MGT190-SP. ENTREPRENEURSHIP (MGT190-SP)
Take Assessment: MGT 190 Exam 3
Question 1
Companies that make the best candidates for direct public offerings (DPOs):
a. have the ability to meet the same requirements as companies making stock offerings
using more traditional methods.
b. have high name recognition and a loyal customer base.
c. usually are simple, one-product companies.
d. All of the above.
Question 2
To finance her inventory of cars, auto dealer Sarah Ann Lopez would most likely rely on which type of loan?
a. commercial bank loan
b. line of credit
c. floor plan
d. installment loan
Question 3
For which of the following businesses would clustering be an effective location strategy?
a. a car dealership
b. a flower shop
c. a sporting goods store
d. a dry cleaner
Question 4
__________ are domestic wholesalers who do business in foreign markets, buying goods from many domestic manufacturers (often competitors) and then marketing them in foreign countries.
a. Export trading companies (ETCs)
b. Export management companies (EMCs)
c. Export merchants
d. Resident buying offices
Question 5
A(n) __________ is a combination of hardware and software operating between the
Internet and a company?s computer network that allows employees to have access to
the Internet but keeps unauthorized users from entering the company?s network and
the programs and the data it contains.
a. virus detection program
b. firewall
c. intrusion detection program
d. hacker block
Question 6
The average success rate of joint ventures is __________ percent , while its average
life is __________ years.
a. 81; 20
b. 62; 10.5
c. 43: 3.5
d. 25; 1.5
Question 7
Which of the following statements concerning financing a small business is true?
a. Choosing the right sources of capital for a business can be just as important as choosing the right form of ownership or the right location because of the long-term impact it has on a company.
b. When it comes to attracting capital for launching or expanding a business, creativity counts; entrepreneurs must use as much ingenuity in financing their businesses as they do
in generating their product or service ideas.
c. Before accepting startup money, entrepreneurs must take into account the "chemistry"
between themselves, their companies, and their funding sources, making sure that the
match is a good one.
d. All of the above.
Question 8
A business owner seeking money to purchase a building and the equipment needed to launch a welding shop would need which kind of capital?
a. Fixed
b. working
c. growth
d. disposable
Question 9
When Blue Fish Clothing decided to raise money for growth and expansion by selling shares of company stock straight to investors without relying on an investment banker (or underwriter), the company was making which kind of stock offering?
a. Rule 147
b. direct stock offering
c. Regulation S-B
d. Best-efforts stock offering
Question 10
The Americans with Disabilities Act (ADA):
a. applies to every business, whatever its size.
b. requires companies to make expensive changes to their work environments and stores
to accommodate disabled workers and customers.
c. requires most businesses to make their facilities available to physically challenged
customers and workers.
d. requires businesses in all multistory buildings to have elevators.
Question 11
In a _________ layout, a manufacturer groups workers and equipment according to their general function.
a. process
b. product or line
c. fixed position
d. functional
Question 12
The typical venture capital company receives more than 1,200 business plans each year, and ultimately invests in __________ of them.
a. 3 to 6
b. 15 to 20
c. 30 to 35
d. about 100
Question 13
The first place entrepreneurs in search of startup funds should look is:
a. their own pockets.
b. relatives and friends.
c. venture capitalist firms.
d. angels.
Question 14
Domain names can be registered with the U.S. Patent and Trademark Office.
True
False
Question 15
__________ banks are most likely to lend money to small businesses.
a. Small
b. Large
c. International
d. Foreign
Question 16
The most important ingredient in the recipe for a successful joint venture is:
a. negotiating an iron-clad contract that binds both parties.
b. choosing the right partner.
c. seeing the joint venture for what it really is: a chance for both parties to make large
profits by joining forces.
d. to build a monopoly in the target country.
