Etr401 Full

CHAPTER 1
Multiple Choice Questions
21. (p. 4) According
to the text, small business involves _____ people and has its owner
managing the business on a day-to-day basis.
A. 100-200
B. 1-50
C. between 200 to 500
D. at least 500
22. (p. 4) Identify the two hurdles that people need to overcome to move from thinking about
owning their own business to achieving it.
A. Moving from inaction to action and taking the right action.
B. Financing the business and government regulation.
C. Experience from large corporations for needed skill sets and organization abilities.
D. Family support and finding the right people for the organization.
23. (p. 5) According to the Small Business Administration, about _____ of new firms with
employees survive four years, and for owner-only firms this rate is _____ percent surviving
four years.
A. one-fourth; 30
B. one-half; 75
C. two-thirds; 50
D. two-fifths; 60
24. (p. 5) A facility which offers subsidized space and business advice to companies in their
earliest stages of operation is called a(n)
A. small business administration center.
B. franchise.
C. small business development center.
D. incubator.
25. (p. 5) What percent of firms getting help in incubators were still going at four years?
A. 50
B. 81
C. 66
D. 87
26. (p. 5) _____ are the offices co-sponsored by states and the federal government, that offer
free or low-cost help to existing and potential small businesses.
A. Small Business Development Centers
B. Small Business Administration Offices
C. Research and Outreach Services
D. Occupational structures
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27. (p. 5) The U.S. government agency that helps people start business is the
A. Small Business Administration.
B. U.S. Department of Business Development.
C. Department of Business Development.
D. U.S. Entrepreneurial Administration.
28. (p. 5) The Small Business Administration categorizes a business in the U.S. as small, if it

has fewer than _____ employees.
A. 50
B. 500
C. 300
D. 1,000
29. (p. 5) Among SMEs, medium enterprises have _____ people.

A. 51-500
B. 251-500
C. 1-50
D. 1-20
30. (p. 5) A business owned by an individual or small group is referred to as a(n)

A. franchise.
B. incubator.
C. team-dependent business.
D. independent small business.
31. (p. 5) _____ refers to constant or at least daily management of a business by its owner.

A. Franchise.
B. Licensing
C. Franchising
D. Owner-management
32. (p. 5) A(n) _____ is one who profits from a business but is not involved in its day-to-day
operations.
A. incubator
B. absentee owner
C. owner-manager
D. franchisor
33. (p. 6) Truly entrepreneurial businesses are characterized by _____, in their products,

services, or business models.
A. novelty
B. imitation
C. experience
D. government subsidy
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34. (p. 6) Small businesses are
A. imitative in nature.
B. characterized by novelty.
C. described as being unique and distinctive.
D. prepackaged businesses you buy or lease from a franchisor.
35. (p. 6) A prepackaged business bought, rented, or leased from a company is called a(n)
A. incubator.
B. imitative firm.
C. franchise.
D. novelty.
36. (p. 6) A person who becomes an owner through inheriting or being given a stake in a family
business is called a(n)
A. founder.
B. manager.
C. heir.
D. buyer.
37. (p. 7) People starting high-growth ventures

A. require key market knowledge that focuses on their immediate marketplace and
communities.
B. focus on how to start small, with resources from the owner, family, and friends.
C. need to know how to seek and obtain external financing.
D. require a key type of knowledge of how to grow on the schedule set by and for the
purposes of the owner.
38. (p. 7) The key market knowledge for a small business

A. is to know how to seek and obtain external financing.
B. focuses on its immediate marketplace and communities.
C. is to know how to cash out through the sale of an initial public offering of stock or through
the sale of the company to a larger company.
D. focuses on the need to know how to dominate the market and grow dramatically and
quickly.
39. (p. 7) Which of the following is a characteristic of a small business?

A. Preferred funding source is other people's money
B. Focus is on efficiency
C. Approach to human resource is to professionalize
D. Delegation is essential
40. (p. 7) Which of the following is an attribute of a high-growth venture?

A. When the firm is in trouble, it cuts costs
B. Metastrategy is novelty
C. High-growth ventures grow when necessary
D. Delegation is difficult
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41. (p. 7) Identify the characteristic of a small business.
A. When the firm is in trouble, it focuses on selling more products/services
B. Approach to human resources is to professionalize
C. Focus is on effectiveness
D. Metastrategy is imitation
42. (p. 7) Identify the characteristic of a high-tech venture.

A. Owner's own money is the preferred funding source
B. Focus is on efficiency
C. Delegation is essential
D. Sales are more important than marketing
43. (p. 7) Which of the following refers to the eventual size of the market, which can range
from a small, local, or niche market to something used by millions or even billions?
A. Innovativeness
B. Mindshare
C. Potential for growth
D. Occupational structure
44. (p. 7) Rating firms high or low on innovativeness and potential for growth helps identify the
different types of businesses in what is called
A. Dynamic Capitalism Typology.
B. General Equilibrium Economics.
C. Creative destruction.
D. PICS Model of Entrepreneurship.
45. (p. 8) Identify the most numerous and widely available type of firm, ranging from low to
moderate levels of innovation and growth.
A. Resource constrained sector
B. Ambitious firm sector
C. Glamorous sector
D. Economic core sector
46. (p. 8) Why are small businesses considered the economic core of society?

A. They are high growth and high innovation firms.
B. They are made up of franchises and multisite firms, who are generally not very innovative,
but are designed for high levels of growth.
C. They have lots of innovative ideas but lack the funds to bring them to market.
D. They are the most numerous and most widely available type of firms.
47. (p. 8) According to the Dynamic Capitalism Typology, the glamorous: hào nhoáng sector
A. consists of firms with high growth and high innovation.
B. consists of the most numerous and most widely available type of firms.
C. consists of franchises and multisite firms, with low to moderate innovation and high levels
of growth.
D. consists of firms high in innovation but low in growth rate due to a lack of resources.
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48. (p. 8) Which of the following is an example of the glamorous sector?
A. Inventors
B. Fortune 500s
C. Small businesses
D. Franchises and multisite firms
49. (p. 8) All of the following relate to firms in the ambitious firm sector EXCEPT
A. they are mostly franchises and multisite firms.
B. they are characterized by low to moderate innovation.
C. they are made up of inventors and research and development firms.
D. they are designed for high levels of growth.
50. (p. 8) The resource constrained sector

A. are firms that have low to moderate levels of innovation and growth.
B. are high growth and high innovation firms.
C. are firms that have lots of innovative ideas but lack the funds to bring them to market.
D. are generally not very innovative, but are designed for high levels of growth.
51. (p. 8) All of the following are the popular reward types for small business owners EXCEPT
A. flexibility.
B. power.
C. income.
D. growth.
52. (p. 8) Which of the following is a reward that is rarely mentioned by entrepreneurs?

A. Building great wealth
B. Flexibility
C. Continuing a family tradition in business
D. Personal growth
53. (p. 8) _____ rewards are what people get from facing and beating or learning from
challenges.
A. Recognition
B. Flexibility
C. Income
D. Growth
54. (p. 9) These rewards refer to the money made from owning your own business.
A. Growth rewards
B. Flexibility rewards
C. Income rewards
D. Performance rewards
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55. (p. 9) For entrepreneurs, perhaps the most rapidly growing type of reward is _____
rewards.
A. recognition
B. flexibility
C. income
D. growth
56. (p. 9) The ability of business owners to structure life in the way that suits their needs best
refers to
A. flexibility rewards.
B. family rewards.
C. growth rewards.
D. wealth rewards.
57. (p. 10, 14) Which of the following is NOT a myth about small businesses?

A. There is not enough financing to start businesses.
B. You need to make something if you are going to make money.
C. You can never try again if you fail once.
D. There is no flexibility when you own your own business.
58. (p. 10) Funding invested for a share of a firm or given as loans or credit from family,
friends, and other businesses used to help start or grow a firm is known as
A. committed capital.
B. informal capital.
C. mezzanine capital.
D. formal social capital.
59. (p. 11) According to Sageworks, in 2008, amid a recession, which of the following

represented the most profitable industries for small businesses?
A. Manufacturing industries
B. Financial services
C. Service industries
D. Software industries
60. (p. 12) According to the BRIE model, in order to start a business, you need all of these
elements to come together EXCEPT
A. boundary.
B. resources.
C. intention.
D. experience.
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61. (p. 12) Which factor distinguishes a firm from the process of buying or selling or bartering
we all do occasionally?
A. Resources
B. Boundary
C. Intention
D. Exchange
62. (p. 12) A business name or government registration, a phone or e-mail address dedicated to

the business, or a specific location for the firm in a home, commercial space, or on the
Internet are examples of a(n)
A. exchange.
B. resource.
C. boundary.
D. intention.
63. (p. 13) Resources
A. include a business name or government registration.
B. refer to moving goods or service to others in exchange for money.
C. are the most frequently occurring element of the BRIE model.
D. include the product or service to be offered.
64. (p. 13) Which is the most frequently occurring element of the BRIE model?

A. Intention
B. Boundary
C. Exchange
D. Resources
65. (p. 13) The desire to start a business represents which element of the BRIE model?
A. Intention
B. Boundary
C. Exchange
D. Resources
66. (p. 14) The BRIE model can help an individual deal with one of the biggest hurdles in
starting a business, which is
A. getting resources.
B. being inactive.
C. setting boundaries.
D. making an exchange.
67. (p. 15) According to the latest statistics, small businesses have created _____ percent of the
new jobs.
A. 75
B. 25
C. 50
D. 95
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68. (p. 15) The sequence or organization of jobs and careers in the economy refers to
A. franchising.
B. creative destruction.
C. occupational structure.
D. incubators.
69. (p. 15) The way newly created goods, services, or firms can hurt existing goods, services,
or firms refers to
A. franchising.
B. creative destruction.
C. occupational structure.
D. incubators.
70. (p. 15) Mandarin is a restaurant which has opened recently. People from all over town flock
to Mandarin to find out how good it is. This gives a big boost to the restaurant's initial
business. But it causes the other restaurants in the area to lose business temporarily. The way
in which Mandarin hurts existing restaurants is an example of
A. creative destruction.
B. efficiency.
C. innovative disruption.
D. market penetration.
71. (p. 15) According to the U.S. Small Business Administration, small businesses generate

_____ the number of patents per employee than big businesses.
A. 13 to 14 times
B. about twice
C. 40 to 50 times
D. about half
72. (p. 18) A nation where the major forces for jobs, revenues and taxes come from farming or
extractive industries like forestry, mining, or oil production is a(n)
A. factor-driven economy.
B. efficiency-driven economy.
C. innovation-driven economy.
D. competency-driven economy.
73. (p. 18) A nation where industrialization is becoming the major force providing jobs,
revenues and taxes, and where minimizing costs while maximizing productivity is a major
goal is a(n)
A. factor-driven economy.
B. efficiency-driven economy.
C. innovation-driven economy.
D. dynamic-driven economy.
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74. (p. 18) Innovation-driven economies
A. are those where entrepreneurship becomes a key way to build the middle class.
B. are nations where industrialization is becoming the major force providing jobs, revenues
and taxes.
C. are focused on high-value-added manufacturing but are marked by a very large service
sector.
D. are those where entrepreneurship is essential to helping build personal wealth and break
the cycle of low-wage jobs.
75. (p. 18) Entrepreneurship levels in countries such as Germany, Israel, the Republic of Korea,

and the United States average the lowest of the
A. innovation-driven economies.
B. efficiency-driven economies.
C. factor-driven economies.
D. competency-driven economies.
76. (p. 19) Which of the following statements about virtual instant global entrepreneurship

(VIGE) is false?
A. VIGE depends on using Web sites like eBay for products to quickly establish a global
presence.
B. Many VIGE sites offer procedures, services, and Web page templates which incorporate
best practices for global trading.
C. The VIGE approach produces large numbers of smaller-scale exporters.
D. VIGE sites replace institutional procedures with personal contacts to help even the smallest
small businesses go global.
77. (p. 19) Which aspect of entrepreneurship refers to being in-tune with one's market?

A. Efficiency
B. Creation
C. Customer-focus
D. Growth
78. (p. 19) The form of entrepreneurship in which a person or group own their own for-profit
business is
A. independent entrepreneurship.
B. social entrepreneurship.
C. public entrepreneurship.
D. corporate entrepreneurship.
79. (p. 19) The entrepreneurial focus which refers to doing the most work with the fewest
resources is
A. innovation.
B. creation.
C. efficiency.
D. customer-focus.
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80. (p. 19) The entrepreneurial focus which looks at a new thing or a new way of doing things
is
A. customer-focus.
B. innovation.
C. creation.
D. efficiency.
81. (p. 20) Public entrepreneurship
A. focuses typically on customer-focus and innovation, bringing new products or services to
market, or opening up new markets to your firm.
B. involves creating new charitable and civic organizations which are financially self-
sufficient.
C. requires all four elements, and that is what makes small business so important as the role
model for the other forms.
D. involves revitalizing government agencies, so it tends to focus on the customer-focus and
efficiency aspects of entrepreneurship.
82. (p. 20) Identify the type of entrepreneurship which concentrates typically on innovation and

customer-focus.
A. Public entrepreneurship
B. Corporate entrepreneurship
C. Independent entrepreneurship
D. Social entrepreneurship
83. (p. 20) Which of the following best describes a corporate form of entrepreneurship?

A. It is a form of entrepreneurship involving the creation of self-sustaining charitable and
civic organizations.
B. It is a form of entrepreneurship that involves revitalizing government agencies.
C. It is a form of entrepreneurship in which a person or group owns their own for-profit
business.
D. It is a form of entrepreneurship which takes place in existing businesses around new
products, services or markets.
84. (p. 20) Social entrepreneurship
A. involves creating new charitable and civic organizations which are financially self-
sufficient.
B. involves bringing new products or services to market.
C. involves a person or group who owns their own for-profit business.
D. involves revitalizing government agencies.
85. (p. 20) This is the degree of attention your target market pays to your idea or organization.
A. Efficiency
B. Identity
C. Mindshare
D. Growth
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86. (p. 5) Where can Jamie go to get some help with his business idea?
A. Small Business Development Center
B. U.S. Department of Commerce office
C. Incubator
D. Small Business Administration Center
87. (p. 6) If Jamie gets "For Kidz" up and running, he could be described as all of the following
EXCEPT
A. founder.
B. owner-manager.
C. independent small business.
D. franchisor.
88. (p. 7) Given that "For Kidz" will be a small business in a rural area, which of the following
characteristics would be true?
A. Its focus should be on effectiveness
B. The approach to human resources should be to professionalize
C. Metastrategy should be imitation
D. It should grow when possible
89. (p. 10, 14) Jamie should be aware that all of the following are myths about a small business
EXCEPT
A. there is not enough financing to start businesses.
B. you need to make something if you are going to make money.
C. you can never try again if you fail.
D. the biggest hurdle facing an individual considering a business opportunity is inaction.
90. (p. 12) In order to start "For Kidz" successfully, Jamie needs all of the following elements to
come together EXCEPT
A. boundary.
B. recruitment.
C. intention.
D. exchange.
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CHAPTER 2
21. (p. 28) Following the BRIE model in starting a business, the entrepreneur creates a
boundary within the environment, setting his firm apart from the rest of the environment. In
doing this, the entrepreneur gives the firm a(n)
A. identity.
B. bootstrap.
C. organizational culture.
D. network.
22. (p. 28) Using low-cost or free techniques to minimize your cost of doing business is known
as
A. caveat emptor.
B. sustainable entrepreneurship.
C. bootstrapping.
D. the billboard principle.
23. (p. 28) Which of the following is at the core of exchange in the BRIE model?

A. The boundary
B. The environment
C. Identity
D. Resources
24. (p. 29) The _____ of a firm consists of those people inside the boundary—the owner, any
employees, and any other owners or board members of the firm.
A. macroenvironment
B. external environment
C. operating environment
D. internal environment
25. (p. 29) Identify the set of shared beliefs, basic assumptions, or common accepted ways of
dealing with problems and challenges within a company that demonstrate how things get
done.
A. Trust
B. Modeling
C. Organizational culture
D. Social networking
26. (p. 29) When a small business is first getting started, there is a lot of flexibility in terms of
A. ethics.
B. finances.
C. government regulations.
D. roles and expected behaviors.
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27. (p. 30) Those parts of the environment that directly and consistently touch on the firm are
called the
A. task environment.
B. internal environment.
C. macroenvironment.
D. general environment.
28. (p. 30) Which of the following statements about the task environment is true?

A. The economic sector includes the trends and current conditions of the overall market for
goods and services.
B. This part of the environment is made up of those people the firm deals with every day, as
well as important groups you may deal with directly less often, but that are always on your
mind.
C. The technological sector includes innovation, invention, and modernization.
D. It is a part of the external environment made up of sectors of major forces that shape the
people and institutions, such as the economic sector or the demographic sector.
29. (p. 30) Which of the following would be a part of the task environment?

A. The owners
B. The political-legal sector
C. Environmental groups
D. Employees
30. (p. 30) A part of the external environment made up of sectors of major forces that shape
the people and institutions of the task and internal environments is the
A. general environment.
B. macroenvironment.
C. task environment.
D. internal environment.
31. (p. 30) Which of the following is an example of the general environment?

A. The government
B. The board of directors
C. The economic sector
D. Unions
32. (p. 30) The economic sector includes

A. trends in the mix of ages, races, and gender in society.
B. innovation, invention, and modernization.
C. the availability of equity and credit.
D. cultures often based on things such as nationality or religion.
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33. (p. 33) The general description for the processes and skills used in the management of a
firm's interactions with people, organizations and institutions outside of its boundary is
A. external relations.
B. community planning partnerships.
C. organizational culture.
D. utilitarianism.
34. (p. 33) According to the text, the goal of any small business owner is to
A. manage external relations in order to create social capital.
B. make sure the customer knows about the details of its products.
C. generate alternatives that could meet ethical, legal, and economic goals.
D. to keep track of social and business contacts.
35. (p. 33) All of the following are true of social capital EXCEPT

A. it includes characteristics like trust, consistency, and networks.
B. it can be accumulated or spent.
C. it is not associated with the concept of "goodwill."
D. it is capital in the same sense that cash or land can be.
36. (p. 33) Which of the following includes characteristics of a business, like trust,

consistency, and networks that help make business operations smooth and efficient?
A. Social capital
B. Universalism
C. Legitimacy
D. Utilitarianism
37. (p. 33) Which of the following statements about small businesses that are high in social
capital is false?
A. They are not given the benefit of the doubt when problems occur
B. They are more trusted
C. They are treated more fairly by regulators
D. They are checked up on less
38. (p. 33) The two ways to build social capital are through

A. consistency and visibility.
B. legitimacy and social networking.
C. culture and personal ethics.
D. individuals and teams.
39. (p. 33) _____ is the major component of "goodwill," and can be found on a business's

balance sheet.
A. Economic capital
B. Social capital
C. Cultural capital
D. Financial capital
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40. (p. 33) _____ means that a firm is worthy of consideration or doing business with because
of the impressions or opinions of customers, suppliers, investors, or competitors.
A. Visibility
B. Flexibility
C. Legitimacy
D. Modeling
41. (p. 33) Achieving _____ means building trust among customers and other key groups.
A. modeling
B. legitimacy
C. visibility
D. flexibility
42. (p. 33) The three general forms of legitimacy that you can develop are based on
A. products, people, and organization.
B. individuals, teams, and industry views.
C. universalism, utilitarianism, and the Golden Rule.
D. integration, distribution, and universalism.
43. (p. 34) Selling brand name merchandise or services is a people-based legitimate indicator

of
A. attire.
B. product/service name recognition.
C. business network membership.
D. organizational size.
44. (p. 34) Having well-known or well-regarded owners, employees, supporters, or

spokespeople is a people-based legitimate indicator of
A. public recognition.
B. goodwill.
C. business network membership.
D. service name recognition.
45. (p. 34) _____ refers to certification for having met a standard of quality that is consistently
evaluated around the world.
A. ANSI
B. Six Sigma
C. ISO
D. TQM
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46. (p. 34) The _____ is given by the U.S. Government to businesses and nonprofit
organizations that have been judged outstanding in quality leadership; strategic planning;
customer and market focus; measurement, analysis, and knowledge management; human
resource focus; process management; and results.
A. Economic Times Award
B. Ron Brown Award
C. Malcolm Baldrige National Quality Award
D. Deming Prize
47. (p. 34) Documentation and demonstration offered for products are product-based

legitimacy indicators of
A. customer assurance.
B. experiential supports.
C. customer service.
D. quality standards.
48. (p. 34) Which of the following is a product-based legitimacy indicator?

A. Organization size
B. Testimonials
C. Business network membership
D. Internet identity
49. (p. 34) Having trademarks, service marks, patents, or copyrights are product-based

A. certifications.
B. customer service.
C. intellectual property.
D. quality standards.
50. (p. 34) Setting technological or service standards adopted by competitors are product-based

A. quality standards.
B. certifications.
C. experiential supports.
D. industry leadership.
51. (p. 35) Which of the following is an organization-based legitimacy indicator?

A. Testimonials
B. Intellectual property
C. Legal form
D. Attire
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52. (p. 35) Which of the following legal forms of organization-based legitimacy indicators
would be the least legitimate?
A. Corporation
B. LLC
C. Sole proprietorship
D. Partnership
53. (p. 35) Following rules and orders, not swearing, and dressing appropriately would be
examples of which class of ethical standards?
A. Employees should be dependable organizational citizens
B. Employees should not do anything that will harm the organization
C. Employees should be good to customers
D. Employees should protect confidential information
54. (p. 36) Which of the following statements about legitimacy indicators is true?

A. Across the three types of legitimacy indicators, there are 15 characteristics.
B. Part of legitimacy and building trust comes from the consistency of a firm's actions over
time.
C. Most small businesses incorporate all the elements of the different types of legitimacy
indicators.
D. Changing the legitimacy characteristics daily does more to build social capital than
repeating one legitimacy characteristic stressed by the firm.
55. (p. 36) An entrepreneur's relationships and contacts with others is termed as

A. a social network.
B. visibility.
C. the Golden Rule.
D. mutuality.
56. (p. 37) The number one type of help sought by entrepreneurs from the PSED is
A. introduction.
B. information.
C. financial resources.
D. physical resources.
57. (p. 38) According to the text, what is the most important part of social networking that
would make a difference in how you would conduct business every day?
A. Asking for help when you need it
B. Respecting the other person's time
C. Respecting the other person's expertise
D. Being willing to reciprocate if asked
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58. (p. 38) The idea and action of each person helping another refers to
A. networking.
B. flexibility.
C. mutuality.
D. consistency.
59. (p. 38) Interacting with others in order to build relationships useful to a business refers to
A. networking.
B. flexibility.
C. mutuality.
D. consistency.
60. (p. 40) Which of the following is the largest online social networking site?

A. Facebook.com
B. MySpace.com
C. LinkedIn.com
D. Twitter.com
61. (p. 40) Which of the following is NOT a key to success in electronic networking?

