Deck 14: Choosing the Right Location and Layout

Question 1

A glass manufacturer that requires an extremely pure, very fine sand in its production process would be most concerned about the ________.

A)business climate
B)proximity to raw materials
C)demographic profile of the local market
D)local wage rates

Answer 1

B

Question 2

TIGER ________.

A)is a software package combining the ability to draw detailed maps with the power to search through databases
B)breaks down the population, retail sales, etc., by census region
C)contains the names of every street in the country and detailed block statistics for 345 urban areas
D)All of the above

Answer 2

C

Question 3

A Geographic Information System (GIS)________.

A)is a software package combining the ability to draw detailed maps with the power to search through databases
B)helps entrepreneurs discover important trends and characteristics in the population that otherwise might go unnoticed
C)can be an incredibly powerful tool for determining the ideal location based on specific criteria the entrepreneur establishes
D)All of the above

Answer 3

D

Question 4

Which of the following information is available from U.S. Census data?

A)The value of the homes in an area
B)The number of rooms in the homes in an area
C)Number of vehicles owned
D)All of the above

Question 5

When examining a state's available labor force, the potential business owner needs to know ________.

A)the state's labor relations history
B)the demographics of the target customers
C)both the number and education of the available workforce
D)the proximity to its customers

Question 6

When the cost of transporting finished goods to market is high relative to their value, the key location criterion is ________.

A)low rental or lease rates
B)proximity to raw materials
C)proximity to markets
D)zoning regulations

Question 7

Which of the following characteristics for selecting a city would be of greatest interest to a retail store selling fine china and collectibles?

A)Public services
B)Transportation
C)Zoning
D)Population characteristics

Question 8

When would a business choose to locate near the source of the raw material?

A)The company requires an important raw material that is difficult to transport.
B)The company requires an important raw material that is expensive to transport.
C)The company keeps its inventory of an important raw material low to keep costs down and counts on quick deliveries from suppliers.
D)All of the above

Question 9

Locating close to ________ is critical for manufacturers, service providers and other companies that will be competitive.

A)markets they plan to serve
B)suppliers
C)transportation routes
D)airports and rail transportation

Question 10

________, published annually, matches population demographics with lifestyle interests.

A)The Lifestyle Market Analyst
B)The Commercial Atlas and Marketing Guide
C)The Zip Code Atlas and Market Planner
D)A Researcher's Guide to the 1990 Census

Question 11

A labor force that has technical training would be most important to a ________.

A)clothing store
B)restaurant
C)skiing equipment specialty store
D)computer company

Question 12

________ provides useful demographic information in eight areas.

A)Topological Integrated Geographic Encoding Referencing
B)The American Marketplace: Demographics and Spending Patterns
C)Zip Code Atlas and Market Planner
D)Sales and Marketing Management's Survey of Buying Power

Question 13

When choosing a state in which to locate, one must evaluate which of the following?

A)The general business climate
B)The state's business laws, regulations, and taxes
C)Tax incentives and/or investment credits
D)All of the above

Question 14

One direct way to lower annual operating costs is to locate in a state where ________.

A)there is an attractive business climate
B)the labor market is highly competitive
C)taxes and regulatory costs are lowest
D)the key markets are relatively accessible

Question 15

The first phase of determining where to locate a business is ________.

A)choosing a state in which the business owner wants to live
B)determining which city has the demographics that best fit the business
C)conducting a specific site analysis
D)determining which regions of the country are experiencing growth

Question 16

Which of the following information is not available from Census data?

A)Education levels
B)Income levels
C)Expenditures on dining out
D)Occupational data

Question 17

Entrepreneurs using the Census Bureau's Web site to evaluate potential locations have access to which of the following information about the residents in those locations?

A)Income levels
B)Age distributions
C)Occupational data
D)All of the above

Question 18

The "Best and Worst States for Doing Business" indicates that California is one of the least attractive states in which to do business based on these factors ________.

A)wage costs based on hourly and salaried compensation
B)tax costs and electricity costs
C)industrial and office rent costs
D)All the above

Question 19

What is the state's overall attitude toward your kind of business? Has it passed laws that impose restrictions on the way a company can operate? Does the state offer small business support programs of financial assistance to entrepreneurs? These questions help an entrepreneur to assess the overall ________.

A)population trends
B)proximity to markets
C)labor supply
D)business climate

Question 20

The location has far-reaching ramifications (such as high-tech companies)that need ________.

A)a highly-skilled work force
B)a high traffic site
C)easy access to shipping routes
D)a nearby retail district

Question 21

The first level of the location decision is the selection of a particular region of the country.

Question 22

The Zip Code Atlas and Market Planner provides detailed information on sales, spendable income, etc., by census region, county, and city.

Question 23

The U.S. Census department's "TIGER" file is a computerized map of the entire United States that gives entrepreneurs the power to pinpoint existing and potential customers.

Question 24

When conducting a regional evaluation, one of the first places an entrepreneur should turn for information is the U.S. Census Bureau.

