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Chapter 6

Chapter 6. Entrepreneurship and Starting a Small Business CPS questions. 1. Entrepreneurs’ ______ is an example of their importance to our economy. impact on the political process ability to create jobs for others contributions of money to organizations that help people in need

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Chapter 6

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  1. Chapter 6 Entrepreneurship and Starting a Small Business CPS questions

  2. 1. Entrepreneurs’ ______ is an example of their importance to our economy. • impact on the political process • ability to create jobs for others • contributions of money to organizations that help people in need • ability to influence national macroeconomics polices

  3. 2. _______ is a group of experienced people from different areas of a business joined together to develop, produce, and market a new product. • Entrepreneurial team • Joint venture • Self-directed functional team • Managerial task force

  4. 3. Which of the following reasons, given by people willing to accept the risks of entrepreneurship, indicate the most common reason for starting a business? • The desire to earn a profit is the only reason most people have for becoming entrepreneurs • Many people become entrepreneurs because they do not enjoy working for someone else • The strongest motivator is the desire to be famous and powerful • Contrary to popular opinion, most entrepreneurs are not interested in personal achievement

  5. 4. Geraldine developed a new type of exercise equipment she calls the Tuck N' Tone. After unsuccessfully searching for potential investors, she arranged a personal loan and borrowed additional money from her parents. Her willingness to continue believing in her idea and remain enthusiastic shows that Geraldine is: • self-nurturing. • better suited to managing a nonprofit organization. • unaware of the risks she was taking. • not a true entrepreneur.

  6. 5. _______ is one of the fastest-growing segments of the U.S. economy in the last decade. • Large scale manufacturing • Minority-owned businesses • Transportation industry • Farming sector

  7. 6. A manufacturing firm with 1,000 employees would be classified as which of the following, according to SBA guidelines? • A large firm in the industrial sector • A small business depending upon the size of other firms in the industry • Too small to achieve the efficiencies of large scale production • An S corporation

  8. 7. According to a review of small business successes and failures: • businesses that are easiest to start offer the greatest potential for long term growth and profits • restaurant industry offers the least risk for entrepreneurs • businesses with the potential of high profit levels tend to be difficult to start and hard to keep going • reason the service sector is rapidly growing is that these firms are easy to start and keep going, and offer high levels of security and growth potential

  9. 8. After working as a manager of a small business for several years, Donald has been offered a management position with a local charity. If he accepts the job offer, he is likely to find that: • his previous experience will be of little value in his new position. • the principles of management are much the same regardless of the type of organization. • nonprofit organizations are motivated by their desire to help people and so financial management is of little concern. • planning is less important to a nonprofit organization.

  10. 9. Conversations with people who start their own business often reveal which of the following? • Many small business owners got their entrepreneurial idea from a previous job. • It is unusual for experienced corporate managers to start their own businesses. • The most successful entrepreneurs often start their business ventures right after high school. • Most small business owners begin with significant personal wealth.

  11. 10. Seeking the advice of established small business owners is which of the following? • Generally not a good idea since they desire to limit their competition. • Often valuable since you can from learn from their experiences. • Not recommended since federal privacy laws could be violated. • Only helpful if the person giving the advice has been successful.

  12. 11. As a prospective entrepreneur, Skipper benefited from his experience working for an established florist. He now feels that he is ready to start his own shop, but he lacks the necessary capital. Which of the following would best help Skipper achieve his goal of business ownership? • Offer to take over management of the business, allowing the owner to enjoy some leisure time. • Consider working for a major corporation, live modestly and save until he has sufficient funds to start his business. • Enroll in the closest university and apply for student loans. • Open his business and trust that his work experience will bring him success even with insufficient capital.

  13. 12. When starting a small business, it is important to remember that _______. • luck is the critical factor in achieving small business success • doing things differently from previous entrepreneurs is the real key to success • learning from others and gaining relevant business experience improves the odds for success • to avoid burnout, limit the number of hours you work each week as you adapt to the rigors of self-employment

  14. 13. A new entrepreneur should include_______ in the business plan of a business. • lifestyle of the competition • qualifications of the owners • import/export information • names of employees

  15. 14. Which of the following is defined as a firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company? • Corporate raider • Takeover specialist • Financial capitalist • Venture capitalist

  16. 15. Which of the following should entrepreneurs applying for a bank loan realize that bankers will do? • The banker will expect to receive a share of ownership in the business in exchange for their loan. • The banker will expect the entrepreneur to have a well prepared business plan. • The banker will generally make loans only to small businesses in dot.com related industries. • The banker will offer only short-term financing.

  17. 16. Willy wants to improve his chances to be a successful entrepreneur and so he has written a business plan. One advantage of developing this plan is that it: • meets federal reporting requirements of the Internal Revenue Service. • ensures financing will be available from the Small Business Administration. • forces Willy to think carefully about all aspects of his planned business. • will enable him to switch from a sole proprietorship to a corporation without any further paperwork.

  18. 17. Which of the SBA’s programs provide export financing opportunities for small businesses? • Global trade funding • Homeland security funding • Export Express loan • International Monetary Funding

  19. 18. One advantage of small businesses in international markets is: • a greater expertise in managing the paperwork required to sell goods in international markets. • a better understanding of the cultural differences involved. • individualized customer service as opposed to impersonal corporate bureaucracies. • the ability to obtain financing through the International Monetary Fund.

  20. 19. Mark is a partner in a firm that specializes in producing vitamins and health food products. While the business is considered small by U.S. standards, he is attempting to persuade his partner to expand internationally. Mark would list which of the following as an advantage of going international? • Exporting can help sell excess inventory. • Marketing programs benefit from the cultural similarities in prospective markets. • Financing can easily be obtained to expand internationally. • Selling your products in other markets reduces their life cycle, making them more attractive.

  21. 20. Astyr, a small business owner, is considering marketing her product in Brazil. If she enters the Brazilian market, she is likely to face which of the following problems? • Cultural differences between the United States and Brazil • Difficulties in ramping up her production to meet demand • Convincing foreign firms to do business with a small firm, rather than a large corporation • Resistance of Brazilian firms to buying American products

  22. 1. Answer: B LG: 1 Page: 150 2. Answer: A LG: 1 Page: 154 3. Answer: B LG: 1 Page: 151 4. Answer: A LG: 1 Page: 151 5. Answer: B LG: 2 Page: 160 6. Answer: B LG: 2 Page: 160 7. Answer: C LG: 2 Page: 162 - 163 8. Answer: B LG: 2 Page: 160 9. Answer: A LG: 3 Page: 163 - 164 10. Answer: B LG: 3 Page: 163 - 164 11. Answer: A LG: 3 Page: 164 - 165 12. Answer: C LG: 3 Page: 163 13. Answer: B LG: 4 Page: 165 14. Answer: D LG: 4 Page: 168 15. Answer: B LG: 4 Page: 166 16. Answer: C LG: 4 Page: 165 17. Answer: C LG: 5 Page: 174 18. Answer: C LG: 5 Page: 173 19. Answer: A LG: 5 Page: 173 20. Answer: A LG: 5 Page: 173

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