Question 17
An entrepreneur who wants to open a bed and breakfast inn in an area that is zoned "residential" is going before the local zoning board seeking a(n) __________, a special exemption to the zoning ordinance that would allow her to locate her business in this area.
a. exception
b. variance
c. redemption
d. exclusion
Question 18
The Arthur Andersen/MassMutual Survey of American Family Businesses reports that __________ percent of small business owners have written estate plans.
a. 25
b. 40
c. 55
d. 75
Question 19
Which of the following statements concerning global trade is true?
a. Today, the global marketplace is as much the territory of small, upstart companies as it
is that of giant multinational corporations.
b. Ninety-six percent of the world's population and 67 percent of the world's purchasing
power lie outside the borders of the United States.
c. Small companies that export grow more rapidly than those that operate domestically only.
d. All of the above.
Question 20
When financing a business startup with angel financing, entrepreneurs should remember that:
a. angels are most likely to finance startups in the $5 to $10 million range.
b. angels are willing to wait no more than two years to "cash out" their investments and
expect to earn at least 60 to 75 percent returns annually.
c. angels usually invest their money locally, so it is wise to look close to home for them -usually within a 50-to 100-mile radius.
d. All of the above.
Question 21
When searching for a location, a company that develops computer software for the entertainment industry would be interested in studying which of the following factors
about the labor supply in a particular area?
a. the number of workers available
b. the level of education, training, and experience of the workforce
c. the prevailing wage rate in the area
d. All of the above
Question 22
Research by BizRate.com found that __________ percent of Web shoppers who fill their online shopping carts become frustrated and leave the site before checking out.
a. 15
b. 25
c. 55
d. 75
Question 23
The ideal domain name for a company's Web site should be:
a. short.
b. indicative of the company's business or business name.
c. easy to spell.
d. all of the above.
Question 24
Which of the following statements concerning asset-based loans is false?
a. The most common types of asset-based loans are discounting accounts receivable and
inventory financing.
b. Because of its efficiency and low cost, asset-based loans are an ideal source of
long-term financing.
c. A small company that qualifies for a $1 million line of credit would be able to borrow as
much as $3 million using asset-based loans.
d. All of the above
Question 25
_________ are trade intermediaries that work on a buy-and-sell arrangement, play the role of an independent international marketing department, and are an important
channel of foreign distribution for small companies just getting started in international
trade.
a. Export trading companies (ETCs)
b. Export management companies (EMCs)
c. Resident buying offices
d. Government buying offices
Question 26
The biggest barrier to exporting facing small companies that have never exported is:
a. not knowing how or where to start.
b. government regulations that make it nearly impossible for small companies to export.
c. the lack of products and services that would sell successfully in foreign markets.
d. intense competition in international markets from major multinational corporations.
Question 27
The most popular loan program sponsored by the Small Business Administration (SBA) is:
a. Low Doc Program
b. Export Working Capital Program
c. 7(a) Loan Guaranty Program
d. All of the above
Question 28
In a _________ layout, a manufacturer arranges workers and equipment according to the sequence of operations.
a. process
b. product or line
c. fixed position
d. functional
Question 29
An entrepreneur trying to find a location for a sporting goods store has decided to use the index of retail saturation as a guide. She knows that Site 1 has a trading area with 42,374 potential customers who spend an average of $87.50 on sporting goods per year. The only competitor in the trading area has 16,000 square feet of selling space. Site 2 has 38,649 potential customers spending an average of $91.25 per year on sporting goods. In this trading area, two competitors occupy 17,100 square feet of space. The index of retail saturation for Site 1 is:
a. 182.86
b. 206.24
c. 231.73
d. None of the above.
Question 30
Small companies that operate globally are able to:
a. offset sales declines in the domestic market.
b. extend their products' life cycles.
c. raise their levels of quality and customer-orientation.
d. All of the above.
Question 31
More than __________ percent of all companies in the United States are familyowned.
a. 20
b. 40
c. 60
d. 90
Question 32
__________ items are best suited for selling on the World Wide Web.
a. high-volume
b. low-margin
c. commodity
d. all of the above.
