starting a small business
1.A friend of yours has recently received his MBA. He wants to open his own business but feels that it might be too riskyat this point in his career. As an SBA counselor, you are able to advise him and explain more clearly to him some ofthe advantages and disadvantages of starting a small business. Which of the following statements best representssomething you might tell him?
A.Small businesses foster personal relationships and offer flexibility and independence
B.The cost of opening a small business is relatively low, and financing is easily obtained.
C.Although opening a small business is risky, there is practically unlimited potential.
D.Record keeping will be complicated, and public disclosure of most transactions is required.
E.Opening a small business is especially difficult because there is little help available for those desiring to do so.
2.A furniture manufacturer like Thomasville would be concerned with the producer price index because it
A.measures the effect of interest rates on the economy.
B.tracks the cost of housing and transportation.
C.measures prices that manufacturers must pay for lumber and other raw materials used in the manufacturingprocess.
D.is related to the real gross domestic product.
E.is published daily.
3. A limited-liability company is
A.taxed like a partnership
B.always used to organize charitable organizations
C.similar to a cooperative
D.the result of a horizontal merger
E.taxed like a corporation
4.A local retailer calls its customers when it receives merchandise that they may be interested in, provides individual service to each customer, providesforms and phone numbers for complaints and comments, and has a 100 percent satisfaction guarantee. Which objective is this business working hard toaccomplish?
A.Achieving low employee turnover
B.Keeping up with the current technology
C.Making a profit
D.Satisfying the needs of its customers
E.Increasing the owner’s wealth
5.Although Frank is not in top management, he is charismatic and well liked by others in his organization. Other employeesoften look to Frank to see how he reacts to new policies implemented by top management, and they follow his lead.Frank has leadership in his organization.
6.An organization of nations formed to promote the free movement of resources and products among its members and tocreate common economic policies is called a(n)
A.free trade association
C.none of the above
7.Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail businessthat sells sporting goods equipment. When she started to work there, she noticed several things that were possibly thecause of the business not doing as well as it hoped. Angela has been thinking of starting her own small business becauseshe 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 planwould put things into perspective to help the company do better. After creating the plan, Angela suggested thatPersonal Wellness contact a group of senior and graduate students to provide management counseling for thecompany. Angela wants to make sure that her leaving does not become the cause of the company going under.
Question: Personal Wellness can be classified as operating in what type of industry?
8As a businessperson planning to open a new small business, you know that the business plan should not contain
A.a discussion of the nature and mission of the new business.
B.pages and pages of detailed facts and figures
C.any mention of the businessperson’s goals; financial institutions just aren’t interested in these.
D.an explanation of why opening a business of this type makes good business sense.
E.information about how much it will cost to open and operate the new business
9.As a limited partner in a construction business, Joe
A.does not receive any portion of the profits
B.contributes only his time and not his money
C.has input only on major company decisions
D.cannot lose his investment in the partnership
E.only risks his initial investment
10.As a manager at Johnson Electric, an armature motor manufacturer, Charles is responsible for quality. As he carries outhis controlling function, Charles sets the standard for the number of defective parts per million, and then he gathersthe data measuring the actual performance. What third step of the control function should Charles take next?
A.Change the standards to match the actual performance
B.Take corrective action
C.Begin planning again
D.Determine the cause of the discrepancy
E.Motivate his employees