Deck 16: The Small-Firm Sector

Question 1

In the UK in 2012 small firms, defined as having less than 50 employees, provided work for about________Of all employees.

A) 30%
B) 60%
C) 80%
D) 15%

Answer 1

60%

Question 2

In the EU, the definition of SMEs (small and medium- sized enterprises) has a category called 'micro enterprise' which have ______employees.

A) 0
B) <3
C) <10
D) <6

Answer 2

<10

Question 3

In the UK in 2012 SMEs (small and medium- sized enterprises) were responsible for about ___________of turnover (sales revenue).

A) 50%
B) 90%
C) 35%
D) 15%

Answer 3

35%

Question 4

Which of the following market structures will be represented by small and medium- sized firms?

A) Perfect competition
B) Monopolistic competition
C) Oligopoly
D) Monopoly
E) All of the above

Question 5

In the UK, from 1980 onwards, there was an increase in the number of SMEs (small and medium- sized enterprises). This cannot be attributed to

A) anti- monopoly policy.
B) downsizing and outsourcing.
C) higher unemployment between 1980 and 1995.
D) the growth of the service sector.

Question 6

Several factors help small firms succeed. Which of the following is not one of them?

A) Easy access to bank loans
B) Personal service to customers
C) Lower cost of premises
D) Flexible responses to market changes

Question 7

Several factors help small firms succeed. Which of the following is not one of them?

A) Personal service to customers
B) Ease of marketing overseas
C) Innovative entrepreneurial activity
D) Quality of service

Question 8

Several factors make it difficult for SMEs (small and medium- sized enterprises) in the UK to succeed. Which of the following is not one of them?

A) Lack of economies of scale
B) Lack of marketing or product credibility
C) The principal- agent problem
D) Banks are not willing to lend on reasonable terms

Question 9

Small firms can adopt strategies that will help them grow. These do not include

A) a flat management structure.
B) the use of external finance.
C) using professional managers.
D) workforce and management training.

Question 10

Small firms can adopt strategies that will help them grow. Typically, these do not include

A) workforce and management training.
B) product innovation.
C) concentrating on overseas markets.
D) the use of external finance.

Question 11

Part of the UK assistance to SMEs (small and medium- sized enterprises) involves tax incentives for large firms to invest in new small business ventures. This is called

A) Small Firms Loan Guarantee Scheme.
B) National Business Angels Network.
C) Enterprise Finance Guarantee.
D) corporate venturing.

Question 12

Small firms may differ from larger firms in terms of their

A) capital structure.
B) innovation activities.
C) investment strategies.
D) all of the above

Question 13

Small firms are more likely to be found

A) in the service sector.
B) in areas where goods are exported overseas.
C) in the manufacturing sector.
D) in countries with high levels of government regulation.

Question 14

If small firms are more likely to be located in niche markets, their demand curves are likely to be

A) closer to the origin than average.
B) less elastic than average.
C) further from the origin than average.
D) more inelastic than average.

Question 15

If unemployment is high, then typically

A) fewer people will consider self- employment as an option.
B) more people will consider self- employment as an option.
C) large firms will experience recruitment difficulties.
D) the SME market will experience a lower failure rate.

Question 16

Which of the following is not likely to be an advantage of a small firm?

A) Low overhead costs
B) Quality of service
C) Flexibility
D) Economies of scope

Question 17

Which of the following would not hinder the success of micro- sized firms in the UK?

A) Lack of economies of scale
B) Banks not willing to lend on reasonable terms
C) Lack of marketing or product credibility
D) Owners worried about managers establishing non profit- maximising objectives
E) Lack of key management skills

Question 18

What is the ascending order of typical stages in managing the growth of small firms?

A) Formation, growth, survival, decentralisation, expansion
B) Inception, survival, growth, expansion, maturity
C) Inception, growth, maturity, expansion, survival
D) Inception, survival, diversification, decentralisation, maturity

Question 19

Bank loans to small firms are often offered at relatively high rates. This is partly because of

A) adverse section.
B) large firms are using most of the available funds from the banking sector.
C) small firms offer low risks to the banking system.
D) small firms can afford to pay more.

Question 20

The major sources of financial support for SMEs (small and medium- sized enterprises) from the EU are from

A) The European Investment Bank.
B) The European Central Bank.
C) structural funds.
D) A and C

Question 21

Firms in which of the following groups are most likely to fail?

A) Large firms
B) Established firms
C) Small firms
D) Firms in areas with high product taxes

Question 22

Small firms can make changes relatively quickly as

A) they do not have so many competing stakeholders.
B) they have fewer co- ordination difficulties.
C) they have fewer decision- makers.
D) all of the above

Question 23

New firms may have problems establishing a customer base as

A) they are likely to focus on minimising costs rather than maximising sales.
B) they are often perceived as less reliable than established rivals.
C) they are unlikely to be aiming to gain repeat business in the early stages.
D) all of the above

Question 24

As a business grows in size its organisational structure is likely to become more

A) unstructured.
B) functional.
C) inceptionist.
D) entrepreneurial.

Question 25

The EU has three categories of SME. A 'small' firm would have fewer than ten employees.

Question 26

In the UK most small firms are in the service sector.

Question 27

Many small firms operate in niche markets.

Question 28

Most small firms have problems obtaining finance to develop new products.

Question 29

It is very easy to set up a small firm. You just to have inform HM Revenue and Customs.

Question 30

Large firms are usually classified as those that have more than 250 employees.

Question 31

The principal- agent problem is a serious one in many small firms.

Question 32

Fast growing firms tend not to bring in specialist managers from outside the firm.

Question 33

The sector of the economy in which the business is operating is a key characteristic of a small firm that will determine its rate of growth.

Question 34

Small firms often serve a localised market.

Question 35

When a small firm first starts trading, its management structure is likely to be unstructured.

Question 36

When management structure is decentralised, and is either functional or organised around products, a firm would be in the expansion stage of growth.

Question 37

Small businesses pay no corporation tax.

Question 38

Small firms typically find it easier than large firms to access finance.

Question 39

Part of the UK assistance to SMEs (small and medium- sized enterprises) is tax incentives for large firms to invest in new small business ventures. This is called The Small Business Service.

Question 40

How do the EU and UK define small firms?

Question 41

How important are SMEs in the UK?

Question 42

Why is flexibility a competitive advantage for firms in the small sector?

Question 43

What are the main competitive advantages of small firms?

Question 44

What is the GEM?

Question 45

Why are SMEs often suited to niche markets?

Question 46

Which strategies will lead to fast growth of small firms?

Question 47

What are the five main stages of small business growth? How do these relate to organisational structure

Question 48

Summarise the forms of financial support available from government for small businesses in the UK.

Question 49

What are the main problems facing small businesses?

Question 50

Why does self- employment typically rise during a recession?

Question 51

There is some evidence to suggest that limited companies grow faster than sole proprietorships. Why might to be the case?