1) Entrepreneurial education:

 

 

 

a. more courses are being offered in entrepreneurship

 

 

 

b. has become extremely popular

 

 

 

c. universities are not able to meet the demand

 

 

 

d. all of the above

 

 

 

2) Which of the following is not a common characteristic of entrepreneurs?

 

 

 

a. Desire for responsibility

 

 

 

b. High energy level

 

 

 

c. Preference for moderate risk

 

 

 

d. Business plan expertise

 

 

 

3) More businesses fail because of ________ than for any other reason.

 

 

 

a. poor choice of location

 

 

 

b. incompetent management

 

 

 

c. insufficient capital

 

 

 

d. theft by employees

 

 

 

4) The location of the business is especially important for what type of start-up businesses?

 

a. service

b. manufacturing

c. retail

d. computer-based service

 

 

 

5) The key ingredient—the crucial element—to avoiding the failure of a new business is:

 

 

 

a. technical expertise regarding the product

 

 

 

b. the business plan

 

 

 

c. knowing the business

d. differentiating the business and product from the competitionUnit 1 Examination 41 BAM 418 – Small Business Management

 

 

 

 

6) A knowledge based business economy favors small business because:

 

 

 

a. information technology is driving cost of managing and transmitting knowledge lower

 

 

 

b. small businesses are more successful

 

 

 

c. the cost of managing and transmitting knowledge is very low

 

 

 

d. Both A and C

 

 

 

7) “Copreneurs” are:

 

 

 

a. business magazines targeted towards entrepreneurs

 

 

 

b. entrepreneurial couples who work together as co-owners of their business

 

 

 

c. personality traits of entrepreneurs

 

 

 

d. none of the above

 

 

 

8) The most important change due to expansion occurs in:

 

 

 

a. organizational structure

 

 

 

b. personnel assignments

 

 

 

c. managerial expertise

 

 

 

d. inventory and financial control procedures

 

 

 

9) Customer service, convenience, speed and quality are all examples of:

 

 

 

a. learning to manage people effectively

 

 

 

b. generating more revenue

 

 

 

c. setting your business apart from others

 

 

 

d. small businesses

 

 

 

10) How is the strategic planning process for small companies different from that for large

 

 

 

companies?

 

 

 

a. It should be conducted by top management and provided to lower management.

 

 

 

b. The process should be informal and not overly structured–”a shirtsleeve approach.”

 

 

 

c. The planning horizon should cover at least five years into the future.

 

 

 

d. The process should begin with setting objectives and conclude with competitive analysis.

 

 

 

11) 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 create it in cooperation with their employees.

d. They are able to communicate it and their enthusiasm for it to all those around them. Unit 1 Examination 42 BAM 418 – Small Business Management

 

 

 

 

12) ________ are relationships between a controllable variable—plant size, quality, packaging—

 

 

 

and a critical factor influencing the firm’s ability to compete in the marketplace.

 

 

 

a. Core competencies

 

 

 

b. Key success factors

 

 

 

c. Goals and objectives

 

 

 

d. The competitive advantages

 

 

 

13) A ________ strategy tends to be ideally suited to the small business.

 

 

 

a. product quality

 

 

 

b. cost leadership

 

 

 

c. focus

 

 

 

d. differentiation

 

 

 

14) The ________ is a set of measures unique to the company that gives managers a quick and

 

 

 

comprehensive view of how the business is doing and includes both financial and operational

 

 

 

factors.

 

 

 

a. key success factors

 

 

 

b. core competencies

 

 

 

c. balanced scorecard

 

 

 

d. action plan

 

 

 

15) The strategic management procedure for a small business should include the following

 

 

 

features:

 

 

 

a. encourage the participation of employees moderate

 

 

 

b. be informal and not overly structured difficult

 

 

 

c. use a relatively short planning horizon easy

 

 

 

d. all of the above

 

 

 

16) A partnership agreement sets how the partners will be compensated. Normally:

 

 

 

a. both general and limited partners are permitted salaries, but all silent or dormant partners

 

 

 

are compensated only by sharing in the profits.

 

 

 

b. partners are not entitled to salaries or wages, but are compensated by a share of the profits

 

 

 

of the business.

 

 

 

c. while the agreement establishes payout schedules, it does not spell out what constitutes

 

 

 

profit.

d. the general partner’s salary is set at 2 times the salaries of the limited partners. Unit 1 Examination 43 BAM 418 – Small Business Management

 

 

 

 

17) The limited liability company is most like a/an:

 

 

 

a. S-corporation

 

 

 

b. master partnership

 

 

 

c. sole proprietorship

 

 

 

d. general partnership

 

 

 

18) Which of the following is true about choosing a limited liability company form of ownership?

 

 

 

a. It is inexpensive, easy to form, and covered by little regulation due to its newness.

 

 

 

b. It has no disadvantages except its newness.

 

 

 

c. It’s an excellent conversion vehicle for existing businesses that are suffering from double

 

 

 

taxation but problematic for sole proprietorships.

 

 

 

d. It is ideal for a new company but difficult to convert to with an existing company.

 

 

 

19) ________ partners are not active in a business but generally are known to be members of the

 

 

 

partnership.

 

 

 

a. Silent

 

 

 

b. Limited

 

 

 

c. General

 

 

 

d. Dormant

 

 

 

20) Shares the corporation itself owns are called:

 

 

 

a. preferred stock

 

 

 

b. common stock

 

 

 

c. treasury stock

 

 

 

d. bonds

 

 

 

21) In franchising, the reputation of the franchiser is dependent on:

 

 

 

a. the quality of the goods and services provided

 

 

 

b. the brand name recognition and appeal

 

 

 

c. their locations and popularity with the local customer

 

 

 

d. the rate of growth and the number of national outlets

 

 

 

22) When it comes to purchasing products, equipment, etc., the franchiser:

 

 

 

a. is permitted to set the retail price for the franchisee

 

 

 

b. cannot require franchisees to buy from an “approved” supplier

 

 

 

c. can set prices paid for the products, etc., but cannot set the retail price the franchisee

 

 

 

charges

d. cannot require the franchisees buy from the franchise company Unit 1 Examination 44 BAM 418 – Small Business Management

 

 

 

 

23) Typically, the franchiser controls are very tight on what the franchisee:

 

 

 

a. sets in terms of retail pricing and hours of operation.

 

 

 

b. does in terms of who they hire as employees.

 

 

 

c. sales in terms of the product or service they offer.

 

 

 

d. does with his/her net profits after fees and taxes are paid.

 

 

 

24) The Uniform Franchise Offering Circular:

 

 

 

a. requires the release of a detailed earnings projection.

 

 

 

b. includes 23 major topics in its disclosure statement.

 

 

 

c. was developed in 1946 in the State of California.

 

 

 

d. is only necessary in the 33 states that do not have their own franchise disclosure laws.

 

 

 

25) ________ is when owners of independent businesses become franchisees to gain the advantage

 

 

 

of name recognition.

 

 

 

a. Master franchising

 

 

 

b. Multiple-unit franchising

 

 

 

c. Combination franchising

 

 

 

d. Conversion franchising