Small Business Management
Midterm Exam
Course Introduction
Small Business Management explores the foundational principles, strategies, and skills necessary to start, operate, and grow a successful small business. The course covers topics such as entrepreneurship, business planning, financing, marketing, operations, and human resources management. Students will examine real-world cases and develop practical solutions to common challenges faced by small business owners, including risk management, legal compliance, and competitive positioning. By the end of the course, students will gain the knowledge and tools needed to effectively manage or launch their own small business ventures.
Recommended Textbook
Entrepreneurship Successfully Launching New Ventures MA 4th Edition by Barringer Bruce
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15 Chapters
1125 Verified Questions
1125 Flashcards
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Page 2
Chapter 1: Introduction to Entrepreneurship
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Sample Questions
Q1) Over the past 10 years, the demographic makeup of entrepreneurial firms has remained fairly stable in the United States and around the world.
A)True
B)False
Answer: False
Q2) In terms of the "types" of startup firms, entrepreneurial firms bring new products and services to market.
A)True
B)False
Answer: True
Q3) According to the Global Entrepreneurship Monitor (GEM) 2007 study, the majority of people in high-income countries are drawn to entrepreneurship:
A) to take advantage of an attractive opportunity
B) due to lack of career prospects
C) as a result of government incentives
D) because an important role model was an entrepreneur
E) to gain prestige
Answer: A
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Chapter 2: Recognizing Opportunities and Generating Ideas
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Sample Questions
Q1) In 2000, Tish Cirovolo realized that there were no guitars on the market made specifically for women. As a result, she started Daisy Rock Guitars, a company that makes guitars just for women. Daisy Rock Guitars are stylish and come in feminine colors, and incorporate design features that accommodate a woman's smaller hand and build. The best way to describe how Cirovolo's business idea was recognized is:
A) brainstorming
B) talking to consumers
C) reading industry reports
D) observing trends
E) finding a gap in the marketplace
Answer: E
Q2) Economic factors, social factors, technological advances, and political action and regulatory changes are the most important trends to follow in trying to identify opportunities.
A)True
B)False
Answer: True
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Chapter 3: Feasibility Analysis
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Sample Questions
Q1) Which of the following items is typically not included in a concept statement?
A) a brief description of the company's management team
B) a description of how the product or service will be sold and distributed
C) a description of how much money the new venture needs
D) the benefits of the product or service
E) the intended target market
Answer: C
Q2) There are two components to product/service feasibility analysis: product/service desirability and total startup funds needed.
A)True
B)False
Answer: False
Q3) The two components of product/service feasibility analysis are:
A) product/service value and product/service affordability
B) product/service demand and product/service timeliness
C) product/service timeliness and product/service value
D) product/service durability and product/service value
E) product/service desirability and product/service demand
Answer: E
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Chapter 4: Writing a Business Plan
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Sample Questions
Q1) The ________ is a short overview of the entire business plan.
A) summary statement
B) executive summary
C) managerial review
D) founder's introduction
E) abstract
Q2) The executive summary is a lengthy overview of the entire business plan.
A)True
B)False
Q3) According to the textbook, only ________ of the 600 entrepreneurs that participated in a recent Wells Fargo/Gallup Small Business Study indicated that they had started their venture with a business plan.
A) 12 percent
B) 31 percent
C) 20 percent
D) 6 percent
E) 48 percent
Q4) A firm's operating leverage is an analysis of its debt versus its equity.
A)True
B)False
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Chapter 5: Industry and Competitor Analysis
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Sample Questions
Q1) In the context of competitor analysis, ________ offer close substitutes to the product sold by the firm completing the analysis.
A) potential competitors
B) direct competitors
C) indirect competitors
D) impending competitors
E) future competitors
Q2) The primary opportunity available to firms in fragmented industries is consolidation. The most common way to do this is through a geographic roll-up strategy, in which one firm starts acquiring similar firms that are located in different geographic areas.
A)True
B)False
Q3) According to the textbook, the first step in a competitor analysis is to:
A) develop a marketing plan
B) develop the strategic plan
C) study the strength of the industry
D) study the external environment
E) determine who the competition is
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Chapter 6: Developing an Effective Business Model
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Sample Questions
Q1) An arrangement between two or more firms that establishes an exchange relationship but has no joint ownership involved is called a:
A) network
B) trade association
C) consortia
D) joint venture
E) strategic alliance
Q2) Catherine Smith has just finished writing a business plan for a startup in the medical products industry. She has now reached the point where she needs to develop a plan for how her firm will compete, use its resources, structure its relationships, interface with customers, and create value to sustain itself on the basis of the profits it earns. Jennifer needs to establish her firm's:
A) tactical plan
B) feasibility plan
C) business model
D) business template
E) operating plan
Q3) Describe the two potential fatal flaws of business models.
Q4) Why is it important for a firm to have a well-thought-out business model?
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Chapter 7: Preparing the Proper Ethical and Legal Foundation
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Sample Questions
Q1) What is a founders' agreement? Describe the purpose of a buyback clause and why it's important?
Q2) Which of the following statements regarding business licenses and permits is incorrect?
A) Most business licenses and permits can wait until after a business is launched to be obtained.
B) A business license can be obtained at the city clerk's office in the community where the business will be located.
C) If a business will be run out of a home, a home occupation business license is often required.
D) Some business licenses are hard to get.
E) The business licenses and permits that are needed vary by city, county, and state.
Q3) Corporations are organized as either C Corporations, T Corporation, or subchapter S corporations.
A)True
B)False
Q4) Describe what is meant by a "general partnership" and a "limited partnership." Describe the major difference between the two.
