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Q:
The product/service plan section should include
a. a description of the competitions products. b. a description of the companys own product or service.
c. a listing of the weaknesses of the competitions product or service. d. a statement of how the company intends to capture market share.
Q:
Jill is writing a business plan for a small home based operation. If well written, the business plan will assist her in determining if
a. the business aligns with personal goals.
b. an investor would be a perfect fit for the proposed company.
c. suppliers can be found for the operation.
d. outsiders can be made into insiders.
Q:
In considering the content of a business plan, an entrepreneur should think first and foremost about
a. how to present factors related to the opportunity.
b. formulating effective strategies and financial projections.
c. who will be reviewing the plan.
d. how to protect the confidentially of the plan.
Q:
When dealing with weaknesses in a business plan, the entrepreneur should
a. use technical jargon to confuse readers.
b. ignore weaknesses as they might not attract investors.
c. assume that investors will not find them.
d. be straightforward with them and have an action plan.
Q:
When making a decision regarding the extent of planning, an entrepreneur should consider the
a. preferences of employees.
b. complexity of the environment.
c. level of uncertainty of the venture.
d. competitiveness of the product.
Q:
The cost structure of a business model
a. defines the types of income.
b. determines how much money is needed for positive cash flow.
c. drives the companys cost and expenses.
d. is the most critical component for long term success.
Q:
It is most important that the marketing plan
a. describe how the firm will reach and service customers.
b. show the degree of patent or copyright protection.
c. summarize the location of potential customers.
d. identify distribution channels.
Q:
The exercise of reasonable care in the evaluation of a business opportunity
a. co-branding
b. master licensee
c. multibrand franchising
d. multiple-unit ownership
e. noncompete clause
f. non-disclosure agreement
g. piggyback franchising
h. product and trade name franchising
Q:
An entrepreneur whose power is limited by a contractual relationship with a franchising organization
Q:
A business model involving a business owner who licenses trademarks and methods to an independent entrepreneur
Q:
The legal document between a franchisor and a franchisee
Q:
A rule that prescribes that the franchisor must disclose certain information to prospective franchisees
Q:
The party in a franchise contract that specifies the methods to be followed and the terms to be met by the other party
Q:
A detailed statement that provides the accepted format for satisfying the franchise disclosure requirements of the FTC
Q:
One possible disadvantage of becoming a franchisor is:
a. complying with all the government regulations. b. the cost of franchising exceeds the franchise fee.
c. the cost of screening prospective franchisees. d. providing training to new franchisees.
a. due diligence
b. fair market value
c. franchise
d. franchise contract
e. Franchise Disclosure Document
f. Franchise Rule
g. franchisee
h. franchisor
Q:
If a franchisor is guilty of encroachment of a franchisee, which agreement is it most likely to be in violation of?
a. Nondisclosure agreement
b. Franchise Rule
c. Franchise Disclosure Document
d. Noncompete agreement
Q:
Edmond is negotiating to purchase an existing business. One provision he should write into the sale contract is:
a. access to the sellers customer list. b. disclosure of the businesss revenues for the last year.
c. a statement of the royalties payable to the seller. d. a non-compete agreement.
Q:
Union contracts are among the many _____ factors in valuing a business.
a. nominative
b. nonessential
c. nonquantitative
d. nonqualitative
Q:
A plan of action that requires a firm to hold down its costs so that it can compete by charging lower prices and still make a profit
Q:
Miltons Auto Service is a small auto maintenance and repair shop located in a small town in a garage behind Miltons house. Milton doesnt charge as much as auto dealerships so he has a steady stream of local customers. Which of the following best describes Miltons strategy?
a. innovation b. strategic alliances
c. cost-based d. differentiation
Q:
Startup ideas centered around providing customers with new or improved products or services
Q:
The two broad strategies for building a competitive advantage are the _____ strategies.
a. cost-based and differentiation-based
b. price-advantage and cost-advantage
c. marketing-advantage and price-advantage
d. focus-advantage and marketing-advantage
Q:
A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment
Q:
Which of the following could be considered a core competency?
a. Zappos 365 day return policy b. NutriSystems claim that users lose weight by eating
c. McDonalds ability to fry hamburgers quickly d. Southwest Airlines ability to make flying fun
Q:
An assessment that catalogs the startups sources of potential strengths
Q:
A company selling diapers knows the market is for people with young children. However, within that segment they can further divide the market by a demographic factor like:
a. culture.
b. lifestyle.
c. consumption pattern.
d. income.
