Exam 2

Question 1

1) According to the Small Business Administration, a small business is
defined as a company that ________.

Answer 1

A) is any independent firm with fewer than 500 employees

Question 2

2) Which of the following is an example of a lifestyle business?

Answer 2

A) A self-employed landscape designer

Question 3

3) Small companies tend to differ from large ones because ________.

Answer 3

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

Question 4

4) How do small businesses help to support the needs of larger
organizations?

Answer 4

B) Small businesses act as serving agents and suppliers to larger
corporations.

Question 5

5) What is one major advantage of a small firm over a large firm?

Answer 5

B) Freedom to innovate and move quickly

Question 6

The positive, forward-thinking desire to create a profitable, sustainable
business is called ________.

Answer 6

E) entrepreneurial spirit

Question 7

7) Which of the following is a quality that a successful entrepreneur is most
likely to have?

Answer 7

C) Passion for a new product or idea

Question 8

8) Intrapreneurship refers to ________.

Answer 8

D) entrepreneurial efforts within a larger organization

Question 9

9) Why is an innovative spirit harder to have in a larger company?

Answer 9

D) Large firms are more analytical and careful as they mature.

Question 10

10) How can a large firm foster an entrepreneurial spirit within the
organization?

Answer 10

A) Reward risky behavior that might lead to innovation.

Question 11

11) Entrepreneurs often have a talent for inspiring others, and are driven by
a(n) ________ to succeed.

Answer 11

E) passion

Question 12

12) The summary section of a business plan should include a(n) ________
which defines how it will generate revenue and produce a profit.

Answer 12

E) business model

Question 13

13) Which of the following is an advantage of buying into a franchise
system?
A) It requires very little risk.
B) It comes with an established business system.
C) It allows the owner to have a very high level of freedom.
D) It requires the owner to establish brand recognition from scratch.
E) It comes with a workforce.

Answer 13

B) It comes with an established business system.

Question 14

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

Answer 14

E) proposed business venture, goals, and plans for achieving those goals

Question 15

15) Preparing a business plan serves which of the following functions?

Answer 15

B) It helps persuade lenders and investors to finance the business.

Question 16

16) A business plan indicates that investors will be able to sell their
investment through a public stock offering, or participate in a buyback of
the investors’ interest. This is an example of which of the following
elements of a business plan?
A) Exit strategy
B) Target market
C) Operations plan
D) Marketing strategy
E) Start-up schedule

Answer 16

A) Exit Strategy

Question 17

17) Which of the following requires less work and less risk because there is an established customer base?

Answer 17

A) Buying an existing business

Question 18

18) Which of the following combines the benefits of independent business
ownership with the support of a large organization?

Answer 18

A) Buying a franchise

Question 19

) Which of the following should indicate the business plan for a new
company and be compelling enough to entice an investor into reading
more?
A) Marketing strategy
B) Company overview
C) Products or services
D) Summary
E) Mission and objectives

Answer 19

D) Summary

Question 20

20) Which of the following should be developed to present a concise
overview of a business plan to investors?

Answer 20

A) Executive summary

Question 21

21) Data that will persuade an investor that you understand the strengths
and weaknesses of your competitors can be found in which section of the
business plan?

Answer 21

C) Target market

Question 22

22) At the federal level, small businesses can apply for loans backed by the
________.

Answer 22

E) Small Business Administration (SBA)

Question 23

23) A(n) ________ is a form of “group mentoring” in which you assemble a
team of people with subject-area expertise or vital contacts to help review
plans and decisions.

Answer 23

D) advisory board

Question 24

25) ________ help an entrepreneurial team develop an idea into a workable
business model.

Answer 24

A) Business incubators

Question 25

29) Private individuals who put their own money into start-ups, with the
goal of eventually selling their interest for a profit, are called ________.

Answer 25

A) angel investors

Question 26

34) In addition to receiving funding from the initial cost of a franchise
purchase, how does a franchisor make money?

Answer 26

B) Royalties on a percentage of sales revenue

Question 27

37) Managerial roles are grouped into three main categories: interpersonal,
decisional, and ________.

Answer 27

B) informational

Question 28

45) Some companies use a(n) ________ as a brief and inspirational
expression of what a company aspires to be.

Answer 28

E) vision statement

Question 29

47) Which of the following is an example of a strength that companies
possess?

Answer 29

B) Respected brand

Question 30

49) In order to be effective, a business goal should be ________.

Answer 30

D) measurable

Question 31

53) Which of the following functions is typically performed by top managers
of an organization?

Answer 31

A) Establishing the structure for the organizatio

Question 32

59) A diagram that shows how employees and tasks are grouped and where
the lines of communication and authority flow is called a(n) ________.

Answer 32

A) organization chart

Question 33

64) Grouping people within an organization into logical groups that are then
clustered into larger departments is called ________.

Answer 33

A) departmentalization

Question 34

65) Which of the following is an advantage of working in a team?

Answer 34

B) Teams improve flexibility and responsiveness.

Question 35

75) How can managers avoid or eliminate reoccurring mistakes in the
system?

Answer 35

A) Use mistakes as an opportunity to learn.

Question 36

76) ________ include all the elements and processes from transforming raw
materials to making the final products available to the ultimate customer.

Answer 36

A) Value chains

Question 37

79) The phenomenon where U.S. companies move their production back to
U.S. soil is known as ________.

Answer 37

E) reshoring

Question 38

80) Which of the following is a disadvantage of offshoring?

Answer 38

C) Customer responsiveness may suffer

Question 39

83) ________ refers to determining the right quantities of supplies and
products to have on hand and tracking where those items are.

Answer 39

B) Inventory control

Question 40

84) Which of the following is the main objective of engaging in inventory
control?

Answer 40

D) Balancing supply and storage costs

Question 41

93) Most services are consumed at the same time they are produced and
cannot exist before or after that time. This means that most services are
________.

Answer 41

B) perishable

Question 42

99) ________ refers to the combination of forces that moves individuals to
take certain actions and avoid other actions.

Answer 42

E) Motivation

Question 43

100) An employee’s rational and emotional commitment to his or her work
is termed as ________.

Answer 43

C) engagement

Question 44

101) ________ refers to a supposed effect of organizational research, in
which employees change their behavior because they are being studied and
given special treatment.

Answer 44

B) Hawthorne effect

Question 45

114) The tendency for a manager to oversee every detail of their
employees’ work and give them little autonomy in how to perform their jobs
is known as ________.

Answer 45

A) micromanagin

Question 46

115) Which of the following would be an effective way to make a reward
personal and meaningful for an employee?

Answer 46

E) Know what is important to each person.

Question 47

116) What is the first step in implementing a performance management
system?

Answer 47

E) Employees and managers must agree on goals