Question 25

Job training for workers and reduced tax rates, financial grants and loans, are examples of what some ________ offer as business ________ to locate in their jurisdictions.

A)states; motivators
B)cities; incentives
C)regions; perks
D)counties; attractions

Question 26

The first phase in selecting a location is determining what regions of the country are experiencing substantial growth.

Question 27

The key to finding a suitable location is identifying the characteristics that can give a company a competitive edge and then searching out potential sites that meet those criteria.

Question 28

Proximity to needed raw materials is critically important for a service firm.

Question 29

________ is a system that divides a county or city into small cells or districts to control the use of land, buildings, and sites.

A)An enterprise zone
B)Zoning
C)Apportioning
D)Redistricting

Question 30

When the cost of transporting a product is high relative to its value, locating close to the market a manufacturer plans to serve is critical.

Question 31

A location in a city offering a high quality of life can be attractive to the entrepreneur and may make ________ easier.

A)financing
B)recruiting employees
C)resolving zoning issues
D)access to a trading area

Question 32

Geographic Information Systems (GIS)are powerful software programs that allow entrepreneurs to pinpoint the ideal location for their businesses.

Question 33

The purpose of zoning regulations is to ________.

A)restrict the growth of businesses
B)contain similar types of activities in suitable locations
C)help new businesses "incubate" in their startup period
D)build the traffic volume for retail and service businesses

Question 34

The Lifestyle Market Analyst matches population demographics with age.

Question 35

When Jan and Detmar Wolcinski bought their 152-year-old house, they began remodeling it with one goal in mind - opening a bed and breakfast inn. The Chadwick Inn has exceeded the Wolcinski's expectations in its first year of operation, but now some neighbors are starting to complain about the increased traffic in their neighborhood and the late hours some of the Inn's guests keep. The Wolcinski's greatest challenge in the near future is most likely ________.

A)convincing the local historical preservation board that the modifications they made to the house are in keeping with its historical character
B)zoning laws prohibiting commercial businesses in a residentially zoned area
C)major hotel chains opening competing "bed and breakfast" hotels on adjacent lots
D)encroaching shopping centers and malls that push up real estate prices

Question 36

Geographic concentrations of interconnected companies, specialized suppliers, and service providers that are present in a region are called ________.

A)zones
B)clusters
C)trading areas
D)variances

Question 37

When analyzing the labor supply, a small business is concerned only with the level of education and training of the labor force in the area.

Question 38

By studying the demographics of a proposed location, a small business owner can determine how well it matches the market for the owner's product or service.

Question 39

By collecting a wealth of data on possible locations, entrepreneurs will find that the location decision is made for them.

Question 40

A(n)________ is a special exemption to a zoning ordinance.

A)variance
B)exception
C)trade area
D)cluster

Question 41

Discuss the various sources of information available to the small business owner for deciding in which region of the country to locate her/his business.

Question 42

The region from which a business can expect to draw its customers over a reasonable time span is called its ________.

A)enterprise zone
B)zoning area
C)trading area
D)retail draw

Question 43

The index of retail saturation ________.

A)is retail expenditures times retail facilities divided by the number of customers
B)is the ratio of a trading area's sales potential to its sales capacity
C)evaluates both the number of customers and the intensity of competition in a trading area
D)B and C above

Question 44

A location that has housed several businesses that have failed within the past few years is likely to have a bad reputation and a negative image.

Question 45

A variance is a special exemption to a zoning ordinance.

Question 46

For many entrepreneurs, quality of life is one of the key determinants of their choice of locale.

Question 47

Refer to the following information to answer the following questions.
An entrepreneur considering two sites for a men and boys shop determines that (s)he needs sales of $158 per square foot to be profitable. Site #1 has 13,500 potential customers who spend an average of $160.20 per year on men and boys wear. Two competitors occupy 14,200 square feet of space. Site #2 has 10,800 potential customers who spend an average of $152.10 per year on men and boys wear. One competitor has 10,000 square feet.
The index of retail saturation for site #1 is $________.

A)150.21
B)168.51
C)152.30
D)166.19

Question 48

Zoning is a system that divides a city or country into small cells or districts to control the use of land, buildings, and sites.

Question 49

The primary variable(s)that influence(s)the scope of a trading area is/are the ________.

A)character of the transportation network
B)nature of competing businesses
C)type and size of the business operation
D)racial and political barriers in the local community

Question 50

Nature's Way, a health food store, has just opened in a popular neighborhood shopping center next to Silver's Gym, a physical fitness center catering to both men and women. Nature's Way is relying on which location principle?

A)Trade area
B)Retail consistency
C)Retail compatibility
D)Zoning

Question 51

Mini-Case 14-2: "It's a Great Location for a Bar"
Fred Stanford has just completed bartenders' school in Los Angeles and is ready to build a life for himself. Sunday's paper has an ad in the business opportunities section for a bar in Mesa Verde, Colorado. Fred has heard that the West is a high growth area and the quality of life in Colorado is very good. Fred's best friend, Carl, begins to ask Fred some questions about his new idea. "To begin with, Fred, where is Mesa Verde, Colorado?"
Fred decides to call the telephone number in the ad and is put in touch with Ansel King, a business broker located in Pueblo, Colorado. When asked where in Colorado Mesa Verde was, Ansel was prompt to point out that it was only 35 miles from Pueblo on the Interstate and has a population of nearly ten thousand. "Fred, this town is a great location for a bar, and I have just the kind of deal for a young man like you looking to get started."
What city-related factors does Fred need to consider when evaluating this community as a location for a bar?

