INTRODUCTION TO BUSINESS & MANAGEMENT

UNIVERSITY COLLEGE OF ISLAMIC ECONOMICS TAZKIA

EXERCISE 3: ENTREPRENEURSHIP & NEW VENTURE

34. Which entity is defined as independent and has little influence on its market?
A) corporation
B) joint venture
C) government agency
D) small business
E) partnership

36. What is the name of the document in which an entrepreneur summarizes his or her business
strategy for a proposed new venture?
A) success chart
B) business plan
C) director's guideline
D) financial blueprint
E) balance sheet

38. Which of the following is the most significant disadvantage of starting a business from
scratch?
A) coming up with new ideas
B) having competition
C) the risk of failure
D) inability to franchise
E) having few employees

40. Who constitutes the membership of SCORE?

A) successful entrepreneurs
B) venture capitalists
C) company officers
D) commercial lenders
E) retired executives

42. Which of the following types of businesses is most common in the United States?
A) corporations
B) cooperatives
C) limited partnerships
D) general partnerships
E) sole proprietorships

44. In which business sector are cooperatives still important?

A) public utilities
B) automotive
C) manufacturing
D) agriculture
E) health care

46. Which type of business is legally considered a separate entity from its owners and is liable
for its own debts?
A) general partnership
B) sole proprietorship
C) cooperative
D) corporation
E) limited partnership

48. What are shares in a business that the business sells called?
A) dividends
B) stocks
C) loans
D) profits
E) bonds

50. The U.S. Department of Commerce considers a business "small" if it has fewer than how
many employees?
A) 10
B) 500
C) 1,500
D) 50
E) 100

52. Which of the following types of venue is favored by small-business retailers?

A) superstore
B) catalog showroom
C) studio workroom
D) department store
E) specialty shop

54. What are specific locations of Ramada, McDonald's, and Subway examples of?
A) university sponsored businesses
B) networking businesses
C) franchises
D) cooperatives
E) government entities

56. What is the major drawback of accepting venture capital?

A) having to write a proposal
B) limiting expansion
C) having to pay high interest rates
D) sharing company control
E) facing a short repayment period
58. Which of the following is federally licensed to borrow money from the Small Business
Administration to invest in or lend to small businesses?
A) SEC
B) SCORE
C) SBDC
D) SBICs
E) FDIC

60. Which of the following is the most significant recent trend in small-business start-ups?
A) emergence of e-commerce
B) global economic downturn
C) increased opportunities for women
D) increased opportunities for minorities
E) entrepreneurs who cross over from big business

62. Which of the following factors most contributes to small business failure?
A) personnel issues
B) bad product design
C) legal problems
D) managerial incompetence or inexperience
E) time spent raising capital

64. Which of the following legal forms of business is owned and usually operated by a person
who is responsible for its debts?
A) cartel
B) sole proprietorship
C) general partnership
D) corporation
E) limited partnership

66. When can a sole proprietorship legally be dissolved?

A) the owner dies
B) the owner donates profits
C) sales exceed $1 million
D) the partners reorganize the firm's structure
E) earnings are less than $500,000

68. What type of business has two or more owners who share in the operation of the firm and are
financially responsible for its debts?
A) cooperative
B) nonprofit
C) conglomerate
D) partnership
E) corporation

70. Who invests all of the funds needed for a business but plays no role in its management?
A) general partner
B) silent partner
C) director
D) sole proprietor
E) principal

72. What do both sole proprietorships and partnerships lack?

A) legal standing
B) adaptable processes
C) trust
D) shared vision
E) continuity

74. What percent of all businesses in the United States are corporations?
A) 75 percent
B) 85 percent
C) 20 percent
D) 15 percent
E) 50 percent

76. What type of corporations are those comprised of doctors, lawyers, or accountants most
likely to be?
A) multinational
B) public
C) private
D) professional
E) subchapter S

78. Which of the following occurs when two firms combine to create a new company?
A) takeover
B) merger
C) venture
D) acquisition
E) divestiture

80. Why do attitudes about entrepreneurship vary internationally?

A) Foreign-owned companies can be unresponsive to local markets.
B) Consumer attitudes are influenced by economic cycles.
C) Attitudes towards risk-taking in business are culturally determined.
D) Decision making in big business can overlook local customs.
E) International business is creating a global village.

82. Viola wants to be a business owner, and is contemplating whether to start her own business
or open a franchise.
Which of the following, if true, would be a compelling reason for Viola to open a franchise
rather than start a new business?
A) The company has only recently become a franchise.
B) The franchiser tightly controls and monitors the service protocol.
C) The franchiser requires $3,000 in start-up costs and a 5 percent monthly royalty fee.
D) There are several other franchises with the same company in the area.
E) The franchisee is responsible for developing all marketing materials.

84. Each year, between 600,000 and 650,000 new businesses are launched in the United States.
Approximately how many businesses fail each year?
A) 500,000 to 700,000
B) 100,000 to 250,000
C) 250,000 to 500,000
D) 700,000 to 1 million
E) 50,000 to 100,000

86. Which figures reflect the current size and the growth in Hispanic-owned businesses for the
last five years?
A) 4.25 million and 85 percent
B) 2.25 million and 31 percent
C) 3.55 million and 81 percent
D) 3.15 million and 71 percent
E) 2.75 million and 41 percent

88. What is the most effective way for an entrepreneur to become a competent manager?
A) working alone
B) getting a college degree
C) relying on luck
D) being open to opportunities
E) working for a successful company first

90. Shirley is opening a flower shop and has decided to operate as a sole proprietorship. Which
of the following is NOT an advantage Shirley will have in operating her business?
A) choice of location
B) freedom
C) low start-up costs
D) limited liability
E) simplicity of operation

92. Today, what percent of all businesses in the United States are registered as sole proprietors?
A) 72 percent
B) 10 percent
C) 94 percent
D) 28 percent
E) 54 percent

94. American Business Machines is organized as a corporation. Its income will be taxed at the
corporate level and also on shareholder returns as dividends. What is this situation known as?
A) regulatory costs
B) double taxation
C) financial balancing
D) double ownership
E) dual costs