NATURE OF A SMALL BUSINESS

Question 1

“People with large amounts of financial capacity (capital) are only a few, so there is little possible engagement in entrepreneurship.” TRUE or FALSE

Answer 1

TRUE

Question 2

“People with small amounts of financial capacity (capital) are large, so there many possible engagements in entrepreneurship.” TRUE or FALSE

Answer 2

TRUE

Question 3

Small business may be defined by using any of the two approaches:

Answer 3

Market share or total assets

Question 4

Small business may be defined as one which is independently owned and operated and which is not dominant in its field of operation.

Answer 4

Market sharer approach

Question 5

Ownership is by a private individual, a partnership, or a corporation

Answer 5

Independently owned

Question 6

Indicates that a small business does not control a sizable share of its market.

Answer 6

“not dominant”

Question 7

When the total sale of a business firm is less than one percent of the total demand for its products, the firm may be considered small business.

Answer 7

TRUE

Question 8

As one having total asset that fall within a certain bracket. For example, the Magna Carta for small Enterprise (R. A. 6977) indicates that the firm must have total assets valued at above Php 1.5 million to Php 15million to be considered small business. The government prefers this approach because it simplifies formulation and implementation of policy.

Answer 8

Total Assets Approach

Question 9

One of the disadvantage of the total assets approach is that asset values are affected by inflation.Inflation alters the nominal value of business assets and what may be previously considered small business may no longer be classified as such.

Answer 9

TRUE

Question 10

From the point of view of business management, the market share approach in defining small business is more appropriate. This is so because the target market share is an objective more basic than other objectives.

Answer 10

TRUE

Question 11

Kinds of Business According to Size

Answer 11

Public Enterprises
Private enterprises

Question 12

5 Kinds of Private Enterprise

Answer 12

1. Micro Business
2. Cottage Business
3. Small Business
4. Medium Business
5. Large Business

Question 13

Types of Small Business

Answer 13

1. manufacturing
2. service
3. wholesaling
4. retailing
5. general construction firms

Question 14

Involved in the conversion of raw materials into products needed by society.

Answer 14

Manufacturing Business

Question 15

Those that provide service in one way or another.

Answer 15

Service business

Question 16

Service business may be classified into the ff:

Answer 16

1. Business services
2. Personal services
3. Repair services
4. Entertainment and recreation
5. Hotels and motels
6. Education services

Question 17

Provide service to other business.

Answer 17

Business service

Question 18

Provide service to the person

Answer 18

Personal service

Question 19

Provide repair services to owners of various machinery

Answer 19

Repair service

Question 20

Includes movie houses, resorts, billiard pool centers

Answer 20

Entertainment and recreation

Question 21

Include Montessori schools for children, high school, correspondence schools, among others.

Answer 21

Educational services

Question 22

Refers to the activities of persons or establishments which sell to retailers and other merchants, and / or to industrial, institutional, and commercial users, but who do not sell in large amounts to final consumers.

Answer 22

Wholesaling

Question 23

Covers all activities involved in the sale of goods and services to the final consumers.

Answer 23

Retailing

Question 24

The bulk of retailing activities are performed by small businesses.

Answer 24

TRUE

Question 25

Engaged in the construction of buildings whether for private individuals or firms, or for the government. Many of them perform subcontracting jobs for the bigger contractors. - employ hundreds of thousands of people and they operate mostly in the countryside.

Answer 25

General construction firms.

Question 26

Small businesses are the ff:

Answer 26

1. Independent management 2. Small capital requirement 3. Mostly local operation

Question 27

The owner is also the manager

Answer 27

Independent management

Question 28

Small business requires only small capital and this can be supplied by a single or a few individuals.

Answer 28

Small capital requirement

Question 29

Small business usually operates in a certain locality although there are cases when the market is not confined to a local area.

Answer 29

Mostly local operation

Question 30

Small businesses play an important role in the development or our economy. They assume the ff functions:

Answer 30

1. providers of economic opportunities for entrepreneurs 2. providers of products and services to consumers 3. suppliers of products and services to other businesses 4. distributors of products and services to other businesses 5. supporters of government 6. providers of employment

Question 31

People who do not feel comfortable as employees have the option of engaging in small business operation

Answer 31

Provide of economic opportunities for entrepreneurs

Question 32

The production of many products and services is oftentimes not feasible with big and medium business operation. These limited opportunities are naturally fitted for small businesses.

Answer 32

Providers of products and services to consumers

Question 33

Some businesses require raw materials, semi-finished parts, finished components, or even labor, which they cannot economically produce. The small business perform this task for them

Answer 33

Supplier of products and services to other businesses

Question 34

Some manufacturers do not have the ability to distribute their products and services. Many small businesses assume this role for them.

Answer 34

Distributors of products and services of other businesses

Question 35

Small businesses support the government with the taxes they pay, as well as performing other functions.

Answer 35

Supporters of government

Question 36

A large proportion of the labor force are employed by small businesses

Answer 36

Providers of employment

Question 37

An individual has various options to improve his economic lot. They are the ff:

Answer 37

1. be an employee 2. be a professional; 3. be a small business operator (SBO)

Question 38

Provider of: - economic opportunities for entrepreneurs - products and services to consumers -funds to the government in the form of taxes - employment to the labor force Supplier of : - products and services to other businesses Distributor of : - products and services produced by large firms

Answer 38

Small Business

Question 39

A professional may generate higher income through the effective practice of his profession. His income, however, is limited by the number of patients he attends to every day as he cannot delegate his skill to others.

Answer 39

TRUE

Question 40

A small business operator keeps long working hours and absorbs whatever damages that happen as a result of his faulty decision-making. However, he is afforded to the ff benefits:

Answer 40

1. Opportunity to gain control over his destiny. 2. Opportunity to reach his full potential. 3. Opportunity to reap unlimited profits, and 4. Opportunity to make a contribution to society and receive recognition for his efforts.

Question 41

Prospective small business owner can choose from several business opportunities that he would like to take advantage of.

Answer 41

Opportunity to gain control over his own destiny

Question 42

The employee will do his work based on prescribed targets which may only require less than his full potential.

Answer 42

Opportunity to reach full potential

Question 43

If the small business succeeds, all profits, big or small, accrue to the owner.

Answer 43

Opportunity to reap unlimited profit

Question 44

Entrepreneurs who make innovative products available to the public are recognized properly by society.

Answer 44

Opportunity to make a contribution to society and receive recognition for his efforts

Question 45

Although certain advantages accrue to the small business operator, there are certain disadvantages that must be considered. these are the ff:

Answer 45

1. uncertainty of income 2. risk of losing your entire capital investment; 3. lower quality of life until the business gets established; 4. complete responsibility; 5. having to serve undesirable costumers; 6. paperwork and other chores; and 7. long hours and demanding work condition

Question 46

Small businesses play an important role in the development of our economy. They provide economic opportunities for entrepreneurs, products and services to consumers and industrial users, services to other firms by way of distributing their products and services, payment of taxes to the government, and employment.

Answer 46

TRUE