Page 9
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Chapter 8: Assessing a New Ventures Financial Strength and Viability
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Sample Questions
Q1) The balance sheet reflects the results of the operations of a firm over a specified period of time.
A)True
B)False
Q2) If a firm's debt-to-equity ratio gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.
A)True
B)False
Q3) ________ are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.
A) Profitability statements
B) Financial statements
C) Owners' equity statements
D) Budgets
E) Statements of cash flows
Q4) Stability is a company's ability to meet its short-term financial obligations.
A)True
B)False
Page 10
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Chapter 9: Building a New Venture Team
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Sample Questions
Q1) The fact that a corporation has a board of directors precludes it from having a board of advisors.
A)True
B)False
Q2) Networking is building and maintaining relationships with people whose interests are similar or whose relationship could bring advantages to a firm.
A)True
B)False
Q3) Which of the following statements about advisory boards is incorrect?
A) If a firm has a board of directors it is not permitted to have an advisory board.
B) Many people are more willing to serve on a company's board of advisors than its board of directors because it requires less time and there is no potential legal liability involved.
C) Most boards of advisers have between 5 and 15 members.
D) A growing number of startups are forming advisory boards.
E) An advisory board can be established for general purposes or can be set up to address a specific issue or need.
Q4) What is a skills profile and what is it used for?
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Chapter 10: Getting Financing or Funding
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Sample Questions
Q1) Which of the following statement is not correct regarding business angels?
A) Business angels invest in more startups on a yearly basis than venture capitalists.
B) The number of angel investors has decreased dramatically over the past decade.
C) Business angels usually take a seat on the board of directors of the firms in which they invest.
D) Business angels are valuable because of their willingness to make relatively small investments.
E) Business angels are difficult to find.
Q2) Why do most firms need funding? Provide a brief explanation of each reason.
Q3) Venture capitalists are individuals who invest their personal capital directly in startups.
A)True
B)False
Q4) Angel investors, private placement, venture capital, and initial public offerings are the most common sources of equity funding.
A)True
B)False
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Page 12
Chapter 11: Unique Marketing Issues
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Sample Questions
Q1) Once a firm has segmented the market, the next step is to:
A) decide on a position within the segment
B) select a critical market
C) select a target market
D) select a focal market
E) immediately decide on the "4Ps" of the marketing strategy
Q2) The first step in the formal sales process described in the book is:
A) qualify the lead
B) make the sales presentation
C) prospect for sales leads
D) meet objections and concerns
E) make the initial contact
Q3) The What Went Wrong feature in Chapter 11 focuses on Ugobe, the company that made Pleo, a small robotic baby dinosaur. Ugobe failed primarily because it didn't establish a clear:
A) positioning strategy
B) branding strategy
C) social media strategy
D) financial strategy
E) advertising strategy
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Chapter 12: The Importance of Intellectual Property
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Sample Questions
Q1) The average time for the approval of a patent is 19 months.
A)True
B)False
Q2) Which of the following is an example of a certification mark?
A) ModCloth
B) International Franchise Association
C) Underwriter's Laboratories
D) Rotary International
E) 1-800-FREE-411
Q3) A form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work is referred to as a(n):
A) assurance document
B) patent
C) trade secret
D) brand
E) copyright
Q4) What are the two primary rules of thumb for determining whether intellectual property protection should be pursued for a particular intellectual asset?
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Chapter 13: Preparing for and Evaluating the Challenges of Growth
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Sample Questions
Q1) According to Chapter 13, business success doesn't always scale. What is meant by this statement?
Q2) In regard to firm growth, evidence shows that:
A) relatively few firms generate sustained and profitable growth
B) the majority of firms generate sustained and profitable growth
C) an equal number of firms generate sustained and profitable growth than firms that don't
D) firms in the manufacturing sector are more likely to achieve sustained and profitable growth than firms in the service sector
E) firms in the service sector are more likely to achieve sustained and profitable growth than firms in the manufacturing sector
Q3) According to Penrose, the set of opportunities a firm feels it is capable of pursuing is referred to as the:
A) creative field of potential
B) productive opportunity set
C) prolific potential
D) passionate opportunity set
E) dynamic opportunity options
Q4) What is the organizational life cycle and why is it important?
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Chapter 14: Strategies for Firm Growth
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Sample Questions
Q1) The majority of entrepreneurial firms first enter foreign markets via joint ventures.
A)True
B)False
Q2) Which of the following was identified in the textbook as an advantage of participating in strategic alliances and joint ventures?
A) risk and cost sharing
B) loss of organizational flexibility
C) partners' cultures may clash
D) risk becoming dependent on a partner
E) loss of proprietary information
Q3) An advantage of internal growth is that it is a rapid form of growth.
A)True
B)False
Q4) A market penetration strategy involves actions taken to increase the sales of a product or service through greater marketing efforts or through increased product capacity and efficiency.
A)True
B)False
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Page 16
Chapter 15: Franchising
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Sample Questions
Q1) What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?
Q2) According to the textbook, the main disadvantage of buying a franchise is:
A) franchise organizations typically grow slower than non-franchise organizations in the same industry
B) franchisors typically provide poor levels of support
C) the cost involved
D) the service sector of the U.S. economy is waning in importance
E) franchising is waning in its popularity
Q3) Despite its advantages, franchising is not a popular form of business growth.
A)True
B)False
Q4) Betty Collins has been a Ford dealer for the past 20 years. Betty owns a:
A) business format franchise
B) product and trademark franchise
C) business design franchise
D) product plus franchise
E) product and business format franchise
Q5) List and explain three of the common misconceptions about franchising.
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