Chapter 6 Practice Quiz Essay

question

A business plan is a written document that summarizes the ________.
answer

proposed business venture, goals, and plans for achieving those goals
question

A company that licenses elements of its business system to other companies is called a ________.
answer

franchisor
question

A company’s ________ defines how it will generate revenue and produce a profit.
answer

business model
question

A corporation’s first offering of shares of stock to the public is called ________.
answer

an initial public offering (IPO)
question

Andy, an entrepreneur, plans to open a bakery in his neighborhood. He realizes that there are no branded bakeries in the locality, even though there are a number of independent bakeries. He approaches Soft Bakes, an international bakery chain, and signs an agreement with them that gives him the right to open a bakery shop that uses Soft Bakes’ name and management methods. In this scenario, which of the following business methods does Andy use?
answer

business-format franchise
question

Compared to starting a new business, buying an existing business can involve more work and more risk. True or False
answer

False
question

Investors who provide money to finance new businesses or turnarounds in exchange for a portion of ownership, with the objective of reselling the business at a profit are called ________.
answer

venture capitalists
question

Money used or needed to set up a new business is ________.
answer

seed money
question

One of the general characteristics of a small business is that it typically sells fewer products ________.
answer

to fewer market segments
question

________ provide a small business with a wide array of support resources and services during its early growth phase.
answer

Business incubators
question

The failure rate of new businesses is usually high during the first year. True or False
answer

True
question

A business plan summarizes the proposed business venture, goals, and plans for achieving those goals. True or False
answer

True
question

Small companies tend to differ from large ones because ________.
answer

they can react to market changes and make decisions more quickly than larger companies
question

Three factors contributing to the increased number of small businesses are technologies such as e-commerce, growing diversity in entrepreneurship, and ________.
answer

downsizing and outsourcing
question

Well-known examples of ________ include Taco Bell, Pizza Hut, The UPS Store, and Curves fitness centers.
answer

business franchises

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