Small Business Management
Exam Questions
Course Introduction
Small Business Management explores the fundamental principles and practices required to start, operate, and grow a successful small business. The course covers critical topics such as business planning, financial management, marketing strategies, human resource considerations, legal structures, and risk management. Students will learn how to identify business opportunities, develop effective business models, secure funding, and navigate the challenges unique to small enterprises. Through case studies, practical assignments, and group discussions, learners gain practical skills and knowledge to manage day-to-day operations, foster innovation, and ensure the long-term sustainability of small businesses in a competitive marketplace.
Recommended Textbook Business in Action 7th Edition by Courtland L. Bovee
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Page 2
Chapter 1: Developing a Business Mindset
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Sample Questions
Q1) Unlike accounting tasks,for which there is a long tradition of outsourcing,the work of financial managers is generally kept "in house," particularly in midsize and large companies.
A)True
B)False
Answer: True
Q2) ________ encompasses all the people and processes used to create the goods and perform the services that a company sells.
A) Sales and marketing
B) Information technology management
C) Human resources management
D) Operations management
E) Financial management
Answer: D
Q3) True professionals avoid committing ethical lapses.
A)True
B)False
Answer: True
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Chapter 2: Understanding Basic Economics
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Sample Questions
Q1) Explain the meaning of a leading indicator with the help of an example.
Answer: Leading indicators suggest changes that may happen to the economy in the future and are therefore valuable for planning.Housing starts,for example,are a leading indicator that shows where several industries are headed.When housing starts drop,the construction industry contracts,and the effect soon ripples through other sectors of the economy,from the manufacture of plumbing fixtures,carpet,and appliances to a variety of services,including furniture retailing,real estate sales,and other areas dependent on housing-related transactions.Another key leading indicator is durable-goods orders,or orders for goods that typically last more than three years (which can mean everything from desk chairs to airplanes).A rise in durable-goods orders is a positive indicator that business spending is turning around.In addition to all these indicators,economists closely monitor several price indexes and the nation's economic output to get a sense of how well the economy is working.
Q2) Capital is the collective intelligence of an organization.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Global Marketplace
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Sample Questions
Q1) Economies of scale are savings from not buying too much of any one thing.
A)True
B)False Answer: False
Q2) All U.S.companies are bound by the Foreign Corrupt Practices Act.
A)True
B)False Answer: True
Q3) Foreign direct investment (FDI)________.
A) usually does not receive support from domestic governments
B) carries much lesser political risk
C) typically gives companies greater control
D) carries much lesser economic risk
E) is less complex than any other form of global entry
Answer: C
Q4) The North American Free Trade Agreement was formed by twelve North American countries.
A)True
B)False Answer: False
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Chapter 4: Business Ethics and Corporate Social Responsibility
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Sample Questions
Q1) In ________ CSR,company leaders believe they have responsibilities beyond making a profit,and they back up their beliefs and proclamations with actions taken on their own initiative.
A) proactive B) cynical
C) minimalistic
D) primary
E) philanthropic
Q2) The Occupational Safety and Health Act of 1970 set mandatory standards for safety and health and established the Occupational Safety and Health Administration (OSHA)to enforce them.
A)True
B)False
Q3) What is defensive CSR? How is it different from proactive CSR?
Q4) What is consumerism? List the fundamental consumer rights.
Q5) What is a conflict of interest? How is it related to ethical decision making?
Q6) Discuss the two-tiered approach to CSR.
Q8) What is ethics? List the components of good business ethics? Page 6
Q7) Compare and contrast cap and trade programs and sustainable development.
Q9) Compare and contrast ethical lapse and ethical dilemma?
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Page 7
Chapter 5: Forms of Ownership
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Q1) A ________ merger occurs when different companies at the same stage or level merge.
A) standardized
B) horizontal
C) conglomerate
D) vertical
E) operational
Q2) Proxy is a document that authorizes another person to vote on behalf of a shareholder in a corporation.