Question 33
Under NAFTA, companies have greater protection of their patents, trademarks, and copyrights across national borders.
True
False
Question 34
Small companies account for __________ percent of the companies involved in exporting, and they generate about __________ of the dollar value of the nation's exports.
a. 20; one-fifth
b. 45; one tenth
c. 58; two-thirds
d. 97; one-third
Question 35
A __________ is an exemption from the Security and Exchange Commission's full-blown registration process that is designed to make it easier and less expensive for small companies to make initial public offerings. The ceiling on this type of issue is $1 million, and the price of the shares must be at least $5.
a. Regulation S-B
b. Regulation A
c. Small Company Offering Registration (SCOR)
d. Direct Public Offering
Question 36
When a bank becomes a __________ lender under the Small Business Administration's loan program, the bank makes the final decision on a small company's loan application (subject only to review by the SBA) but still receives the security of the SBA's loan guarantee.
a. certified
b. preferred
c. authorized
d. conferred
Question 37
Shopping malls typically average __________ parking spaces per 1,000 square feet of
shopping space.
a. 2
b. 5
c. 10
d. 16
Question 38
A survey by GTE Superpages.com found that __________ percent of small businesses do not have Web sites.
a. 10
b. 30
c. 55
d. 75
Question 39
The simplest and least expensive way for a small business to begin conducting business globally is to:
a. establish a site on the World Wide Web (WWW).
b. launch an export program.
c. set up a foreign joint venture with a company in another country.
d. establish a location in a foreign country.
Question 40
A company must file a __________ describing both the company and the stock offering with the Securities and Exchange Commission (SEC) before making an initial public offering.
a. lockup agreement
b. letter of intent
c. statement of corporate standing
d. registration statement
Question 41
In America, business people expect to do business quickly and typically do not waste time "getting down to business." In other countries around the world, however, closing a deal typically takes much longer. In which country would an American entrepreneur need a large dose of patience when conducting business?
a. Spain
b. China
c. Japan
d. All of the above
Question 42
Small businesses on the Web are better able to compete if they focus on a niche market.
True
False
Question 43
Alexandra Hudson, owner of a company that manufactures high quality wood furniture has forged a long-term partnership with an upscale furniture wholesaler in Denmark to sell her company's products in that country. The Danish wholesaler has agreed to
handle the distribution details and to provide design ideas to help Hudson's company
create new styles that will appeal to Danish customers in exchange for some price
concessions. The relationship between the two companies began when a
representative of the Danish furniture wholesaler contacted Hudson through Hudson's
World Wide Web site. Hudson and the Danish company have formed a:
a. foreign joint venture.
b. a domestic joint venture.
c. countertrading relationship.
d. foreign licensing arrangement.
Question 44
Online newsletters should be kept to about:
a. 600 words
b. 2000 words
c. 6 pages
d. 20 pages
Question 45
In a performance appraisal, a manger should:
a. keep comments as general as possible to avoid upsetting workers.
b. use the time to spring several "surprises" (both good and bad) on employees about their performances over the past year.
c. critique employees' attitudes and abilities rather than their actions.
d. spend about 20 percent of the time discussing past performance and use the remaining 80 percent of the time to develop goals and plans for the future.