Q:
The typical risks of a differentiation strategy do NOT include which of the following?
a. Customers may find the price differential between the low-cost product and the differentiated product too large.
b. Customers' experience with other products may narrow customers' perception of the value of a product's differentiated features.
c. Counterfeit goods are widely available and acceptable to customers.
d. Suppliers of raw materials erode the firm's profit margin with price increases.
Q:
Considering Michael Porters five factors, the chicken meat processing industry is characterized by:
a. low barriers to entry. b. intense rivalry among competitors.
c. availability of many substitutes. d. strong buyers.
Q:
A company pursuing the differentiation or focused differentiation strategy would tend to:
a. build economies of scale and efficient operations.
b. develop and maintain cost-effective MIS operations.
c. develop flexible systems that allow rapid response to customers' changing needs.
d. have relationships with suppliers to maintain efficient flow of supplies for operations.
Q:
The very feature of a market that makes it attractive to one small company (the lack of competition) will make it attractive to others; this fact is called the __________ ___ ___________.
a. cost-based strategy
b. focus strategy
c. general environment
d. industry environment
e. inside-out analysis
f. intangible resources
g. new benefit ideas
h. new market ideas
i. new technology ideas
Q:
Recently, the only type of car available for Anthony to rent on a business trip was a compact, fuel-efficient Japanese import. Anthony was surprised at the comfort and performance of the car. He is in the market for a new car and had previously considered only buying another luxury SUV. Now, he is thinking about the significant cost savings he would have if he bought the compact vehicle rather than a new SUV. This is an example of the competitive risk that:
a. a competitor's products can convey a product's differentiated features to a customer at a significantly reduced price.
b. a product imitation can cause customers to perceive that competitors offer essentially the same goods.
c. experience can narrow a customer's perceptions of the value of a product's differentiated features.
d. brand loyalty insulates a company from rivalry with competitors.
Q:
Substitute products
a. reduce the attractiveness and profitability of an industry.
b. represent those items manufactured by direct rivals within an industry.
c. are usually cheaper than the products they can replace.
d. are always a serious threat to rivals in an industry.
Q:
The focused differentiation strategy differs from the differentiation strategy in that:
a. the focused differentiators have a broader competitive scope.
b. the value-creating activities of focused differentiators are more constrained.
c. focused differentiators target a narrower customer market.
d. there are fewer risks with the focused differentiation strategy.
Q:
A computer technician recognizing a need for more aesthetically pleasing computers would be said to have entrepreneurial _____.
a. technology
b. alertness
c. strategy
d. rivalry
Enter the appropriate word(s) to complete the statement.
Q:
When selecting a business level strategy, the firm must determine all of the following EXCEPT:
a. how will the customer's needs be satisfied?
b. who is the customer?
c. what are the customers' needs?
d. why should these customers' needs be satisfied?
Q:
The ________dimension of relationships with customers is particularly important for social networking sites such as Facebook and Twitter.
a. reach
b. richness
c. affiliation
d. social
Q:
New Balance Athletic Shoes target Baby Boomers' needs for well-fitting shoes. The company is unique in that it offers a very broad range of shoe widths. A realistic potential risk New Balance runs in this focused differentiation strategy includes the possibility that:
a. Baby Boomers may find that they do not need well-fitting shoes, because they will become increasingly sedentary as they age.
b. a competitor may be able to better use flexible manufacturing systems to make shoes with an individualized fit.
c. athletic shoes may go out of style.
d. New Balance shoes may begin to appeal to a wider market, thus losing New Balance's focus advantage.
Q:
A cost leadership strategy targets the industry's ____ customers.
a. most typical
b. poorest
c. least educated
d. most frugal
Q:
Before the firm decides what products to offer and what benefits and features they will have, the firm must decide all the following questions EXCEPT:
a. who the firm should serve.
b. when the customer's needs should be satisfied.
c. what needs the firm should satisfy.
d. what core competencies are needed to satisfy customer needs.
Q:
Ever-improving levels of efficiency enhance profit margins for a cost-leader. This effects which of the five forces of industry structure most directly?
a. Potential entrants
b. Substitutes
c. Buyer power
d. Supplier power
Q:
Milton Friedman believed the only ________ ____________ of a business is to make a profit while operating within the rules of the game.
Q:
Rhoda, the bookkeeper for a small company, has been diverting company funds into her personal bank account. Rhoda is engaging in ____________.
Q:
Waverly Corporation ensures the temperature of water released back into the river is the same temperature as water drawn from the river for its production needs. It does the same for its exhausted air. Its products are made with a minimal environmental impact and it has won many awards in its industry. Waverly Corporation is an example of a __________ ______ ________.