A)True
B)False
Q3) A company decides to establish a relationship with a local company in order to better its business in a foreign country.The company must choose joint ventures ahead of mergers and acquisitions if it wants to ________.
A) establish a company that is totally different
B) create a single management structure
C) create a unified business structure
D) establish a well-structured arrangement
E) avoid disrupting the original companies too much
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Page 8
Chapter 6: Entrepreneurship and Small Business Ownership
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Q1) In the business plan,the exit strategy explains how and when the owner will close her business.
A)True
B)False
Q2) Funding a business with credit cards or a personal line of credit is extremely risky.
A)True
B)False
Q3) Discuss banks and microlenders as sources of private financing.How does it differ from seeking funds by going public?
Q4) Briefly describe what a business plan is and discuss its importance in starting a business.
Q5) A small business is defined as a company that ________.
A) is newly launched and has fewer than 100 shareholders
B) is dominant in its field and employs fewer than 1,500 employees
C) has revenue of less than $750,000
D) is independently owned and operated and not dominant in its field
E) is funded through personal lines of credit and has fewer than 1,000 employees
Q6) Compare and contrast lifestyle businesses with high-growth ventures.
Q7) Compare and contrast venture capitalists with angel investors.
Page 9
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Chapter 7: Management Roles, Functions, and Skills
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Q1) ________ is the most important and pervasive interpersonal skill that managers use.
A) Communication
B) Evaluation
C) Analytic ability
D) Negotiation skill
E) Technical skill
Q2) Middle managers establish the structure for an organization as a whole.
A)True
B)False
Q3) Explain how democratic leaders function.
Q4) A(n)________ is a specific,short-range target or aim.
A) mission
B) tactic
C) strategy
D) objective
E) vision
Q5) Explain the decisional roles of managers.
Q6) Describe 'SMART' goals with an example.
Q7) Compare and contrast cognitive intelligence and social intelligence.
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Chapter 8: Organization and Teamwork
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Sample Questions
Q1) Which of the following does an organization chart do?
A) depicts the attrition rate in the organization
B) depicts the costs incurred by the organization
C) shows lines of authority in the organization
D) shows the performance of the organization
E) shows the growth curve of employees
Q2) At Meyer Department Store,employees are encouraged to make certain decisions without consulting their managers.For example,cashiers are allowed to make price adjustments for customers without consulting the store manager as long as the amount of the adjustment is less than $10.Meyer Department Store is most likely to have which of the following organizational structures?
A) departmentalized decision making
B) structured decision making
C) decentralized decision making
D) informal organization
E) tall organization
Q3) What is a virtual team?
Q4) Define span of management.How does the span of management in flat organizations differ from that in tall organizations.
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Chapter 9: Production Systems
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Sample Questions
Q1) The period of time between placing an order for supplies and receiving the material is called ________.
A) process forecast
B) run time
C) lead time
D) lag time
E) procurement delay
Q2) Inventory control refers to determining how much of what to have on hand at any given time.
A)True
B)False
Q3) Organizations can promote systems thinking by ________.
A) showing people how they contribute to the overall goal
B) implementing output-based individual incentives
C) restricting interactions at the subsystem level
D) giving them direct solutions from the top
E) implementing output-based incentives for small teams
Q4) Kaizen calls for continuous quality improvements.
A)True
B)False
Page 12
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Chapter 10: Employee Motivation
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Q1) Jason is an assembly-line worker at Mellick Manufacturers.He feels dissatisfied and frustrated with his job,which consists of tightening three bolts on each washing machine as it passes by him on the assembly line.At Mellick Manufacturers,assembly-line workers are closely supervised,and their incentives are linked to quantitative measures of productivity.According to the job characteristics model,which of the following is TRUE about Jason's job?
A) It has high task significance.
B) It has low task identity.
C) It has high autonomy.
D) It has low skill variety.
E) It has low feedback.
