Chapter 3

Question 1

Small Business Association

Answer 1

government agency charged with assisting small businesses

Question 2

small business

Answer 2

independently owned business that has relatively little influence in its market

Question 3

entrepreneurs

Answer 3

businessperson who accepts both risks and opportunities involved in creating and operating a new business

Question 4

entrepreneurship

Answer 4

process of seeking business opportunities under conditions of risk

Question 5

established markets

Answer 5

one in which many firms compete according to relatively well defined criteria

Question 6

niche

Answer 6

a segment of a market that is not currently being exploited

Question 7

first mover advantage

Answer 7

any advantage that comes to a firm because it exploits an opportunity before any other firm does

Question 8

business plan

Answer 8

document in which the entrepreneur summarizes their business strategy for the proposed new venture and how the strategy will be implemented

Question 9

franchise

Answer 9

arrangement in which a buyer (franchisee) purchases the right to see the product of the seller (franchiser)

Question 10

venture capital companies

Answer 10

group of small investors who invest money in companies with rapid growth potential

Question 11

small business investment company

Answer 11

government regulated investment company that borrows moment from the SBA to invest in or lend to a small business

Question 12

Small Business development center

Answer 12

consolidates information from various disciplines and makes it available to small businesses

Question 13

sole proprietorship

Answer 13

business owned and usually operated by one person who is responsible for all debts

Question 14

unlimited liability

Answer 14

legal principle holding owner responsible for paying off all debts of a business

Question 15

general partnership

Answer 15

business with two of more owners who share and operate the firm and financial responsibly for debts

Question 16

silent partner

Answer 16

invests all the funds needed but plays no managerial role

Question 17

sweat equity

Answer 17

the partner who invests no money, gradually gains ownership via labor

Question 18

limited partnership

Answer 18

consists of limited partner and a general/active partner

Question 19

limited partner

Answer 19

partner who does not share in a firm’s management and is liable for its debts only to the limits of said partner’s investment

Question 20

general/active partner

Answer 20

partner who actively manages a firm and has unlimited liability

Question 21

corporation

Answer 21

business that legally is considered an entity separate from its owners and is liable for it sown debts; owner’s liability extended to the limits of their investments

Question 22

limited liability

Answer 22

investors are liable for a firm’s debts only to the limits of they personal investments in it

Question 23

tender offer

Answer 23

offer to buy shares made by a prospect buyer directly to target a corporation’s shareholders who then make individual decisions about where to sell

Question 24

double taxation

Answer 24

taxes may be payable both by a corporation’s profits and by shareholders on dividend incomes

Question 25

closely/privately held corporation

Answer 25

stock is held by only a few people and it is not for sale to the general public

Question 26

publicly held corporation

Answer 26

stock is widely held and available for sale to the general public

Question 27

S Corpoation

Answer 27

hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes

Question 28

limited liability corporation

Answer 28

hybrid of publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability

Question 29

professional corporation

Answer 29

allows professionals to take advantage of the benefits of a corporation while granting limited business liability and unlimited professional liability

Question 30

multinational corporation

Answer 30

(translational) spans over national borders

Question 31

corporate governance

Answer 31

roles of shareholders, directors, and all other managers in corporate decision making and accountability

Question 32

stockholders

Answer 32

owners of shares of stock in a corporation

Question 33

board of directors

Answer 33

governing body of a corporation that report its shareholders and delegates power to run its day to day operations while remaining responsible of sustaining assets

Question 34

officers

Answer 34

top management team of a corporation

Question 35

strategic alliance

Answer 35

strategy in which two of more organization collaborate on a project for mutual gain

Question 36

joint venture

Answer 36

strategic alliance in which the collaboration involves joint ownership of the new venture

Question 37

employed stock ownership plan

Answer 37

arrangement where corporation hold its own stock in toys t for its employees who gradually receive ownership of the sock and control its voting rights

Question 38

institutional investors

Answer 38

large investors such as mutual funds or pension funds that purchase large blocks of corporate stock

Question 39

merger

Answer 39

union of two corporations to form a new corporation

Question 40

acquisition

Answer 40

purchase of one company by another

Question 41

divestiture

Answer 41

strategy whereby a firm sells one or more of its business units

Question 42

spin-off

Answer 42

strategy of setting up one or more corporate units as new independent corporations

Question 43

measurements of small business contributions

Answer 43

job creation innovation contribution to big business

Question 44

popular areas of enterprise for small businesses

Answer 44

``` services retail construction wholesale finance and insurance manufacturing transportation other ```

Question 45

characteristics of an entrepreneur

Answer 45

``` resourceful concern for good desire to be own boss deals well with uncertainty and risk passionate ```

Question 46

distinctive competencies

Answer 46

identifying niches in established markets identifying new markets first mover advantage

Question 47

parts of business planning

Answer 47

setting goals and objectives sales forecasting financial planning

Question 48

ways to start a small business

Answer 48

buy an existing small business franchising start up

Question 49

how to finance

Answer 49

``` family, friends savings, lending institutions, investors, government agencies venture capital comptines SBIC SBA programs SBDC overseas investors the internet ```

Question 50

facts of small business start ups

Answer 50

``` ecommerce crossover from big businesses opportunities for women and minorities global and foreign opportunities better survival rates ```

Question 51

reasons for small business failure

Answer 51

managerial incompetence neglect weak control INSUFFIICIENT CAPITAL

Question 52

reasons for success

Answer 52

``` hardwork drive dedication the market demand is there managerial competence luck ```

Question 53

types of business ownership

Answer 53

sole proprietorship partnership corporation cooperative

Question 54

types of corporations

Answer 54

``` Closely held Publicly held S Corp LLC Professional Multinational ```

Question 55

3 levels of corporate management

Answer 55

stockholders board of directors officers