Q:
The purpose of the ___________ _________ _________ is to promote ethical conduct on the part of all businesses in a region.
Q:
Refusing to pay a bribe even though it is a common practice in the country one is doing business in is an example of:
a. cultural relativism
b. social entrepreneurship
c. integrity
d. sustainability
Enter the appropriate word(s) to complete the statement.
Q:
Giving the impression a business is something it is not
a. is ingenious and resourceful. b. is illegal.
c. is acceptable so long as no one is hurt by the transactions. d. is a way to manipulate customers.
Q:
When Evelyn hired a new sales manager, she issued a press release emphasizing the new hires education and industry experience because:
a. she wanted to introduce the sales manager to the community. b. this was her first new hire and she wanted everyone to know her business was expanding.
c. She had stolen the sales manager from a competitor and wanted to gloat publicly. d. she wanted to bolster the sales managers credibility.
Q:
Abner sometimes shorts the customer when weighing out bulk merchandise, believing the practice leads to higher profits so it is acceptable. We could infer that
a. Abner lacks integrity. b. Abner is not an entrepreneur.
c. Abner cheats on his taxes. d. Abner is skimming.
Q:
Many types of socially responsible actions can be consistent with a firms long-term profit resulting in some degree of _____ being earned by such behavior.
a. money
b. respect
c. goodwill
d. management expertise
Q:
Because a firm has considerable discretion in reporting performance results, financial reports can sometimes be _____ without technically being illegal.
a. inaccurate
b. misleading
c. unreliable
d. bellicose
Q:
An effective way for an entrepreneur to establish legitimacy is:
a. to hire experienced employees from competitors. b. to insist on professional behavior from all customer-contact employees.
c. to communicate the companys mission clearly and frequently. d. to out-perform the competition by underbidding and over-promising.
Q:
Walmart uses core competencies, such as information technology and distribution channels, to create value for its customers through its "everyday low prices."
a. True
b. False
Q:
Resources are the source of capabilities, some of which lead to the development of core competencies. In turn, some core competencies may lead to competitive advantage.
a. True
b. False
Q:
At Southwest Airlines, the complex interrelationship between its culture and human capital adds value for customers in ways that other airlines cannot, such as jokes on flights by flight attendants and cooperation between gate personnel and pilots.
a. True
b. False
Q:
Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.
a. True
b. False
Q:
"Motivating, empowering, and retaining employees" is an example of a capability that resides within the human resources functional area.
a. True
b. False
Q:
Creating customer value is the source of the firm's potential to earn above-average returns.
a. True
b. False
Q:
By themselves, resources can allow firms to create value for customers as the foundation for earning above-average returns.
a. True
b. False
Q:
Capabilities of an organization emerge spontaneously through the interaction of tangible and intangible resources.
a. True
b. False
Q:
Analyzing the internal environment enables a firm to determine what it can do by identifying resources, capabilities, and core competencies in the internal organization.
a. True
b. False
Q:
Firms should never outsource a primary activity because of the danger of the activity being imitated by rivals.
a. True
b. False
Q:
Valuable capabilities allow the firm to exploit strengths or neutralize weaknesses in the internal environment.
a. True
b. False
Q:
The prudent investor rule is an example of a regulation designed to ensure appropriate _____________ by money managers.
A. fiduciary responsibility
B. fiscal responsibility
C. monetary responsibility
D. marketing procedures
Q:
The prudent investor rule requires __________.
A. executives of companies to avoid investing in options of companies they work for
B. executives of companies to disclose their transactions in stocks of companies they work for
C. professional investors who manage money for others to avoid all risky investments
D. professional investors who manage money for others to constrain their investments to those that would be approved by a prudent investor
Q:
The objectives of personal trusts normally are __________ in scope than those of individual investors, and personal trust managers typically are __________ than individual investors.
A. broader; more risk averse
B. broader; less risk averse
C. more limited; more risk averse
D. more limited; less risk averse
Q:
Suppose that the pretax holding-period returns on two stocks are the same. Stock A has a high dividend payout policy and stock B has a low dividend payout policy. If you are a high-tax rate individual and do not intend to sell the stocks during the holding period, __________.
A. stock A will have a higher after-tax holding-period return than stock B
B. the after-tax holding period returns on stocks A and B will be the same
C. stock B will have a higher after-tax holding-period return than stock A
D. The answer cannot be determined from the information given.
Q:
When a company sets up a defined contribution pension plan, the __________ bears all the risk and the __________ receives all the return from the plan's assets.