A. Making it easy for people to contact you
B. Taking initiative to ask others on the network to link with you
C. Taking time to develop networks
D. Finding and linking up with network mavens
62. (p. 40) Electronic social networks

A. often have membership costs.
B. offer the all-important personal touch.
C. are usually fast and easy to develop.
D. offer the all-important local connections.
63. (p. 41) When faced with a crisis, what is the first step that a small business owner should
follow?
A. Get to the scene as soon as possible
B. Communicate facts you know
C. Appoint one person as the spokesperson
D. Admit you are in trouble
64. (p. 41) According to the gold standard for crisis leadership, all of the following are steps to
follow in a crisis EXCEPT
A. show caring and accountability.
B. have one person serve as the firm's spokesperson.
C. deal with the crisis quickly.
D. desegregate crisis management with the everyday management of the firm.
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65. (p. 41) To help small businesses with crisis planning, the federal government recommends
all of the following steps for preparing for disasters EXCEPT
A. plan to stay in business.
B. plan when the crisis arises.
C. talk to your people.
D. protect your investment.
66. (p. 41) _____ is an approach to operating a firm or a line of business which identifies,

creates and exploits opportunities to make a profit in a way that can minimize the depletion of
natural resources, maximize the use of a recycled material, or improve the environment.
A. Business entrepreneurship
B. Economic entrepreneurship
C. Sustainable entrepreneurship
D. Intrapreneurship
67. (p. 42) _____ is a certification standard from the U.S. Green Building Council for buildings
that are more environmentally friendly.
A. LEED
B. Green audit
C. ISO
D. BATNA
68. (p. 42) Green retailing is

A. is at the core of exchange in the BRIE model.
B. another term for sustainable entrepreneurship taken from the belief that green is the color
of a healthy environment.
C. minimizing waste and environmental degradation.
D. selling products that have a better environmental footprint.
69. (p. 42) A system of values that people consider in determining whether actions are right or
wrong is referred to as
A. organizational culture.
B. ethics.
C. trust.
D. modeling.
70. (p. 42) _____ occurs when a person's values are in conflict, making it unclear whether a
particular decision is the right thing to do.
A. Modeling
B. Social networking
C. Ethical dilemma
D. Mutuality
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71. (p. 42) Which of the following can occur when there are several different options for a
decision one has to make and the best choice is not clear?
A. Community impact
B. Lack of flexibility
C. Innovation
D. Ethical dilemma
72. (p. 42) Which of the following is a three-step process that helps people make better and
more ethical decisions?
A. First principles
B. Golden rules
C. Ethical decision-making
D. Mutuality development process
73. (p. 42) The first step of ethical decision-making is

A. creating options for action.
B. defining the moral problem.
C. conducting ethical tests.
D. obtaining employee approval on planning.
74. (p. 43) Which of the following is NOT a question in step one of ethical decision-making?

A. Who will be hurt, and how badly?
B. What do others owe you, if anything?
C. What regulations get broken, and how badly?
D. Who will benefit, and how much?
75. (p. 43) The question in step one of ethical decision-making, "What do you owe others?"
focuses on the _____ of people who make decisions.
A. mutuality
B. distributive view
C. integrative view
D. obligations
76. (p. 44) _____ means "let the buyer beware" is a philosophy sometimes used by businesses
to put the burden for consumer protection onto the customer.
A. Caveat emptor
B. Habeas corpus
C. Quid pro quo
D. Respondeat superior
77. (p. 44-45) Which of the following statements about caveat emptor is true?

A. Caveat emptor is often the first line of defense by producers of mediocre merchandise.
B. As a legal principle, the phrase "caveat emptor" has been routinely approved.
C. Using it as a defense puts the entrepreneur who uses it in a positive light.
D. If you find a business using caveat emptor as a principle, accept them.
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78. (p. 46) Which ethical model supports seeking the greatest good for the greatest number of
people?
A. Utilitarianism
B. The billboard principle
C. The Golden Rule
D. Universalism
79. (p. 46) An ethical model that suggests that there is a code of right and wrong that everyone
can see and follow refers to
A. the billboard principle.
B. universalism.
C. the Golden Rule.
D. utilitarianism.
80. (p. 46) Which of the following observations concerning the Golden Rule is NOT true?
A. It is an ethical model.
B. It suggests that you treat others in the same manner you wish to be treated.
C. Almost every major religious tradition in the world has some version of it.
D. It suggests that there is a code of right and wrong that everyone can see and follow.
81. (p. 46) An ethical model which suggests you treat others in the manner you wish to be
treated refers to
A. the billboard principle.
B. universalism.
C. the Golden Rule.
D. utilitarianism.
82. (p. 46) "Would others think worse of you if they knew what you had done to resolve your
ethical dilemma?" This question is fundamental to which ethical model?
A. The billboard principle
B. Universalism
C. The Golden Rule
D. Utilitarianism
83. (p. 47) In a negotiation, _____ is the second-best outcome identified by the parties to help
clarify the value of achieving a successful negotiation.
A. caveat emptor
B. bootstrapping
C. LEED
D. BATNA
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84. (p. 47) Often, the alternative to negotiating together can be _____ if the amounts are small,
or undertaking legal action if the amounts warrant legal fees or the hassles of enforcing small
claims court decisions.
A. "holding a strike"
B. "lumping it"
C. seeking a new job
D. seeking results from higher authorities
85. (p. 48) The creation of something new or trying something for the first time refers to
A. personal ethics.
B. innovation.
C. universalism.
D. flexibility.
86. (p. 42) The situation that Amanda faces can be described as a(n)

A. mutuality.
B. ethical dilemma.
C. decadence.
D. discourse ethic.
87. (p. 46) If Amanda has tried many ways to think the situation through and still cannot
decide whether what she plans to do is ethical, she should explore the ethical model of _____
by asking herself whether she would be comfortable having her decision and name advertised
for the public to see.
A. the billboard principle
B. universalism
C. utilitarianism
D. the Golden Rule
88. (p. 42-43) Which of the following might help Amanda with her situation of inserting a
lower quality panel in the garage doors to remain profitable?
A. Consistency and visibility
B. Social obligations
C. People-based legitimacy
D. Ethical decision-making
89. (p. 46) If Amanda wants a solution that is the best thing for most people, she should explore
the ethical model of
A. universalism.
B. the Golden Rule.
C. utilitarianism.
D. the billboard principle.
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90. (p. 34) 'Durable Doors' is known for its high quality standards, exceptional personalized
customer service, and industry leadership. These are indicators of which type of legitimacy?
A. Product-based
B. Organization-based
C. People-based
D. Industry-based
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CHAPTER 3

21. (p. 58) A loner, often socially isolated, a hard worker, a fast learner, and a risk taker seeking
wealth represents the profile of a(n)
A. idea person.
B. classic entrepreneur.
C. managerial entrepreneur.
D. small business owner.
22. (p. 58) Unlike _____, _____ are actually risk-averse.

A. idea persons; classic entrepreneurs
B. managerial entrepreneurs; classic entrepreneurs
C. sales entrepreneurs; idea persons
D. classic entrepreneurs; small business owners
23. (p. 58) Like classic entrepreneurs, small business owners are all of the following EXCEPT
A. risk takers.
B. socially isolated.
C. often alone.
D. hard workers.
24. (p. 58) Idea people are not particularly driven by _____, but they are driven by _____.
A. greatness; great wealth
B. hard work; risk taking
C. great wealth; having their idea achieve greatness
D. fame; socialization
25. (p. 58) Which of the following personality types is often very risk-averse, preferring to build
wealth through careful planning and action?
A. Idea person
B. Small business owner
C. Managerial entrepreneur
D. Classic entrepreneur
26. (p. 58) All of the following observations are true of the salesperson type of entrepreneur
EXCEPT
A. they work hard.
B. they are very socially driven.
C. they use their networks to minimize risk.
D. they are most concerned with their wealth.
27. (p. 58) Which of the following personality types is more concerned with their social
standing and acceptance than their personal wealth?
A. Salesperson entrepreneur
B. Managerial entrepreneur
C. Classic entrepreneur
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D. Idea person
28. (p. 59) Identify the trait which all entrepreneurial personality types have in common.
A. Loneliness
B. Social isolation
C. Risk taking
D. Hard work
29. (p. 60) The forms of business-related expertise are called

A. competencies.
B. core processes.
C. personalities.
D. ethics.
30. (p. 62) The competency suggested by _____ relates to the organizational and business

processes of a firm.
A. intention
B. resource
C. exchange
D. boundary
31. (p. 62) There are certain fundamental activities that all businesses must perform, which are
called
A. engineering business functions.
B. basic business functions.
C. business accreditations.
D. key business functions.
32. (p. 62) Key business functions and industry-specific knowledge are parts of _____

competency.
A. resource
B. basic business
C. determination
D. opportunity
33. (p. 62) Getting organized and registered—which creates a boundary—is an example of

a(n)
A. financial activity.
B. operations activity.
C. human resources activity.
D. management activity.
34. (p. 62) The ability or skill of the entrepreneur at finding expendable components necessary

to the operation of the business such as time, information, location, financing, raw
materials, and expertise is called
A. basic business competencies.
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B. opportunity competencies.
C. resource competencies.
D. determination competencies.
35. (p. 62) The intention component of the BRIE model reflects _____ competencies.

A. basic business
B. opportunity
C. resource
D. determination
36. (p. 62) The energy and focus needed to bring a business into existence relates to which of
the following competencies?
A. Determination
B. Resource
C. Opportunity
D. Basic business
37. (p. 63) Which of the following deals with the actual process of exploring an opportunity
for profit?
A. Resource
B. Exchange
C. Intention
D. Boundary
38. (p. 63) Which of the following relates to the skills necessary to identify and exploit elements
of the business environment that can lead to profitable and sustainable business?
A. Determination competencies
B. Basic business competencies
C. Resource competencies
D. Opportunity competencies
39. (p. 63) For those businesses that do get started, the amount of _____ is what distinguishes
the more successful from the less successful firms.
A. effort
B. opportunities
C. subordination
D. expertise
40. (p. 63) _____ refers to the extent to which a firm meets or exceeds the standard business
practices of its industry.
A. Standard operating procedure
B. Organizational commitment
C. Professionalization
D. Intention
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41. (p. 63) Being asked if you want to supersize your order at a fast-food restaurant is an
example of
A. a key business function.
B. a resource competency.
C. a standard business practice.
D. industry-specific knowledge.
42. (p. 63) According to the text, there are three levels of professionalization. These are
A. low, medium, and high.
B. company, industry, and global.
C. personal, team, and organizational.
D. expert, specialized, and minimalized.
43. (p. 63) Expert businesses
A. are those which have owners who are passionate about one key business function.
B. are those where the entrepreneur does nearly everything in the simplest way possible.
C. usually lack good business procedures.
D. are those in which you notice everything seems to be done in the best way possible.
44. (p. 63) Which of the following relates to expert businesses?

A. The entrepreneur does nearly everything in the simplest way possible.
B. All the major functions of the firm follow standard business practices of the industry.
C. The founders are passionate about one or two of the key business functions.
D. They are satisfied if other activities are no worse than other businesses in their market.
45. (p. 63) Following certain "best practices" are typical of these types of businesses.

A. Specialized businesses
B. Expert businesses
C. Minimalized businesses
D. Factor businesses
46. (p. 63) _____ businesses have founders or owners who are passionate about one or two of
the key business functions, such as sales or operations.
A. Expert
B. Specialized
C. Minimalized
D. Global
47. (p. 63) The middle level of professionalization is called _____, where as opposed to a "best"

restaurant, there is probably a restaurant you know of with great food but so-so service.
A. specialized
B. minimalized
C. expertise
D. standard
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48. (p. 63) Which of the following does NOT hold true of the minimalized level of
professionalization?
A. The entrepreneur does nearly everything in the simplest way possible.
B. Usually, there is no systematic accounting.
C. Record keeping will vary between nonexistent and haphazard.
D. Inspires the highest levels of trust among customers.
49. (p. 63) At which of these levels of professionalization does the entrepreneur do nearly

everything in the simplest way possible?
A. Expert
B. Specialized
C. Minimalized
D. Global
50. (p. 64) Which of the following is NOT a typical career path for entrepreneurs?

A. Habitual entrepreneurship
B. Harvest entrepreneurship
C. Mature entrepreneurship
D. Spiral entrepreneurship
51. (p. 64) _____ entrepreneurs are owners for a lifetime, sometimes in one business, and
sometimes across several firms.
A. Habitual
B. Harvest
C. Growth
D. Spiral
52. (p. 64) The career goal of which entrepreneur is personal satisfaction first, income second?
A. Growth entrepreneurs
B. Harvest entrepreneurs
C. Occasional entrepreneurs
D. Habitual entrepreneurs
53. (p. 64) Which of the following holds true of habitual entrepreneurs?

A. Their goal is to work first in order to play later
B. Usually they have no succession plan
C. When they do retire, they tend to want to micromanage their successors
D. They work on a seasonal basis
54. (p. 64) What is the goal of growth entrepreneurs?

A. Personal satisfaction
B. Major success
C. Income
D. Work first in order to play later
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55. (p. 64-65) All of the following observations are true of growth entrepreneurs EXCEPT
A. their goal is to achieve major success.
B. they are interested in giving their firms strong balance sheets.
C. they are lifetime owners.
D. when they retire, they tend to want to micromanage their successors.
56. (p. 65) Which of the following are owners with an exit plan?

A. Growth entrepreneurs
B. Harvest entrepreneurs
D. Habitual entrepreneurs
57. (p. 65) Harvest entrepreneurs
A. are often wealthy, but largely unknown.
B. alternate periods of growth and stability which are determined by personal needs.
C. may scale down their ventures as they get older, but continue to work in their business.
D. are people who generally have another job that is their primary one.
58. (p. 65) As they age, these entrepreneurs' unspoken exit strategy is to let the time between
deals drag out.
A. Harvest entrepreneurs
B. Helical entrepreneurs
D. Growth entrepreneurs
59. (p. 65) _____ entrepreneurs alternate periods of growth and stability which are determined
by personal or family needs.
A. Occasional
B. Harvest
C. Spiral
D. Growth
60. (p. 65) Identify the strategy where the idea is to slow down when children are young and
push for growth when the children are older.
A. Spiral
B. Harvest
C. Growth
D. Habitual
61. (p. 65) A(n) _____ entrepreneur's typical end-game strategy involves scaling down the
business.
A. occasional
B. helical
C. harvest
D. growth
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62. (p. 65) _____ entrepreneurs are people who generally have another job that is their primary
one.
A. Harvest
B. Occasional
C. Helical
D. Spiral
63. (p. 65) These entrepreneurs are the classic part-time entrepreneurs, who might work on a
seasonal basis.
A. Habitual
B. Spiral
C. Growth
D. Occasional
64. (p. 65) Doing work on a seasonal basis such as doing taxes or making Christmas wreaths is
an example of
A. occasional entrepreneurship.
B. spiral entrepreneurship.
C. growth entrepreneurship.
D. habitual entrepreneurship.
65. (p. 66) Family owned and managed small businesses represent what percent of American
businesses?
A. 58
B. 25
C. 39
D. 72
66. (p. 66) Which of the following entrepreneurs employ about 58 percent of America's total

workforce?
A. Women entrepreneurs
B. Second career entrepreneurs
C. Family business owners
D. Minority entrepreneurs
67. (p. 66) All of the following are characteristics of a family-owned business EXCEPT

A. they are the only group that faces the challenge of access.
B. they are a major source of funds and personnel for new small businesses.
C. they are a self-perpetuating source for future small businesses.
D. a strong family bond can become a strong business culture.
68. (p. 66) Two challenges typical to family businesses are

A. motivation and nepotism.
B. leadership and finances.
C. succession and access.
D. role conflict and succession.
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69. (p. 66) What best describes the problem that arises when people have multiple
responsibilities and each makes different demands on them?
A. Role conflict
B. Succession
C. Leadership
D. Role ambiguity
70. (p. 66-67) Which of the following does not pertain to role conflict?

A. It describes the kind of problem that arises when people have multiple responsibilities
B. It is at its worst when people fail to recognize it
C. It causes a shortage of time
D. It is the process of intergenerational transfer of a business
71. (p. 67) For family business, the most effective approach for avoiding role conflict is
A. time management.
B. to avoid schedule overload.
C. to try and make decisions based on family necessities.
D. to keep family issues out of the business.
72. (p. 67) Only _____ of family-owned businesses survive beyond the first generation.

A. three-quarters
B. one-half
C. one-fourth
D. one-third
73. (p. 67) _____ refers to the process of intergenerational transfer of business.

A. Role conflict
B. Succession
C. Leadership
D. Access
74. (p. 68-69) Which of the following statements about a family council is false?

A. One way to maximize communication in the succession process is to create a family
council.
B. The main function of the family council is to be focused on running the business.
C. A family council includes family members with immediate interests in the business.
D. The meetings can be a good forum for grappling with issues like role expectations.
75. (p. 69) What is the key difference between a family council and a board of directors?
A. The board is focused on business-family relationships.
B. The board includes significant family membership.
C. The function of the family council is to keep the family involved.
D. Family councils should get professional advice at the start.
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76. (p. 69-70) Which of the following statements about entrepreneurial teams is false?
A. Most teams are nonfamily related
B. The majority of new businesses have a team of two or more co-owners
C. The trend is toward even more businesses being developed by teams of entrepreneurs
D. When family members start a business, they start with already knowing and trusting each
other
77. (p. 70) The two fastest growing minority groups represent the largest segments of minority
business owners. These are
A. Hispanics and Asians.
B. Hispanics and Africans.
C. Asians and Africans.
D. Asians and Pacific Islanders.
78. (p. 71) Identify the simplest form of discrimination.

A. Access
B. Role conflict
C. Set-asides
D. Collusion
79. (p. 71) When woman or minority-owned businesses are simply excluded from the

opportunities offered to firms owned by white males, it is called the challenge of
A. consistency.
B. access.
C. flexibility.
D. mutuality.
80. (p. 71) Access problems for women- and minority-owned small businesses crop up most
often as
A. differences in labeling.
B. discrimination in financing.
C. problems involved in business contacts.
D. the presence and absence of certain skills.
81. (p. 71) All of the following observations pertain to set-asides EXCEPT

A. they are government contracting funds.
B. they are earmarked for particular types of firms.
C. they focus on extra efforts to network.
D. they are a solution for access-based challenges.
1-32
82. (p. 71) Which of the following statements about certification for women- and minority-
owned small businesses is false?
A. Certification consists of an examination based acknowledgement that the firm is owned
and operated as specified.
B. Certification is for every women- or minority-owned small business.
C. For those businesses that qualify, certification provides a ready means of access to
opportunity and to networks of businesses and government agencies.
D. For corporations, certification is handled by organizations that are not affiliated with the
government or big business, such as the National Minority Supply and Diversity Council.
83. (p. 71) People who begin their business after having retired or resigned from work in
corporations at the age of 50 or later are called _____ entrepreneurs.
A. harvest
B. helical or spiral
C. late career
D. growth
84. (p. 72) Which of the following is NOT a challenge faced by second career entrepreneurs?

A. Adjusting to the entrepreneurial life
B. Reestablishing self-confidence
C. Keeping personal finances out of the business
D. Deciding whether to return to work
85. (p. 72) The key for managing the demanding life of the entrepreneur is to
A. list all your responsibilities as soon as you get them.
B. prioritize your tasks based on their importance to your business and their due date.
C. get advice from people in your line of business about the basic activities of the small
business.
D. perform all the business functions including sales, operations, accounting, finance, and
human resources yourself.
86. (p. 58) Being an idea person, Bart would not be driven by

A. great wealth.
B. hard work.
C. fame.
D. fast learning.
87. (p. 59) Being a contemporary classic entrepreneur, Brad would exhibit all of the following
traits EXCEPT being
A. a hard worker.
B. socially isolated.
C. an average income seeker.
D. a fast learner.
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88. (p. 64) Bart appears to express an interest in which of the following careers?
A. Habitual
B. Harvest
C. Spiral
D. Occasional
89. (p. 65) Brad appears to be leaning toward which of the following careers?