Question 52

The most important factor when evaluating the labor supply in an area is its prevailing wage rate.

Question 53

The "friendliness" of the overall business environment is an important consideration in location selection and information is available to offer objective insight for this assessment.

Question 54

Zoning is a system for mixing types of business and industrial activities to make maximum efficient use of the area.

Question 55

The choice of the location for a Tiffany & Company should be determined by the compatibility with the community it will serve.

Question 56

What publications could Fred use to investigate whether or not this is a good region for this bar?

Question 57

When choosing a location, a small business owner should match the characteristics of the labor force her/his company requires with the characteristics of an area's available labor pool.

Question 58

Knowing the type of labor a business needs and preparing job descriptions and job specifications in advance will help a business owner determine whether or not there is a good match with the available labor pool.

Question 59

Identify and explain five of the eight criteria a small business owner should consider when selecting the state in which to locate her/his business.

Question 60

Identify and briefly discuss the eight factors an entrepreneur should consider when selecting the city in which to locate her business.

Question 61

To calculate the IRS, a retailer needs to know the number of customers in the area, the retail expenditures for her/his product, and the total square feet of space allocated to selling her/his kind of product in the trading area.

Question 62

The index of retail saturation for site #2 is $________.

A)164.27
B)140.83
C)170.64
D)146.30

Question 63

Generally, the larger a retail store and the greater its selection, the broader its trade area size.

Question 64

Increased traffic flow can be beneficial to similar businesses located in close proximity to one another (e.g., auto dealers, clothing retailers, and antique shops).

Question 65

Mary's successful clothing store was located on the back edge of the parking lot of a large mall. She did not have to pay mall rents since she was not part of the mall, but drew many customers who parked at the mall and then noticed her store. The mall developers built a movie theater on the part of the parking lot directly in front of Mary's store, basically hiding her from most mall customers. After about six months, Mary's business dropped off so much she had to move. What retailer site selection criterion forced Mary to move?

A)Proximity of competitors
B)Visibility
C)Adequate parking
D)Room for expansion

Question 66

Factors such as ________ should be sought out in the selection of retail and service business locations.

A)the lowest possible rent/lease options, transportation network, adequate parking, physical and psychological barriers
B)modest customer traffic, transportation network, lack of parking, physical and psychological barriers
C)customer traffic, transportation network, adequate parking, physical and psychological barriers
D)customer traffic, isolation from other stores, adequate parking, physical and psychological barriers

Question 67

Reilly's Law of Retail Gravity uses the analogy of gravity to estimate the attractiveness of a particular business to potential customers.

Question 68

Based on the above calculations, what is the entrepreneur's best option?

A)(S)he should choose site #1.
B)(S)he should choose site #2.
C)Neither site meets minimum criteria of $158 per square foot.
D)Either site will work well since both meet minimum criteria of $158 per square foot.

Question 69

To calculate the IRS, a retailer needs to know the number of customers, the number of competitors, and the total square feet of space allocated to selling her/his kind of product in the trading area.

Question 70

Shopping malls typically average ________ parking spaces per 1,000 square feet of shopping while a typical central business district offers ________ space(s)per 1,000 square feet of shopping space.

A)20; 1
B)3; 6
C)5; 3.5
D)3; 8

Question 71

The Index of Retail Saturation (IRS)is a measure of the potential sales per square foot of store space for a given product in a specific trading area.

Question 72

One element of the location decision common to all businesses is the need to locate where customers want to do business.

Question 73

Few decisions are as important for retailers as the choice of a location.

Question 74

A company's trade area can be influenced by intangible factors, such as physical and political barriers.

Question 75

Criteria for a "good location" are universal and apply to all types of small businesses.

Question 76

Reilly's Law of Retail Gravitation ________.

A)uses the analogy of gravity to estimate the attractiveness of a particular business to potential customers
B)predicts the declining fate of brick-and-mortar retail to online shopping
C)is based on downward trending of established locations
D)uses the analogy of contagious diseases and attracting customers

Question 77

Carmen is starting a childcare center. One location closed after a murder on the property and is near a neighborhood where there are many single parents. What city site selection factor might give Carmen problems with her childcare center?

A)Transportation
B)Police and fire protection
C)The reputation of the location
D)Compatibility with the community

Question 78

The average community net income is the key factor in Reilly's Law of Retail Gravitation to determine the point of customer indifference.

Question 79

Retail compatibility describes the benefits a company receives by locating near other businesses selling complementary products and services.

Question 80

Clever business owners choose their location with an eye on the surrounding mix of businesses.