Question 46
Which area of a retail store would be least valuable?
a. the main floor in a multistory building
b. the intersection of two primary aisles
c. the right rear corner of a store
d. the right front corner of a store
Question 47
Column A Column B
people things
vision logistics toward the vision
doing the right things doing things right
comes first comes second
Column A deals with __________, and column B deals with __________.
a. staffing; leadership
b. leadership; staffing
c. management; leadership
d. leadership; management
Question 48
Which of the following is an effort by the Small Business Administration (SBA) to speed
up processing times and streamline the process for its loan applications?
a. Preferred Lender Program
b. Low Doc Loan Program
c. SBAExpress Program
d. All of the above
Question 49
The most popular estate planning technique among business owners is the:
a. buy/sell agreement.
b. grantor retained annuity trust
c. estate freeze
d. family limited partnership
Question 50
Studies show that __________ percent of first-generation family businesses fail to
survive into the second generation, and of those that do survive, __________ make it
to the third generation.
a. 20; 81
b. 40; 75
c. 70; 12
d. 90; 24
Question 51
__________ offer many of the same kinds of loans that commercial banks do, but they are willing to tolerate more risk in their loan portfolios than banks and often use some type of asset-based lending when making commercial loans.
a. Insurance companies
b. Stock brokerage houses
c. Commercial finance companies
d. Credit unions
Question 52
Experts draw an analogy between today's successful small business leader and:
a. the conductor of a symphony orchestra.
b. the leader of a jazz band.
c. a member of a rock and roll band.
d. a chamber music concert group.
Question 53
A __________ is relatively small, containing from three to twelve stores and serving a population of up to 40,000 people who live within a 10-minute drive.
a. neighborhood shopping center
b. community shopping center
c. regional shopping mall
d. power center
Question 54
The central business district (CBD) in most cities is characterized by:
a. the ability to draw customers from the entire trading area of the city.
b. traffic congestion.
c. inadequate parking facilities.
d. All of the above
Question 55
When creating a Web site, the best approach is:
a. Get the site online and then tweak it, change it, and update it based on what is working best.
b. Don't launch a Web site until it is absolutely perfect.
c. The flashier a Web site is the better it is.
d. All of the above.
Question 56
The average Web user spends nearly __________ hours online each week.
a. 2
b. 6
c. 16
d. 25
Question 57
Which of the following statements concerning business location is false?
a. Analyzing the characteristics of an area's residents gives entrepreneurs the facts they
need to make an informed location decision.
b. Assembling a demographic profile helps entrepreneurs determine how well a particular
site measures up to their market profile.
c. Entrepreneurs should avoid locating their businesses near competitors.
d. Population density is an important location factor, especially for businesses that
depend on high traffic for their success.
Question 58
A(n) __________ minimizes estate taxes on a business by creating two classes of stock: preferred voting stock (the value of which remains constant) for the parents, and nonvoting common stock (the value of which reflects the increased value of the business) for the children.
a. family limited partnership
b. estate freeze
c. buy/sell agreement
d. grantor retained annuity trust
Question 59
This financing program spans 11 government agencies and is designed to encourage small companies to expand their research and development efforts in science and engineering and to develop new commercial products and services from those efforts.
a. Small Business Innovation Research Program
b. Small Business Technology Transfer Program
c. Certified Development Company Program
d. Urban Development Action Grant Program
Question 60
Experts estimate that __________ of the products U.S. companies export to other nations require little modification to sell in foreign markets.
a. one-tenth
b. one-fourth
c. one-third
d. one-half
Question 61
The first and foremost obstacle an entrepreneur must overcome to become a truly global business is:
a. finding the financing to establish an export program.
b. learning to think globally.
c. locating a foreign partner to help navigate the market successfully.
d. adapting the product or service to suit the tastes, preferences, and customs of foreign markets.
Question 62
Web-based selling enables small businesses to:
a. increase their revenues.
b. expand their reach into global markets.
c. lower the cost of doing business.
d. all of the above
Question 63
Retail customers on the Web demand:
a. good product selection at competitive prices
b. well-designed product presentations
c. easy ordering with fast and reliable shipping and handling
d. All of the above.