A. Habitual
B. Harvest
C. Spiral
D. Occasional
90. (p. 69) B&B Music can be described as a(n)

A. minority business.
B. entrepreneurial team.
C. second-career entrepreneurship.
D. expert business.
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CHAPTER 4
21. (p. 80) Which of the
following refers to searching and capturing new ideas that lead to
business opportunities?
A. Innovation
B. Entrepreneurial alertness
C. Opportunity recognition
D. Technology transfer
22. (p. 80) Researchers in the field of entrepreneurship and small business believe that

_____ behavior is the most basic and important entrepreneurial behavior.
A. opportunity recognition
B. idea networking
C. observational
D. question-seeking
23. (p. 81) A special set of observational and thinking skills that help entrepreneurs identify
good opportunities refers to
A. innovation.
B. opportunity recognition.
C. technology transfer.
D. entrepreneurial alertness.
24. (p. 81) All of the following pertain to entrepreneurial alertness EXCEPT

A. entrepreneurs have a special set of observational skills.
B. entrepreneurs have thinking skills that help them identify opportunities.
C. it is the ability to notice things that have been overlooked.
D. it involves launching a formal search for opportunities.
25. (p. 81) If an owner of a fast-food restaurant notices that customers are asking for
substitutions of healthier ingredients to food items, she may be motivated to contact her
suppliers to ask about getting new ingredients, changing the menu, and increasing the healthy
offerings on the menu to keep customers satisfied. This is an example of
A. creativity.
B. technology transfer.
C. innovation.
D. entrepreneurial alertness.
26. (p. 81) According to the PSED, a majority of entrepreneurs indicated that

A. the decision to start a business came first.
B. the business idea came first.
C. both idea and decision were simultaneous.
D. they have no recollection of what happened with business start-up.
1-35
27. (p. 81) Working for a very large organization in the tractor manufacturing industry, John
always heard complaints from customers about the parts and service aspect of the business.
Taking an early retirement, John started his small business to address the customer complaints
he had been hearing. Which of the following best describes the factor that led John to this
business idea?
A. A similar business
B. Chance
C. Work experience
D. Family and friends
28. (p. 81) You might see a business in an area that intrigues you because you learn that there is
a growing market for this business and you think of a way to expand on the opportunity.
Which of the following factors is considered the business idea behind this?
A. Serendipity
B. Personal interest
C. A similar business
D. Work experience
29. (p. 81-82) According to the text, all of the following factors lead business owners to their
business ideas EXCEPT
A. work experience.
B. government regulation.
C. serendipity.
D. family and friends.
30. (p. 82) When people find a way to turn their hobbies into successful businesses, which of
the following factors is considered as leading them to their business idea?
A. Family and friends
B. Education and expertise
C. Serendipity
D. Personal interest
31. (p. 82) When you happen to be at the right place at the right time resulting in a successful
business idea, which of the following factors can be said to be responsible?
C. Serendipity
32. (p. 83) Many owners of consulting companies took their own skills and launched businesses
by selling those skills to other companies who needed them. This is an example of which of
the following factors leading to business ideas?
B. Serendipity
C. Education and expertise
1-36
33. (p. 83) According to the entrepreneurs studied in PSED, which of the following factors was
the most frequently mentioned source that led to their business idea?
A. Discussion with potential investors
C. Family and friends
D. Work experience
34. (p. 83) One powerful but rarely used source of ideas is

A. family and friends.
B. work experiences.
C. existing customers.
D. government agencies.
35. (p. 83) A _____ is a legal agreement granting you rights to use a particular piece of
intellectual property.
A. caveat emptor
B. franchise
C. set-aside
D. license
36. (p. 84) The firm that obtains the rights to use a particular piece of intellectual property is
the
A. licensor.
B. licensee.
C. obligor.
D. assignor.
37. (p. 84) The person or organization which is offering the rights to use a particular piece of
intellectual property is the
A. consignee.
B. assignee.
C. licensor.
D. licensee.
38. (p. 84) _____ is a payment to a licensor based on the number or value of licensed items

sold.
A. Milestone payment
B. Lump sum payment
C. Royalty
D. An exclusive right
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39. (p. 84) Which of the following best describes a licensee?
A. It is a person or organization offering the rights to use a particular piece of intellectual
property.
B. It is a legal agreement granting rights to use a particular piece of intellectual property.
C. It is a person or firm obtaining the rights to use a particular piece of intellectual property.
D. It is a person or organization offering the rights to use any piece of intellectual property.
40. (p. 84) In a typical I 2 P analysis, this is a nontechnical description of the concept simple

enough for everyone to understand it.
A. What is the market and its size?
B. What is your product or idea?
C. Why will customers buy your product?
D. Who are the people behind the idea?
41. (p. 84) "Why might a cell phone that can play music MP3s be a better approach than a
dedicated MP3 player?" pertains to which of the following questions?
A. Is your product or idea innovative?
B. Why will customers buy your product?
C. Is your underlying technology unique?
D. Who are the people behind the idea?
42. (p. 84) This question looks at the specific individuals, groups, or organizations you would
approach first to buy your product or service.
A. Who are the people behind the idea?
B. Describe how you create value for your customers.
C. How would you define the best initial set of customers?
D. What marketplace need does your product address better than any other option?
43. (p. 84) Which of the following looks like the simplest question but is actually the hardest
one?
A. Is your underlying technology unique?
B. Who will buy your product?
C. What is your product or idea?
D. What is the market and its size?
44. (p. 84-85) Which of the following is NOT a focus while answering the eight questions in a
typical I 2 P analysis?
A. People
B. Product
C. Market
D. Intellectual property protection
1-38
45. (p. 85-86) "Beyond the start-up dollars that will be needed to buy any raw materials to make
the product or develop the service, what information, relationships, and degree of effort will
be needed to turn the idea into reality?" pertains to which of the following?
A. Is your product or idea innovative?
B. What resources are needed to take the idea and sell it to the customer?
C. Describe how you create value for your customers.
D. What marketplace need does your product address better than any other option?
46. (p. 87) "S" in the creativity tool SCAMPER stands for

A. strategize.
B. substitute.
C. submit.
D. solicit.
47. (p. 87) A feature that allows your customers to order directly from a Web site rather than
visiting your store is an example of
A. elimination.
B. adaptation.
C. magnification.
D. substitution.
48. (p. 87) Which of the following is an idea trigger for the "substitute" cue in SCAMPER?
A. What opportunities can you think of that come as a result of replacing something that
already exists?
B. What separate products, services, or whole businesses can you put together to create
another distinct business?
C. What could you adapt from other industries or fields to your business?
D. What could I make more noticeable or dramatic, or different in some way from my
competitors?
49. (p. 87) The idea trigger "What separate products, services, or whole businesses can you put
together to create another distinct business?" pertains to which cue in SCAMPER?
A. Substitute
B. Magnify
C. Adapt
D. Combine
50. (p. 87) _____ is a process of producing an idea or opportunity that is novel and useful,

frequently delivered from making connections among distinct ideas or opportunities.
A. Ethics
B. Creativity
C. Imitation
D. Flexibility
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51. (p. 87) When a bookstore starts to sell videos, music, and coffee as well, they are using
which element of SCAMPER?
A. Rearrange
B. Eliminate
C. Combine
D. Substitute
52. (p. 87) Which popular innovation strategy can be just as effective and much more likely in
the real world, than business opportunities that result from radical innovations?
A. Magnifying
B. Adapting
C. Eliminating
D. Rearranging
53. (p. 87) Looking at the concept of "Book-of-the-Week" from Borders, if Olive Garden starts

a "Pasta-of-the-Week", it would be an example of which element of SCAMPER?
A. Adapt
B. Magnify
C. Combine
D. Substitute
54. (p. 87) Rejecting existing ideas, and presenting a way to do things differently refers to

_____ strategy.
A. imitative
B. cost leadership
C. radical innovation
D. integration
55. (p. 88) The microchip industry was born when someone asked the question, "What if we
shrunk them?" This refers to which of the following cues?
A. Rearrange
B. Minimize
C. Put to other uses
D. Adapt
56. (p. 88) The idea trigger "Suppose you learned that all the traditional uses for your product
had disappeared and that you have trailer truckloads out back with tons of product. What
other uses might there be?" refers to which cue?
A. Substitute
B. Put to other uses
C. Eliminate
D. Rearrange
1-40
57. (p. 88) "M" in the creativity tool SCAMPER stands for
A. manage.
B. match.
C. market.
D. modify.
58. (p. 88) There is much a small business can do to create memorable images and advertising
for itself, and it does not need expensive television ads to do it. Which element of SCAMPER
is being referred to here?
A. Magnify
B. Substitute
C. Combine
D. Put to other use
59. (p. 88) When Crest toothpaste introduces "New and Improved" toothpaste, it is an example

of which element of SCAMPER?
A. Modify
B. Substitute
C. Rearrange
D. Eliminate
60. (p. 88) Which element of SCAMPER involves thinking of ways to generate a high number

of opportunities for a service beyond its traditional function?
A. Putting to other uses
B. Magnifying or modifying
C. Adapting
D. Combining
61. (p. 89) "What if people didn't have to leave their houses to go grocery shopping?" refers to
which cue?
A. Minimize
B. Reverse
C. Eliminate
D. Substitute
62. (p. 89) Using paradox to challenge old ways of thinking such as using stimulants to calm
hyperactive children refers to which of the following cues?
A. Minimize
B. Substitute
C. Reverse
D. Rearrange
1-41
63. (p. 89) Searching for opportunities that arise when you get rid of something or stop doing
something refers to
A. adapting.
B. eliminating.
C. rearranging.
D. modifying.
64. (p. 89) According to Graham Wallas, the creative thought includes which of the following
stages?
A. Industry survey
B. Elimination
C. Combination
D. Incubation
65. (p. 89) According to Graham Wallas, exploring the problem or opportunity in all directions

is called
A. illumination.
B. incubation.
C. preparation.
D. verification.
66. (p. 89) According to Graham Wallas, thinking about the problem or opportunity in a "not-

conscious" way is called
A. preparation.
B. verification.
C. illumination.
D. incubation.
67. (p. 89) The creative thought process, according to Graham Wallas, includes all of the
following stages EXCEPT
A. incubation.
B. illumination.
C. combination.
D. verification.
68. (p. 90) According to the text, all of the following are techniques that you can try as you
practice the business of innovation EXCEPT
A. read magazines and trade journals about your area.
B. have a "scan the environment" day.
C. redesign your work environment.
D. invite someone you have never included before to a meeting at which you are solving a
problem.
1-42
69. (p. 90-91) All of the following are major pitfalls that business owners can become victims
of when trying to become more innovative EXCEPT
A. judging ideas too quickly.
B. stopping with the first good idea.
C. obeying rules that do not exist.
D. getting the "bandits on the train."
70. (p. 91) You assume, as the business owner, that you need to do all the work, make all the
sales calls, and solve everybody's problems. This refers to which major pitfall that business
owners can become victim to when trying to become more innovative?
A. Obeying rules that do not exist
B. Judging ideas too quickly
C. Identifying the wrong problem
D. Getting the "bandits on the train."
71. (p. 91) An overall strategic approach in which the entrepreneur does more or less what
others are already doing refers to
A. imitative strategy.
B. innovative strategy.
C. incremental strategy.
D. status quo strategy.
72. (p. 91) This model has the entrepreneur assess whether the situation faced is one that is the
same as it has been traditionally or if it is changing.
A. Business process modeling
B. Opportunity identification process
C. Pilot test
D. Radical innovation strategy
73. (p. 91) Taking an idea and offering a way to do something slightly better than it is done
presently refers to
A. imitative strategy.
B. incremental strategy.
C. status quo strategy.
D. innovative strategy.
74. (p. 92) _____ means the extent to which the idea is viable and realistic, and the extent to
which you are aware of internal and external forces that could affect your business.
A. Flexibility
B. Consistency
C. Feasibility
D. Innovation
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75. (p. 92) According to PSED, start-up entrepreneurs feel most confident about which of the
following aspects?
A. Complying with local/state/federal regulations
B. Obtaining start-up capital
C. Obtaining a bank's help
D. Attracting employees
76. (p. 92) Feasibility studies consist of careful investigation of all the following areas

EXCEPT
A. product/service.
B. industry and market.
C. profitability.
D. idea generation.
77. (p. 92) What is the goal of a feasibility study?

A. To create additional value for customers through great products or services.
B. To get useful ideas out of creative employees that affect the business's bottom line.
C. To assess if an idea can be profitably brought to market.
D. To assess how well a preliminary run of a business works and what problems it might
have.
78. (p. 93) The business idea component of the feasibility study includes which of the following
aspects?
A. Stage of development
B. Competition
C. Market penetration
D. You, your firm, and your fit
79. (p. 93) The product/service component of the feasibility study should include which of the
following aspects?
A. Stage of development
B. Competition
D. Cost forecast
80. (p. 94) The industry and market component of the feasibility study should include which of
the following components?
A. Sales revenue forecast
B. The competition
C. Writing a business plan
D. Pricing
1-44
81. (p. 95) The financial projections component of the feasibility study includes all of the
following EXCEPT
A. pricing.
B. operating expenses.
C. insurance requirements.
D. cost forecasts.
82. (p. 95) The future action plan component of the feasibility study includes which of the
following elements?
A. Profitability
B. The competition
C. Legal restrictions and rights
D. Writing a business plan
83. (p. 96) What refers to a preliminary run of a business, sales effort, program, or Web site
with the goal of assessing how well the overall approach works and what problems it might
have?
A. Conversion rate
B. Pilot test
C. Incubation period
D. Commercialization
84. (p. 96) The measure of the number of visitors to your Web site who have actually made a
purchase from you is known as
A. eyeball rate.
B. frame rate.
C. conversion rate.
D. pilot testing.
85. (p. 98) _____ is at the heart of entrepreneurship, because every time people start a business
or become the owner of one, it is a new start and often a new experience for them.
A. Innovation
B. Leadership
C. Marketing
D. Teamwork
86. (p. 82-83) Which of the following factors can be attributed to Rashmi considering the

catering business idea?
A. A similar business
B. Serendipity
C. Work experience
D. Family and friends
1-45
87. (p. 84-86) In assessing the viability of the catering business idea, Rashmi should consider
all of the following questions EXCEPT
A. What regulations are supporting this idea?
B. How would you define the best initial set of customers?
C. What resources are needed to take the idea and sell it to the customer?
D. What is the market and its size?
88. (p. 88) Rashmi appears to be applying which element of the SCAMPER tool in her

cooking?
A. Modify
B. Substitute
C. Rearrange
D. Eliminate
89. (p. 90) All of the following are pitfalls that Rashmi should be careful to avoid succumbing
to EXCEPT
A. judging ideas too quickly.
B. stopping with the first good idea.
C. obeying rules that do not exist.
D. getting the "bandits on the train."
90. (p. 92) In conducting the feasibility study for the "Tastes of India" idea, Rashmi should
ensure a careful investigation of all of the following areas EXCEPT
A. product/service.
B. cultural diversity management.
C. profitability.
D. industry and market.
1-46
CHAPTER 5
21. (p. 120) Working at your business 35 hours a week or less is called

A. franchising.
B. full-time self-employment.
C. aggrandizing.
D. part-time self-employment.
22. (p. 120) Which of the following does NOT hold true of part-time self-employment?

A. It is a minor portion of all current entrepreneurship.
B. There is tremendous volatility as individuals jump in and out of self-employment quickly
and frequently.
C. It accounts for around half of small businesses in the United States.
D. It is the way most people start in entrepreneurship.
23. (p. 120) Full-time approaches include all of the following EXCEPT

A. buying or inheriting existing businesses.
B. stand retailing.
C. franchising.
D. opening a new full-time business.
24. (p. 120) Part-time businesses are important for which of the following reasons?

A. They are important and necessary for our global competitiveness.
B. Majority of new inventions have come from part-time self-employed businesses.
C. Part-time self-employment is the way most people start in entrepreneurship.
D. Part-time businesses provide the cheap labor for large businesses and full-time
entrepreneurs.
25. (p. 120) The frequency of business starts and stops is referred to as

A. volatility.: tính biến động
B. aggrandizing.
C. bootstrapping.
D. moonlighting.
26. (p. 120) Nowadays, the conventional wisdom is that if you are serious about starting a
business, you ought to start a business full time and prepare for it by
A. doing a business plan.
B. making bylaws.
C. doing a strategic plan.
D. creating an organizational chart.
1-47
27. (p. 120-121) Which of the following statements about a business plan is false?
A. A business plan enables you to look at every aspect of your business.
B. Business plans are important if you intend to ask others for expertise or financial
investments.
C. Estimates suggest that a business plan may take anywhere from 10 to 20 hours or more if
you are new to business.
D. If you are new to business and need to gain basic experience, you might want to obtain
other types of experience before writing a business plan.
28. (p. 121) Under which of the following situations might it make better sense to undertake a
part-time business first?
A. You are buying an existing business
B. You want to gain basic experience
C. You are opening a franchise
D. There is too much competition
29. (p. 121) All of the following are situations in which it might make better sense to undertake
a part-time business EXCEPT
A. when you are new to business and need to gain basic experience.
B. when you lack resources to pursue a full-scale business.
C. when there is a narrow window of opportunity.
D. when there is enough time and resources to get the entire business going.
30. (p. 121) _____ is/are probably the ultimate resource, and starting a business can tax it
heavily.
A. Family
B. Friends
C. Money
D. Time
31. (p. 121) In all of the following situations, it might make better sense to undertake a part-time
business EXCEPT when
A. there is a narrow window of opportunity.
B. you lack the resources for a full-scale business.
C. you want to gain basic experience.
D. you are buying an existing business.
32. (p. 121) In organizing your part-time small business start-up, which of the following is NOT
a key consideration?
A. Cost to start-up
B. Competition
C. Time to start-up
D. Permanence
1-48
33. (p. 122) Which of the following statements about the key considerations for part-time small
business start-ups is false?
A. You want a low cost of start-up, since you probably will not have a lot of money to invest.
B. The more time and energy you spend preparing for a small-scale part-time business, the
shorter it takes to make a profit.
C. In most cases, the cost to start-up and the time to market are closely related.
D. The fundamental idea of permanence is that customers want to know if the firm is likely to
be around for awhile, to provide customer service and future sales.
34. (p. 122) Which of the following U.S. industries had the most number of establishments in
2007?
A. Manufacturing
B. Wholesale
C. Construction
D. Professional services
35. (p. 123) All of the following are reasons for the large numbers of home-based businesses in
the United States EXCEPT
A. the idea that a customer knows where the entrepreneur lives can be a point in favor of
trusting in the potential permanence of the firm.
B. it is inexpensive, since you are already living somewhere.
C. they generally give customers the strongest sense of legitimacy.
D. you can get your business going where you live in a moment.
36. (p. 123) Government specifications for acceptable use of land and buildings in particular

areas are called
A. licensing laws.
B. public utility laws.
C. environmental laws.
D. zoning laws.
37. (p. 123) What is the greatest problem that home-based entrepreneurs face?

A. Zoning challenges
B. Gaining customers
C. Insurance problems
D. Delivering work
38. (p. 123) The limitations imposed on your property by your neighborhood group are known
as
A. pacts.
B. covenants.
C. volatilities.
D. aggrandizements.
1-49
39. (p. 124) Permission from a government organization to act differently than the laws state is
known as
A. a covenant.
B. volatility.
C. variance.
D. bootstrapping.
40. (p. 126) An Internet site designed to introduce and explain a business to others is known as
a(n)
A. e-commerce Web site.
B. portal Web site.
C. advocacy Web site.
D. informational Web site.
41. (p. 126) Products like music and cell phones are examples of the kind of goods we buy as
individuals. This type of e-commerce is called
A. business-to-business (B2B).
B. business-to-consumer (B2C).
C. consumer-to-consumer (C2C).
D. business-to-Internet (B2I).
42. (p. 126) In _____ sales, one firm sells to another firm.

A. business-to-business (B2B).
B. business-to-consumer (B2C).
C. consumer-to-consumer (C2C).
D. business-to-Internet (B2I).
43. (p. 126-127) Identify the correct statement about B2B.

A. For most of us, the B2B market is visible.
B. An example of a B2B transaction would be an individual buying a cell phone.
C. It involves electronically-facilitated transactions between consumers through a third party.
D. B2B e-commerce is larger than B2C e-commerce.
44. (p. 127) Identify the correct statement about a hosting package.

A. It should include at least 1 terabyte of traffic a month.
B. It should give you at least five Web pages of space to tell your story.
C. It should include at least two e-mail accounts using your domain name.
D. It should include an online Web site editor so you can make changes to your site without
buying Web-authoring software.
45. (p. 127) A Web page in which entries are posted in reverse chronological order is a
A. blog.
B. tweet.
C. search engine.
D. push service.
1-50
46. (p. 128) Identify the correct statement about RSS feeds.
A. All Web sites push content out to customers by using an RSS feed.
B. An RSS feed sends whatever Web material you specify to subscribers to that feed.
C. RSS stands for "really simple sequence."
D. RSS feeds can be read only with special readers.
47. (p. 128) A listed, live connection to a different Web site, which in turn displays a similar link
to the first Web site is a(n)
A. sponsored link.
B. reciprocal link.
C. backlink.
D. incoming link.
48. (p. 133) Identify the correct statement about the eBay Web site.

A. The eBay method of auctioning means you pay a fee for posting your product and a sales
fee based on the final bid price when the item sells.
B. Most online transactions use a credit card or an online payment system like PayMate,
which is a division of eBay.
C. eBay does not allow buyers and sellers anonymity.
D. On eBay, you can list a single item for sale only by creating a Web site to support your
effort.
49. (p. 136) The party and door-to-door model represents which of the following part-time
business approaches?
A. Stand retailing
B. Consignment
C. Home retail
D. Mail order
50. (p. 136) Which of the following is also called multilevel marketing?

A. Network marketing
B. Auctioning
C. Catalog sales
D. Online marketing
51. (p. 136) _____ means getting the customer to agree to buy.

A. Opening
B. Promoting
C. Auctioning
D. Closing
52. (p. 136) Identify the statement that does not relate to home retail.

A. Low cost of setting up
B. Ability to do the work away from your home and employer
C. Provides a high steady income
D. Minimized potential conflicts
1-51
53. (p. 136) Which of the following is NOT an advantage of home businesses?
A. Speed and ease of setting up.
B. Low cost of getting started.
C. Ability to do the work away from your home and employer.
D. Always working "on the road" thereby enhancing productivity.
54. (p. 136) All of the following are disadvantages of home retailing EXCEPT

A. high cost of getting started.
B. always working "on the road."
C. lacking a base from which you can organize and work.
D. having a highly variable income.
55. (p. 136) The fundamental success factor in oor-to-ddoor selling is

A. closing the sale.
B. having a location with enough foot traffic.
C. approaching a "high-rent" district.
D. having a perishable product for sale.
56. (p. 136) An approach to selling in which the salesperson recruits customers to become

distributors of the products or services to others is called
A. consignment shop.
B. network marketing.
C. auctioning.
D. licensing.
57. (p. 137) One of the most ancient forms of small business is

A. stand retailing.
B. consignment.
C. mail order.
D. licensing.
58. (p. 137) Which of the following represents an advantage of stand retailing?

A. Variable income
B. Minimum startup investment
C. Steady income
D. Strong consumer base
59. (p. 137) _____ are often among the most expensive locations in the mall in terms of rent per
square foot.
A. Large anchor stores
B. Medium-sized boutique stores
C. Carts and kiosks
D. Food court stores
1-52
60. (p. 137) All of the following relate to "stand retail" EXCEPT
A. they tend to be either semipermanent ones or movable ones.
B. they need to be built in places where there is less traffic.
C. they can be quickly established.
D. they have a problem of building customer base.
61. (p. 137) The key success factor for a stand is

A. having a location where there is enough foot or vehicle traffic.
B. having a variable income.
C. having nonperishable sale items.
D. sharing with other businesses to minimize the high rent.
62. (p. 138) Retail stores in which customers can come and buy products placed in the shops by
a wide variety of sellers are called
A. licensed outlets.
B. franchised kiosks.
C. consignment shops.
D. auctions.
63. (p. 138-139) Which of the following does NOT hold true of consignment shops?

A. It promotes the popular way which is to give your product to someone else to sell.
B. They are retail stores in which customers can come and buy products placed in the shops
by a wide variety of sellers.
C. The shop's owner handles the sale and gets a portion of the money from the sale in return.
D. Many consignment shops have a maximum selling price for items.
64. (p. 139) Which of the following represents an advantage of a consignment approach?

A. Full-time sale with only a part-time involvement from you
B. High potential for competing offers
C. Amount of time before payout
D. Sellers' fees
65. (p. 139) Which of the following pertains to consignment shops?

A. They permit full-time sales with full-time involvement from you
B. They are high-risk level undertakings
C. They have low profitability because of seller fees
D. They have limited flexibility
66. (p. 139) Which of the following represents a disadvantage of a consignment approach?

A. Availability of different consignment stores and auctions
B. Long amount of time before payouts
C. Full-time sales with only a part-time involvement from you
D. High setup costs
1-53
67. (p. 139) Research indicates that most service and retail firms typically start out as a
A. losing venture.
B. franchise.
C. hobby.
D. self-employment business.
68. (p. 140) The key device for managing time for part-time business individuals is
A. the to-do list.
B. auctioning.
C. hiring employees.
D. outsourcing.
69. (p. 141) The two key groups outside your business with whom you must deal with as part-
time business owners are
A. the state and federal governments.
B. the government and customers.
C. customers and employees.
D. employees and investors.
70. (p. 141) _____ refers to information provided to the government concerning the existence

of, name of, nature of, and contact information for your business.
A. Zoning
B. Franchising
C. Registration
D. Bootstrapping
71. (p. 141) _____ is the documented permission from the government to run your business.
A. Bootstrapping
B. Delegation
C. Licensing
D. Zoning
72. (p. 142) All of the following are challenges of being a part-time entrepreneur EXCEPT

A. delegation and outsourcing.
B. ethical challenges.
C. moving from part-time to full-time entrepreneur.
D. the ability to make money to sustain the business.
73. (p. 142) The assignment of work to others over whom you have power refers to
A. delegation.
B. outsourcing.
C. licensing.
D. zoning.
1-54
74. (p. 142) Delegation does NOT make sense in which of the following situations?
A. When you want your business to operate in two places at once.
B. When trust is low and employees lack skills.
C. When you want your business to operate when you are not present.
D. When others can do things better than you.
75. (p. 142) Contracting with people or companies outside your business to do work for your
business refers to
A. moonlighting.
B. bootstrapping.
C. outsourcing.
D. licensing.
76. (p. 143) Which of the following is the most outsourced item by small businesses?

