question

For manufacturers, which of the following is a top priority in location decisions?

answer

Closeness to raw materials

question

A good reason for relocating a typical manufacturing business is to

answer

Get closer to raw materials

question

Using special-purpose equipment in the manufacturing process typically results in

answer

greater output per machine-hour of operation.

question

A woman is planning to establish a business in her residence. In order to maintain a proper balance between family and business matters, she should

answer

establish spatial and nonspatial boundaries.

question

The Internet has brought new life and technology to the old-fashioned notion of

answer

customer service

question

Dell Computer Corporation deals directly with corporate customers online and builds computers to specifications after an order is placed, which reduces the firm's storage and carrying costs. This illustrates that B2B firms can create

answer

greater efficiency in their selling.

question

In the B2B model, the customers can best be described as

answer

businesses

question

Which of the following is not one of the advantages B2C models have over bricks-and-mortar retailing? Speed of access Speed of transaction 24/7 service Superior customer service

answer

Superior customer service

question

B2B firms, in particular, use e-commerce to reduce costs associated with

answer

sales force management.

question

Which statement is not correct concerning business incubators?

answer

Their goal is to build businesses that will develop into a long term office rental relationship.

question

Which of the following lists are the three types of business startups talked about in the book?

answer

Brick-and-mortar, Home-based-business, E-commerce.

question

Which of the following is a true statement?

answer

The Internet is basically a tool that parties use to communicate

question

T or F: Locating close to niche market customers often requires placement at a site that otherwise would be less than desirable.

answer

True

question

T or F: If the cost of shipping the finished product is high, the factory should probably be located near a source of raw materials.

answer

False

question

T or F: A building's functional attributes determine its suitability for the operation of a business.

answer

True

question

T or F: A milking machine in a dairy is a type of general-purpose equipment.

answer

False

question

T or F: To function successfully, owners of home-based businesses need to establish both spatial and nonspatial boundaries between the business and the home.

answer

True

question

T or F: Because of its complexity, modern technology has had no noticeable effect in expanding the number of home-based businesses.

answer

False

question

T or F: Customer accessibility is important in locating an electrical contracting firm.

answer

False

question

T or F: If a brand's product, such as a snack food, is not located close enough to the target customer, the customer will most likely be inconvenienced by traveling further to get the product.

answer

False

question

The ____ shows the results of a firm's operations over a period of time, usually one year.

answer

cash flow statement

question

Which of the following does not increase or decrease cash flows from assets?

answer

Changes in working capital

question

Earnings before taxes are computed by deducting the firm's financing costs from its ____ income.

answer

Total

question

Pro forma financial statements can answer the following question:

answer

How profitable can the firm be, given past sales and expense relationships?

question

A startup typically does not become profitable or breakeven for

answer

two to three years.

question

An example of a current asset is

answer

accounts receivable.

question

A common weakness in small business financing is

answer

too much investment in fixed assets.

question

A ____ shows the level that sales must reach before profitability is achieved.

answer

break-even case

question

T or F: A profitable company does not necessarily have positive cash flows.

answer

FALSE

question

T or F: The income statement shows the profit or loss from a firm's operations over a given period of time.

answer

TRUE

question

T or F: A conventional measure of a firm's liquidity is a comparison of current assets to current liabilities.

answer

TRUE

question

T or F: Dividends to a firm's owners are not considered an expense in the income statement.

answer

False

question

T or F: Accounts payable consist of payments due from a firm's customers.

answer

False

question

T or F: Net working capital includes

answer

stockholders' equity.

question

The number resulting when taxes are subtracted from earnings is the ____ income

answer

total

question

T or F: The money that owners invest in the business is called owners' equity.

answer

True

question

T or F: Jan Woodring is considering investing in a business. To see the firm's financial position over a period of time, she should look at its balance sheet.

answer

True

question

T or F: Inventory is a relatively permanent asset that is intended for use in the business rather than for sale.

answer

False

question

Harvesting refers to

answer

exiting a business.

question

Matt Townsend owns a car dealership that is very profitable. Since he plans to retire in 5-10 years, Townsend has decided to retain ownership for now, but without continuing to grow the business. This change would also allow him to invest for retirement some of the cash that the business is now generating. Which of the following harvesting methods does this illustrate?

answer

A strategy to release the firm's free cash flows to the owners

question

Which of the following steps in the IPO process precedes the others?