Q2) ________ refers to training workers to perform multiple jobs and rotating them through these various jobs to combat boredom or burnout.
A) Job enrichment
B) Behavior modification
C) Cross-training
D) Job enlargement
E) Task significance
Q3) Discuss the risks and limitations of the goal-setting theory.
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Page 13
Chapter 11: Human Resources Management
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Sample Questions
Q1) Workforce analytics are a computer-based statistical approach to analyzing and planning for workforce needs.
A)True
B)False
Q2) Compare and contrast job description with job specification.
Q3) Creation of a sexist environment in which employees are made to feel uncomfortable by lewd jokes,remarks,or gestures is a form of sexual harassment.
A)True
B)False
Q4) Roughly,10 percent of U.S.workers can be categorized as contingent employees.
A)True
B)False
Q5) An employee who works from home and uses electronic communications to stay in touch with colleagues is said to be telecommuting.
A)True
B)False
Q6) Compare and contrast commissions with bonus.
Q7) What are diversity initiatives?
Q8) Compare and contrast retirement plans with pension plans.
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Chapter 12: Labor Relations
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Sample Questions
Q1) Identify and discuss the "alt-labor" movement.
Q2) Seniority refers to the ________.
A) length of time someone has worked for his or her current employer
B) skills that an employee has acquired over a period of time
C) present productivity level of an employee
D) lifetime productivity value of an employee
E) total compensation and benefits offered to an employee
Q3) Which of the following is a key difference between mediation and arbitration?
A) Mediation involves a third party, whereas arbitration is performed without third parties.
B) Arbitrators give suggestions, whereas mediators give directives.
C) Mediation is compulsory, whereas arbitration is voluntary in nature.
D) Arbitration provides a legally binding settlement, whereas mediation is not binding.
E) Mediation has a win-lose orientation, whereas arbitration has a win-win orientation.
Q4) "Unions have a negative impact on productivity." Do you agree with this statement? Explain your answer.
Q5) What are unfair labor practices? Provide examples.
Q6) Compare and contrast the Wagner act of 1935 and The Taft-Hartley Act of 1947.
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Chapter 13: The Art and Science of Marketing
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Sample Questions
Q1) The purchasing behavior of organizations is easier to understand than the purchasing behavior of consumers because it's more clearly driven by economics and influenced less by subconscious and emotional factors.
A)True
B)False
Q2) When you segment a market using psychographics,you subdivide your customers according to characteristics such as their ________.
A) gender
B) ethnic group
C) self-concept
D) counties
E) occupation
Q3) Compare and contrast consumer market with organizational market.
Q4) Compare and contrast market penetration with diversification.
Q5) What is market segmentation.List the four fundamental factors marketers use to identify market segments.
Q6) Compare and contrast product development with market development.Explain using an example.
Q7) Compare and contrast concentrated marketing with micromarketing.
Page 16
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Chapter 14: Product and Pricing Strategies
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Sample Questions
Q1) Which of the following refers to a graphical representation of a brand?
A) brand equity
B) brand name
C) trademark
D) logo
E) prototype
Q2) Target customers are familiar with a brand and are likely to consider buying it.This brand has high brand preference.
A)True
B)False
Q3) Brand preference means that people ________.
A) are not willing to accept substitutes for the product
B) will purchase the product if it is available
C) are willing to wait long for the product
D) are not willing to experiment with other brands
E) will buy the product only if it is availed in small numbers
Q4) Prototypes are diagrammatic representations of a business model.
A)True
B)False
Q5) Compare and contrast co-branding and licensing.
Page 17
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Chapter 15: Distribution and Marketing Logistics
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Sample Questions
Q1) ________ are full-service merchant wholesalers that set up displays in retail outlets,stock inventory,and perform other services such as marking prices on merchandise.
A) Rack jobbers
B) Agents
C) Brokers
D) System integrators
E) Value-added resellers
Q2) Online retailers can be either Internet-only operations or online extensions of store-based operations.