A. Payroll
B. Financial advice and management
C. Advertising and marketing
D. Legal issues
77. (p. 143) Finding a low-cost or no-cost way to do something is called

A. moonlighting.
B. bootstrapping.
C. outsourcing.
D. licensing.
78. (p. 144) All of the following are the key ideas of bootstrapping EXCEPT

A. cutting your personal and business expenses.
B. seeing if you can get things which you need for free.
C. seeing if you can substitute a lower-cost alternative before you buy.
D. borrowing heavily from banks while keeping your money untouched.
79. (p. 144) Ownership of a portion of a business is called

A. equity.
B. debt.
C. leverage.
D. cash flow.
80. (p. 144) Working on your own part-time business after your regular job is called
A. moonlighting.
B. bootstrapping.
C. outsourcing.
D. licensing.
1-55
81. (p. 146) All of the following are major concerns of moonlighting EXCEPT
A. conflict of interest.
B. bootstrapping.
C. cannibalizing sales.
D. poisoning the well.
82. (p. 146) _____ means taking business away from your employer.

A. Bootstrapping
B. Licensing
C. Cannibalizing
D. Aggrandizing
83. (p. 146) _____ refers to creating a negative impression among your employers' customers.

A. Bootstrapping
B. Cannibalizing
C. Aggrandizing
D. Poisoning the well
84. (p. 146) Attempting to make yourself seem more accomplished than reality refers to
A. aggrandizing.
B. poisoning the well.
C. moonlighting.
D. cannibalizing.
85. (p. 146) The most typical form of aggrandizement is

A. implying that a firm is a full-time one when it is only part time.
B. creating a negative impression among your employers' customers.
C. working on your own part-time business after your regular job.
D. finding a low-cost or no-cost way to do something.
86. (p. 120) Elizabeth can be described as a(n)

A. full-time self-employed.
B. franchisor.
C. absentee employee.
D. part-time self-employed.
87. (p. 137) "Light a Candle" can be described as

A. stand retailing.
B. mail ordering.
C. home retailing.
D. consignment retailing.
1-56
88. (p. 137) Elizabeth should know that the challenge or disadvantage of her choice of business
is the
A. difficulty in setting up.
B. cost of setting up.
C. variable income.
D. seller fees.
89. (p. 146) If Elizabeth starts to take days off from work to staff the kiosk at the flea market,
she may be facing
A. bootstrapping.
B. conflict of interests.
C. poisoning the well.
D. aggrandizing.
90. (p. 139) If Elizabeth wants to have a full-time sale with only part-time involvement, she
should consider
A. consignment stores.
B. home retailing.
C. bootstrapping.
D. stand retailing.
1-57
CHAPTER 6
21. (p. 154) Which of the following is NOT a path to full-time business ownership?
A. Franchising
B. Stand retailing
C. Starting a new business
D. Buying an existing business
22. (p. 154) A legal agreement that allows a business to be operated using the name and business
procedures of another firm is referred to as a
A. franchise.
B. license.
C. turnkey.
D. consignment.
23. (p. 154) A new business that is started from scratch is called a

A. buyout.
B. franchise.
C. start-up.
D. buy-in.
24. (p. 154) Purchases of existing businesses may occur through _____ in which the business is
bought over a period of time with money earned from the business.
A. turnkey
B. cash purchases
C. earn-outs
D. leveraged buyouts
25. (p. 154) _____ franchise is one in which every part of setting up the business is handled by
professionals.
A. Turnkey
B. Product or trade name
C. Single unit
D. Multi unit
26. (p. 155) Which of the following is an advantage of a start-up?

A. It begins with a clean slate
B. It has initial name recognition
C. It is easy to establish and provide positive cash flow
D. It has easy access to revolving credit
27. (p. 155) Which of the following is a disadvantage of a start-up?

A. It begins with a clean slate
B. Absence of "legacy" locations, buildings, and equipment
C. Absence of initial name recognition
D. Providing new products or services
1-58
28. (p. 155-156) All of the following are advantages of a start-up EXCEPT
A. the use of the most up-to-date technologies.
B. the access to revolving credit line.
C. it can be kept small deliberately to limit the magnitude of possible losses.
D. it has a clean slate.
29. (p. 155-156) All of the following are disadvantages of a start-up EXCEPT

A. absence of initial name recognition.
B. access to revolving credit line.
C. difficulty in financing.
D. it starts with a clean slate.
30. (p. 156) _____ refers to something the business owns that has economic value or is expected
to have economic value in the future.
A. Asset
B. Revolving credit
C. Cash flow
D. Synergy
31. (p. 156) A(n) _____ credit is a credit agreement that allows the borrower to pay all or part of
the balance at any time; as the loan balance is paid off, it becomes available to be borrowed
again.
A. revolving
B. installment
C. social
D. nonrevolving credit
32. (p. 156) Often the only competitive advantage for a "me-too" start-up is the

A. finance.
B. location.
C. marketing.
D. subsidy.
33. (p. 157) The specific concept that leads to a start-up business usually comes from the _____
of the person starting the business.
A. credentials
B. interests
C. education
D. experience
34. (p. 157) Research into the indicators of successful start-ups shows that one of the best
predictors of success is
A. the level of experience of the founders.
B. suggestions from friends and associates.
C. random events.
D. specific education courses.
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35. (p. 157) Doing all of the following things has been shown to be the most effective route to
success EXCEPT
A. starting a business in a business incubator.
B. securing outside investment.
C. taking part in a mentoring program.
D. starting with one founder.
36. (p. 157) A _____ is an organization that provides financial, technical, and managerial help to
start-up businesses.
A. business incubator
B. trade association
C. venture capital firm
D. consultancy
37. (p. 157-158) Which of the following statements about business incubators is false?

A. Incubator participants have individual office services, such as telephone answering, and
production and copying of documents.
B. They provide access to angel investors, public grants for seed money, and technology
support.
C. They are created to strengthen the local economy by helping create jobs through the
establishment of successful small businesses.
D. They aid in the commercialization of new technologies, the revitalization of distressed
neighborhoods, and the creation of wealth.
38. (p. 158) In _____, executive volunteers contribute their time and energy in assisting start-up
and struggling small businesses as a public service.
A. mentoring programs
B. trade associations
C. business incubators
D. franchising
39. (p. 158) The _____ phase is usually the most difficult time you will have in business.
A. start-up
B. work
C. growth
D. completion
40. (p. 158) When a small business start-up secures outside investment, one thing it

accomplishes is that
A. the business is critically examined by outsiders.
B. it brings the synergy from multiple founders.
C. the business produces a product or service for which there is a proven demand.
D. the founders take part in the mentoring program.
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41. (p. 159) A combination in which the whole is greater than the sum of its component parts
refers to
A. revolving credit.
B. synergy.: sức mạnh tổng hợp
C. microinventory.
D. spin-off.
42. (p. 159) Having multiple founders: nhiều người sang lập at a start-up is a key success
indicator for all of the following EXCEPT
A. providing a forum for examining ideas.
B. evaluating information.
C. dividing up the business risks and rewards.
D. making good business decisions.
43. (p. 159) The amount by which sales prices exceed product costs refers to
A. high margins.
B. synergy.
C. spin-off.
D. asset.
44. (p. 159) The single greatest hurdle to a successful start-up is

A. obtaining and maintaining mentoring relationships.
B. obtaining and maintaining sufficient cash.
C. hiring and retaining qualified employees.
D. procuring enough inventory for sale.
45. (p. 159) You can go about obtaining committed customers prior to start-up via all of the
following ways EXCEPT
A. starting a spin-off from your employer's business.
B. competing with your employer.
C. subcontracting services to your employer.
D. getting your employer's business into an incubator.
46. (p. 159) A business that is created by separating parts of an operating business into a

separate entity is called a
A. synergy.
B. franchise.
C. spin-off.
D. turnkey.
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47. (p. 159-160) All of the following holds true of creating spin-offs in businesses EXCEPT
A. it is a regular business practice that is done by big businesses at the initial stages of
business development.
B. they are created to get rid of "noncore" activities.
C. it is a business that is created by separating part of an operating business into a separate
entity.
D. some of them are created when the parent lacks either the interest or the resources to
pursue the opportunity.
48. (p. 161) In which way will working with a partner reduce the risk of a start-up?
A. Banks prefer partnered start-ups.
B. Federal government provides subsidies to partnering situations.
C. Partners may provide capital, equipment, or advice.
D. Partners eliminate the need to hire other employees.
49. (p. 161) Which of the following statements about home-based businesses is true?

A. Having a business based at home increases the cash flow requirements of a start-up
business.
B. From around 1960 to 1980, home-based businesses largely fell out of favor.
C. Because of the proximity of the business to the living area, no time is spent commuting
between home and office.
D. The U.S. Small Business Administration estimates that 93 percent of all businesses are
home-based, putting the number at around 15 million firms.
50. (p. 162) Which of the following is an advantage of buying an existing business?

A. It is easy to find an appropriate existing business for sale given the technology today.
B. Purchasing a business often requires less cash outlay than for creating a start-up.
C. Existing managers and employees embrace change due to continuing operations that
provide job security.
D. New technology needs are eliminated.
51. (p. 162) Which of the following is a disadvantage of purchasing an existing business?

A. Established customers leaving due to change.
B. Existing business processes being difficult to change.
C. Purchasing a business being significantly more expensive than a start-up.
D. Existing managers and employees resisting change.
52. (p. 164) Which of the following is an excellent way to find businesses for sale?

A. Yellow pages
B. Local community center
C. Networking
D. Universities
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53. (p. 165) The process of investigating a business to determine its value is called
A. synergy.
B. spin-off.
C. due diligence.
D. heuristics.
54. (p. 165) Identify the statement that is not a part of the steps which make up the process of
due diligence.
A. Conducting extensive interviews with the sellers of the business.
B. Making a personal examination of the site (or sites) of the business.
C. Interviewing customers and suppliers of the business.
D. Developing a brief business plan for the acquisition.
55. (p. 165) This is not a reason for obtaining a set of financial statements when a business is
acquired.
A. The seller usually has to gather financial information and incurs added cost and time in
providing them.
B. As a business person you are most likely familiar with financial statements and can extract
useful information from them.
C. Financial statements are accepted as representative of the business by bankers and
investors.
D. Financial statements are considered to be indicators of future business results.
56. (p. 165) Which of the following steps is NOT a part of due diligence?

A. Leveraging the contributions of the partner to provide faster growth.
B. Studying the financial reports and other records of the business.
C. Developing a detailed business plan for the acquisition.
D. Conducting extensive interviews with the sellers of the business.
57. (p. 165) Which of the following terms means "let the buyer beware"?

A. Caveat lector
B. Spin-off
C. Caveat emptor
D. Synergy
58. (p. 165) Which of the following is a primary goal of due diligence?

A. Finding any wrongdoing
B. Paying the top dollar for the business
C. Fulfilling all requirements for state regulations
D. Establishing yourself as a competitive threat
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59. (p. 165) Financial statements, in performing due diligence, should include all of the
following EXCEPT a(n)
A. balance sheet.
B. mission statement analysis.
C. income statement.
D. statement of cash flows.
60. (p. 165) Patents and trade secrets are examples of

A. ESOPs.
B. heuristics.
C. franchising.
D. intangible assets.
61. (p. 166) _____ are the cash flows that have been reduced in value because they are to be
received in the future.
A. Book value cash flows
B. Replacement value cash flows
C. Free cash flows
D. Discounted cash flows
62. (p. 166) _____ analysis is based on the concept that the longer you have to wait to receive
money, the less valuable it is right now.
A. Discounted cash flow
B. Replacement value cash flow
C. Free cash flow
D. Book value cash flow
63. (p. 166) The process of determining the net present value of an investment opportunity

requires all of the following EXCEPT
A. estimating the cash that must be invested.
B. estimating the cash that will be returned.
C. estimating the periods in the future in which cash inflows will occur.
D. estimating the cost of capital to the seller.
64. (p. 166) Which of the following statements about asset valuation methods is false?

A. Estimates do not consider the value of an ongoing firm over the value of its identifiable
assets.
B. They are based on the assumption that a business is worth the value of its assets minus the
value of any liabilities.
C. It is very difficult and time consuming to separately identify and estimate the values of all
the assets of a business.
D. The application of asset valuation methods to business valuation is similar to having an
annuity.
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65. (p. 166) The difference between original acquisition cost and the amount of accumulated
depreciation is called the
A. replacement value.
B. book value.
C. earnings multiple.
D. discounted cash flow.
66. (p. 166) All of the following are major problems with using book value EXCEPT
A. the original cost of an asset might bear no relation to its current value.
B. depreciation is an arbitrary, but nonsystematic, method of transferring asset value to
expense.
C. internally developed assets, such as patents, trademarks, and trade secrets do not have book
value.
D. Depreciation makes no attempt to measure actual loss of value of an asset.
67. (p. 167) The amount for which an asset would sell, less the costs of selling the asset is
called
A. book value.
B. replacement value.
C. net realizable value.
D. earnings multiple.
68. (p. 167) _____ is an estimate of what an identical asset would cost to be acquired and

readied for service.
A. Earnings multiple
B. Book value
C. Replacement value
D. Net realizable value
69. (p. 167) _____ of other firms in the same industry are commonly used to estimate the value
of a business. One major problem with this method is that no two firms are exactly alike.
A. Synergies
B. Comparable sales
C. Spin-offs
D. Industry heuristics
70. (p. 167) The ratio of the value of a firm to its annual earnings is called

A. unappropriated profit.
B. accumulated earnings.
C. retained earnings.
D. the earnings multiple.
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71. (p. 167) _____ are rules of thumb that are commonly used to estimate firm value in relation
to some easily observable characteristic of the business.
A. Synergies
B. Spin-offs
C. Book values
D. Heuristics
72. (p. 168) The price at which a buyer is indifferent about buying or not buying the business
is called
A. spin-off.
B. the point of indifference.
C. caveat emptor.
D. ESOP.
73. (p. 168) The purchase of substantially less than 100 percent of a business is called a

A. takeover.
B. buy-in.
C. spin-off.
D. buyout.
74. (p. 168) Seizing of control of a business by purchasing its stock to be able to select the

board of directors refers to
A. buy-in.
B. takeover.
C. merger.
D. heuristics.
75. (p. 168) The primary advantage to a buyout is

A. hands-off approach.
B. significantly less cost.
C. simplicity.
D. ESOP.
76. (p. 169) _____ are the only way a sole proprietorship may be purchased.

A. Buy-ins
B. Takeovers
C. Key resource acquisitions
D. Buyouts
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77. (p. 170) Identify the statement that is not essential for an agreement to constitute a
franchise.
A. The agreement does not require the franchisee to pay a fee for the right to enter into the
business.
B. The agreement grants the franchisee use of a brand name, trademark, service mark, logo, or
other commercial symbol which designates the franchisee as an affiliate of the franchisor.
C. The agreement provides that the franchisee may engage in business using a marketing plan
or system provided by the franchisor or proposed by the franchisee.
D. The agreement provides the franchisee with a legal right to engage in the business of
offering, selling, or distributing goods or services.
78. (p. 171) Which of the following statements determines the value of a franchise?

A. By the rights granted.
B. By the conditions and standards set.
C. By the operating permissions granted.
D. By the value of assets acquired.
79. (p. 171) This is an agreement that provides only the rights to use the franchisor's trade
name and/or trademarks.
A. Product distribution franchising
B. Trade name franchising
C. Conversion franchising
D. Business format franchising
80. (p. 171) Which of the following observations holds true of product distribution

franchising?
A. It provides the franchisee with specific brand named products, which are resold by the
franchisee in a specified territory.
B. It provides an organization through which independent businesses may combine resources.
C. It is an agreement that provides only the rights to use the franchisor's trade name and/or
trademarks.
D. It is an agreement that provides a complete business format.
81. (p. 171) _____ provides an organization through which independent businesses may

combine resources.
A. Product distribution franchising
B. Trade name franchising
C. Conversion franchising
D. Business format franchising
82. (p. 171) Which of the following are forms of franchising?

A. Trade name, product distribution, and business format.
B. Product, service, and mix-format.
C. Regional, local, and global.
D. Sole proprietorship, partnership, and corporation.
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83. (p. 174) Which of the following statements about family businesses succession is true?
A. Turning over management authority is not easy for most founders.
B. Fewer than 10 percent of family-owned businesses are successfully transferred to a second
generation.
C. It is easy for the heir of the founder to assume authority.
D. Fewer than 5 percent family-owned businesses succeed long enough to be inherited by the
third.
84. (p. 175) To avoid having the diversity of values, goals, and motivators from becoming the
source of such intrafamily strife, you and the other family business members should respect
one another's differences by all of the following ways EXCEPT
A. being certain that all family members know and accept that they are not forced to enter the
management of the business if they don't want to.
B. providing each member of the family business with the opportunity to obtain education and
experience outside the business.
C. allowing each family member who does wish to enter the business to find out and do those
functions and activities that he or she does best.
D. assuming that the leadership of the business must come from within the family.
85. (p. 176-177) Which of the following statements about the professional management of small

businesses is false?
A. If a business grows large enough, no matter how experienced a business owner is,
eventually the demands of managing will become too great to be handled alone.
B. As small businesses grow, the business starts to decline.
C. As small businesses grow, professional managers are hired to share the management load.
D. In terms of small business, professional management is an issue of education, titles, and
credentials.
86. (p. 154) Given that Tavanna has no inheritance possibility, all of the following are other
options you could offer her for full-time business EXCEPT
A. buying a business.
B. franchising.
C. consignment business.
D. starting a new business.
87. (p. 155) Which of the following would you offer Tavanna as an advantage for starting a
new business?
A. Initial name recognition
B. Clean slate
C. "Legacy" locations, buildings, and equipment
D. Accessibility to experienced managers and workers
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88. (p. 157) Based on what you have learned from this class, which of the following should
Tavanna NOT do to increase her chance of start-up success?
A. Getting a mentor
B. Securing outside investment
C. Building trust in her "story"
D. Starting her business without any other founders to avoid conflict
89. (p. 162) If Tavanna were to buy an existing business, which of the following disadvantages
should you point out?
A. Difficulty in determining the worth of the business.
B. Possibility of established customers leaving due to change.
C. Difficulty in changing existing business processes.
D. Buying a business being more expensive than starting one.
90. (p. 178) Tavanna brought with her a franchise business packet. She likes the idea but is
unsure what might be its disadvantage?
A. It is probably expensive and not profitable.
B. You give up control of marketing and operations.
C. You compete with the franchise company itself.
D. You receive no training and management support.
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CHAPTER 7
21. (p. 184) _____ is the idea and actions that explain how a firm will make its profits.
A. Strategy
B. Objective
C. Mission
D. Goal
22. (p. 184) Most small businesses are more _____ than _____.

A. cost-directed; profit-directed
B. imitative; innovative
C. customer-driven; employee-driven
D. innovative; imitative
23. (p. 184) The first step of the small business strategy planning process

A. involves performing a SWOT.
B. involves reviewing and confirming the prestrategy decisions that define your firm and your
goal for it.
C. is where you consider your customers and the benefits you want to offer them.
D. is to study the dynamics and trends of your industry.
24. (p. 184) The second step of the small business strategy planning process is considering with
_____
A. customers; benefits.
B. competitive advantage; value chain analysis.
C. prestrategy; VRIO analysis.
D. benefits; industry analysis.
25. (p. 184) The tool appropriate for the third step of the small business strategy process to study
the dynamics and trends of your industry is the
A. value chain analysis.
B. SWOT analysis.
C. VRIO analysis.
D. industry analysis.
26. (p. 184) The fourth step of the small business strategy planning process

A. is where you consider your customers and the benefits you want to offer them.
B. aims to refine your firm's capabilities in order to maintain a competitive advantage.
C. involves determining the best strategic direction and strategy for the firm.
D. is to study the dynamics and trends of your industry.
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27. (p. 186) Which of the following statements about supply shortages is true?
A. Supply shortages occur when a new product is in demand
B. The target audience is the mass market
C. This is a long-term market
D. The key benefits are lower costs and scale savings
28. (p. 186) Which of the following is a key benefit of customer contracting?

A. Delivery
B. Personalization
C. Organizational practices
D. Technology
29. (p. 186) Second sourcing
A. occurs when business firms leave a market.
B. occurs because many big businesses have policies that provide for set-asides for purchases
from small businesses.
C. offers the advantage of being globally based.
D. at its best provides a competitive pressure to keep both suppliers providing the best
service and prices.
30. (p. 186) When does market relinquishment occur?

A. When there are rule changes by the government
B. When business firms leave a market
C. When a customer is willing to sign a contract with a small business to ensure a product
D. When a new product is in demand
31. (p. 186) _____ occurs because government agencies, government-sponsored commercial

contracts, and many big businesses have policies that provide for quotas for purchases from
small businesses.
A. Second sourcing
B. Favored purchasing
C. Market relinquishment
D. Customer contracting
32. (p. 186) An opportunity that makes it possible for a new business to gain a foothold in a
market refers to
A. parallel competition.
B. incremental innovation.
C. entry wedge.
D. altruism.
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33. (p. 186-187) Which of the following, according to Vesper, is NOT an entry wedge specific to
small businesses pursuing an imitation strategy?
A. Customer contracting
B. Market relinquishment
C. Government rules
D. Product differentiation
34. (p. 187) What is the key benefit of rule changes by the government?

A. Place
B. Delivery
C. Quality
D. Technology
35. (p. 187) _____ is the general name for the line of products or services being sold.
A. Strategy
B. Competitive advantage
C. Market
D. Industry
36. (p. 187-188) Which are the two major classification systems that code industries?
A. NAICS and SIC
B. SCALE and SCOPE
C. SWOT and VRIO
D. SIC and SWOT
37. (p. 188) Which of the following statements about NAICS and SIC codes is true?
A. SIC covers more industries
B. NAICS covers more of the newer types of industries
C. SIC codes have six digits
D. NAICS codes have four digits
38. (p. 189) An overall strategic approach in which the entrepreneur does more or less what
others are already doing is called a(n)
A. cost-leadership strategy.
B. imitative strategy.
C. grand strategy.
39. (p. 189) An overall strategic approach in which a firm seeks to do something that is very
different from that of what others in the industry are doing is called a(n)
A. cost-leadership strategy.
B. imitative strategy.
C. grand strategy.
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40. (p. 189) The key benefit of an imitation strategy comes from the
A. customers.
B. employees.
C. competition.
D. government agencies.
41. (p. 189) Which of the following is an advantage of using an innovative strategy?

