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Los Angeles Trade Technical College - MGMT 013 Chapter 5--Small Business, Entrepreneurship, and Franchises MULTIPLE CHOICE  Personal Wellness Angela has been working for a local small business called Personal Wellness for the last three years

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Los Angeles Trade Technical College - MGMT 013

Chapter 5--Small Business, Entrepreneurship, and Franchises

MULTIPLE CHOICE

 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 to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped. Angela has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.

 Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would put things into perspective to help the company do better. After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company. Angela wants to make sure that her leaving does not become the cause of the company going under.

1) Refer to Personal Wellness. In preparing the business plan, Angela would have incorporated all of these componentsexcept

a.	company and industry descriptions.
b.	an exit strategy.
c.	government regulations.
d.	benefits to the community.
e.	a marketing plan.

 

2   Refer to Personal Wellness. A business plan should answer all of the following questionsexcept

a.	"Which accounting firm will audit the company?"
b.	"What exactly is the nature and mission of the new venture?"
c.	"Why is this new enterprise a good idea?"
d.	"How much will the new venture cost?"
e.	"What are the entrepreneur's goals?"

 

Mc-King

 

Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.

 Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided they would go ahead with their decision to expand internationally.

  3.   Refer to Mc-King Chicken. When Brian opens the Mc-King Chicken restaurant in his town, he would be known as the

a.	franchisor.
b.	franchising.
c.	franchise.
d.	franchisee.
e.	franchises.

 

4.   Refer to Mc-King Chicken. Which of the following wouldnotbe an advantage of a franchise?

a.	He gains fast and well-controlled distribution.
b.	He has more capital available to expand.
c.	Outlets are maintained and operated according to a set plan.
d.	He has the opportunity to start a business with limited capital.
e.	Success will cause another outlet to be opened nearby.

 

5.   Refer to Mc-King Chicken. Which of the following would be an advantage for Brian?

a.	Guidance from the franchisor
b.	Franchise holders paying for their security
c.	Disagreements increasing
d.	Contract disputes
e.	The franchisor maintaining a great deal of control

 

 6   Michael Tucker operates Tucker Farms in northern Illinois. Last year, his annual receipts were just under $750,000. According to the Small Business Administration, Tucker Farms is a

a.	small business.
b.	medium-sized business.
c.	large business.
d.	franchise.
e.	joint venture.

 

7   A small business is all of the followingexcept

a.	independently owned.
b.	operated for profit.
c.	dominant in its field.
d.	difficult to manage.
e.	demanding of the owner's time and attention.

 

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

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

 

9   Which of the following wouldleast likelybe started as a small business?

a.	Flower shop
b.	Restaurant
c.	Electricity company
d.	Landscaping business
e.	Furniture repair store

 

 10.   Joe decides to start his own business designing websites for other businesses. Joe's business would be classified as a

a.	distribution business.
b.	retailer.
c.	production business.
d.	wholesaling business.
e.	service business.

 

 11.   Small businesses are typically managed by

a.	relatives.
b.	professional managers.
c.	friends.
d.	the people who start and own them.
e.	a board of directors.

 

   12   An individual's desire to create a new business is referred to as

a.	the entrepreneurial spirit.
b.	the desire for ownership.
c.	self-determination.
d.	self-evaluation.
e.	the laissez-faire spirit.

 

13.  Which of the following isnota reason for starting a small business?

a.	Desire to determine one's own destiny
b.	Willingness to find and accept a challenge
c.	Desire for a guaranteed financial return
d.	Desire for independence
e.	Desire to create a new business

 

14.   Which of the following statements is true regarding the profitability of new businesses?

a.	It may take several years for a new business to begin showing a profit.
b.	Profitability is not an important issue for new businesses.
c.	Most new businesses will turn a profit within the first year.
d.	If a company does not show a profit within the first year, it will fail.
e.	Most new businesses are highly profitable when they first start.

 

15   What is a common mistake that small-business owners make when their businesses begin growing?

a.	They sell more goods and services.
b.	They put too much money in advertising.
c.	They move beyond their local area.
d.	They overexpand without proper planning.
e.	They invest too much of their own money.

 

 16.   You have just opened a new small business. You're really happy to learn that studies show that small-business workers

a.	don't really like bill collectors much.
b.	are more innovative than workers in large businesses.
c.	are especially good at handling inventories in the warehouse to avoid damage and spoilage.
d.	design ad campaigns that work especially well on network television.
e.	pay little attention to their salary levels compared to similar workers in small businesses.

 

17   A friend of yours has recently received his MBA. He wants to open his own business but feels that it might be too risky at this point in his career. As an SBA counselor, you are able to advise him and explain more clearly to him some of the advantages and disadvantages of starting a small business. Which of the following statementsbestrepresents something you might tell him?

a.	Although opening a small business is risky, there is practically unlimited potential.
b.	The cost of opening a small business is relatively low, and financing is easily obtained.
c.	Record keeping will be complicated, and public disclosure of most transactions is required.
d.	Small businesses foster personal relationships and offer flexibility and independence.
e.	Opening a small business is especially difficult because there is little help available for those desiring to do so.

 

18.   A carefully constructed guide for the person starting a business is a

a.	business plan.
b.	marketing plan.
c.	organizational plan.
d.	articles of business.
e.	business budget.

 

19   The following statement answers which major question that a business plan should address? "This business will serve over 200 customers by the end of the year and employ seven full-time employees."

a.	How much will the new business cost?
b.	Why is this new business a good idea?
c.	What are the goals for the business?
d.	What is the nature and mission of the business?
e.	How often will the business advertise?

 

  20.   SBA stands for

a.	Special Business Agency.
b.	Small Bond Administration.
c.	Society for Business Alliances.
d.	Special Business Association.
e.	Small Business Administration.

 

   21.   The SBA places special emphasis on aid to

a.	new businesses.
b.	those in production industries.
c.	minority-owned businesses.
d.	franchise outlets.
e.	those in need of guaranteed loans.

 

   22.   The average size of an SBA-guaranteed business loan is about

a.	$25,000.
b.	$100,000.
c.	$200,000.
d.	$300,000.
e.	$500,000.

 

   23.   A franchisor supplies all of the followingexcept

a.	land to place the business on.
b.	the name of the shop.
c.	the methods of doing business.
d.	any necessary training.
e.	advertising materials.

 

   24   You have decided to open a pet store and have engaged in a contract with Dog N' Cat Centers, Inc. You and the company have drawn up an agreement that allows you to use the company's name and its proven method of doing business, to receive training, and to use its advertising materials. In this agreement, Dog N' Cat is the ____ and you are the ____.

a.	entrepreneur; corporation
b.	franchisor; franchisee
c.	employee; employer
d.	entrepreneur; local chain
e.	corporation; manager

 

  25.   You have been running a successful art and framing shop for three years. You have decided to allow others to use your business name, materials, and methods in operating their own business for a fee. You are going to enter a

a.	joint venture.
b.	small-business development center.
c.	franchise agreement.
d.	venture capitalist agreement.
e.	business contraction.