Question 1

Which of the following is not considered a category in the distribution industries?

Accepted Answer

A)  Manufacturing 
B)  Wholesaling 
C)  Retailing 
D)  Transportation 
E)  Communications 
A)  Manufacturing 
B)  Wholesaling 
C)  Retailing 
D)  Transportation 
E)  Communications

Question 2

Some franchisors claim that contracts are unfairly tilted toward the franchisees.

Accepted Answer

A) True 
 B)False

Question 3

The SBA places special emphasis on aid to

Accepted Answer

A)  new businesses. 
B)  those in production industries. 
C)  minority-owned businesses. 
D)  franchise outlets. 
E)  those in need of guaranteed loans. 
A)  new businesses. 
B)  those in production industries. 
C)  minority-owned businesses. 
D)  franchise outlets. 
E)  those in need of guaranteed loans.

Question 4

Some advantages of the sole proprietorship also apply to the small business.

Accepted Answer

A) True 
 B)False

Question 5

Sarah owns a 7-Eleven franchise. What is the primary disadvantage of owning a franchise for Sarah?

Accepted Answer

A)  She has to pay royalties to the franchisor. 
B)  She cannot use her name as the restaurant name. 
C)  The franchisor still retains a great deal of control. 
D)  Sarah is not allowed to hire her own employees. 
E)  Sarah may not find ways to improve operations. 
A)  She has to pay royalties to the franchisor. 
B)  She cannot use her name as the restaurant name. 
C)  The franchisor still retains a great deal of control. 
D)  Sarah is not allowed to hire her own employees. 
E)  Sarah may not find ways to improve operations.

Question 6

What is a business plan? What are its components? Why is it so important?

Accepted Answer

A business plan is a written document th

Question 7

All of the following are disadvantages to the franchisee except

Accepted Answer

A)  a loss of control. 
B)  continuing royalty fees. 
C)  hard work. 
D)  a fee for advertising. 
E)  starting a business with limited capital. 
A)  a loss of control. 
B)  continuing royalty fees. 
C)  hard work. 
D)  a fee for advertising. 
E)  starting a business with limited capital.

Question 8

All of the following are advantages to the franchisor except

Accepted Answer

A)  fast and selective distribution of products. 
B)  no involvement in national advertising campaigns. 
C)  assurance of how the outlets will be maintained and operated. 
D)  gains from the franchisee's high motivation. 
E)  a freeing up of capital for expansion of goods and services. 
A)  fast and selective distribution of products. 
B)  no involvement in national advertising campaigns. 
C)  assurance of how the outlets will be maintained and operated. 
D)  gains from the franchisee's high motivation. 
E)  a freeing up of capital for expansion of goods and services.

Question 9

The various types of businesses attracting small business are generally grouped into service industries, distribution industries, and financial industries.

Accepted Answer

A) True 
 B)False

Question 10

How can small businesses challenge larger, established firms?

Accepted Answer

Small businesses can challenge larger, e

Question 11

Approximately how many businesses are there in the United States?

Accepted Answer

A)  960,000 
B)  11.8 million 
C)  27.5 million 
D)  1.05 billion 
E)  4 billion 
A)  960,000 
B)  11.8 million 
C)  27.5 million 
D)  1.05 billion 
E)  4 billion

Question 12

Which of the following statements is true?

Accepted Answer

A)  The risk of failure for women-owned businesses is lower than average. 
B)  Women are starting businesses at about the same rate as men. 
C)  Women are almost always sure to succeed. 
D)  Women own 7.7 million businesses in the United States. 
E)  Minority business owners pay lower federal tax on profits than men do. 
A)  The risk of failure for women-owned businesses is lower than average. 
B)  Women are starting businesses at about the same rate as men. 
C)  Women are almost always sure to succeed. 
D)  Women own 7.7 million businesses in the United States. 
E)  Minority business owners pay lower federal tax on profits than men do.

Question 13

Give examples to support the statement, "There must be some motivation to start a business."