A)True
B)False
Q3) Merchant wholesalers that sell products to organizational customers for internal operations or the production of other goods,rather than to retailers for resale,are called
A) manufacturers' representatives
B) drop shippers
C) rack jobbers
D) distributors
E) system integrators
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Chapter 16: Customer Communication
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Sample Questions
Q1) The chief downside of trade allowances is that they can create the controversial practice of forward buying,in which customers load up on merchandise while the price is low.
A)True
B)False
Q2) ________ refers to a creative tactic designed to capture the audience's attention and promote preference for the product or company being advertised.
A) Media mix
B) Advertising appeal
C) Advertising media
D) Specialty advertising
E) Communication mix
Q3) Advertising differs from direct marketing in that advertising ________.
A) often uses personally addressable media
B) doesn't involve the purchase of time or space in other media
C) often excludes a direct response aspect
D) works to build lasting relationships with customers
E) involves personal sales contacts
Q4) Discuss integrated marketing communications.
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Chapter 17: Financial Information and Accounting Concepts
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Q1) ________ ratio is calculated by dividing current assets by current liabilities.
A) Debt-to-equity
B) Current
C) Quick
D) Acid-test
E) Inventory turnover
Q2) Statement of cash flows is a statement of a firm's cash receipts and cash payments.
A)True
B)False
Q3) Accrued expenses are expenses that ________.
A) are likely to be incurred at a future time in a different financial year
B) have been incurred but for which bills have not yet been received
C) are long-term liabilities that have been incurred in a financial year
D) have been incurred and for which the bills have been received
E) are likely to be incurred at a future time in the same financial year
Q4) A fiscal year is a 12-month accounting period that begins on January 1 and ends on December 31.
A)True
B)False
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Chapter 18: Financial Management
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Questions
Q1) A company decides to remain highly leveraged to minimize the ownership shares.Critically analyze this approach.
Q2) Which of the following is a component of a firm's working capital account?
A) long-term loans
B) debentures
C) inventory
D) mortgage bonds
E) convertible bonds
Q3) Equity financing refers to arranging funding by selling ownership shares in the company.
A)True
B)False
Q4) Hedging refers to selling a product at a higher rate than what was determined.
A)True
B)False
Q5) Term loans have maturities between three months to one year.
A)True
B)False
Q6) Explain why businesses use factoring to raise funds.
Q7) Compare and contrast various types of budgets.
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Chapter 19: Financial Markets and Investment Strategies
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Q1) Preferred stock owners have no voting rights in a corporation.
A)True
B)False
Q2) Treasury bills are sold at a discount and redeemed at face value.
A)True
B)False
Q3) Suppliers use futures contracts to protect themselves from future price decreases.
A)True
B)False
Q4) Robex Retail forms a contract with one of its suppliers to buy specific amounts of agricultural produce at a later date.This contract is an example of a(n)________.
A) financial future
B) put option
C) credit derivative
D) call option
E) commodities future
Q5) Compare and contrast blue chip,income,growth and cyclical stocks.
Q6) Describe a bull market and a bear market.
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Chapter 20: The Money Supply and Banking Systems
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Q1) What are foreclosures? When do such situations occur?
Q2) Compare and contrast federal funds rate and discount rate.
Q3) Investment banks offer all of the following services EXCEPT ________.
A) facilitating mergers, acquisitions, and sales
B) underwriting initial public offerings
C) offering checking and savings accounts
D) managing and advising on investments
E) enabling clients to trade commodities
Q4) A ________ is a market situation in which frenzied demand for an asset pushes the price of that asset far beyond its true economic value.
A) liquidity crisis
B) bubble
C) default
D) flash crash
E) credit freeze
Q5) Compare and contrast independent mortgage companies and mortgage brokers.
Q6) If the Fed decreases the reserve requirement,banks will have less money to lend.
A)True
B)False
Q7) Compare and contrast retail banks and merchant banks.
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