A. employee; employee
B. employee; employer
C. employer; employee
D. employer; employer
Q:
An investor who is in the 35% federal tax bracket and the 5% state bracket buys a 6.5% yield corporate bond. What is his after-tax yield? (Assume that federal taxes are not deductible against state taxes and vice versa).A. 3.9%B. 4.75%C. 6.5%D. 9.9%
Q:
An investor in the 34% tax bracket would be indifferent between a corporate bond with a before-tax yield of 8% and a municipal bond with a yield of _________.
A. 3.91%
B. 6.15%
C. 5.28%
D. 10.72%
Q:
The fact that the U.S. government provides deposit insurance to banks creates a form of ___________, which is at least partially offset by requiring banks to hold more capital if they are riskier.
A. moral hazard
B. adverse selection
C. risk aversion
D. interest rate risk
Q:
A nonprofit organization offers a 5% salary contribution to John's 403b plan regardless of his own contributions, plus a matching 5% when John contributes 5% of his salary. John makes $56,000 a year.
What is John's total cost of his 5% contribution?
A. $2,100 cost
B. $2,800 cost
C. $700 benefit
D. $3.500 benefit
Q:
A nonprofit organization offers a 5% salary contribution to John's 403b plan regardless of his own contributions, plus a matching 5% when John contributes 5% of his salary. John makes $56,000 a year.
What is John's effective salary reduction if he is in the 25% tax bracket?
A. $2,100
B. $2,800
C. $5,600
D. $8,400
Q:
If you have an extremely "bullish" outlook on the stock market, you could attempt to maximize your rate of return by ________________.
A. purchasing out-of-the-money call options
B. purchasing at-the-money bull spreads
C. purchasing in-the-money call options
D. purchasing at-the-money call options
Q:
The stock price of Bravo Corp. is currently $100. The stock price a year from now will be either $160 or $60 with equal probabilities. The interest rate at which investors invest in riskless assets is 6%. Using the binomial OPM, the value of a put option with an exercise price of $135 and an expiration date 1 year from now should be worth __________ today.
A. $34.09
B. $37.50
C. $38.21
D. $45.45
Q:
The stock price of Ajax Inc. is currently $105. The stock price a year from now will be either $130 or $90 with equal probabilities. The interest rate at which investors can borrow is 10%. Using the binomial OPM, the value of a call option with an exercise price of $110 and an expiration date 1 year from now should be worth __________ today.
A. $11.59
B. $15
C. $20
D. $40
Q:
The current stock price of Johnson & Johnson is $64, and the stock does not pay dividends. The instantaneous risk-free rate of return is 5%. The instantaneous standard deviation of J&J's stock is 20%. You want to purchase a call option on this stock with an exercise price of $55 and an expiration date 73 days from now.
Using the Black-Scholes OPM, the put option should be worth __________ today.
A. $.01
B. $.07
C. $9.26
D. $9.62
Q:
The current stock price of Johnson & Johnson is $64, and the stock does not pay dividends. The instantaneous risk-free rate of return is 5%. The instantaneous standard deviation of J&J's stock is 20%. You want to purchase a call option on this stock with an exercise price of $55 and an expiration date 73 days from now.
Using the Black-Scholes OPM, the call option should be worth __________ today.
A. $.01
B. $.08
C. $9.26
D. $9.62
Q:
The current stock price of International Paper is $69, and the stock does not pay dividends. The instantaneous risk-free rate of return is 10%. The instantaneous standard deviation of International Paper's stock is 25%. You want to purchase a call option on this stock with an exercise price of $70 and an expiration date 73 days from now.
Using the Black-Scholes OPM, the put option should be worth __________ today.
A. $1.50
B. $2.88
C. $2.55
D. $3.00
Q:
The current stock price of International Paper is $69, and the stock does not pay dividends. The instantaneous risk-free rate of return is 10%. The instantaneous standard deviation of International Paper's stock is 25%. You want to purchase a call option on this stock with an exercise price of $70 and an expiration date 73 days from now.
Using the Black-Scholes OPM, the call option should be worth __________ today.
A. $2.50
B. $2.94
C. $3.26
D. $3.50
Q:
The current stock price of Alcoa is $70, and the stock does not pay dividends. The instantaneous risk-free rate of return is 6%. The instantaneous standard deviation of Alcoa's stock is 40%. You want to purchase a put option on this stock with an exercise price of $75 and an expiration date 30 days from now. According to the Black-Scholes OPM, you should hold __________ shares of stock per 100 put options to hedge your risk.
A. 30
B. 34
C. 69
D. 74