Principles of Business Organization Ch. 5-7

Small businesses enjoy several unique benefits that larger firms may not have such as _______

• Access to more resources
• the ability to adapt to change and simplified record keeping

• Higher profit margins
• Greater flexibility and adaptability

Jeffrey Inc. is a large business that produces off-road vehicle parts. In addition to this market stream, Jeffrey produces auto parts, boat parts, and parts for machinery and equipment. Inventions, LLC is a small business that focuses only on the off-road vehicle market and has created lighter weight, stronger, and more efficient parts for off-road vehicles. Its primary market is off-road racing which it believes will serve the dual purpose of showcasing its product and filling the needs of its customers. Inventions has significantly increased its market share in the off-road vehicle parts market over the years causing Jeffrey to revamp its marketing techniques and reanalyze its customer's needs. Which of the following is true about the relationship of small businesses to large businesses?

• Small businesses can only dominate in an area of business if many firms join together to offer the same goods or services.

• When compared to large businesses, small businesses take more time to respond to customer's needs because they hesitate to invest in new product lines out of fear of having the line fail and losing money as a result.

• Small businesses challenge larger, established firms in many ways, causing them to become more efficient and more responsive to consumer needs.

• Large businesses must create different departments that resemble small businesses in order to effectively compete against small businesses.

The growth of women and minorities in franchising is attributable to which of the following activities?

• Banks having loan programs targeted at women and minority business owners

• Women and minorities having a greater work ethic than nonminority males

• More women and minorities graduating from business college

• Special outreach programs designed to encourage franchisee diversity

Sears, Roebuck & Co., and General Motors rely heavily on _______ to provide merchandise, parts, supplies, and other goods and services. Companies like these buy parts and assemblies for these businesses because it is less expensive than manufacturing them in their own factories.

• Direct retail
• Small business firms

• In-house production
• Franchising

A business plan is essential for starting a new business because it

• helps to attract potential investors
• provides a roadmap for the business
• helps to identify potential challenges
• is a guide for the person starting a business

Which of the following is not a management resource provided by the Small Business Administration?

• Free assistance in closing failed small businesses

• Free publications

• Free technical assistance

• Counseling, courses, conferences, and workshops

According to the authors, franchises may become unsuccessful because the franchisor

• Expanded too rapidly

• Charges too high franchise fees
• Does not have a well-known brand
• All of the above

Franchising agreements fall into three general categories, which of the following is not one of those categories?

• A producer licenses distributors to sell a given product to retailers.

• A franchisor supplies brand names, techniques, or other services instead of a complete product.

• A distributor franchises the channels of distribution to franchisees.

• A manufacturer franchises retail stores to sell its products.

What percentage of home-based businesses have no employees?

• Over 90%

• Under 30%

• Under 50%

• Over 70%

Statistics show that most small business failures are related to

• Poor marketing strategies
• Inadequate funding
• poor management

• Poor location