Small Business Its Opportunities and Rewards (Answer Key) Part 6

  54. The competency suggested by _____ relates to the organizational and business processes of a firm.  (p.35) A.intention B.resource C.exchange boundary The competency suggested by boundary relates to the organizational and business processes of a firm. This type of expertise can be called basic business competency.   55. Key business functions:  (p.35) A. are skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business. B. are activities that reflects a person's determination to start their business and make it a success. are certain fundamental activities that all businesses must perform. D.are business-related activities that are optional for the entrepreneur to perform. There are certain fundamental activities that all businesses must perform, which are called the key business functions, and include sales, operations (also called production), accounting, finance, and human resources.  Topic: The Psychology of Entrepreneurs  56. Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as _____.  (p.35) key business functions B.competencies C.business accreditations D.business-related expertise Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as key business functions. These are certain fundamental activities that all businesses must perform.   57. Certain businesses demand higher safety related rules. For example, window cleaners that specialize in high-rise buildings have certain rules and safety protocols. These specific rules would comprise the _____.  (p.35) A.specialized business professionalization B.infant-industry argument industry-specific knowledge D.key business functions Activities, knowledge, and skills specific to businesses in a particular industry is known as industry-specific knowledge. A restaurant really is different from a mechanic's shop or a computer store or a portrait studio. Each requires you to understand a particular industry and market, and each requires a very particular kind of skill.   58. The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as_____.  (p.35) A.basic business competencies resource competencies C.opportunity competencies D.determination competencies The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as resource competencies. Resources lead to specific resource competencies. For even the smallest part-time business, the entrepreneur needs to find or gain access to resources such as time, information, financing, space for the business, raw materials, and a variety of people (advisers, suppliers, service providers, customers).   59. Which of the following competencies requires the energy and focus needed to bring a business into existence?  (p.35) Determination competencies B.Resource competencies C.Opportunity competencies D.Basic business competencies Determination competencies are skills identified with the energy and focus needed to bring a business into existence. They are demonstrated by focusing on your business over other choices and being ready to find out about and do what it takes to pursue opportunities that will help get the business going.   60. (p.35) Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously worked as a house painter in another company had good know-how of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's basic business competency?  A.Martin hiring more house painters to meet demand B.Martin contracting with the mayor to help paint during reconstruction Martin getting his company registered D.Martin having prior knowledge of the house-painting business The competency suggested by boundary relates to the organizational and business processes of a firm. This type of expertise can be called basic business competency. There are certain fundamental activities that all businesses must perform, which are called the key business functions, and include sales, operations (also called production), accounting, finance, and human resources. Getting organized and registered—which creates the boundary—is an example of an operations activity.   61. Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously (p.35) worked as a house painter in another company had good know-how of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following provides industry-specific knowledge to martin?  A.Martin hiring more house painters to meet demand B.Martin contracting with the mayor to help paint during reconstruction C.Martin getting his company registered  Martin having worked in a house-painting company before starting his own business Activities, knowledge, and skills specific to businesses in a particular industry are known as industry-specific knowledge. Some of these skills focus on knowing your new business and its context.   62. (p.35) Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously worked as a house painter in another company had good know-how of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's resource competency?  Martin hiring more house painters to meet demand B.Martin contracting with the mayor to help paint during reconstruction C.Martin setting up the business's office in his garage D.Martin having prior knowledge of the house-painting business Resources lead to specific resource competencies. For even the smallest part-time business, the entrepreneur needs to find or gain access to resources such as time, information, financing, space for the business, raw materials, and a variety of people.   63. (p.36) Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously worked as a house painter in another company had good know-how of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's opportunity competency?  A.Martin hiring more house painters to meet demand Martin contracting with the mayor to help paint during reconstruction C.Martin setting up the business's office in his garage D.Martin deciding to set up his own business after quitting his previous job Exchange deals with the actual process of exploiting the opportunity for profit—which is a fancy way of saying "making sales." The competencies that make this work are called opportunity competencies, which include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy.   64. (p.36) Which of the following deals with the actual process of exploiting an opportunity for profit?  A.Resource Exchange C.Intention D.Boundary Exchange deals with the actual process of exploiting the opportunity for profit—which is a fancy way of saying "making sales."   65. Which of the following relates to the skills necessary to identify and exploit elements of (p.36) the business environment that can lead to a profitable and sustainable business?  A.Determination competencies B.Basic business competencies C.Resource competencies Opportunity competencies Opportunity competencies include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy.   66. (p.37) Which of the following comprises a family business?  