A. There is much opportunity to sell the business.
B. You can make your business precisely fit your own ideas and preferences.
C. There is the possibility to buy existing businesses.
D. The owner spends very little time in creating the processes.
42. (p. 189) Imitation minus one degree of similarity would be the business equivalent of
A. incremental innovation.
B. cloning.
C. pure innovation.
43. (p. 189) An imitation business that competes locally with others in the same industry is
called
A. pure innovation.
B. entry wedge.
C. parallel competition.
D. incremental innovation.
44. (p. 189) An overall strategic approach in which a firm patterns itself on other firms, with the
exception of one or two key areas is called
A. pure innovation.
B. differentiation focus.
C. pure imitation.
D. incremental innovation.
45. (p. 190) The process of creating new products or services is called

C. pure innovation.
D. pure imitation.
46. (p. 191) A(n) _____ is the business term for the population of customers for your
products or services.
A. market
B. industry
C. strategy
D. SIC
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47. (p. 191) There are two market decisions you need to make early in the process of going into
business:
A. NAICS and SIC.
B. scale and scope.
C. make or buy.
D. imitation and innovation.
48. (p. 191) _____ refers to the size of the market whereas _____ refers to its geographic
range.
A. Scope; scale
B. Mass; niche
C. Scale; scope
D. Niche; mass
49. (p. 191) A customer group that involves large portions of the population is called a
A. niche market.
B. scope of market.
C. parallel competition.
D. mass market.
50. (p. 191) A _____ is a narrowly defined segment of the population that is likely to share
interests or concerns.
A. niche market
B. mass market
C. degree of similarity
D. parallel competition
51. (p. 191) Identify the incorrect observation concerning niche markets.

A. Most industries have both mass and niche markets.
B. In this approach, you try to target customers only in the niche.
C. They are specific and broad.
D. It comprises of a segment of the population that is likely to share interests or concerns.
52. (p. 192) What types of customers are likely to generate more potential customers than any
other type?
A. Loyal customers
B. Local customers
C. Passionate customers
D. Corporate customers
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53. (p. 193) Which of the following statements about value benefits is false?
A. They display characteristics related to the nature of the product or service itself.
B. Things like quality, fashion, and reputation are elements that give a product value in the
eyes of the customer.
C. They are important because they are almost always what lead to higher prices and higher
profits.
D. They refer to the ways by which a firm can keep costs low for the customer.
54. (p. 193) Cost benefits
A. are important because they always lead to higher profits.
B. imply what the customer senses in the service.
C. display characteristics related to the nature of the service itself.
D. refer to the ways by which a firm can keep costs low for the customer.
55. (p. 194) Value benefits can include all of the following EXCEPT

A. quality.
B. style.
C. delivery.
D. learning.
56. (p. 194) Cost benefits can come from all of the following EXCEPT

A. credit.
B. scale savings.
C. learning.
D. organizational practices.
57. (p. 194) This type of value benefit involved can come from the products or services that you
offer, or from your own firm's reputation.
A. Brand
B. Style
C. Personalization
D. Place
58. (p. 194) If your product helps the community, a group, the environment, or the world,
what type of value benefit is it?
A. Assurance
B. Personalization
C. Altruism
D. Quality
59. (p. 194) Buying in volume usually produces savings. Identify the type of cost benefit
involved.
A. Scope savings
B. Lower costs
C. Scale savings
D. Learning
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60. (p. 194) As a firm gets more experience, it can often work with fewer mistakes and greater
efficiencies, thereby lowering costs. What type of cost benefit is it?
A. Service
B. Scope savings
C. Learning
D. Organizational practices
61. (p. 194) Changes in competitors, sales and profits in an industry over time is called

A. industry dynamics.
B. retrenchment.
C. a shake-out.
D. a transformational competency.
62. (p. 195) Which of the following represent the five stages of industry life cycle?
A. Introduction, growth, maturity, decline, and death.
B. Introduction, pioneers, early adopters, decline, and death.
C. Pioneers, growth, early adopters, decline, and death.
D. Pioneers, early adaptors, late adopters, early majority, and death.
63. (p. 195) An industry life cycle stage in which customer purchases increase at a dramatic
rate is the
A. decline stage.
B. growth stage.
C. boom.
D. shake-out.
64. (p. 195) A _____ type of life cycle growth stage is marked by a very rapid increase in sales
in a relatively short time.
A. decline stage
B. growth stage
C. boom
D. shake-out
65. (p. 195) A type of life cycle stage following a boom in which there is a rapid decrease in
the number of firms in an industry is the
A. shake-out.
B. growth stage.
C. maturity stage.
D. decline stage.
66. (p. 195) This is the third stage in the industry life cycle which is marked by a stabilization of
demand.
A. Growth stage
B. Maturity stage
C. Introduction stage
D. Decline stage
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67. (p. 195) An organizational life cycle stage in which established firms must find new
approaches to improve the business and its chances for survival is called
A. retrenchment.
B. maturity.
C. growth.
D. introduction.
68. (p. 196) What represents the amount of money the owners take out of the firm annually
and on which they pay taxes?
A. Profit before taxes
B. Gross profit
C. Net profit
D. Rate of profit
69. (p. 196) Which of the following refers to funds left over after deducting the cost of goods
sold?
A. Profit before taxes
B. Gross profit
C. Net profit
D. Rate of profit
70. (p. 196) A research process that provides the entrepreneur with key information about the
industry, such as its current situation and trends is called
A. SWOT analysis.
B. VRIO analysis.
C. value chain analysis.
71. (p. 196) The amount of money left after operating expenses are deducted for the business
refers to
A. net profit.
B. gross profit.
C. operating profit.
D. earnings before tax.
72. (p. 196-197) Which of the following is NOT a key type of information needed to perform an

industry analysis?
A. How profits are made
B. Regulatory oversight agency requirement
C. Target market competitor concentration
D. SIC/NAICS number and description
1-77
73. (p. 198) All of the following are classic strategies for businesses of all types EXCEPT
A. differentiation.
B. cost.
C. integration.
D. focus.
74. (p. 198) A type of generic strategy aimed at clarifying how one product is unlike another in
a mass market refers to _____ strategy.
A. differentiation
B. cost
C. integration
D. focus
75. (p. 199) A generic strategy aimed at mass markets in which a firm offers a combination of
cost benefits that appeal to the customers is called _____ strategy.
A. differentiation
B. integration
C. cost
D. focus
76. (p. 199) _____ strategies target a portion of the market called a segment.

A. Differentiation
B. Integration
C. Cost
D. Focus
77. (p. 200) Which of the following is NOT one of the supra-strategies identified by Shepherd

and Shanley?
A. Craftsmanship
B. Tightly manage centralization
C. Elite
D. Super-support
78. (p. 201) In SWOT, strengths are

A. chances to make greater sales or profits in the environment.
B. characteristics of the business that give it an advantage over others in the industry.
C. elements in the environment that could cause trouble for the business.
D. characteristics that place the firm at a disadvantage relative to others.
79. (p. 201) A group discussion in which criticism is suspended in order to generate the

maximum number of ideas is
A. mind mapping.
B. a focus strategy.
C. brainstorming.
D. a boom.
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80. (p. 202) The strategic direction option, at the end of a SWOT analysis, where opportunities
match strength is
A. flaunt.
B. fight.
C. flee.
D. fix.
81. (p. 202) At the end of a SWOT analysis, the strategic direction option, where strengths are
matched against threats, is
A. flaunt.
B. fight.
C. flee.
D. fix.
82. (p. 203) Which of the following refers to the particular way a firm implements customer
benefits that keeps the firm ahead of other firms in the market?
A. Industry analysis
B. Competitive advantage
C. Resource distribution
D. Value chain
83. (p. 203) Capabilities, organizational processes, information, or knowledge of a firm that is

not clearly evident refers to
A. tangible resources.
B. competitive advantages.
C. intangible resources.
D. core competencies.
84. (p. 204) The abilities of a firm to make its product or service in a way that enhances
value or efficiency compared to other firms refers to
A. transformational competencies.
B. organizational altruism.
C. value chain analysis.
D. combinational competencies.
85. (p. 204) A resource characteristic which enhances value through offering uniqueness to the
buyer is
A. a combinational competency.
B. a transformational competency.
C. a rare resource.
D. difficult to imitate.
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86. (p. 184) The first thing that Amy and her friends need to do to pursue their strategy is to
perform
A. an industry analysis.
B. a SWOT analysis.
C. a VRIO analysis.
D. a value chain analysis.
87. (p. 191) Identify the two market decisions that Amy and her friends need to make.
A. Imitation and innovation
B. Local or global
C. Mass or niche
D. Scale and scope
88. (p. 189) Using the degree of similarity, Amy's concept of laundromat with a workout space
can be described as
C. cloning.
D. mass differentiation.
89. (p. 203) When performing a SWOT analysis, where Amy's business threats meet her
business weaknesses, what should her strategy option be?
A. Fix
B. Fight
C. Flee
D. Flaunt
90. (p. 203) In performing a SWOT analysis, if Amy's business opportunities meet her

business threats, what should her strategy option be?
A. Fire-up
B. Fight
C. Flaunt
D. Fix
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CHAPTER 8
21. (p. 214) A document designed to detail the major characteristics of a firm is called a(n)
A. mission statement.
B. marketing plan.
C. executive summary.
D. business plan.
22. (p. 214) The extent to which a small business is taken for granted, accepted, or treated as
viable by organizations or people outside the small business is referred to as
A. tagline.
B. external legitimacy.
C. test marketing.
D. internal understanding.
23. (p. 214) Which of the following is NOT a business plan concern of family and friend
investors?
A. Competitive advantage
B. Amounts and schedules for returns
C. Funds use
D. Stability of firm
24. (p. 214) Which of the following represents a business plan concern of silent partners/angel

investors?
A. Competitive advantage
B. Growth rate
C. Asset/collateral base
D. Benefit
25. (p. 214) _____ represents a business plan concern of joint venture partners.

A. Amounts and schedules of returns
B. Cash flow and cash cycle
C. Intellectual property protection
D. Stability of firm
26. (p. 214) Which of the following is NOT a business plan concern of bankers?

A. Cash flow and cash cycle
B. Asset/collateral base
C. Long-term prospects
D. Monitoring compliance
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27. (p. 214) All of the following are business plan concerns of potential customers EXCEPT
A. amounts and schedules for returns.
B. responsiveness to customers.
C. benefits.
D. competitive advantage.
28. (p. 214) Which of the following is a business plan concern of key employees in a business?

A. Intellectual property protection
B. Stability of firm
C. Monitoring compliance
D. Asset/collateral base
29. (p. 214-215) There are two circumstances under which creating a business plan is absolutely
necessary: (1) _____ and (2) _____.
A. when outsiders expect it; for internal understanding
B. for government requirement; for investor demands
C. for stakeholders; for stockholders
D. when family is involved; for friends' information
30. (p. 215) The extent to which employees, investors, and family members involve in the
business, know the business's purpose and operation, is called
A. external legitimacy.
B. test marketing.
C. internal understanding.
D. angel investing.
31. (p. 215) Which of the following statements about business plans is false?

A. If you are seeking a banker, investor, or partner, a business plan is absolutely essential.
B. If you are trying to run your business in an ambitious way, a business plan is vitally
important.
C. Typically, the higher-performing firms in any industry tend to be those who engage in
planning.
D. Having a business plan guarantees higher profits.
32. (p. 215) The business planning presentation types include all of the following EXCEPT
A. mission.
B. annual objectives.
C. elevator pitch.
D. executive summaries.
33. (p. 216) The length of a vision statement should be

A. 20-50 words.
B. 60-100 words.
C. 5-10 words.
D. 250-500 words.
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34. (p. 216) Which of the following is perhaps a firm's most important single idea held by the
owner and employees?
A. Vision statement
B. Executive summary
C. Mission statement
D. Elevator pitch
35. (p. 216) The length of an executive summary should be

A. 20-50 words.
B. 60-100 words.
C. 5-10 words.
D. 250-500 words.
36. (p. 216) A tagline that expresses the fundamental idea or goal of the firm is called its
A. vision statement.
B. executive summary.
C. mission statement.
D. elevator pitch.
37. (p. 216) All of the following concern taglines EXCEPT

A. they are a good way to present vision statements, as they are brief and memorable.
B. they talk in terms of what will make a difference for the customer or the industry.
C. it expresses the fundamental idea or goal of the firm.
D. it can serve as the company's vision statement.
38. (p. 216) A memorable catchphrase that captures the key idea of a business, its service,
product, or customer is called a(n)
A. mission statement.
B. tagline.
D. business plan.
39. (p. 216) The _____ describes the firm's goals and competitive advantages.

A. vision statement
B. executive summary
C. mission statement
D. elevator pitch
40. (p. 216-217) All of the following observations hold true of mission statements EXCEPT

A. they are an action-oriented description of your business.
B. they rarely discuss profits, but often mention the entry wedge that follows from the firm's
strategy.
C. they might include the major competitive advantages of the firm, and its position in the
industry.
D. they are best when they are simple, short, and direct.
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41. (p. 217) A 30-second action-oriented description of a business designed to sell the idea of
the business to another is called a(n)
A. vision statement.
B. mission statement.
D. elevator pitch.
42. (p. 217-218) Which of the following statements about an elevator pitch is true?

A. It is shorter than a vision statement or tagline.
B. It consistently leads to specific businesses.
C. The idea of the pitch is that you are alone with a prospective customer for the length of an
elevator ride.
D. The pitch ends with where the business is headed.
43. (p. 218) While writing the elevator pitch, including something about your product or service
that people would remember and take to heart relates to the
A. hook of the plan.
B. purpose of the plan.
C. delivery of the plan.
D. position of the plan.
44. (p. 218) Which of the following is NOT a success factor of an effective elevator pitch?

A. Hook
B. Time
C. What
D. Delivery
45. (p. 218) A one- to two-page overview of the business, its business model, market,
expectations, and immediate goals represents a(n)
A. executive summary.
B. vision statement.
C. mission statement.
D. elevator pitch.
46. (p. 218-219) Which of the following is NOT a topic addressed in the executive summary?

A. Competitive advantages
B. Product
C. Mission
D. Finances
47. (p. 218-219) Which of the following statements about executive summaries is true?

A. Typically, they remain the least popular item to send people who ask about your business.
B. The order for the topics in an executive summary is fixed.
C. They do not give as much information about the business as the vision or mission
statements do.
D. They form the basis for additional discussion when someone asks for more detail.
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48. (p. 220) Identify the correct statement about the 5-M Model.
A. It is typical to have multiple measures, and they are typically given in qualitative form.
B. Mission statements give the firm's major business goal, which can be stated quantitatively
or qualitatively, but always with a time period.
C. Methods typically involve identifying quantitatively stated strategic achievements which
would prove you have done what you set out to do as a business.
D. Mechanics are generally given as one-paragraph project descriptions.
49. (p. 221) The classic business plan contains _____ pages that include financials and
appendixes.
A. 15
B. 25
C. 60
D. 40
50. (p. 221) A one-page document on a letterhead that introduces the business plan and owner
and indicates why the recipient is being asked to read the plan is called a(n)
A. executive summary.
B. cover letter.
C. appendix.
D. title page.
51. (p. 221) Where the type of business is well established, what is the appropriate size for a
business plan?
A. 10 pages
B. 20 pages
C. 25 pages
D. 40 pages
52. (p. 222) Which of the following is NOT a major component of a business plan?

A. Company
B. Markets
C. Organization
D. Regulations
53. (p. 223) In the first paragraph of the cover letter, you

A. explain your company in detail.
B. describe the current situation of your company.
C. introduce yourself.
D. thank the reader for their consideration.
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54. (p. 223) In which paragraph of the cover letter do you thank the recipient for his/her
consideration?
A. First
B. Second
C. Third
D. Fourth
55. (p. 225) A product or service that is kept as a trade secret or is protected legally using
patents, trademarks, copyright, or service mark is called a
A. tagline.
B. proprietary: độc quyền technology.
C. pioneering business.
D. test marketing.
56. (p. 225) The market section talks about your

A. employees.
B. stockholders.
C. customers.
D. family.
57. (p. 225) The market refers to the

A. total population of people or firms to whom you plan to sell.
B. geographic locations where you open business.
C. national boundaries where you operate.
D. local area where you recruit people for jobs.
58. (p. 226) A good marketing strategy focuses on all of the following ideas EXCEPT
A. the overall strategy your firm pursues in the market.
B. the sales plan.
C. the long-term competitive plan.
D. harvesting the business plan.
59. (p. 226) Which of the following is a supra-strategy?

A. Cost
B. Customization
C. Formula facilities
D. Differentiation
60. (p. 226) A "no-frills" strategy is an example of a

A. fragmented industry strategy.
B. generic strategy.
C. supra-strategy.
D. focus strategy.
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61. (p. 226) _____ involves introducing your product to potential customers and taking orders
for late delivery.
A. R&D
B. Test marketing
C. Preselling
D. New entrant business
62. (p. 226) Which of the following refers to the part of a business that is focused on creating
new products or services and preparing new technologies, ideas, products or services for the
firm's market?
A. R&D
B. Test marketing
C. Preselling
D. New entrant business
63. (p. 226) Growth plans often talk about all of the following EXCEPT

A. longer-term partnerships to be sought.
B. new markets to be pursued.
C. ways to leverage the firm's assets.
D. the day-to-day specifics of how sales are achieved.
64. (p. 226) The legal form of business and the place where it is registered should be presented
under which section of the business plan?
A. Company
B. Market
C. Organization
D. Financials
65. (p. 228) Which of the following financial statements is NOT expected in the business

plan?
A. Income statement
B. SEC filing statement
C. Balance sheet
D. Cash flow statement
66. (p. 228) For an existing business

A. income and cash flow are given monthly for the first year.
B. the tradition is to offer three years of data projections.
C. the financials offer two-year projections for the income, cash flow, and balance sheet.
D. the financials report the last five years of actual data.
67. (p. 229) What is the goal of appendixes?

A. To inform customers and partners about the firm and the product.
B. To establish an ongoing relationship with the listener.
C. To provide supporting information that helps detail the key selling points of your plan.
D. To sell customers and investors on the idea of the business and their need for it.
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68. (p. 230) A firm whose product or service is new to the industries or is itself creating a new
industry is called
A. a new entrant business.
B. R&D.
C. test marketing.
D. a pioneering business.
69. (p. 230) When a firm sells its products in a limited area, for a limited time, it is called
A. an R&D venture.
B. a pioneering business.
C. test marketing.
D. a new entrant business.
70. (p. 230) A firm whose product or service is established elsewhere and is new to this market
is called
A. an R&D venture.
B. a pioneering business.
C. test marketing.
D. a new entrant business.
71. (p. 231) Which of the following gives the basic overview of a firm and a detailed look at the
financials?
A. Screening plan
B. Operational plan
C. Marketing plan
D. Investing plan
72. (p. 231) Which of the following is incorrect of screening plans?

A. The idea behind it is to give a basic overview of the firm and a detailed look at the
financials.
B. It usually consists of the cover letter, title page, executive summary, and financial sections
of the business plan.
C. Appendixes are included only when it is important to prove the viability of contracts.
D. It consists of company and organization sections.
73. (p. 231) Identify the business plan that typically consists of company and organization
sections.
A. Idea plan
B. Informational plan
C. Operational plan
D. Invention plan
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74. (p. 231) Which of the following business plans is also called a "mini-plan"?
A. Invention plan
B. Idea plan
C. Operational plan
D. Screening plan
75. (p. 231-232) Which of the following is NOT a special-purpose plan?

A. Screening plan
B. Key employer plan
C. Invention plan
D. Informational plan
76. (p. 232) A special form of informational plan posted on the Internet is the _____ Web site.
A. proof-of-concept
B. invention plan
C. operational plans
D. private placement memo
77. (p. 232) A key employee/partner plan is also referred to as all of the following EXCEPT
A. summary plan.
B. concept plan.
C. idea plan.
D. mini-plan.
78. (p. 232) These plans are designed to be used as working documents within a business.

A. Idea plans
B. Informational plans
C. Operational plans
D. Invention plans
79. (p. 232) All of the following pertain to a private placement memorandum EXCEPT

A. it is the official version of a business plan offered to potential investors.
B. it is a legal document, and should be drafted by a lawyer.
C. it is used to send your business plan to professional funding sources.
D. it builds on a business plan, using information about the company, products and services,
strategy and operations, and competition.
80. (p. 232) Which of the following is a business plan that provides information to potential

licensees?
A. Screening plan
B. Business plan
C. Invention plan
D. Informational plan
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81. (p. 232) Which of the following is a business plan designed to be used internally for
management purposes?
A. Screening plan
B. Informational plan
C. Invention plan
D. Operational plan
82. (p. 232) Identify the specialized legal form of business plan crafted by lawyers for the
purpose of soliciting formal investments.
A. Concept plan
B. Private placement memorandum
C. Proof-of-concept plan
D. Mini-plan
83. (p. 235) Which of the following risks is NOT a common threat to business?

A. Understated numbers
B. Uncertain sales
C. Overlooked competition
D. Inadequate cushion
84. (p. 235) The _____ is the percentage of people who buy out of the total population of people
you approach.
A. base rate
B. hit rate
C. tagline rate
D. proof-of-concept rate
85. (p. 237) All of the following are key things an influential person looks for in your business
plan presentation EXCEPT
A. your passion for the business.
B. your expertise about the business and the plan.
C. how many others are already working with you.
D. how easy it would be to work with you.
86. (p. 214) Which of the following would represent Mr. Johnson's interest in Connie's

business plan?
B. Growth rate
C. Competitive advantage
D. Amounts and schedules for returns
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87. (p. 214) If Connie gets her family and friends involved as investors, which of the following
would be their concern or interest?
B. Growth rate
C. Competitive advantage
D. Amounts and schedules for returns
88. (p. 221) Connie shops are established businesses and so Connie's business plans

could/should be _____ pages of text.
A. 40
B. 10
C. 20
D. 25
89. (p. 222) Connie needs to know that all of the following are key components of a business
plan she should include EXCEPT
A. the market.
B. the organization.
C. the regulatory limitations.
D. the financials.
90. (p. 235) Connie should be aware of which of the following risks that may cause Mr. Johnson
to evaluate her plan negatively?
A. Most likely the numbers
B. Experiencing deficit
C. High hit rate for preselling
D. Adequate or high payback
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CHAPTER 11
21. (p. 342) For small business location issues, there are two basic "where" questions to be
considered
A. Where are my customers? Where should I be?
B. Where are my customers? Where are my suppliers?
C. Where are the raw materials? Where are the finished products?
D. Where are the sales? Where are the profits?
22. (p. 342) The distribution channel of manufacturers to the consumer is referred to as

A. wholesaler marketing.
B. direct marketing.
C. middlemen sales.
D. agent-buyer relationship.
23. (p. 342, 344, 348) Which of the following is NOT a form of direct marketing?

A. Word-of-mouth
B. Telemarketing
C. Guerilla marketing
D. Wholesalers
24. (p. 342) _____ is usually the first technique an entrepreneur uses to get customers.