answer

Audit the last three years of financial statements

question

The owner of a hardware store has agreed to sell his business to another local hardware store owner. The purchaser would likely be described as a sale to a ____ buyer.

answer

strategic

question

The sale of Linda Bush's company, SafeRent, Inc., to First American Corporation is an example of

answer

a sale to a strategic buyer.

question

Harvesting owners generally prefer ____ over ____.

answer

cash, stock

question

The value of a business is determined by

answer

what a buyer with the cash is prepared to pay.

question

Running a public company requires

answer

managing the firm toward a track record of successful performance.

question

T or F: Investors always think ahead about how to exit an enterprise, but the entrepreneur should not have this focus since the business will perform better if it is managed with day-to-day operations in mind.

answer

False

question

T or F: Most businesses with ESOPs are large, and eventually all of them become publicly traded.

answer

False

question

The mere fact that a firm is earning high rates of return on the firm's asset indicates that

answer

the firm is worth more as a going concern than as a dead one.

question

A leveraged buyout involves a high level of ____ financing.

answer

debt

question

Uncertainties accompanying an impending sale of a business often

answer

lead to lower employee morale.

question

After harvesting, many entrepreneurs experience conflicts that are ____ in nature.

answer

emotional

question

Which of the following is not one of the common harvest strategies used by small businesses?

answer

Inviting a friendly takeover

question

The different types of transactions involving small businesses are

answer

strategic, financial, and employee acquisitions.

question

T or F: One of the reasons for going public to raise equity capital is to create a liquid market for the company's stock.

answer

TRUE

question

T or F: Entrepreneurs frequently do not appreciate the difficulty of selling or exiting a business.

answer

True

question

T or F: The opportunity to exit a business is triggered by an interested seller.

answer

False

question

T or F: As in any exit strategy, the sale of a firm is solely about determining the value of a company.

answer

False

question

Buying an expensive set of underwear is most likely an attempt to satisfy which category of need?

answer

physiological

question

Attending a wedding is most likely an attempt to satisfy which category of need?

answer

social

question

Working out at the gym is most likely an attempt to satisfy which category of need?

answer

physiological

question

The basic ideas forming the foundation of customer loyalty for small firms include the notion that

answer

small firms possess great potential for providing superior customer service.

question

Divisions in society with different levels of social prestige are called

answer

social classes.

question

Erin Withers, a typical consumer, often purchases goods and services because she feels her family and fellow workers will approve of these items. Family and co-workers are ____ for this consumer.

answer

reference groups

question

Which of the following does not cause a customer to recognize a problem and desire a change?

answer

Using up the last tube of toothpaste

question

Which of the following is not a psychological influence?

answer

Culture

question

Long-term transactional relationships with customers are fostered by

answer

good information.

question

T or F: Long-term transactional relationships with customers are fostered by good information.

answer

True

question

T or F: Sales endeavors generate the second largest amount of customer contact.

answer

False

question

T or F: Mac McConnell, owner of the Artful Framer Gallery in Plantation, Florida. reworked his business based on the results of a survey showed that price was a top priority and quality was last. He added a low end line and made inexpensive framing his specialty.

answer

False

question

T or F: Customer profiles primarily reflect demographic variables such as age, gender, and marital status, but they can also include behavioral, psychological, and sociological information.

answer

True

question

T or F: Small businesses must strive to recognize cognitive dissonance among their customers and to manage it effectively.

answer

True

question

T or F: An evoked set is a group of brands that a consumer is aware of but unwilling to consider as a solution to a purchase problem.

answer

False

question

T or F: Post-purchase dissonance has been shown to be unrelated to customer satisfaction because it occurs after customers have satisfied their needs.

answer

False

question

T or F: Attitudes have an indirect impact on consumer behavior.

answer

False

question

T or F: Three classes of needs—social, psychological, and spiritual—cannot be connected to behavior through motivations.

answer

False

question

T or F: Buying or developing CRM software leads to higher customer retention.

answer

False

question

T or F: Customer satisfaction is all about providing extraordinary services to the buyer.

answer

False

question

The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is known as

answer

Price

question

A competitor would likely use a ____ pricing strategy for a gaming console intended to compete directly with Sony's Playstation gaming console.

answer

follow-the leader

question

Within the framework of a break-even analysis, an examination of ____ is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.

answer

costs and revenue

question

Clock Tickers, a small retailer of a quality alarm clock, sells its product for $180. If Clock Tickers adheres to pricing based on a 35% markup of cost, the firm's product costs are approximately

answer

$133

question

Gomez is pricing his products at a lower than normal, long-range market price in order to gain more rapid market acceptance. He is using a ____ strategy.

