Multiple Choice Questions

1. The executive summary should contain which of the following information?

a. a short description of potential buyers

b. a complete description of your business

c. a brief statement of the financial needs of the business and what the money would be used for

d. a brief history of the business

2. An explanation of how the product will be distributed is contained within the:

a. competitive analysis

b. description of the product line

c. marketing strategy portion of the business plan

d. business strategy section of the business plan

3. A business plan performs a number of functions including:

a. identifying how many employees will be needed in the business start-up phase

b. attracting capital for the start-up

c. providing the basis for purchasing property and casualty insurance for the new company

d. providing the entrepreneur with a plan for managing inventory

4. The C of the five Cs that is a synonym for "cash flow" is:

a. character

b. capacity

c. collateral

d. capital

5. Competitor's analysis should identify:

a. What are their strategies?

b. Who are the company's key competitors?

c. What images do they have in the marketplace?

d. all of the above

6. The phrase, "avoid the off-the-shelf, 'cookie-cutter approach that produces look-alike plans" means:

a. that every business plan is unique

b. avoiding a business plan that looks ordinary

c. the business plan should reflect the excitement of the entrepreneur

d. all of the above

7. The product life cycle concept means that small businesses must:

a. constantly be involved in product innovation

b. use a market penetration strategy if they are to be successful

c. create both place and time utility if they are to survive

d. track demographic and psychographic trends carefully

8. Numerous surveys have concluded that the most important element of service is:

a. the personal touch

b. speedy transactions

c. innovative product design

d. convenient business hours

9. Small companies with limited financial resources can often use ______ as a way to differentiate themselves from larger competitors.

a. high price and high quality

b. innovation

c. customer service

d. lower prices with higher quality

10. Shifting patterns in the age, income, education, race, and other characteristics of the population are the subject of ______ and exert a potent force on a company's marketing plan.

a. psychographics

b. geo-demographics

c. geographics

d. demographics

11. If a small business owner wants to use television advertising, he/she should:

a. remember that television is one of the least flexible media

b. consider radio instead because they have identical advantages

c. try to use cable which costs $200 or less for a 30 second spot

d. go for national advertising to get the maximum absolute cost advantage

12. A tip for effective advertising is:

a. set long-run advertising objectives.

b. advertise in all media.

c. include many texts in your ads.

d. All of the above.

13. The typical household receives an average ______ pieces of direct mail annually.

a.  52

b.  236

c.  624

d.  354

14. A type of non-tariff barrier to trade that consists of selling large quantities of products in foreign countries below cost is referred to as:

a. clearance selling

b. exporting

c. dumping

d. bartering

15. Which of the following is true about global competition?

a. It is largely the domain of small businesses due to their flexibility.

b. It tends to shorten the life cycle of a product or service.

c. It makes companies more customer-focused.

d. There is less of a focus on quality and more of a focus on price internationally.

16. Domino's Pizza, McDonald's, etc., in Japan and Europe are examples of:

a. foreign management companies

b. foreign licensing

c. international franchising

d. joint venturing

17. An executive summary should:

a. briefly describe the owners and key employees, target market(s), and financial highlights

b. briefly describe the company's competitive advantage

c. explain the basic business model and the problem the business will solve for customers

d. all of the above

18. The loan proposal portion of the business plan should include:

a. three sets of forecasts: optimistic, realistic, and pessimistic

b. a listing of anyone who owns more than 20% of the business

c. pro forma for two to three years

d. a realistic timetable for repayment or for investors to exit

19. Market research for a small business can be:

a. haphazard

b. informal

c. random

d. arbitrary

20. The choice of advertising medium is primarily determined by:

a. the unique selling proposition and budget

b. what media the competition uses

c. the target audience and the message

d. what media the industry focuses on

21. Countertrades have significant drawbacks, including:

a. being limited in size to $100,000 per deal

b. needing a trading intermediary to arrange the countertrade, thereby raising costs

c. receiving currency that cannot be exchanged outside the foreign nation

d. getting goods that are of no direct use to the seller

22. A business plan:

a. should be done by professional writers in consultation with the owner

b. should be kept in outline form to avoid over structuring the company

c. reduces the risk and uncertainty involved in starting a new company

d. is a guarantee of success for the small company

23. Free trial offers, free delivery, lengthy warranties, and money back guarantees are examples of:

a. non-price competition

b. product differentiation

c. customer discounts

d. promotion

24. Transit advertising's advantages include:

a. the high quality color reproduction

b. its wide coverage

c. its generality

d. the prominence of display

25. If you can't afford to invest in foreign facilities, don't have time to even learn the foreign market, but you are willing to give someone else the right to make and market your product for a fee and royalties, your best bet for entering the foreign market is:

a. international franchising

b. a foreign management company

c. foreign licensing

d. joint venturing