A. Internet
B. Guerilla marketing
C. Word-of-mouth
D. Telemarketing
25. (p. 342) One method of spreading information about one's business through the comments
friends and customers make to other potential customers is called
A. word-of-mouth.
B. guerilla marketing.
C. telemarketing.
D. direct sales.
26. (p. 342) Which of the following is NOT a method of direct selling?

A. Vending machine
B. Word-of-mouth
C. Leasing space at a craft fair
D. Industrial sales
27. (p. 343) Which of the following direct sales methods offer the flexibility of having your
product available around the clock and at convenient locations?
A. Leasing space at a craft fair
B. Farmers' markets
C. Vending machines
D. Door-to-door sales
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28. (p. 344) Which of the following is NOT a form of direct mail?
A. Catalogs
B. E-mails
C. Faxes
D. Vending machines
29. (p. 344) Which of the following are more modern forms of direct mail?

A. Catalogs and e-mailing
B. Direct faxing and e-mailing
C. Sales letters and e-mailing
D. Postcards and direct faxing
30. (p. 344) What is perhaps the greatest challenge of the direct mail approach?

A. The need for adequate preparation before selling
B. The need for writing and photography skills
C. The need to find the right market for your offering
D. A way to get customers' attention
31. (p. 345) Which of the following statements about catalogs is true?

A. Typically, the number of catalogs you will have to order is 10,000 at a minimum.
B. Creating and disseminating a catalog online saves you the cost of printing and mailing.
C. Most full-time entrepreneurs typically try to get their products into existing catalogs.
D. Depending on the size and quality of the catalog, costs for print versions start at around $2
each.
32. (p. 346) A _____ is a set of goods or services that consists of only one or a few items.
A. customer-managed inventory
B. vendor-managed inventory
C. microinventory
D. just-in-time inventory
33. (p. 346) A _____ is having just enough product on your shelves to meet the immediate
purchases; this usually requires frequent shipment from your supplier.
A. macroinventory
B. in-process inventory
C. microinventory
D. just-in-time inventory
34. (p. 346) Which of the following is the least expensive form of direct mail?

A. Catalogs
B. Videos
C. Direct faxing
D. E-mail
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35. (p. 346) Which of the following is the most expensive form of direct marketing?
A. E-mail
B. Telemarketing
C. Brochures
D. Leaflets
36. (p. 346) Which of the following is NOT a requirement of the national law related to e-

mailing?
A. Do not in any way falsely misrepresent who you are.
B. For direct e-mailing, sender must use harvested e-mail addresses.
C. All emails should allow recipient the opportunity to "opt-out."
D. Do not in any way falsely misrepresent where the e-mail is from.
37. (p. 346) Contact via telephone for the express purpose of selling a product or service is
called
A. direct response advertising.
C. telemarketing.
D. multichannel marketing.
38. (p. 346) Telemarketing can either be _____ or _____.

A. in person; on the phone
B. by fax; e-mail
C. door-to-door; direct response advertising
D. inbound; outbound
39. (p. 347) In _____, you place an ad in a magazine, newspaper, radio, billboard, or television

that includes a phone number, e-mail, or snail-mail address, and wait for the orders to come
in.
A. telemarketing
B. direct mail sales
C. guerilla marketing
D. direct response advertising
40. (p. 347) Which of the following is the cheapest form of direct response advertising?

A. Billboard
B. Radio, 30-second spot
C. Magazine newsweekly, 4-color page
D. Newspaper daily, 1/3 black and white page
41. (p. 347) Which form of direct response advertising allows for very specific targeting and
offers an appropriate place for direct response advertising for business-to-business selling?
A. Television
B. Radio
C. Newspaper
D. Magazines
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42. (p. 347) Which of the following direct response advertising forms allows for specific
geographic segmentation?
A. Newspapers
B. Magazines
C. National television
D. Home shopping networks
43. (p. 348) What form of direct response advertising provides both geographic and

demographic segmentation, though the audience for this medium is generally highly
distracted?
A. Television
B. Radio
C. Magazines
D. Newspapers
44. (p. 348) The use of creative and relatively inexpensive ways to reach your customers with
techniques such as door-knob hangers and flyers under windshield wipers is called
A. multichannel marketing.
C. direct sales.
D. direct mail.
45. (p. 348) _____ is a form of direct response advertising that reaches local people but does not
permit a lot of details.
A. Radio
B. Billboard
C. Magazine
D. Newspaper
46. (p. 349) The use of several different channels to reach your customers, for example, a Web
site, direct mail, and traditional retailing is called
A. guerilla marketing.
B. Internet marketing.
C. multichannel marketing.
D. direct sales.
47. (p. 349) This form of marketing allows your customers to contact you in the way they feel
the most comfortable.
A. Guerilla marketing
B. Multichannel marketing
C. Internet marketing
D. Direct sales
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48. (p. 350) With direct marketing, one option to consider when you are doing quantity shipping
is
A. the retailer.
B. the U.S. Postal Service.
C. a fulfillment center.
D. the wholesaler.
49. (p. 350) A company that will warehouse your products and fill your customers' orders for
you is called
A. a retailer.
B. the U.S. Postal Service.
C. fulfillment center.
D. a wholesaler.
50. (p. 350) The end user of a product or service is called a(n)

A. consumer.
B. agent.
C. wholesaler.
D. retailer.
51. (p. 350) A middleman business which sells to consumers or end-users of a product is

called a(n)
A. manufacturer.
B. agent.
C. wholesaler.
D. retailer.
52. (p. 350) A middleman business which buys and sells to businesses rather than consumers is
called a(n)
A. manufacturer.
B. agent.
C. wholesaler.
D. retailer.
53. (p. 350) Identify the term for any form that assists in getting your product to your end
customer.
A. Electronic malls
B. Intermediaries
C. Born internationals
D. Traffic generators
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54. (p. 350) A middleman business which represents a manufacturer's products or services to
other business-to-business middleman firms is called a(n)
A. retailer.
B. wholesaler.
C. agent.
D. supplier.
55. (p. 351) Who can afford to take a chance on unknown firms or products due to low
overheads and unlimited shelf space?
A. E-tailers
B. Wholesalers
C. Retailers
D. Fulfillment centers
56. (p. 351) One suggestion for finding out which distribution channel is correct for your
product is to
A. start at the end and work your way up by asking each link from whom they buy.
B. ask the competitors.
C. explore what regulations are required from the small businesses.
D. ask the customers who do they prefer buying the products from.
57. (p. 351) A store that exists only on the Internet is called a(n)

A. wholesaler.
B. e-tailer.
C. agent.
D. electronic manufacturer.
58. (p. 352) A new firm that opens a Web site immediately, thus being exposed to customers
around the world is called
A. freight forwarders.
B. indirect exporters.
C. born internationals.
D. e-tailers.
59. (p. 352) Putting together an export strategy involves answering all of the following questions
EXCEPT
A. where should we go?
B. whom do we contact over there?
C. are we ready?
D. which employees do we send?
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60. (p. 352) Exporting using middlemen such as agents or export management companies is
referred to as
A. indirect exporting.
B. freight forwarding.
C. e-tailers.
D. high credit risk exporting.
61. (p. 352) All of the following are examples of using middlemen for indirect exporting
EXPECT
A. export management companies.
B. agents.
C. export trading companies.
D. fulfillment centers.
62. (p. 353) Firms specializing in arranging international shipments—packaging, transportation,

and paperwork are called
A. born internationals.
B. e-tailers.
C. direct exporters.
D. freight forwarders.
63. (p. 354) Which of the following can be exercised only when presented with specified
shipping documents?
A. Documentary drafts
B. Letter of credit
C. Airway bill
D. Bill of lading
64. (p. 354) A(n) _____ is a document issued by a bank that guarantees a buyer's payment for a
specified period of time upon compliance with specified terms.
A. documentary draft
B. letter of credit
C. import document
D. freight document
65. (p. 356) For many entrepreneurs, their hometown is their first choice for the location of their
business because of all of the following EXCEPT
A. convenience and a familiar setting.
B. elimination of a lot of possible family issues.
C. local government offering subsidized locations to local businesses.
D. their knowledge about the market or potential customers.
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66. (p. 357-358) Restaurants and barbershops are examples of which of the following locations
for services?
A. Client's location
B. Mutually accessible location
C. Your firm's location
D. Competitor's location
67. (p. 358) Identify this type of service in which face-to-face meetings with the client are
infrequent.
A. Mutually accessible location
B. Remote location
C. Client's location
D. Competitor's location
68. (p. 359) When an existing firm with the correct manufacturing capabilities makes your
product for you, it is called
A. contract manufacturing.
B. sheltered workshops.
C. e-tailing.
D. freight forwarding.
69. (p. 359) These can be used to perform light manufacturing or assembly sort of business.

A. Contract manufacturing
B. E-tailing
C. Sheltered workshops
D. Freight forwarding
70. (p. 359) For high customer contact businesses, which of the following is NOT a critical
site selection consideration?
A. Traffic
B. Customer ease
C. Cost potential
D. Competition
71. (p. 359) Which of the following is a nonprofit organization or institution that provides

business services by using handicapped or rehabilitated workers?
A. Contract manufacturing
B. E-tailing
C. Sheltered workshops
D. Freight forwarding
72. (p. 359) Which of the following is an example of a high customer contact form of business?

A. Manufacturing businesses
B. Legal offices
C. Headquarters of client location-based services
D. Remote location services
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73. (p. 361) Other businesses that bring customers to the area are called
A. traffic generators.
B. competitors.
C. nonprofit organizations.
D. local government agencies.
74. (p. 362) All of the following are examples of low customer contact businesses EXCEPT
A. industrial parks.
B. business incubators.
C. empowerment zones.
D. retail establishments.
75. (p. 364) Which of the following statements about HVAC is false?

A. It can be the most expensive type of repair.
B. For any type of equipment, you want the landlord to at least guarantee the first six months
of operation.
C. It is one of the types most likely to go wrong.
D. If the location has a central air system so everyone shares the same air conditioner and
heating equipment, it is the landlord's responsibility.
76. (p. 364) _____ are permanent changes made to the location to fit your business's needs.
A. Build-ins
B. Improvements to buildings
C. Leasehold improvements
D. Improvements to land
77. (p. 364) "Tenant improvement allowances" or "construction allowances" are rent dollars

typically
A. $1 to $10 a square foot.
B. $5 to $25 a square foot.
C. $10 to $50 a square foot.
D. $15 to $75 a square foot.
78. (p. 364) _____ is a concession which covers the time while you prepare your location prior
to opening.
A. Rent-free use period
B. Leasehold improvement
C. Construction allowance
D. Tenant improvement allowance
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79. (p. 365) Which of the following statements about handling an early termination is false?
A. The bailout clause lets you out of the lease if sales do not meet an agreed-to level.
B. If your business falters, you are obligated to continue paying your monthly rent and fees
for the duration of the lease.
C. In terms of a three-year lease, with a one-year cap you are obligated to pay one year's
more rent.
D. In terms of a three-year lease, if you close down after only six months, you are obligated to
pay 30 more months' rent.
80. (p. 366) In the _____ layout, material flows in on one side of the operation and continues to
the other end of the operation.
A. grid
B. production line
C. free-form
D. process
81. (p. 366) Which of the following formats is much more appropriate for low-volume, flexible
manufacturing?
A. Grid layout
B. Production line
C. Free-form layout
D. Process layout
82. (p. 366) Identify the layout by which most assembly manufacturing is done.

A. Production line
B. Process
C. Grid
D. Free-form
83. (p. 366) This form of layout has aisles running from the front of the store to the back like the
typical grocery.
A. Production line
B. Process
C. Grid
D. Free-form
84. (p. 366) What is the term used for the layout of a store that is laid out in sections with aisles
that angle or meander through the store?
A. Production line
B. Process
C. Grid
D. Free-form
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85. (p. 366) Which of the following layouts is more typically found in upscale department
stores?
A. Grid layout
B. Production line
C. Free-form layout
D. Process layout
86. (p. 367) Which of the following is a disadvantage of leasing?

A. It is costly and slow
B. You are usually limited in the renovations you can do
C. Any remodeling that needs to be done may overshadow any time or money savings
D. It is an option with a considerably high initial cash outlay
87. (p. 342) Knowing the market of professors at other universities well, Jessica has decided to
approach them for her product sales. This method can be described as
A. direct marketing.
B. going international.
C. using middlemen.
D. wholesaling.
88. (p. 346) Given that Jessica has a very limited budget, which of the following forms of direct
mail might be least expensive?
A. Brochures
B. Sales letters
C. E-mailing
D. Post-cards
89. (p. 347) If Jessica places an advertisement in "Chronicle of Higher Education," a leading

publication for University professors about her product with her e-mail and contact
information, it can be described as
A. guerilla marketing.
B. telemarketing.
C. direct sales.
D. direct response advertising.
90. (p. 352) Some of Jessica's students suggested that she create a Web site for her product and
company. Being a new company immediately starting a Web site, her company can be called
A. freight forwarders.
B. born international.
C. a middleman.
D. an exporter.
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CHAPTER 9
21. (p. 274) A product can include all of the following EXCEPT
A. goods.
B. ideas.
C. people.
D. price.
22. (p. 274) An item's capability of being touched, seen, tasted, or felt is called

A. tangibility.
B. inseparability.
C. heterogeneity.
D. perishability.
23. (p. 274) Goods are _____, while services are _____.

A. heterogeneous; homogeneous
B. tangible; intangible
C. inseparable; separable
D. perishable; not perishable
24. (p. 275) Leasing a car is an example of a

A. service-dominated product.
B. good-dominated product.
C. pure service.
D. hybrid good and service combination.
25. (p. 275) Which of the following is INCORRECT about services?

A. Services are inseparable from consumption
B. Services are tangible
C. Services are heterogeneous
D. Services are perishable
26. (p. 276) A quality of a service in which the service being done cannot be disconnected from
the provider of the service is called
A. perishability.
B. tangibility.
C. inseparability.
D. heterogeneity.
27. (p. 276) A quality of a service in which each time it is provided it will be slightly different
from the previous time refers to
A. perishability.
B. tangibility.
C. inseparability.
D. heterogeneity.
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28. (p. 276) If a service is not used when offered, it cannot be saved for a later use, thereby
describing its
A. perishability.
B. tangibility.
C. inseparability.
D. heterogeneity.
29. (p. 276) Which of the following includes the entire bundle of products and services that
you offer?
A. Total product
B. Augmented product
C. Hybrid product
D. Core product
30. (p. 277) The very basic description of what a product is refers to

A. the total product.
B. an augmented product.
C. the hybrid product.
D. the core product.
31. (p. 277) Identify the product that has features which differentiate it from the competition but
is still closely related to the core product.
A. Total product
B. Core product
C. Augmented product
D. Me-too product
32. (p. 277) The group of people on which a marketer focuses promotion and sales efforts is
called a
A. me-too group.
B. target market.
C. maturity group.
D. breakeven market.
33. (p. 278) Which of the following is NOT the best option when naming your company?
A. Catchy name
B. Easy to spell and pronounce
C. Same as your product name or your name
D. Descriptive of your business
34. (p. 279) Which of the following is the first stage of the new product development process?
A. Idea screening
B. Commercialization
C. Idea evaluation
D. Idea generation
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35. (p. 279) Products essentially similar to something already on the market are called
A. parallel competition products.
B. prototypes.
C. test market products.
D. me-too products.
36. (p. 280) In the new product development process, what stage comes after idea generation?
A. Idea screening
B. Commercialization
C. Idea evaluation
D. Product development
37. (p. 280) Idea screening
A. is the process of specifying the details of each idea's technological feasibility, its cost, how
it can be marketed, and its market potential.
B. is the process of selecting the most promising ideas to be further evaluated for feasibility.
C. involves the first versions of products called prototypes which are used in further consumer
testing.
D. is the process of making the new product available to consumers.
38. (p. 280) This is an exhaustive process of specifying the details of each idea's technological

feasibility, its cost, how it can be marketed, and its market potential.
A. Idea screening
B. Product development
C. Idea evaluation
D. Commercialization
39. (p. 281) The first versions of products in formal development are called

A. test markets.
B. prototypes.
C. total products.
D. hybrid products.
40. (p. 281-283) Which of the following statements about prototypes is true?

A. If you are not in business, or if you are in a very different business, prototyping is not very
difficult.
B. If a rapid prototyping model can be developed, the molds for manufacturing can be made,
but expensively, by modern manufacturers.
C. Test marketing involves selling the prototype in a simulated market environment only.
D. The Internet makes it easier to find companies willing to bid on and build prototypes.
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41. (p. 282-283) Which of the following statements about prototypes is false?
A. Once the prototype is developed and tested, the product is ready for test marketing.
B. Small businesses, for financial reasons, primarily choose smaller local markets and conduct
fewer tests than their larger counterparts.
C. Standard test marketing introduces the product and the marketing strategy in the simulated
environment.
D. If you are not in business or are in a very different business, test marketing services are
very difficult.
42. (p. 283) Which of the following is the final stage of the new product development process?
A. Idea screening
B. Feasibility study
C. Commercialization
D. Product development
43. (p. 283) _____ is the process of making the new product available to consumers.

A. Commercialization
B. Test marketing
C. Breakeven
D. Pricing psychology
44. (p. 284) Standard product life cycle has four stages:

A. introduction, growth, maturity, and decline.
B. core, growth, total, and decline.
C. introduction, core, merge, and decline.
D. introduction, growth, merge, and decline.
45. (p. 283-285) Which of the following statements about the introduction stage of the product life
cycle is true?
A. The risks from competition in the introduction stage are generally high.
B. From a marketing standpoint, the more innovative the product, the slower the sales.
C. The best sales method is to focus on the absolute advantage your product has over the
competition.
D. All products survive the introduction phase of the product life cycle.
46. (p. 285) During the _____ stage of product life cycle, acceptance of the product increases
rapidly and sales and profits grow at higher rates than at any other part of the product life
cycle.
A. maturity
B. introduction
C. growth
D. decline
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47. (p. 285) Identify the incorrect statement about the growth stage of the product life cycle.
A. Prices tend to drop as production becomes more efficient and competition increases.
B. During this stage, advertising and promotion are much more critical than in the
introduction stage.
C. From a marketing standpoint, consumers are aware of your product and know how it will
make their lives better.
D. This stage is when you try to get into all the markets you can nationally or internationally.
48. (p. 285) What is the challenge a small business faces in the maturity stage?

A. Keeping sales and profits at a fairly high level.
B. Educating customers about your product.
C. Keeping up with production and ensuring good distribution.
D. Convincing intermediaries about why your product is preferable.
49. (p. 285-286) Which of the following statements about the maturity phase of the product life
cycle is false?
A. Manufacturers find ways to cut costs to keep market share.
B. Since there are few new users for the product, most gains in market share are made by
stealing customers from competitors.
C. A product can stay in the maturity stage for only a short period of time.
D. As weaker competitors start to leave the market, you will have opportunities to take their
"leftover" customers.
50. (p. 286) At which stage of the product life cycle do promotions such as coupons, rebates, and
multipacks become an important marketing tool?
A. Growth
B. Decline
C. Introduction
D. Maturity
51. (p. 286) Identify the correct statement about the decline phase of the product life cycle.
A. Advertising and promotion expenses are usually nearly ratified at this point.
B. Many products go into decline, only to be resurrected in the future as styles come back to
old standards.
C. Companies upgrade their product lines in order to cut costs.
D. Companies market to less profitable segments to squeeze as much profit out of the final
stage as possible.
52. (p. 288) All of the following influence the prices you set for your products EXCEPT
A. costs.
B. customer.
C. competition.
D. employees.
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53. (p. 288) Of all the marketing variables available, which is the easiest to change?
A. Price
B. Product
C. Promotion
D. Placement
54. (p. 288) The optimum price is primarily a function of all of the following EXCEPT

A. demand for the product or service.
B. value delivered by the customer.
C. prices set by competing firms.
D. your business strategy and product placement.
55. (p. 290) _____ is the amount of profit, usually stated as a percentage of the total price.
A. Elasticity
B. Breakeven
C. Margin
D. Markup
56. (p. 290) _____ products have lots of substitutes or are not necessities.

A. Elastic
B. Hybrid
C. Inelastic
D. Augmented
57. (p. 290) Which of the following is an example of an elastic product?

A. Candy bar
B. Antibiotics
C. Heating oil
D. Drinking water
58. (p. 290) Which of the following is an example of an inelastic product?

A. Luxury goods
B. Hamburgers
C. Gasoline
D. Coffee
59. (p. 291) A product for which there are few substitutes and for which a change in price makes
very little difference in quantity purchased is called a(n)
A. hybrid product.
B. total product.
C. elastic product.
D. inelastic product.
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60. (p. 291) A consumer's mental image of what a product price should be refers to
A. breakeven price.
B. internal reference price.
C. fixed cost price.
D. external reference price.
61. (p. 291) _____ prices may come from looking at the competitive ads, researching the
Internet, visiting several stores, or asking friends.
A. Breakeven
B. Internal reference
C. Fixed cost
D. External reference
62. (p. 291-292) Consumers' internal reference price may be based on

A. looking at competitive ads.
B. their understanding of how much it would cost to make it.
C. researching on the Internet.
D. visiting several stores.
63. (p. 294) Increasing market share

A. usually means pricing toward the high end of the competition in order to take market share
from the competition.
B. becomes more popular as a product reaches the decline phase of the product life cycle.
C. should not be an objective for a small business.
D. is a much better option for the small firm than maximizing profits.
64. (p. 295) _____ is the end price to your customer that might be four times from what you got.
A. Skimming
B. Price escalation
C. Premium pricing
D. Partitioned pricing
65. (p. 296) _____ is charging the highest price the market will bear.

A. Skimming
B. Psychological price
C. Breakeven
D. Return pricing
66. (p. 296) What pricing is used for non-status symbol types of products?

A. Prestige pricing
B. Odd-even pricing
C. Premium pricing
D. Captive pricing
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67. (p. 296) Generally, _____ pricing is for an item considered a status symbol, whereas, _____
pricing is used for non-status symbol types of products.
A. skimming; total
B. prestige; premium
C. return; skimming
D. premium; prestige
68. (p. 297) _____ pricing refers to setting the price for a base item and then charging extra for
each additional component.
A. Captive
B. Prestige
C. Partitioned
D. Premium
69. (p. 297) Which of the following refers to setting the price for an item relatively low and then
charging much higher prices for the expendables it uses?
A. Prestige pricing
B. Captive pricing
C. Partitioned pricing
D. Odd-even pricing
70. (p. 298) The practice of setting (usually) three price points: good, better and best quality
refers to which of the following?
A. Captive pricing
B. Partitioned pricing
C. Price lining
D. Breakeven point pricing
71. (p. 298) Identify the term for an attempt to appeal to several different markets.

A. Prestige pricing
B. Captive pricing
C. Price lining
D. Random discounting
72. (p. 298) _____ discounting refers to sales that happen on some regular cycle.

