MGT 190 Exam 1 49 Unanswered Please be sure to save at least once every 15 minutes. If you leave this page without saving, or if your session times out, any answers you have not saved will be lost. The Submit for Grading button will become available once you’ve answered all questions. Exams are not timed; you do not have to finish an exam in one sitting as long as you have saved your answers. Q1. Innovation is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. a. true b. false Q2. Polaroid’s Creativity and Innovation Lab reports that out of every 3,000 new product ideas, __________ are actually launched, and __________ become(s) successful in the market. a. 1000; 500 b. 500; 250 c. 10; 3 d. 2; 1 Q3. Which of the following forms of ownership is taxed differently from the others a. the sole proprietorship b. the partnership c. the corporation d. the S-corporation Q4. Which of the following statements concerning franchising is true? a. Franchise sales total more than $1 trillion. b. Franchises account for 44 percent of all retail sales. c. A new franchise opens somewhere in the world every six-and-a-half minutes d. All of the above. Q5. When evaluating the assets a company owns, a prospective buyer should be most interested in their __________ value. a. book b. par c. market d. stated Q6. _________ are negative internal factors that act as roadblocks in a company’s quest to meet its mission, goals, and objectives. a. Strengths b. Weaknesses c. Opportunities d. Threats Q7. The basis for the global economy today is __________ capital. a. financial b. manufacturing c. intellectual d. economic Q8. The most valuable financial resource any small business can have is: a. cash b. accounts receivable c. bank line of credit d. retained earnings Q9. A study by the Federal Trade Commission found that __________ percent of new franchisees sign their franchise contracts without reading them. a. 10 b. 20 c. 40 d. 60 Q10. By setting its products apart from those of competitors, Straus Family Creamery, a family business that produces organic, all-natural dairy products, is using which strategy? a. low-cost b. differentiation c. focus d. maintenance Q11. For years, a small, locally-owned pizza restaurant located near a university in a small town has focused on the university’s students, offering them special student discounts and free on-campus delivery. Recently, Domino’s Pizza announced its intention to open a new location in the same town so that it can sell pizza to the university students. To the locally-owned pizza restaurant, Domino’s decision represents a: a. strength b. weakness c. opportunity d. threat Q12. Which of the following statements concerning franchise operations is true? a. Franchisers may provide their franchisees with a business system, but they encourage franchisees to deviate significantly from the system to stimulate innovation. b. Most franchisers provide extensive financial assistance, usually in the form of direct loans, to their franchisees. c. One of the greatest sources of friction between franchisers and franchisees concerns the location of new franchises; existing franchisees are afraid that placing new outlets so close to their existing ones causes their sales and profits to be diluted. d. The primary reason franchising has proved so popular is that franchisees are guaranteed that they will succeed. e. All of the above. Q13. About 85 percent of the companies that are available for sale are: a. listed with business brokers. b. advertised in the “Businesses for Sale” section of major newspapers. c. found in the Internet. d. tucked away in the “hidden market” of companies that are for sale but are not advertised as such. Q14. An exclusive right that protects the creator of original works is called a: a. trademark b. patent c. copyright d. All of the above. Q15. The very abilities that make an entrepreneur successful often lead to managerial ineffectiveness. a. true b. false Q16. The balanced scorecard: a. gives managers a comprehensive view of an organization’s performance from both a financial and an operational perspective. b. operates on the premise that relying on any single measure of a company’s performance is dangerous. c. measures a company’s performance by viewing it from a financial perspective, a customer perspective, an internal business perspective, and an innovation and learning perspective. d. all of the above. Q17. In most business sales, a. the buyer pays the seller 100 percent of the purchase price at the closing of the deal. b. the seller finances 100 percent of the purchase price over a 30-year time period. c. the buyer makes a down payment up front with the seller financing the remaining 30 to 80 percent of the purchase price over three to ten years. d. the actual price the buyer pays is much more important than the structure and the terms of the deal. Q18. A ________ gives one the right to exclude others from making, using, or selling something. a. trade secret b. trademark c. copyright d. patent Q19. The 3Rs of rapid prototyping are: a. rough, rapid, and right b. rapid, repeatable, and ready c. realistic, rapid, and reliable d. rough, rapid, and refined Q20. Building a company’s strategy around it core competencies enables a business to gain a sustainable competitive advantage. a. true b. false Q21. Which of the following statements concerning core competencies is false? a. Core competencies are a unique set of capabilities that a company develops in key operational areas that allow it to vault past competitors. b. b. Small companies’ core competencies often originate from the advantages their size offers. c. Entrepreneurs