answer

penetration pricing

question

Which one of the following is not true with respect to pricing in a small business?

answer

Conducted properly, price determination is an exact science.

question

Benefits of credit to sellers include all of the following except

answer

sustaining long-term sales, even if these exceed the buying power of the customer.

question

Which of the following is true with respect to installment accounts?

answer

A down payment is normally required.

question

Handyman Hardware, a small community-based store, offers its consumers the option of using credit. Creditworthy individuals are able to use the "HH Credit Card" for all purchases up to a credit limit of $1,000. Consumers are required to pay at least 20 percent of their outstanding balance at the end of each month. A two percent finance charge is assessed on the unpaid balance at the end of each billing cycle. Handyman Hardware is employing ____ in its business.

answer

revolving charge accounts

question

How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5, net 30 on the net due date?

answer

$0

question

CarePair, a small business specializing in making and distributing hospital gowns to medical facilities, often sells its product on credit. The company maintains a ledger that divides accounts receivable into age categories based on the length of time they have been outstanding. Receivables 1-6 months old are deemed grade A (regular business); 7-12, grade B (overdue business); and 13-24, grade C (delinquent business); those accounts receivable over 24 months old are turned over to a collection agency. CarePair is relying on ____ to keep track of accounts receivable.

answer

an aging schedule

question

All of the following are acceptable options available to entrepreneurs attempting to collect delinquent accounts receivable except

answer

telephone calls to a customer's employer.

question

One of the primary purposes of the federal Consumer Credit Protection Act is to

answer

require creditors to specify how finance charges are computed.

question

Which of the following is a retailer credit card?

answer

Sears card

question

In general, products that are consumed in different amounts have

answer

elastic demand.

question

T or F: Markups may be expressed as a percentage of either the firm's cost or the industry-standard cost.

answer

True

question

T or F: Trade credit is extended by businesses to consumers purchasing large volumes of products.

answer

False

question

In the Video "Profit Vs. Margin", what was the common mistake discussed by the contractor?

answer

His numerator, the number on top, should have been the the total Price

question

The "spending as much as the competition" method

answer

can be used to duplicate the promotional efforts of close competitors.

question

Mary White, a sales representative for a small cleaning business, asks current customers for names of friends, customers, and other businesses that might be interested in the company's cleaning services. White is relying on ____ to identify potential customers.

answer

personal refferals

question

Telephone calls and mail surveys are examples of

answer

marketer-initiated contacts

question

Aaron Michels, a corporate account salesperson for Software Etc., is conducting a sales presentation for a potential new customer. Following the presentation, the prospective client states that her firm already uses a competing product. Intuitively, Mr. Michels replies, "In that case, I'm certain that you are now ready to upgrade to the best product available." Mr. Michels's response is an example of using

answer

the boomerang technique.

question

Which of the following is not one of the services ad agencies provide? -Furnishing design and artwork - Evaluating the effectiveness of different advertising appeals -Analyzing the balance of a firm's marketing mix -Advising on sales promotions

answer

Analyzing the balance of a firm's marketing mix

question

Which of the following is one of the basic promotional methods?

answer

Advertising

question

One of the ways that a company can promote its online business is by

answer

making sure that the Web site is accessed by Internet search engines.

question

John Frye, a small business manager, is interested in creating more company goodwill. Which of the following promotional tools should he use?

answer

Specialties

question

The "lasting medium" is a term that refers to which of the following?

answer

Specialties

question

Promotional funds are determined according to past experience in which of the following methods?

answer

Percentage of sales

question

Which of the following is not one of the three traditional categories of Promotion?

answer

Argumentation

question

Of the following advertising mediums, which is considered to have a high pass-along rate?

answer

Magazines

question

Which of the following is not one of the techniques for responding to customers objections?

answer

Clutter Hachette Method

question

The major problem with the ____ method of determining promotional expenditures is the tendency to spend more when sales are increasing and less when they are declining.

answer

precantage of sales

question

T or F: The way small businesses communicate with their customers is completely different from the way family members communicate with one another.

answer

False

question

T or F: Inquiries by a potential customer that do not lead to a sale can still create what is known as a "promising prospect.

answer

False

question

T or F: In relationship selling, a salesperson must exhibit professional etiquette in all contacts with customers, since this will determine the success of the sale.