A.A firm in which two or more families own a stake in a company but with no authority for daily management B.A firm in which no family members are involved in the management of the business C. A firm in which two or more families are involved in the occasional management of the business A firm in which one family owns a majority stake Defined as firms with a majority family ownership and direct daily family involvement, family business is a major economic force, employing 58 percent of America's total workforce.   67. (p.37) Which of the following is a major economic force, employing 58 percent of America's total workforce?  A.Public companies B.Government enterprises Family businesses D.International assignments Defined as firms with a majority family ownership and direct daily family involvement, family business is a major economic force, employing 58 percent of America's total workforce.   68. (p.37) Which of the following is true as an advantage of businesses run by a group of tightknit family members?  A.Succession issues don't crop up in family-owned businesses. B.Role conflicts never happen in family owned businesses. C.Board of members is not used in family-owned businesses. Communication-based integration is most effective in family-owned business. Small, family-owned businesses have many advantages. If the business is managed at the top by a group of tight-knit family members, communication-based integration can be more effective, and decision making can be easier and quicker.  Topic: The Sociology of Entrepreneurs  69. Which of the following challenges is typical to family businesses?  (p.37) A.Motivation and nepotism Role conflict and succession C.Succession and finances D.Leadership and finances There are two challenges typical to family businesses—role conflict and succession.   70. (p.37) Which of the following best describes the problem that arises when people have multiple responsibilities and each makes different demands on them?  Role conflict B.Succession issues C.Strategizing challenges D.Leadership constraints Role conflict describes the kind of problem that arises when people have multiple responsibilities, such as parent and boss, and each makes different demands on them. Role conflict is at its worst when people fail to recognize it.   71. Which of the following is the most effective approach for avoiding role conflict? (p.38)  Keep family issues out of the family business B.Keep separate rules for family members and employees C.Have constant role reversals D.Have decisions narrowed down for family members based on family necessities For family business, the most effective approach for avoiding role conflict is to keep family issues out of the family business. Whenever possible, try and make decisions based on business necessities.   72. Which of the following problems is closely related to role conflict?  (p.38) A.Resource shortage B.Lack of skills Shortage of time D.Perseverance Role conflict breeds another unending problem—the shortage of time. Entrepreneurs are among the most rushed people in the workforce. Part of this comes from the responsibilities of ownership.   73. (p.38) The organizing process to help make the most efficient use of the day is known as _____.  A.promotion focus B.competence C.certification time management The organizing process to help make the most efficient use of the day is known as time management.   74. Only _____ of family-owned businesses survive beyond the first generation. (p.39)  A.three-quarters B.one-half C.one-fourth one-third Thirty-nine percent of U.S. family-owned businesses are expected to face the retirement or semiretirement of their CEO within the next five years. This statistic grows in importance if you factor in the idea that only one-third of family-owned businesses survive beyond the first generation.   75. ____ refers to the process of intergenerational transfer of business.  (p.39) A.Role conflict Succession C.Certification D.Access When the current owners are ready to think about what follows them, we get into succession—the process of intergenerational transfer of a business. Often the lack of a clear succession plan is the death knell for those family firms facing their first intergenerational transition.   76. Which of the following statements is true about a family council? (p.40)   It helps to maximize communication in the succession process of family businesses. B.Its main function is complete the key business activities of a family business. C. It includes family members with immediate interests in the business and a significant number of non-family members. D. It is not a good forum for grappling with issues like role expectations, commitment, and personal responsibility. One way to maximize communication in the succession process is to create a family council. A family council includes family members with immediate interests in the business (spouse, sisters and brothers, older children, etc.). The focus of council meetings is the business-family relationship. The meetings can also be a good forum for grappling with issues like role expectations, commitment, and personal responsibility   77. Which of the following organizations tracks experts in family business?  (p.40) A.Association for Family Business Foundations B.Association for Small Business Entrepreneurs C.Family Business Management Institute Family Firm Institute For family councils and boards of advisers, it is often helpful to get professional advice at the start, and then continue on your own. One organization that tracks experts in family business is the Family Firm Institute.   78. Which of the following statements about entrepreneurial teams is true?  (p.40) Most entrepreneurial teams are family related. B. The majority of new businesses have an entrepreneurial team of a minimum five co-owners. C.The trend is toward even more businesses being developed by a solo entrepreneur. D.Only 10 percent of teams are spouses or life partners working together. While the classic image of the entrepreneurial small business would involve the image of the solo entrepreneur, the modern reality is different. The majority of new businesses have a team of two or more co-owners, and the trend is toward even more businesses being developed by teams of entrepreneurs. Most teams are family related. In fact 53 percent of teams are spouses or life partners working together.   79. (p.42) Which of the following is true with regard to women in small businesses?  A.Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. Women prefer less-risky firms, which also tend to be firms with lower returns. D. Women prefer more high-tech firms, as well as firms where technology is central to the business than men. The entrepreneurs' goals in starting the business might also play a role. For example men more often mention making money as a motivation, while women more often mention having flexibility for personal and family life. The overall growth strategies also differ, with more women choosing single-person lifestyle firms over the small business forms that employ others. Along these strategy lines, women prefer less-risky firms, which also tend to be the firms with lower returns.   80. Qualification for _____ requires certification as a business owned and operated by a (p.43) woman or a minority.  