Accepted Answer

There are several examples to support th

Question 14

By age 26, Tom was a plant manager in the snack-foods division. By 33, he headed the division, one of the most profitable in the corporation. Eventually, however, the company decided to move its corporate offices. Although he loved the job and thought the work was great, Tom's lifestyle was awful. He was on the road so often that he was giving up much of his family life. Tom had also become disenchanted with corporate life. He saw that the closer one got to the top, the more vulnerable one's position became. Thus, Tom left the corporation to start his own snack-foods company. His thoughts and actions most clearly reveal his

Accepted Answer

A)  entrepreneurial spirit. 
B)  need for independence. 
C)  desire to determine his own destiny. 
D)  willingness to find and accept a challenge. 
E)  lack of self-confidence. 
A)  entrepreneurial spirit. 
B)  need for independence. 
C)  desire to determine his own destiny. 
D)  willingness to find and accept a challenge. 
E)  lack of self-confidence.

Question 15

What is the primary reason that so many new businesses fail?

Accepted Answer

A)  Owner does not work hard enough 
B)  Mismanagement resulting from lack of business know-how 
C)  Low employee quality for new businesses 
D)  Lack of brand-name recognition 
E)  Inability to compete with well-established brand names 
A)  Owner does not work hard enough 
B)  Mismanagement resulting from lack of business know-how 
C)  Low employee quality for new businesses 
D)  Lack of brand-name recognition 
E)  Inability to compete with well-established brand names

Question 16

What does it mean to have an entrepreneurial spirit?

Accepted Answer

Having an entrepreneurial spirit refers

Question 17

Doug has always wanted to operate his own fast-food restaurant, but he knows the high failure rate of restaurants. To increase his chances of success, he should consider

Accepted Answer

A)  getting a loan from the SBA. 
B)  buying a franchise of a well-established restaurant. 
C)  hiring only highly educated employees. 
D)  not having a drive-through at his restaurant. 
E)  saving money by selling low-quality food. 
A)  getting a loan from the SBA. 
B)  buying a franchise of a well-established restaurant. 
C)  hiring only highly educated employees. 
D)  not having a drive-through at his restaurant. 
E)  saving money by selling low-quality food.

Question 18

Small businesses have traditionally added ____ new jobs to the economy.

Accepted Answer

A)  more than their proportional share of 
B)  less than their proportional share of 
C)  very few 
D)  the highest paying 
E)  the vast majority of 
A)  more than their proportional share of 
B)  less than their proportional share of 
C)  very few 
D)  the highest paying 
E)  the vast majority of

Question 19

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
-Refer to Personal Wellness. Personal Wellness can be classified as operating in what type of industry?

Accepted Answer

A)  Service 
B)  Production 
C)  Manufacturing 
D)  Distribution 
E)  Wholesaling 
A)  Service 
B)  Production 
C)  Manufacturing 
D)  Distribution 
E)  Wholesaling

Question 20

There is much less likelihood of failure with a franchised outlet than with an independently owned small business.

Accepted Answer

A) True 
 B)False

Exam 5: Small Business, Entrepreneurship, and Franchises

Which of the following is not considered a category in the distribution industries?

Some franchisors claim that contracts are unfairly tilted toward the franchisees.

The SBA places special emphasis on aid to

Some advantages of the sole proprietorship also apply to the small business.

Sarah owns a 7-Eleven franchise. What is the primary disadvantage of owning a franchise for Sarah?

What is a business plan? What are its components? Why is it so important?

All of the following are disadvantages to the franchisee except

All of the following are advantages to the franchisor except

The various types of businesses attracting small business are generally grouped into service industries, distribution industries, and financial industries.

How can small businesses challenge larger, established firms?

Approximately how many businesses are there in the United States?

Which of the following statements is true?

Give examples to support the statement, "There must be some motivation to start a business."

What is the primary reason that so many new businesses fail?

What does it mean to have an entrepreneurial spirit?

Doug has always wanted to operate his own fast-food restaurant, but he knows the high failure rate of restaurants. To increase his chances of success, he should consider

Small businesses have traditionally added ____ new jobs to the economy.

There is much less likelihood of failure with a franchised outlet than with an independently owned small business.

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Choosing a Form of Business Ownership

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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