A. Off-peak
B. Bundling
C. Random
D. Periodic
73. (p. 299) A back-to-school sale is an example of

A. periodic discounting.
B. random discounting.
C. price skimming.
D. off-peak pricing.
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74. (p. 299) Senior citizens' discounts are an example of
A. limit pricing.
B. price discrimination.
C. penetration pricing.
D. price signaling.
75. (p. 299) At or near industry average price is called

A. captive pricing.
B. bait pricing.
C. the going rate.
D. price signaling.
76. (p. 299) Selling a name brand at or near cost in order to attract traffic to a retailer is termed
A. bait pricing.
B. loss leaders.
C. price signaling.
D. customary pricing.
77. (p. 299) What is an extremely low penetration price that discourages competitors from

entering a market called?
A. Everyday low price
B. Going rate
C. Price signaling
D. Limit pricing
78. (p. 299) The term for charging the absolute highest possible price due to inelastic demand
is
A. price skimming.
B. premium pricing.
C. professional pricing.
D. penetration pricing.
79. (p. 299) Advertising an inexpensive product and placing it near better, more expensive

models is called
A. reference pricing.
B. captive pricing.
C. bait pricing.
D. limit pricing.
80. (p. 300) "Buy one large pizza and get a regular one free," offer to long-time customers is an
example of
A. partitioned pricing.
B. loyalty programs.
C. referral discounts.
D. coupons.
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81. (p. 300) Charging lower prices at certain times to encourage customers to come during slack
periods refers to
A. off-peak pricing.
B. bundling.
C. random discounting.
D. partitioned pricing.
82. (p. 300) Rebates are a great tool for small businesses because

A. the redemption rate is extremely high.
B. they create loyalty programs.
C. the redemption rate is extremely low.
D. they generate referral businesses.
83. (p. 300) Identify the term used for combining two or more products in one unit and pricing it
less than if the units were sold separately.
A. Factoring
B. Coupons
C. Bundling
D. Loyalty programs
84. (p. 300) What is the term used for combining more than one unit of the same product and
pricing it lower than if each unit were sold separately?
A. Multiple packs
B. Coupons
C. Factoring
D. Loyalty programs
85. (p. 300) These are especially good for getting customers to return to your business.
A. Multiple packs
B. Coupons
C. Bundling
D. Loyalty programs
86. (p. 301) Which of the following are discounts given to customers who introduce friends to
the business?
A. Coupons
B. Referral discounts
C. Periodic discounts
D. Rebates
87. (p. 280) Having generated several toy ideas, the next step Tammy needs to pursue in the new
product development process is
A. product development.
B. idea evaluation.
C. idea screening.
D. commercialization.
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88. (p. 281) The first versions of the toy products that Tammy develops in the formal
development are called
A. hybrids.
B. test markets.
C. total products.
D. prototypes.
89. (p. 285) Once Tammy has introduced her toys in the market, during which stage of the
product life cycle would the acceptance of her products increase and sales and profits grow
faster than at any other time?
A. Growth
B. Maturity
C. Introduction
D. Decline
90. (p. 296) If Tammy were to charge the highest price the market would bear, it would be
called
A. skimming.
B. return pricing.
C. psychological pricing.
D. partitioned pricing.
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CHAPTER 10
21. (p. 308) Small business
owners' unique selling points that will be used to differentiate their
products and/or services from those of the competition refers to their
A. press kits.
B. value proposition.
C. trendiness.
D. segmentation.
22. (p. 309) _____ is the process of dividing the market into smaller portions of people who
have certain common characteristics.
A. Value proposition
B. Market penetration
C. Segmentation
D. CRM
23. (p. 309) Your _____ is the segment(s) you select to concentrate your marketing efforts.
A. target market
B. CRM
C. customer vector
D. value proposition
24. (p. 309) Dividing the market into different segments using certain cities or neighborhoods
refers to _____ segmentation.
A. geographic
B. economic
C. demographic
D. cultural
25. (p. 309) Dividing the market into different segments using income, age, or religion refers to
_____ segmentation.
A. geographic
B. economic
C. demographic
D. cultural
26. (p. 309) A clothing company that divides the market using characteristics of clothing that are
practical, stylish, for a particular sport, etc., refers to segmentation by the
A. demography.
B. economy.
C. trendiness.
D. benefits sought.
27. (p. 313) To develop a(n) _____, one should try to think of three to five key words that would
describe their business to anyone.
A. advertisement
B. succinct message
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C. public relations piece
D. press kit
28. (p. 314) How much of each message conveyance you will use to sell your product as well as
your objective in using each one is known as the
A. promotional mix.
B. marketing mix.
C. AIDA.
D. CRM.
29. (p. 314) _____ is often used to support the corporate identity and value propositions that are
established through _____ efforts.
A. Personal selling; point of sale
B. Public relations; advertising
C. Advertising; personal selling
D. Advertising; public relations
30. (p. 314-315) Which of the following statements about advertising is false?

A. The key for effective advertising is reinforcing the name and what it stands for in the
consumer's mind.
B. For effective advertising, approaches which provide the highest level of certainty possible
in reaching the target market should be used.
C. It is a method where it is easy to discern feedback.
D. Advertising can be done in print ads in newspapers, magazines, and other print media.
31. (p. 315) Brochures and flyers

A. are standard blank papers typically imprinted with your company's name and contact
information.
B. are sales documents to be posted or handed out, typically printed on sheets of colored
paper or printed in color on white stock of paper.
C. will give more information about your firm and products than your business card.
D. provide potential customers an education in your product, including stories of customers'
whose problems were solved, an FAQ list, as well as a page on your products or services.
32. (p. 315) Which of the following statements about signs is false?

A. They are a form of advertising
B. They need to be large enough to be read by passing traffic
C. They should reflect your firm
D. Homemade signs indicate high quality and professionalism
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33. (p. 315) Business stationery
A. puts your name and message in front of potential clients, existing clients, suppliers, and
others.
B. can be produced on your computer and printed with good results.
C. gives more information about your firm and products than brochures and flyers.
D. can be printed on nice paper and put into a pocket folder with a sticker with your firm's
name and address on it.
34. (p. 315) These can be produced for pennies in quantity.

A. Sales packets
B. Signs
C. Promotional novelties
D. Business cards
35. (p. 315) Which of the following provide potential customers an education in your product or

service, including stories of customers' whose problems were solved, an FAQ list, as well as a
page on your products or services, and a page on you and your firm?
A. Promotional novelties
B. Sales packets
C. Business cards
D. Brochures
36. (p. 316) _____ refer to terms included in the hidden portions of a Web page which are used
by search engines to describe your Web site and evaluate its focus and category placement.
A. Press kits
B. Keyword and description tags
C. Brochures
D. Flyers
37. (p. 316) When it comes to promoting a small business that is just starting out, spreading the
news by _____ is the fastest way to build a client base.
A. word-of-mouth
B. full-scale advertising
C. personal selling
D. point-of-sale
38. (p. 316) _____ is a form of communication that encourages the customer to take immediate

action, such as coupons, sales, or contests.
A. Buzz marketing
B. Sales promotion
C. Viral marketing
D. Public relations
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39. (p. 318) Which of the following statements about buzz marketing is false?
A. It has aspects of network marketing in that you tell one person who tells another who tells
still another.
B. The phrase is most commonly used in reference to using electronic media to pass the
message along.
C. It is a sub-discipline of direct marketing.
D. In buzz marketing, if your product is relevant and appealing, it is likely to be picked up and
sent along via e-mail, blog, or a social networking site.
40. (p. 318) Name the electronic equivalent of word-of-mouth advertising, in which the

advertiser's message spreads quickly and widely via e-mail, Web site, blogs, and other online
tools.
A. Referral marketing
B. Telephone marketing
C. Mobile marketing
D. Viral marketing
41. (p. 319) Personal selling
A. involves activities used to establish and promote a favorable opinion by the media.
B. allows you to only guess what future features clients may want to see.
C. includes issue recognition, trendiness, and visuals.
D. has the advantage that you can be flexible in your presentation.
42. (p. 319) Process of personal selling includes all of the following EXCEPT

A. presenting.
B. closing.
C. prospecting and evaluating.
D. deciding.
43. (p. 319-320) _____ means finding out what you can about the clients before approaching
them.
A. Evaluation
B. Closing
C. Prospecting
D. Preparation
44. (p. 320) _____ means cleaning up your list to remove potential clients that are unable or
unlikely to buy your product.
A. CRM
B. Pre-qualifying
C. Cognitive dissonance
D. Closing
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45. (p. 321) Closing the sale refers to
A. asking the prospect to buy your product.
B. being turned down, asking for referrals.
C. delaying the decision to buy for few days.
D. stimulating interest on part of prospects.
46. (p. 321) The trial close technique is described by which of the following?

A. "I'll just need your credit card for payment."
B. "This rate will end at the end of the day."
C. "Which credit card would you like to use to pay for that?"
D. Customer asks to think about it and you say "What are the chances you will buy later?"
47. (p. 321) "This rate will end at the end of the day" describes which of the following closing
techniques?
A. Trial
B. Urgency
C. Assumptive
D. Threatening
48. (p. 321) "I will just need your credit card for payment" represents which of the following
closing techniques?
A. Trial
B. Urgency
C. Assumptive
D. Threatening
49. (p. 322) Doubt that occurs after a purchase has been made is called

A. cognitive dissonance.
B. customer vector.
C. segmentation.
D. trendiness.
50. (p. 322) An inconsistency between experience and belief refers to

A. value proposition.
B. segmentation.
C. trendiness.
D. cognitive dissonance.
51. (p. 323) Identify the strategy whose goal is growth, based on selling existing customers a
product or service they have never bought before.
A. Market expansion
B. Product expansion
D. Diversification
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52. (p. 323) Name the strategy whose goal is growth, based on selling in areas or to groups
previously not served by the business.
A. Market penetration
C. Diversification
D. Market expansion
53. (p. 323) _____ is a strategy whose goal is growth, based on adding new products or services
to the firm's existing collection of offerings.
A. Market penetration
C. Diversification
D. Market expansion
54. (p. 323) Which is the strategy whose goal is growth, based on selling more of the firm's
product or service to the existing customer base?
A. Market expansion
D. Diversification
55. (p. 323) What is the key to CRM?

A. Tracking sales by purchase basis
B. Follow-through and follow-up
C. The data on current or prospective customers
D. Press release and press kit
56. (p. 323) Which of the following data gives you the particulars on your customers?
A. Contact data
B. Performance data
C. Product data
D. Service data
57. (p. 323) _____ data gives you information on the date and type of contact, since in many
sales situations, it can take repeated contacts before a sale is made.
A. Channel
B. Performance
C. Intercommunication
D. Sales
58. (p. 325) Which of the following is a type of CRM report that segments by customer or

customer group on purchases or dates of purchase?
A. Customer vector
B. Sales report
C. Customer service
D. Interim report
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59. (p. 325) If you track sales by purchase basis
A. you might figure how to better target ads or promotions to particular types of customers.
B. you might be able to tell which mailing lists produce the best returns.
C. you can tell which of your advertising efforts resulted in the most sales, so it makes it
easier to decide which marketing efforts to continue.
D. you could find a product which has low quality.
60. (p. 325) You might figure how to better target ads or promotions to particular types of
customers
A. if you track sales by purchase basis.
B. if you look at customer source basis and purchase.
C. by tracking sales organized by product and customer satisfaction.
D. if you link sales and purchase basis to the type of customer.
61. (p. 325) Which of the following is perhaps the simplest and most important analysis of data?
A. Sales by purchase basis
B. Sales by customer
C. Customer source basis and purchase
D. Sales organized by product satisfaction
62. (p. 326) The proof of a CRM effort is seen in all of the following EXCEPT

A. higher levels of customer loyalty in existing customers.
B. higher levels of purchasing from your existing customers.
C. low levels of customer loyalty in new customers.
D. more tracked prospects making initial purchases from you.
63. (p. 326) Which of the following refers to doing what you said you would do?
A. Spin-off
B. Bottom line
C. Follow-up
D. Follow-through
64. (p. 326) This refers to the contacts you periodically make with customers in order to remind
them of your business, and your interest in their business.
A. Follow-up
B. Customer service
C. Follow-through
D. Board meetings
65. (p. 327) Which of the following Acts lets you contact people with whom you have done
business by asking customers' permission to e-mail them?
A. The Communications Act
B. The Do-Not-Call Implementation Act
C. The CAN-SPAM Act
D. The Junk Fax Prevention Act
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66. (p. 328) What is the term for the activities used to establish and promote a favorable opinion
by the media?
A. Press relations
B. Cognitive dissonance
C. Press release
D. Public recognition
67. (p. 328) In the presentation component of personal selling, "A" in AIDA stands for
A. holding the prospects attention.
B. asking permission to present.
C. attending a personal selling presentation.
D. having an all or nothing option in the sale.
68. (p. 328) AIDA in the presentation component of personal selling includes all of the

following EXCEPT
A. getting prospect's attention.
B. stimulating interest.
C. deciding on product.
D. customer taking action.
69. (p. 328) A written announcement intended to draw news media attention to a specific event
is called
A. a press kit.
B. a press release.
C. identification tags.
D. a cultural resonance.
70. (p. 329) The goal of _____ in AIDA is to get people to be potential clients.

A. action
B. desire
C. interest
D. attention
71. (p. 329) The five Ws and one H of the story should be presented in the _____ of the press
release.
A. headline
B. closing paragraph
C. opening paragraph
D. middle of the body
72. (p. 331) A newsworthy item should have all of the following EXCEPT

A. public recognition.
B. public importance.
C. public interest.
D. public power.
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73. (p. 331) _____ should include product or service brochures, business cards, product
information, and other materials that can provide background material for a reporter; they
should include a letter of introduction and may include a brief history of the firm and
information about the owner and other key managers.
A. Press kits
B. The promotional mix
C. Flyers
D. Business stationery
74. (p. 331) Identify the concept in public recognition which alludes to the extent to which the
public is familiar with the problem at hand.
A. Public importance
B. Currency
C. Issue recognition
D. Public recognition
75. (p. 331) A concept in public recognition which alludes to the fit of the topic to current
fashion or public interest refers to
A. currency.
B. trendiness.
C. cultural resonance.
D. mat release.
76. (p. 331) A concept in public importance which alludes to potential shifts in control or

influence refers to
A. currency.
B. power.
C. trendiness.
D. proximity.
77. (p. 331) Public recognition includes

A. power.
B. proximity.
C. a good story.
D. human interest.
78. (p. 331) Public interest includes all of the following EXCEPT

A. a good story.
B. human interest.
C. visuals.
D. power.
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79. (p. 331) Which of the following is a concept in public importance that alludes to the degree
to which the issue is immediate in its impact?
A. Currency
B. Power
C. Proximity
D. Famous faces
80. (p. 331) A concept in public interest which alludes to a character to whom the public can
relate refers to
A. cultural resonance.
B. good story.
C. trendiness.
D. human interest.
81. (p. 332) A concept in public interest which alludes to events with a broad appeal within the
market or population refers to
A. cultural resonance.
B. good story.
C. trendiness.
D. human interest.
82. (p. 332) Which of the following refers to activities used to establish and promote a favorable
opinion by the public?
A. Public relations
B. Public recognition
C. Public importance
D. Public interest
83. (p. 332) Identify the term that helps in building goodwill and is a good way to get the word
out about your firm.
A. Publicity
B. Sponsorships
C. Donations
D. Power
84. (p. 332) Information about your company and its activities that is disseminated to the public
in order to get their good opinion is known as
A. a mat release.
B. a succinct message.
C. publicity.
D. public interest.
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85. (p. 333) Monetary or other gifts to organizations or people who are in need are called
A. value propositions.
B. mat releases.
C. sponsorships.
D. donations.
86. (p. 334) A news release that is typeset and thus may be photographically reproduced for
inclusion in a newspaper is called a(n)
A. social media release.
B. product press release.
C. event release.
D. mat release.
87. (p. 315) Harry just received in mail several boxes of _____ which puts his name and
message in front of potential clients, existing clients, suppliers, and others.
A. brochures
B. sales packets
C. business stationery
D. flyers
88. (p. 315) If Harry wants to develop brochures for his company's services, he needs to know
that they
A. are sales document to be posted or handed out, typically printed on sheets of colored paper
or printed in color on white stock of paper.
B. are standard blank papers typically imprinted with his company's name and contact
information.
C. can be run off rather inexpensively at many copy centers.
D. give less information about his firm and products than his business card.
89. (p. 316) Which of the following would be the fastest way for Harry to build his client base?
A. Word-of-mouth
B. Full-scale advertising
C. Personal selling
D. Point-of-sale
90. (p. 329) In developing a press release for his company, Harry needs to include the five Ws
and one H in the
A. headline.
B. closing paragraph.
C. opening paragraph.
D. middle of the body.
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CHAPTER 12
33. (p. 374) Examining the current situation includes all of the following EXCEPT
A. what your existing competition is doing.
B. how you define your product or service.
C. how will you solve employee grievances.
D. to whom will you sell.
34. (p. 374) Creating a(n) _____ plan is the first step in putting together your business plan.
A. marketing
B. operational
C. financial
D. human resource
35. (p. 374) _____ refers to systematic collection and interpretation of data to support future

marketing decisions.
A. Marketing plan
B. Marketing research
C. Socialization
D. Sales forecasting
36. (p. 374) _____ research is research gathered to answer a specific marketing question.

A. Primary
B. Post secondary
C. Secondary
D. Consumer
37. (p. 374) Ethan is a marketing research executive for Coca Cola. Recent sales figures suggest
that the sales for Coke have fallen drastically in Cincinnati, Iowa. The regional manager
wants Ethan to conduct a market research in Cincinnati. Which of the following research
should Ethan use?
A. Post secondary
B. Secondary
C. Primary
D. Closed
38. (p. 374) _____ refers to information already collected for some other purpose than the
current problem.
A. Primary data
B. Open-ended research
C. Secondary data
D. Closed research
39. (p. 374) Which of the following is a problem with secondary data?

A. It may not be economical
B. It may not be timely
C. It may be too user-friendly
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D. It may be competitive
40. (p. 374) The challenge in _____ is finding data.

A. primary research
B. secondary analysis
C. ethnographic research
D. focus group
41. (p. 378) Data gathered by simple observation seeing what customers do rather than asking
them refers to
A. focus group.
B. survey methodology.
C. ethnographic research.
D. secondary research.
42. (p. 378) Noel is a management student who needs to conduct primary data for his project on
"Retail Marketing." He goes to a local department store and observes customers. He makes a
note of the different products the customers choose, and the time they spend in making
decisions in choosing different products. Which of the following best explains this type of
research?
A. Focus group
B. Survey
C. Secondary
D. Ethnographic
43. (p. 378-379) Which of the following is an informal approach and a good way to test your
questions to make sure your audience understands exactly what you are asking?
A. Ethnographic research
B. Survey
C. Focus group
D. Branching
44. (p. 378) A form of data gathering from a small group led by a moderator is called
A. focus group.
B. survey methodology.
C. ethnographic research.
D. secondary research.
45. (p. 379) A data collection method using a questionnaire is called

A. secondary research.
B. a survey.
C. a focus group.
D. ethnographic research.
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46. (p. 379) Which of following is the most expensive survey method?
A. Mail
B. Phone
C. In-person
D. On line
47. (p. 379) This form of survey has the lowest return rate and does not allow for much
flexibility.
A. Mail
B. Face To Face
C. Telephonic
D. Internet
48. (p. 379) Which of the following are the two major types of questions used in surveys?
A. Formal and informal
B. Primary and secondary
C. Open-ended and close-ended
D. Personal and professional
49. (p. 379) Identify the form of questions that gives you several predetermined groups from
which to choose.
A. Categorical questions
B. Scalar questions
C. Dichotomous questions
D. Open-ended questions
50. (p. 380) These questions provide data that are more difficult to tabulate and the answers can
be difficult to compare.
A. Categorical questions
B. Open-ended questions
C. Scalar questions
D. Dichotomous questions
51. (p. 379) Questions that have only two possible choices are called _____ questions.
A. open-ended
B. categorical
C. dichotomous
D. scalar
52. (p. 379) Jeff is a market research executive who has prepared questionnaires’ for his
respondents. The questionnaires allow respondents to answer in either a "Yes" or a "No." This
questionnaire can be categorized under which of the following question type?
A. Open-ended
B. Categorical
C. Scalar
D. Dichotomous
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53. (p. 379) If you are asked a question: What is your ethnicity? White, African American,
Hispanic, Asian, other, it reflects a _____ question.
A. open-ended
B. categorical
C. dichotomous
D. scalar
54. (p. 379) Questions that allow respondents to express themselves as they choose are called
_____ questions.
A. open-ended
B. categorical
C. dichotomous
D. scalar
55. (p. 379) With _____ questions, it is much easier to compare groups and statistically analyze.
A. informal
B. open-ended
C. close-ended
D. subjective
56. (p. 379) _____ questions can help you find new niches and perfect your product or service
before you introduce it.
A. Categorical
B. Dichotomous
C. Open-ended
D. Scalar
57. (p. 379) Which of these is not a close-ended question type?

A. Scalar
B. Dichotomous
C. Categorical
D. Subjective
58. (p. 379) Open-ended questions are best for all of these EXCEPT

A. gathering preliminary information.
B. when samples are small.
C. comparing groups and statistical analysis.
D. when there are data that is difficult to get any other way.
59. (p. 381) One of the most important pieces of the marketing plan that determines your
profitability and ultimately whether you will stay in business or not is
A. knowing what your sales will be.
B. regulations that affect your business.
C. estimating the human resource need.
D. having the succession plan in place.
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60. (p. 382) A Web-based program that uses artificial intelligence technique to automate tasks
such as searches is called a(n)
A. e-tailer.
B. bot.
C. blogger.
D. tag identification.
61. (p. 382) The characteristic that separates one company from another in product, price,
promotion and/or distribution, is referred to as
A. differential advantage.
B. sales forecasting.
C. marketing research.
62. (p. 382) Which of the following is also known as competitive advantage?

A. Marketing strategy
B. Sales forecasting
C. Differential advantage
D. Marketing research
63. (p. 385) Which of these represent the first step of a marketing plan?

A. Examining the current situation
B. Discussing the target market
C. Creating a detailed marketing strategy and objectives
D. Addressing the 4 P's
64. (p. 385) Which of these is the final step of a marketing plan?