answer

False

question

T or F: Straight salaries are best for motivating salespeople because of the financial security salaries provide.

answer

False

question

T or F: Institutional advertising is primarily concerned with a company and its reputation

answer

True

question

T or F: Only institutions such as universities use institutional advertising.

answer

False

question

Which of the following is not a constraint on management in small firms?

answer

Bureaucratic red tape

question

Stage 1 in the growth of a business is characterized by

answer

one-person operation

question

Barry Ramirez demands that his employees immediately comply with his orders. His leadership style is typical of ____ leaders.

answer

coercive

question

A new business has been launched with four employees who work for the entrepreneur-owner. As the owner contemplates growth in sales and personnel, she realizes that the next step of growth will involve the special problem of

answer

intermediate supervision.

question

Controlling is the managerial function that involves the manager's

answer

keeping track of performance and investigating when results are out of line.

question

A budget is an example of a

answer

A short-range plan

question

The best feature of an organizational structure that evolves naturally is its

answer

practicality.

question

In a line-and-staff organization, which of the following is a staff activity?

answer

Human resource management

question

The number of subordinates reporting to one superior constitutes that manager's

answer

span of control

question

SCORE refers to

answer

a group of retired executives who act as consultants to small firms.

question

The process of developing and engaging in mutually beneficial relationships with peers is

answer

networking

question

Which of the following is the first stage of a small business?

answer

one-person operation

question

Which is not a typical constraint placed on managers?

answer

Ample marketing budget

question

If Fran Fishburn, who runs a wholesale flower business, successfully creates properly functioning self-managed teams among her employees, her supervisors

answer

will likely become fewer in number.

question

T or F: Entrepreneurs who follow a win-win strategy are taking an approach that ensures that their own firm will achieve the outcomes that are best for their own firm.

answer

False

question

T or F: Developing a plan for the firm helps the entrepreneur to think through the issues faced by the firm as well as providing a focus for the firm.

answer

True

question

T or F: In his study of the origin and evolution of new businesses, Amar V. Bhide found that entrepreneurs play different roles in starting businesses than they play in building what he calls long-lived firms.

answer

True

question

T or F: If staff specialists begin to give orders instead of being helpers, they destroy the unity of command.

answer

True

question

T or F: Stewardship delegation focuses on results in judging the performance of a subordinate in carrying out assigned tasks.

answer

True

question

T or F: The early growth stages of a new business involve significantly less change than that which occurs during the growth of a relative mature business.

answer

False

question

Excess cash should be

answer

Invested

question

The life cycle of receivables begins with which of the following stages?

answer

A credit sale

question

When a business sells its accounts receivable to a finance company, this is called

answer

factoring

question

Inventory is called an "evil" because it

answer

ties up funds that are not actively productive.

question

Assuming that cash is available, payment for an account payable with terms of 3/10, net 30 should be made on day

answer

10

question

Which of the following questions do all types of capital budgeting techniques try to answer?

answer

Do the future benefits from the investment exceed the cost of making the investment?

question

Long-term investments are the focus of

answer

capital budgeting.

question

Discounted cash flow techniques answer which of the following questions?

answer

How does the present value of future benefits from the investment compare to the investment outlay?

question

The question "How many dollars in average profits are generated per dollar of average investment?" is answered using

answer

accounting return on investment.

question

Failure to recognize the time value of money is a weakness of

answer

the accounting return on investment technique.

question

Discounted cash flow (DCF) techniques compare the present value of future cash flows with

answer

the investment outlay.

question

The cash budget

answer

is concerned with dollars received and paid out.

question

Cash deposits during a month less checks written during the same period equal

answer

net cash flow.

question

T or F:Accounts receivable are sometimes called near cash because they can be converted to cash whenever a business needs to do so.

answer

False

question

T or F: Improperly managed stockpiling is harmful to cash flow and should be minimized if possible.

answer

True

question

T or F The accounting return on investment technique reveals how many dollars in average profits are generated per dollar of investment

answer

True

question

T or F: The date on which accounts receivable are collected affects the working-capital cycle.

answer

True

question

Failure to take cash discounts from suppliers

answer

typically makes a big difference to a firm's financial well-being, since a business pays a high rate for use of a supplier's money

question

T or F: The payback period technique measures how long it will take to recover the initial cash outlay of an investment.

answer

True

question

T or F: Net profit is the difference between cash inflows and outflows.

answer

False

Small Business Chapters 9-18, 22 – Flashcards

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