leaders
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70.
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What is a "sustainable competitive advantage"? Be prepared to give an example of a company and what their sustainable competitive advantage is.
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A value-creating position that is likely to endure over time-KFC having their secret recipe
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71.
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Describe the 3 stages of the Competitive Advantage Life Cycle.
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Develop
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Deploy
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Decline
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Describe the Product Life Cycle and what is going on in each of the 4 stages.
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A detailed picture of what happens to a specific product's sales and profits over time
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b.
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Promotion, pricing , and distribution policies must be adjusted to the product's position on the curve
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c.
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Introduction, growth, maturity, decline. The initial stages are characterized by a slow and, ideally, upward movement. They stay at the top is exciting but brief. Then the decline begins, and the downward movement can be rapid.
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Describe the differences between a brandmark, a brand name, and a brand image.
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Brandmark- a brand that cannot be spoken
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Brand name- a brand that can be spoken
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Brand image- the overall perception of a brand
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74.
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What is a "product"?
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A total bundle of satisfaction-whether a service, a good, or both-offered to consumers in an exchange transaction
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75.
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What is the difference between a trademark and a copyright?
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Trademark-legal term indicating that a firm has exclusive rights to use a brand to promote a product
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b.
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Copyright-the exclusive right of a creator to reproduce, publish, perform, display, or sell his or her own works
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76.
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What is "trade dress"? Give an example.
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a.
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Elements of a firm's distinctive image not protected by a trademark, patent, or copyright-Example would be every Target having their employees wear a red shirt and khakis.
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77.
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Describe how social class may influence buying behavior.
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a.
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Influenced by income-upper class shop for luxury items while lower class go more for necessities
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Exam 6
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78.
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A pricing tactic whereby a firm sets a high price to convey an image of high quality or uniqueness is known as
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a.
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Prestige pricing
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79.
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A business will not be successful unless it charges a price for its products that covers its total
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Cost and a margin of profit
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80.
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Elastic demand- demand that changes significantly when there is a change in the price of the product of the product or service
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Demand for a product typically ___ as price ___
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Decreases, increases
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82.
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Penetration pricing strategy- a technique based on setting lower than normal prices to hasten market acceptance of a product or service or to increase market share
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83.
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The major objective of a firm in granting credit it
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Making sales
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84.
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Hillary wants to purchase a refrigerator on credit. If she uses and installment plan, what is most likely to occur?
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A down payment will be required
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85.
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Revolving charge account- a line of credit on which the customer may charge purchases at any time, up to a pre-established limit.
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86.
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Know how to figure a trade credit bill problem
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Know how to figure a break-even point problem
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88.
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The differences among employees on such dimensions as gender, age, ethnicity, and race is known as
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Workforce diversity
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89.
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One of the largest expense categories for most business is
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Payroll
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90.
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Which source of employees do small business owners say accounts for most of their hires?
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Employees
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91.
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The Americans with Disabilities Act requires employers of at least___ employees to make___ adaptations to facilitate the employment of individuals protected by the act
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15, reasonable
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92.
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New employees benefit most from orientation when it is given
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During the first two or three days on the job
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93.
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Small firms give employees a share of ownership in the business through
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Employee stock ownership plans
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94.
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Which item plays the central role in attracting and motivating employees?
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Compensation
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95.
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The Civil Rights Act applies to any employer of ___ or more people.
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a.
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15