Question 64
Job __________ involves building motivators into a job by increasing the planning, decision making, organizing, and controlling functions workers perform.
a. simplification
b. enlargement
c. enrichment
d. rotation
Question 65
Created in 1947, this became the first global tariff agreement, and, today, it includes
124 countries that account for nearly 90 percent of world trade.
a. NAFTA
b. WTO
c. GATT
d. NATO
Question 66
A __________ trust is a special type of irrevocable trust that has become one of the
most popular tools for entrepreneurs seeking to transfer ownership of their companies
while maintaining control over it and minimizing their estate taxes.
a. bypass
b. irrevocable life insurance
c. irrevocable asset
d. grantor retained annuity trust
Question 67
Which of the following statements concerning the interview process is false?
a. To avoid the threat of lawsuits, business owners should ask only questions calling for
"yes/no" answers.
b. Creating hypothetical situations candidates would be likely to encounter on the job and
asking how they would handle them gives insight into their work habits and attitudes.
c. Develop a series of core questions and ask them of every candidate.
d. Business owners should ask candidates about a recent success and a recent failure
and then look for those who describe them both with equal enthusiasm.
Question 68
Business incubators:
a. combine low-cost, flexible rental space with a multitude of support services for their
small business residents.
b. give small companies a greater chance for success by offering them valuable business
services as well as connections to funding sources and management consulting.
c. improve their residents' survival rates;
d. All of the above.
Question 69
A privacy policy is a critical component of a well-designed Internet business strategy.
True
False
Question 70
A small company using factoring would prefer which type of factoring arrangement?
a. with recourse
b. without recourse
c. exempted
d. None of the above. A small company should never use factoring as a source of
financing because of its excessively high risks and costs.
Question 71
When a speaker sends conflicting verbal and nonverbal messages, listeners are most likely to believe
a. the verbal message
b. the nonverbal message
c. neither one
d. none of the above.
Question 72
Regular special offers that are available only to Web customers will annoy most shoppers.
True
False
Question 73
An entrepreneur trying to find a location for a sporting goods store has decided to use the index of retail saturation as a guide. She knows that Site 1 has a trading area with
42,374 potential customers who spend an average of $87.50 on sporting goods per
year. The only competitor in the trading area has 16,000 square feet of selling space.
Site 2 has 38,649 potential customers spending an average of $91.25 per year on
sporting goods. In this trading area, two competitors occupy 17,100 square feet of
space. The index of retail saturation for Site 2 is:
a. 182.86
b. 206.24
c. 231.73
d. None of the above.
Question 74
A foreign sales company is a shell company created in an approved U.S. territory or a
foreign country that allows a business to reduce its U.S. income tax liability by _____
on earnings from foreign trade.
a. 5% to 15%
b. 15% to 30%
c. 30% to 50%
d. More than 30%
Question 75
A __________ Web site is one that visitors are willing to share with their friends because they find it to be useful, informative, or just plain fun.
a. sticky
b. viral
c. collaborative
d. robust
Question 76
Which of the following is a strategy for building a successful e-business?
a. Focus on a niche market.
b. Attract customers by giving away "freebies" and then sell to them.
c. Make sure your Web site says "credibility" to customers.
d. All of the above
Question 77
One distinct advantage of a loan guaranteed by the Small Business Administration (SBA) is:
a. its below-market interest rate.
b. its longer payback period.
c. the small company's ability to defer payments on the loan until its cash position is
strong enough.
d. All of the above.
Question 78
__________ is a work arrangement in which employees who spend most of their time away from the office use the same office space at different times, which can greatly
reduce the need for permanent offices that would sit idle much of the time.
a. Telecommuting
b. Hoteling
c. Job sharing
d. Flexplace
Question 79
Genuine leaders:
a. are self-appointed.
b. know that their success is determined by their employees' success.
c. treat their employees severely to earn their respect.
d. know that what they say to employees is more important than what they actually do.
Question 80
The most commonly cited reasons among CEOs for choosing not to make initial public offerings (IPOs) are:
a. high costs and excessive government regulation
b. high costs and loss of control over the company.
c. excessive government regulation and loss of control over the company.
d. loss of privacy and loss of control over the company.
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