Daytona State College - ACG 2071EXAM 1-4

Question 1 (4 points)

Isabella overheard her customers discussing their desire for more baked treats suitable for
diabetics. Immediately she added sugar-free items to her inventory. Isabella has strong:
Question 1 options:

creativity. Answer available at https://bit.ly/2LDs4Yh

leadership.
opportunity obsession.
risk tolerance.
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Question 2 (4 points)

Natalie enjoyed yarn crafts so she opened a yarn and craft store in her small town. Sales have
been dismal; few people visit her store. What mistake did Natalie make?
Question 2 options:

She overestimated what she could do.

She lacked an understanding of the market.
She hired mediocre people Answer available at https://bit.ly/2LDs4Yh
She failed to share ownership.
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Question 3 (4 points)

A prospective entrepreneur is evaluating the suitability of his own characteristics for an

entrepreneurial career. He realizes that he should be prepared to assume:
Question 3 options:

moderate risks. Answer available at https://bit.ly/2LDs4Yh

no risks--that is, he should plan to operate conservatively.
risks similar to those a gambler assumes in Las Vegas.
psychological risks but not financial risks.
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Question 4 (4 points)
Eduardo took out a second mortgage on his home to finance his new business. He makes all the
decisions and keeps all the profits. Eduardo is:
Question 4 options:

bootstrapping. Answer available at https://bit.ly/2LDs4Yh

an entrepreneur.
an administrator.
a partner.
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Question 5 (4 points)

Darlene was disappointed with mass-produced children’s clothing that fell apart after a couple
washings so she and her few employees began making garments that would hold together until
they were outgrown. Darlene’s competitive edge is:
Question 5 options: Answer available at https://bit.ly/2LDs4Yh

customer focus.
quality performance.
niche markets.
integrity and responsibility.
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Question 6 (4 points)

Which of the following best fits the definition of a small business?

Question 6 options:
A manufacturer with 75 investors Answer available at
https://bit.ly/2LDs4Yh
A hardware store franchise with 20 employees
A fast food franchise with locations in three states
A campground with gross revenues of $4 million per year.
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Question 7 (4 points)
A firm’s employees would be considered __________________ in the business.
Question 7 options:

investors
stakeholders
customers
Stockholders Answer available at https://bit.ly/2LDs4Yh
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Question 8 (4 points)

When Evelyn hired a new sales manager, she issued a press release emphasizing the new hire’s
education and industry experience because:
Question 8 options:

she wanted to introduce the sales manager to the community.

this was her first new hire and she wanted everyone to know
her business was expanding.
She had stolen the sales manager from a competitor and
wanted to gloat publicly.
she wanted to bolster the sales manager’s credibility.
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Question 9 (4 points)

If Floyd elects to monitor the personal email accounts of his employees at work, he should:
Question 9 options:
install screening software to avoid hiring another IT
employee.
first develop a carefully worded and legally sound policy and
make sure all employees are aware of it.
consult an attorney before terminating an employee for
viewing personal email at work.
block access to all personal email servers from company
computers. Answer available at https://bit.ly/2LDs4Yh
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Question 10 (4 points)

U.S. Government assistance is available to lead the entrepreneur in compliance with

environmental law through the
Question 10 options:

Small Business Administration.

Department of Energy.
Department of Commerce.
Interior Department.
Question 11 (4 points)

The application of U.S. standards to ethical issues that are clouded by cultural differences abroad
is sometimes categorized as _____.
Question 11 options:
overly idealistic.
ethical imperialism. Answer available at
https://bit.ly/2LDs4Yh
USA arrogance.
situation ethics.
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Question 12 (4 points)

A person understating income or claiming personal expenses as business expenses is guilty of

_____.
Question 12 options:

bait and switch

skimming
scaling
relativism
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Question 13 (4 points)

When Sally realized her vintage clothing pieces were being bought by the local college students
and not just their parents, she started adding more vintage pieces to her inventory. Sally is
Question 13 options:
recognizing a hot trend and riding the wave.
 combining two businesses into one to create a market
opening. Answer available at https://bit.ly/2LDs4Yh
beginning with a problem in mind.
considering ways to adapt a product or service to meet
customer needs in a different way.
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Question 14 (4 points)

Considering Michael Porter’s five factors, the automotive industry in the United States is
characterized by:
Question 14 options:

weak rivalry.
high barriers to entry. Answer available at
https://bit.ly/2LDs4Yh
many substitute products.
weak suppliers.
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Question 15 (4 points)

A differentiation-based strategy requires that a firm

Question 15 options:

be the lowest-cost provider in an industry.

emphasize the uniqueness of its product or services.
achieve the highest resource efficiency in an industry.
be the lowest-priced competitor in an industry.

Question 16 (4 points)

Which action is a cause for erosion of a small firm's focus strategy?

Question 16 options:

Consumer demand grows.

New firms reconstruct the industry.
Differences between segments grow larger.
 The focus strategy is imitated.
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Question 17 (4 points)

Conisdering Michael Porter’s five factors, we can say that the fast food hamburger industry is
characterized by:
Question 17 options:

intense rivalry.
strong suppliers.
strong buyers.
ease of entry into the industry.
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Question 18 (4 points) Answer available at https://bit.ly/2LDs4Yh

Which statement is an example of an economic trend?

Question 18 options:
The Federal Reserve announces that it will decrease the
interest rate charged to banks.
Congress passes legislation that increases the tax rate on
corporations.
A new computer chip is announced which will allow for
miniaturization of many electronic devices.
The E.U. declares an increase in tariffs on all agricultural
goods.
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Question 19 (4 points)

Which factor is a non-quantitative factor of valuing a business?

Question 19 options: Answer available at https://bit.ly/2LDs4Yh

Future community development

Size of the buildings
Number of employees who will stay with the company
Employee salaries
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Question 20 (4 points)

One possible disadvantage of becoming a franchisor is:

Question 20 options:

complying with all the government regulations.

the cost of franshising exceeds the franchise fee.
the cost of screening prospective franchisees.
providing training to new franchisees.
Answer available at https://bit.ly/2LDs4Yh

Question 21 (4 points)

The cost of a franchise may include

Question 21 options:

royalty payments.
higher operational costs.
a one-time federal franchise tax.
higher labor costs.
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Question 22 (4 points)

Cameron has established a successful business and would like to expand. He is considering
becoming a franchisor. Before taking that step, Cameron should:
Question 22 options:

make sure his business model is reproducible.

have a technical writer create an owner’s manual.
partner with a lender to offer franchisee financing.
hire a master licensee to locate prospective franchisees.
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Question 23 (4 points)

Annabell has been granted the right to conduct business according to specified methods and
terms of another party. Annabell is a:
Question 23 options: Answer available at https://bit.ly/2LDs4Yh
 franchisor.
franchisee.
franchise.
licensee.
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Question 24 (4 points)
Answer available at https://bit.ly/2LDs4Yh
Darin is assembling a team of experts to help him through the process of evaluating a franchise
opportunity. This team should include:
Question 24 options:

a union representative, a lawyer, and a technical writer.

an attorney, an accountant, and a banker.
a banker, an accountant, and a contract law consultant.
an accountant, another franchisee, and a banker.
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Question 25 (4 points)

Nardell’s franchise contract contains language that prohibits him from opening a similar business
under his own brand. Nardell considers this to be:
Question 25 options:

due diligence.
restraint of trade.
restrictive practice.
encroachment.
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Answer available at https://bit.ly/2LDs4Yh