A. Examining the current situation
B. Discussing the target market
C. Creating a detailed marketing strategy and objectives
D. Addressing the 4 P's
65. (p. 385) A marketing plan examines all of these areas EXCEPT

A. target market.
B. current situation.
C. marketing strategy and objectives.
D. employee issues involving product creation.
66. (p. 385) The process of dividing the market into groups that have somewhat homogeneous
needs for a product or service is called
A. market segmentation.
B. sales forecasting.
C. marketing research.
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67. (p. 385) When you divide the market you serve based on regions, such as, Northeast,
Southeast, and Midwest, it is called
A. personality segmentation.
B. benefit segmentation.
C. demographic segmentation.
D. geographic segmentation.
68. (p. 385-386) When you divide your total market based on age and income, it is called
A. personality segmentation.
B. benefit segmentation.
C. demographic segmentation.
D. geographic segmentation.
69. (p. 386) An automobile company has different categories of cars for different types of
customers. The have segmented it as: speed cars, safety cars, capacity cars etc. Customers can
choose their cars accordingly. Which of the following best explains this type of
segmentation?
A. Demographic
B. Geographic
C. Personality
D. Benefit
70. (p. 387) Generally marketers choose one of these targeting strategies EXCEPT

A. undifferentiated.
B. concentrated.
C. differentiated.
D. cost-leadership.
71. (p. 387) A _____ is the population segment or segments that are likely to buy your product
or service.
A. trade area
B. target market
C. test market
D. national market
72. (p. 387) A(n) _____ strategy is useful when there is really no difference in the reasons why
consumers buy your products.
A. undifferentiated
B. concentrated
C. differentiated
D. demographic segmentation
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73. (p. 387) Which of the following strategy is ideal while selling bottled water in a beach on a
hot summer day?
A. Benefit segmentation
B. Concentrated
C. Differentiated
D. Undifferentiated
74. (p. 387) A(n) _____ strategy is used when there is more than one market segment likely to
need a product or service.
A. undifferentiated
B. concentrated
C. differentiated
D. cost-leadership
75. (p. 387) Snackos is a company that manufactures snacks. They advertise their products with
the catch phrase "Snackos, snacks with nutritious value and more for your money". What kind
of strategy are they following?
A. Differentiated strategy
B. Concentrated strategy
C. Undifferentiated strategy
D. Cost leadership strategy
76. (p. 387) A(n) _____ strategy is used when a firm chooses one particular segment on which to
focus all its efforts.
A. undifferentiated
B. concentrated
C. differentiated
D. cost-leadership
77. (p. 387) Maya runs a business of home-based new born baby wear through the Internet
called "First Memories". She targets her business at all first time mothers around the globe.
Identify the type of marketing strategy involved.
A. Differentiated strategy
B. Concentrated strategy
C. Undifferentiated strategy
D. Cost leadership strategy
78. (p. 388) Which of these tools is useful in conducting a situation analysis?

A. SWOT analysis
B. Marketing research
C. Sales forecasting
D. Ethnographic research
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79. (p. 388) The key component in your situation analysis is to consider your
A. employees.
B. suppliers.
C. distributors.
D. competitors.
80. (p. 388) In situation analysis, you need to consider those who provide the same product or
service, otherwise known as
A. promotional marketers.
B. direct competition.
C. your product distributors.
D. indirect competition.
81. (p. 388) Companies that provide alternates that are dissimilar to your product/service that
consumers might choose to meet a similar need are called
A. direct competition.
B. simulators.
C. indirect competition.
D. promotional marketers.
82. (p. 388) Identifying the weaknesses of your competition would result in the identification of

_____ for your firm.
A. strengths
B. weaknesses
C. opportunities
D. threats
83. (p. 389) Which of these is NOT one of the 4Ps?

A. Product
B. Price
C. Place
D. Plan
84. (p. 389) An example or photo of your product or service is a great visual aid in helping you
sell your plan in your written market plan. This is an example of
A. defining your product.
B. defining your product price.
C. using a promotional tool for your product.
D. defining a distribution system for your product.
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85. (p. 390) A firm is planning to introduce a new product in the market. Which of the following
strategy includes determining the ideal medium through which the customers should be
educated?
A. Product
B. Placement
C. Pricing
D. Promotion
86. (p. 374) Fred has received various different numbers from the local Chamber of Commerce
and Economic Development office on how big the potential market is. Which of these can
verify the size of the potential market for Fred?
A. Marketing research
B. Profit forecasting
C. Market segmentation
D. Location analysis
87. (p. 374) The numbers and data offered to Fred by the Chambers of Commerce and
Department of Economic Development are called
A. open-ended research.
B. primary data.
C. close-minded figures.
D. secondary data.
88. (p. 379) If Fred decides to conduct a survey to collect data, compare groups, and statistically
analyze data, which of these questions should he avoid?
A. Scalar
B. Dichotomous
C. Open-ended
D. Categorical
89. (p. 379) If Fred wants to find new niches and perfect his services before he opens Super
Sports, he should focus on which of these questions?
A. Scalar
B. Dichotomous
C. Open-ended
D. Categorical
90. (p. 385) In developing his marketing plan, Fred should know that _____ should be his first
step.
A. conducting a situation analysis
B. identifying the target market
C. addressing the 4 Ps
D. detailing the marketing strategy and objectives
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CHAPTER 19
21. (p. 608) Adding employees
A. decreases the amount of work that can be done.
B. reduces the legal requirements faced by an employer.
C. increases the demands on the owner.
D. increases the business's profitability.
22. (p. 608) Compensation, training time, employee tax, and accounting costs are some of the
additional expenses involved in adding
A. part-time employees.
B. full-time employees.
C. contract employees.
D. temporary employees.
23. (p. 608) The match between the needs, expectations, and culture of the small business with
the expectations and the skills of the individual employees is called
A. employee referral.
B. employee fit.
C. job description.
D. job analysis.
24. (p. 609) _____ refers to the trial period in which an employee has temporary status before a
formal offer to work full time is presented.
A. Test period
B. Probationary period
C. Employee referral period
D. Psychological contract period
25. (p. 609) When you hire employees, typically, a probationary period lasts

A. 180 days.
B. 90 days.
C. 30 days.
D. 1 year.
26. (p. 610) Which among the following federal employment laws requires the payment of same
wages to males and females for work requiring equal skill, effort, and responsibility in similar
working conditions?
A. Fair Labor Standards Act
B. Immigration Reform and Control Act of 1986
C. Worker Adjustment and Retraining Notification Act
D. Executive Order No. 11246
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27. (p. 610) Which among the following federal employment laws prohibits discrimination with
respect to any condition of employment based on race, color, sex, religion, or national origin,
except where religion, sex, or national origin is a bona fide occupational qualification which
is reasonably necessary to the conduct of a particular business?
B. Title VII of the Civil Rights Act of 1964
D. Executive Order No. 11246
28. (p. 610) The Immigration Reform and Control Act of 1986

A. requires payment of same wages to males and females.
B. prohibits hiring of unauthorized aliens.
C. includes a prohibition on harassment.
D. governs confidentiality of medical information.
29. (p. 610) The_____ requires employers to complete I-9 forms for each employee.

D. Immigration Reform and Control Act of 1986
30. (p. 610) The Age Discrimination in Employment Act prohibits employment discrimination

against individuals who are _____ years old and older.
A. 30
B. 40
C. 50
D. 60
31. (p. 610) The Americans with Disabilities Act

A. requires that make employers make reasonable accommodation for limitations of qualified
applicant or employee unless to do so creates undue hardship.
B. prohibits discrimination with respect to any condition of employment based on race, color,
sex, religion, or national origin.
C. prohibits employment discrimination based on national origin or citizenship status.
D. prohibits employers from using polygraph results as basis for employment action.
32. (p. 610) The Family and Medical Leave Act requires employers to give employees up to
_____weeks leave, paid or unpaid, without loss of position, seniority, or benefits, for a
qualifying condition or event.
A. 4
B. 6
C. 8
D. 12
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33. (p. 610) Which among the following federal employment laws requires employers to give 60
days advance notice prior to a plant shutdown or layoff of 50 or more employees?
A. Executive Order No. 11246
34. (p. 610) Which among the following federal employment laws requires employers to

implement an affirmative action plan for hiring and promoting females and minorities?
A. Executive Order No. 11246
35. (p. 612) Which among the following is a method that has traditionally been used by
businesses to hire employees?
A. Employee referral
B. Internet recruitment
C. Help wanted ads
D. Career service offices
36. (p. 612) A relatively low-cost, although time-intensive method of recruiting that can include
colleagues, business professionals, vendors, alumni, and advisory board members is referred
to as
A. internal job postings.
B. internet recruiting.
C. networking.
D. outsourcing.
37. (p. 612) _____ allows you to search a resume database or post a job description on the web.
A. Networking
B. Employee referral
C. Internet recruiting
D. Outsourcing
38. (p. 612) _____ is an underused, low-cost method which rewards your employees for

recommending potential candidates that would be a great fit.
A. Networking
B. Employee referral
D. Outsourcing
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39. (p. 612) A small business owner who knows exactly what he or she wants can use filters to
search vast numbers of résumés with pinpoint accuracy using this.
A. Employee referrals
B. Internet recruiting
C. Networking
D. Outsourcing
40. (p. 612) These should be handled formally with guidelines such as following-up on leads

within 24 hours even by small businesses.
A. Employee referrals
B. Internet recruiting
C. Networking
D. Outsourcing
41. (p. 612) These encourage companies to post openings to their job bank to recruit at both the
undergraduate and the graduate levels.
A. Professional groups
B. Company Web sites
D. Career service offices
42. (p. 612) _____ are jobs in businesses offered to students, arranged through universities.

A. Assignments
B. Careers
C. Internships
D. Referrals
43. (p. 613) Which of these refers to contracting with others outside your firm to do work that
would otherwise be done within your firm?
A. Networking
B. Employee referrals
D. Outsourcing
44. (p. 613) Independent contractors who provide specialized business services or support from

a distance, through different methods of communication are known as
A. virtual employees.
B. temporary employees.
C. job share employees.
D. leased employees.
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45. (p. 613) Which among the following statements is true regarding virtual employees in small
businesses?
A. In the small business, virtual employees are not hired as full-time employees.
B. Small business owners who work with virtual employees have to deal with taxes,
unemployment insurance, sick leave, vacation pay, and benefits.
C. Small business owners are required to provide additional office space for their virtual
employees.
D. Small business owners are responsible for the development and supervision of their virtual
employees.
46. (p. 613) In order to manage and foster productivity among virtual employees, small business
owners
A. should regularly communicate with them via e-mail.
B. should attempt to micromanage them.
C. should consistently review status reports with them.
D. should hire students as interns.
47. (p. 614) Consider these alternative methods to hire an employee at no cost if your budget

does not allow for a paid employee EXCEPT
A. volunteers.
B. barter.
C. virtual employees.
D. internships.
48. (p. 614) Which of these defines and discusses all the essential knowledge, skills, and abilities
that are needed to fill a position?
A. Job analysis
B. Job prospects
C. On-the-job training
D. Job description
49. (p. 616) Which of these is the last step in crafting a job description?

A. Job overviews
B. Special requirements
C. Credentials and experiences
D. Duties and responsibilities
50. (p. 616) Which of these is the first step in crafting a job description?

A. Job overview
B. Duties and responsibilities
C. Job title
D. Credentials and experience
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51. (p. 616) Which of the following steps in writing a job description specifies the basic qualities
that an employee should possess to perform the job?
A. Give a job overview
B. Define the duties and responsibilities
C. Knowledge, skills, and abilities
D. Special requirements
52. (p. 616) The level of education required to perform a particular job would be mentioned

under which section of the job description?
A. Special requirements
B. Define the duties and responsibilities
C. Knowledge, skills, and abilities
D. Credentials and experience
53. (p. 617) When recruiting, once a job description is prepared, the next step is to
A. develop questions for interviewing.
B. create a job analysis.
C. prepare a training module for employees.
D. create a Web site.
54. (p. 617) In evaluating potential employees, a small business owner

A. should hire a moderately qualified person in case filling the position is an urgent
requirement.
B. should ensure that only a single interviewer meets with a candidate in order to avoid
conflicting evaluations.
C. should design interview questions such that "yes" or "no" answers are not applicable.
D. should accept the candidate's word that he or she possesses a certain skill or knowledge
base.
55. (p. 619) There are two broad types of training:

A. on-the-job and off-the-job methods.
B. free and paid methods.
C. online and offline methods.
D. in-house and outsourced methods.
56. (p. 619) _____ training is delivered to employees while they perform their regular jobs.
A. Online
B. On-the-job
C. Paid
D. Off-the-job
57. (p. 619) Which among the following is an on-the-job training method?

A. Lectures
B. Case studies
C. Coaching
D. Role playing
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58. (p. 620) Which of these is an off-the-job training method?
A. Orientations
B. Apprenticeships
C. Case studies
D. Coaching
59. (p. 620) In designing on-the-job instruction that gives an employee a method to complete a

certain task in a job, it is important to
A. use a bulleted list when the order in which tasks are to be performed is important.
B. put notes, warnings, and prerequisite conditions after the list item to which they refer.
C. present any necessary background information after the instructions.
D. use a level of detail that is appropriate to the employees' skill level.
60. (p. 620) Which of these is a suggested guideline for training?

A. It should be provided only at the initial stage of employment.
B. Employees should practice what they have learned on their own time.
C. Have employees sign long-term contracts so they do not leave after receiving training.
D. Think of it as an investment.
61. (p. 621) These beliefs are based on the perception that promises have been made in
exchange for certain employee obligations such as giving of their energy, time, and technical
skills.
A. Open-book policy
B. Work facilitation
C. Psychological contract
D. Autonomy
62. (p. 621) According to Jill Kickul's research, which of these factors is most important to

employees?
A. Autonomy and growth
B. Benefits
C. Rewards and opportunities
D. Job security
63. (p. 621) Which of these factors was least important to employees, according to Jill Kickul's
research?
A. Work facilitation
B. Benefits
D. Autonomy and growth
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64. (p. 621) Which of these refer to employees' beliefs about the promises between the employee
and the firm?
A. Open-book policy
B. Autonomy
C. Work facilitation
D. Psychological contract
65. (p. 621) _____ refers to the concept that key employees should be able to see and understand
a firm's financials, that they should have a part in moving the numbers in the right direction,
and that they should have a direct stake in the strategy and success of the firm.
A. Open-book policy
B. Autonomy
C. Work facilitation
D. Psychological contract
66. (p. 621) Which of the following is a psychological contract item that comes under the factor
of job security and work responsibilities?
A. Challenging and interesting work
B. Freedom to be creative
C. Career guidance and mentoring
D. Well-defined job responsibilities
67. (p. 621) Meaningful work is a psychological contract item described under which factor by

Jill Kickul?
A. Job security and work responsibilities
68. (p. 621) Which of the following psychological contract item comes under benefits?

A. Job security
B. Tuition reimbursement
C. Adequate equipment to perform job
D. Increasing responsibilities
69. (p. 621) Which among the following is a psychological contract term related to work

facilitation?
A. Career guidance and training.
B. Continual professional training.
C. A reasonable workload.
D. Adequate equipment to perform the job.
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70. (p. 621) Sharing ideas, working toward a common goal, analyzing one another's work, and
communicating cross functionally are related to
A. training.
B. teamwork.
C. recognition.
D. work facilitation.
71. (p. 621) Job training is a psychological contract item described under which factor category
by Jill Kickul?
A. Job security and work responsibilities
72. (p. 622) _____ means letting employees make on-the-spot decisions for the companies' best
interest. It requires giving employees permission to act, the knowledge to act, and the skill to
act.
A. Recognition
B. Training
C. Empowerment
D. Teamwork
73. (p. 622) There are two parts to a formal performance appraisal:

A. the self-appraisal and the review by the supervisor.
B. the internal review and the external review.
C. the review of past accomplishments and the setting of future objectives.
D. the performance review and the pay review.
74. (p. 623) A(n) _____ should be filled out and returned to you before the scheduled
performance review so that you can learn the employees' goals, interests, and self-evaluation
when you are crafting your comments.
A. appraisal form
B. application form
C. enrollment form
D. online form
75. (p. 623) One of the first steps in developing a compensation plan is

A. to determine your organization's salary philosophy.
B. to develop a job description.
C. to create job analysis.
D. to pay an above-market salary to create loyalty.
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76. (p. 623) After determining an organization's compensation philosophy, the next step in
developing a compensation plan is
A. to develop a job description.
B. to find comparison factors for salary.
C. to establish a total reward system.
D. to structure the compensation plan.
77. (p. 624) This is the amount needed for a person to meet the basic necessities of life from a
single job.
A. Fair wage
B. Employee benefits
C. Living wage
D. Benefit plans
78. (p. 625) All of the following are examples of long term incentives to employees that help
retain valuable team members EXCEPT
A. profit-sharing plans.
B. stock options.
C. stock grants.
D. employee bonuses.
79. (p. 626) Identify the term that refers to the privileges, services or even tangible items given
to employees as part of the overall compensation and benefits package.
A. Bonuses
B. Long-term incentives
C. Perks
D. Health insurance
80. (p. 626) 401(k) plans are relatively _____ to administer and are _____ expensive than
traditional pension plans.
A. difficult; more
B. easy; less
C. complex; less
D. easy; more
81. (p. 626) Making no distinction between sick, vacation, and personal days and allowing
employees a set number of days off each year to be used at their discretion
A. prevents employees from abusing sick days.
B. causes employees to lie more often when they need to take the day off.
C. increases absenteeism in the workplace.
D. reduces workplace satisfaction.
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82. (p. 626) The rule of thumb is that perks like these should take no more than _____of the
annual personnel budget.
A. 3 percent
B. 5 percent
C. 7 percent
D. 10 percent
83. (p. 627) Which among the following are the three key components of entrepreneurial
leadership?
A. Inspiration, vision, and innovation.
B. Innovation, opportunities, and operations.
C. Innovation, operation, and inspiration.
D. Operations, vision, and opportunities.
84. (p. 628) Identify the management philosophy of selecting and promoting people based on

family ties.
A. Nepotism
B. Capitalism
C. Meritocracy
D. Democracy
85. (p. 628) Which of the following is a management philosophy of selecting and promoting

people based solely on their being the most capable person for the job?
A. Nepotism
B. Capitalism
C. Meritocracy
D. Democracy
86. (p. 629) To treat family and nonfamily as similarly as possible, it is important to

A. have separate personnel policies for family and nonfamily members.
B. create career ladders for nonfamily members.
C. provide favorable treatment to nonfamily members.
D. guarantee the possibility of employee ownership.
87. (p. 630) The term associated with objectively evaluating how well someone is doing their
job is called
A. line of appeal.
B. job metrics.
C. transparent procedures.
D. job basics.
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88. (p. 631) Which of these is NOT a suggested fair personnel policy guideline across family
and non-family members?
A. Hiring the best possible candidate for the position.
B. Having clear performance expectations.
C. Having clearly differentiated personnel policies for family and non-family members.
D. Having clearly defined boundaries for each role.
89. (p. 631) _____ means having a way for the person who has failed to meet a metric, or made
a mistake, or is facing firing to have their side of the story heard.
A. Job basics
B. Transparent procedures
C. Lines of communication
D. Line of appeal
90. (p. 609) Uncle Bob can hire an individual with a probationary period. This probationary
period typically lasts
A. 30 days.
B. one year.
C. six weeks.
D. 90 days.
91. (p. 614) To really understand what he wants the person hired to do, Uncle Bob needs to
develop a _____ which defines and discusses all the essential knowledge, skills, and abilities
that are needed to fill the position.
A. job description
B. job analysis
C. job prospect
D. job training
92. (p. 616) Which of these is the first step Uncle Bob needs to start with, in crafting a job
description?
A. Duties and responsibilities
B. Job training
C. Job overview
D. Job title
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CHAPTER 1

Multiple Choice Questions

28. (p. 5) The Small Business Administration categorizes a business in the U.S. as small, if it

29. (p. 5) Among SMEs, medium enterprises have _____ people.

30. (p. 5) A business owned by an individual or small group is referred to as a(n)

31. (p. 5) _____ refers to constant or at least daily management of a business by its owner.

33. (p. 6) Truly entrepreneurial businesses are characterized by _____, in their products,

37. (p. 7) People starting high-growth ventures

38. (p. 7) The key market knowledge for a small business

39. (p. 7) Which of the following is a characteristic of a small business?

40. (p. 7) Which of the following is an attribute of a high-growth venture?

42. (p. 7) Identify the characteristic of a high-tech venture.

46. (p. 8) Why are small businesses considered the economic core of society?

50. (p. 8) The resource constrained sector

52. (p. 8) Which of the following is a reward that is rarely mentioned by entrepreneurs?

57. (p. 10, 14) Which of the following is NOT a myth about small businesses?

59. (p. 11) According to Sageworks, in 2008, amid a recession, which of the following

62. (p. 12) A business name or government registration, a phone or e-mail address dedicated to

64. (p. 13) Which is the most frequently occurring element of the BRIE model?

71. (p. 15) According to the U.S. Small Business Administration, small businesses generate

75. (p. 18) Entrepreneurship levels in countries such as Germany, Israel, the Republic of Korea,

76. (p. 19) Which of the following statements about virtual instant global entrepreneurship

77. (p. 19) Which aspect of entrepreneurship refers to being in-tune with one's market?

82. (p. 20) Identify the type of entrepreneurship which concentrates typically on innovation and

83. (p. 20) Which of the following best describes a corporate form of entrepreneurship?

23. (p. 28) Which of the following is at the core of exchange in the BRIE model?

28. (p. 30) Which of the following statements about the task environment is true?

29. (p. 30) Which of the following would be a part of the task environment?

31. (p. 30) Which of the following is an example of the general environment?

32. (p. 30) The economic sector includes

35. (p. 33) All of the following are true of social capital EXCEPT

36. (p. 33) Which of the following includes characteristics of a business, like trust,

38. (p. 33) The two ways to build social capital are through

39. (p. 33) _____ is the major component of "goodwill," and can be found on a business's

43. (p. 34) Selling brand name merchandise or services is a people-based legitimate indicator

44. (p. 34) Having well-known or well-regarded owners, employees, supporters, or

47. (p. 34) Documentation and demonstration offered for products are product-based

48. (p. 34) Which of the following is a product-based legitimacy indicator?

49. (p. 34) Having trademarks, service marks, patents, or copyrights are product-based

50. (p. 34) Setting technological or service standards adopted by competitors are product-based

51. (p. 35) Which of the following is an organization-based legitimacy indicator?

54. (p. 36) Which of the following statements about legitimacy indicators is true?

55. (p. 36) An entrepreneur's relationships and contacts with others is termed as

60. (p. 40) Which of the following is the largest online social networking site?

61. (p. 40) Which of the following is NOT a key to success in electronic networking?

62. (p. 40) Electronic social networks

66. (p. 41) _____ is an approach to operating a firm or a line of business which identifies,

68. (p. 42) Green retailing is

73. (p. 42) The first step of ethical decision-making is

74. (p. 43) Which of the following is NOT a question in step one of ethical decision-making?

77. (p. 44-45) Which of the following statements about caveat emptor is true?

86. (p. 42) The situation that Amanda faces can be described as a(n)

22. (p. 58) Unlike _____, _____ are actually risk-averse.

29. (p. 60) The forms of business-related expertise are called

30. (p. 62) The competency suggested by _____ relates to the organizational and business

32. (p. 62) Key business functions and industry-specific knowledge are parts of _____

33. (p. 62) Getting organized and registered—which creates a boundary—is an example of

34. (p. 62) The ability or skill of the entrepreneur at finding expendable components necessary

35. (p. 62) The intention component of the BRIE model reflects _____ competencies.

44. (p. 63) Which of the following relates to expert businesses?

45. (p. 63) Following certain "best practices" are typical of these types of businesses.

47. (p. 63) The middle level of professionalization is called _____, where as opposed to a "best"

49. (p. 63) At which of these levels of professionalization does the entrepreneur do nearly

22. (p. 58) Unlike _, _ are actually risk-averse.