must constantly change their core competencies. d. Developing core competencies does not necessarily require a company to spend a great deal of money. Q22. Experts estimate that __________ percent of franchisers are dishonest. a. 5 to 10 b. 15 to 20 c. 25 to 30 d. 45 to 50 Q23. A plant patent can be obtained: a. for the layout of a new manufacturing facility. b. extends for 20 years from the date of filing. c. only if the plant can be reproduced asexually d. None of the above. Q24. __________ is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. a. Innovation b. Creativity c. Entrepreneurship d. Brainstorming Q25. The Uniform Franchise Offering Circular (UFOC): a. is not required from franchisers with fewer than 10 franchised outlets. b. must be checked, verified, and approved by the Federal Trade Commission before franchisers can use it. c. is designed to provide franchisees with important information about a franchise and must be given to franchisees before they sign a franchise contract or pay any money to the franchiser. d. All of the above. Q26. Porter defined the cost leadership strategy in terms of: a. reaching buyers whose major purchase criterion is price. b. establishing the industry’s floor price. c. winning a price war. d. d. All of the above Q27. The balance sheet technique of business valuation is ___________. a. commonly used and recommended. b. commonly used but not recommended. c. not commonly used but recommended. d. neither commonly used nor recommended. Q28. The disclosure document that is designed to help prospective franchisees evaluate franchise opportunities and to protect themselves from unscrupulous franchisers is the: a. Trade Regulation Rule b. Federal Trade Commission Report c. Franchisee Protection Prospectus d. Uniform Franchise Offering Circular Q29. The aggregation of factors that sets a small business apart from its competitors and gives it a unique position in the market is its: a. mission b. competitive advantage c. SWOT d. Strategy Q30. A strategy that involves dividing a mass market into smaller, more homogeneous units and then attacking only certain of these units is called: a. segmenting b. positioning c. contesting d. None of the above. Q31. A corporation doing business in a state other than the one in which it is incorporated is called a __________ corporation a. domestic b. alien c. foreign d. closely-held Q32. Approximately __________ percent of the small companies that are up for sale ever get sold. a. 25 to 33 b. 40 to 50 c. 65 to 73 d. 80 to 85 Q33. __________ franchising involves combining two or more complementary franchises, such as a Texaco gas station, a Burger King restaurant, and a TCBY yogurt franchise, in the same location. a. master b. conversion c. multiple-unit d. Piggyback Q34. Which form of ownership has the greatest ability to attract capital? a. sole proprietorship b. partnership c. corporation d. S-corporation Q35. In __________ franchising, a franchisee purchases the right to open more than one franchise outlet within a broad territory within a specified time period. a. master b. conversion c. multiple-unit d. piggyback Q36. Which element of the strategic management process addresses the first question of any business venture: “What business am I in?” a. vision b. mission c. SWOT analysis d. Strategy Q37. Every partnership must have at least one __________ partner. a. general b. limited c. silent d. master Q38. Which of the following requirements must an S-corporation meet? a. It must be a domestic corporation. b. It can issue only one class of common stock, but it can issue voting and nonvoting shares of common stock. c. It cannot have more than 75 shareholders. d. All of the above. Q39. Only businesses who have registered their product or service with the Library of Congress are allowed to use Â®. a. true b. false Q40. Each year, more than 500,000 businesses are sold, and __________ percent of those are valued at less than $5 million: a. 20 b. 50 c. 75 d. 90 Q41. Bizcomp found the average sale price for small businesses across the United States was _____ times earnings. a. 15 b. 25 c. 0.05 to 0.10 d. 2.7 Q42. __________ are entrepreneurial couples who work together as co-owners of their business. a. Dropouts b. Copreneurs c. Castoffs d. Angels Q43. To form a limited liability company (LLC), an entrepreneur must file articles of organization and by-laws with the state corporation commission or secretary of state. a. true b. false Q44. The failure rate for franchises is __________ the failure rate for independent businesses. a. lower than b. higher than c. the same as d. cannot be determined Q45. ________ is the ability to see the similarities and connections among various data and events. a. Vertical thinking b. Lateral thinking c. Convergent thinking d. Divergent thinking Q46. If a business buyer purchases assets that, unknown to him, have liens against them, who has financial responsibility for them? a. the buyer b. the seller c. the business broker d. none of the above Q47. The most common form of business ownership in the United States is the: a. sole proprietorship b. the partnership c. the corporation d. the S-corporation Q48. The first rule of negotiating is never confuse price with value. a. true b. false Q49. Which of the following is a way to enhance organizational creativity? a. Expecting creativity b. Expecting and tolerating failure c. Viewing problems as challenges d. All of the above Q50. Which of the following items should be included on a business buyer?s checklist a. Inventory b. Tax returns c. Lawsuits d. All of the above
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