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Chapter Quiz
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1
Which of the following best illustrates a small business?
A)EndosaCorp. is a public traded company that is owned by shareholders across the country.
B)Story Bake is a home-based firm that employs a total number of 17 people.
C)LD Inc. is a leading company in the consumer electronics industry with 250 employees in each of its seven subsidiary units.
D)Margona State Firm is a company that is owned and run by the government of Margona Republic.
E)MF Cooperative is an organization formed and managed by traders of agro products.
2
In 1988, the Malcolm Baldrige Award was designed to:
A)curb competitive business practices in American industry.
B)recognize achievements in quality and performance in businesses of all sizes.
C)recognize nations that traded actively with America.
D)felicitate companies that were nationalized by the federal government.
E)encourage outsourcing of jobs to less developed nations.
3
When compared to large companies, small businesses are more likely to have:
A)a bureaucratic decision-making process.
B)low initial startup cost.
C)a greater focus on mass markets.
D)a low degree of flexibility.
E)a high success rate.
4
Which of the following is a disadvantage of small businesses?
A)Small businesses lack the flexibility to adapt to changing market needs.
B)Small businesses require huge initial investments.
C)Small-business owners lack the freedom to pick where and when to work.
D)Small businesses require more time to develop and introduce a new product.
E)Small-business owners experience high stress levels as a result of multitasking.
5
Which of the following purposes does a business plan serve the least?
A)Financial institutions decide whether to loan a small business money based on its business plan.
B)Customers use a business plan to decide a firm's credibility and to make their purchase decision.
C)It establishes a strategy for acquiring sufficient funds to keep the business going.
D)Employees can refer to the business plan to understand how their company plans to achieve its goals.
E)It includes an analysis of the competition, which can be used when designing strategies.
6
Which of the following is a source of equity financing?
A)Trading one's products for the goods and services offered by other businesses
B)Borrowing a loan from the Small Business Administration (SBA)
C)Securing a mortgage from a bank against personal property
D)Securing a line of credit from a bank
E)Selling stock in the business to investors
7
Which of the following is a source of debt financing?
A)Reinvesting a part of the profits in the business
B)Selling personal assets like land or life-insurance policy
C)Mortgaging personal property like a house for to obtain a loan
D)Selling stocks of the company to friends and relatives
E)Selling ownership interest or stock to people interested in funding the business idea
8
Which of the following is a major drawback of raising capital for a business through venture capitalists or by selling stocks in the business?
A)It cannot be used as working capital.
B)It requires the owner to share profits of the business.
C)It increases the owner's control over the business.
D)It requires pledging of personal property as collateral.
E)It requires channelizing of revenues into repayment of borrowed amount.
9
From a market analysis, Donna has realized that a business that can effectively serve the baby boomers will be highly successful. Thus, she plans to start a new business. Which of the following businesses will best help Donna attract this demographic segment?
A)A fast food restaurant
B)A consultancy that helps people plan their retirement
C)A store that sells pop-culture merchandise.
D)A grooming academy that teaches avariety of life skills
E)A matrimonial site
10
Individuals who champion the development of innovations of any kind within larger organizations are referred to as _____.
A)franchisers
B)financiers
C)venture capitalists
D)intrapreneurs
E)drivers





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