set-asides B.codicils C.product liability insurance D.professional liability insurance Qualification for set-asides requires certification as a business owned and operated by a woman or a minority (or both).   81. (p.43) Which of the following is true with regard to minorities in small businesses?  A. Minority-owned firms have not grown much in recent years and are a slow growing sector.  The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs. C. There is a phenomenal decline in the number of minority entrepreneurs despite the growth of racial and ethnic groups within the U.S. population. D.Minority entrepreneurs do not face the challenge of access anymore. Several reasons account for the phenomenal growth in the number of minority entrepreneurs. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs by offering information, advice, and funding access. Another explanation lies in the growth of racial and ethnic groups within the U.S. population, a trend that is expected to continue.   82.The two fastest growing minority groups that represent the largest segments of minority business owners are:  (p.43) Hispanics and African Americans. B.Hispanics and Pacific Islanders. C.Asians and African Americans. D.Asians and Pacific Islanders. The two fastest growing minority groups (Hispanics and African Americans) represent the largest segments of minority business owners. Hispanics represent 46 percent of all ethnic business owners, Asians 25 percent, and African Americans 24 percent.   83. (p.43) The challenge of _____ refers to when woman or minority-owned businesses are simply excluded from the opportunities offered to firms owned by white males.  A.consistency access C.flexibility D.mutuality Despite the growth in the number of women and minority entrepreneurs, both groups still face the challenge of access. Access refers to the simplest form of discrimination—often women- or minority-owned firms are simply excluded from the opportunities offered to firms owned by white males. This can result from the way that networks built from interpersonal relations in business exclude women and minorities.   84. (p.43) Identify the simplest form of discrimination with regard to women and minority entrepreneurs within the U.S. population.  A.Certification B.Role conflict Access D.Collusion Despite the growth in the number of women and minority entrepreneurs, both groups still face the challenge of access. Access refers to the simplest form of discrimination—often women- or minority-owned firms are simply excluded from the opportunities offered to firms owned by white males. This can result from the way that networks built from interpersonal relations in business exclude women and minorities.   85.Access problems for women- and minority-owned small businesses crop up most often (p.43) as:  A.differences in labeling. discrimination in financing. C.problems involved in business contacts. D.the presence and absence of certain skills. Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing.   86. Government contracting funds which are earmarked for particular kinds of firms, such (p.43) as small businesses, minority-owned firms, women-owned firms, and the like, are known as _____.  A.collective investment scheme B.cooperative fund C.certified items set-asides There are two solutions for access-based challenges. One solution is institutional, when minority and women-owned small businesses pursue dedicated contracting funds, known as set-asides, among big companies and government agencies. The good news is that governments at all levels have special contracting opportunities for small businesses that are owned and operated by minorities or women.   87. (p.44) An examination based acknowledgement that the firm is owned and operated as specified is known as _____.  A.performance analysis certification C.multi source assessment D.homologation An examination based acknowledgement that the firm is owned and operated as specified is known as certification. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies which can be leveraged to gain access to other sectors of business.   88. Which of the following statements about certification with regard to women- or minorityowned small business is true? (p.44)  A. Most corporate certification programs require a business to be in operation at least five years. B.Certification is for every women or minority-owned small business. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies. D. For corporations, certification is handled by organizations that are affiliated with the government or big business. Certification is not for every women- or minority-owned small business. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies which can be leveraged to gain access to other sectors of business.   89. _____ entrepreneurs are people who begin their business after having retired or resigned from work in corporations at or after the age of 50.  (p.44) A.Occasional B.Helical Late career D.Veteran Late career entrepreneurs (also known as second career entrepreneurs) are people who begin their businesses after having retired or resigned from work in corporations at age 50 or later. Whether these individuals start their business as part of a postretirement career plan or after early retirement has forced them to reevaluate their lives, a late career as a business owner has become a necessity for them.   90. Which of the following is an example of a second career entrepreneur?  (p.44) A. Cynthia, a 24-year-old, starting a consultancy business after graduating from B. college. Mark, a 30-year-old, starting a new business venture in stock trading after the failure of his previous business in real estate.  Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. D. Timothy, a 62-year-old, joining a real estate agency as a sales representative, after being retied for 4 years. Late career entrepreneurs (also known as second career entrepreneurs) are people who begin their businesses after having retired or resigned from work in corporations at age 50 or later. Whether these individuals start their business as part of a postretirement career plan or after early retirement has forced them to reevaluate their lives, a late career as a business owner has become a necessity for them.   91. (p.45) Which of the following is one of the prime challenges faced by most second career entrepreneurs?  Keeping personal finances out of the business B.Avoiding overconfidence C.Lacking resources D.Deciding whether to return to work A problem for second career entrepreneurs is keeping personal finances out of the business. Often when individuals are laid off or given early retirement, they can receive lump-sum financial settlements. Frequently, people intending to become late career entrepreneurs plan to use a substantial portion of these funds to start the new business. They fail to carefully consider how they will invest the money in the business, and how it will be used. Taking the easy way out can often mean late career entrepreneurs underprepare for the rigors of business, and they are risking their retirement nest egg. 