Question 1

Research has shown that manufacturing costs often fall as the number of units produced by an organization increases.This relationship between cost and production is called

Accepted Answer

Economy of scale refers to the phenomenon whereby the average cost of producing a product decreases as the scale of production increases. This occurs because fixed costs are spread over a larger number of units, resulting in a lower cost per unit. This principle has been observed across a wide range of industries and is an important consideration for businesses looking to optimize their manufacturing processes.

Question 2

In which of the following industries are you most likely to find small business success?

Accepted Answer

Retailing typically involves selling goods directly to consumers and can be successful at a small business level through niche markets, personalized service, and unique product offerings. Department store retailing involves larger establishments and requires more resources while wholesaling involves selling goods in bulk to retailers and requires a larger starting investment. Airline and manufacturing industries also involve significant investment and competition from larger companies.

Question 3

Whisper Systems developed encryption systems that were efficient and without error.No other company had that ability.Twitter Inc.bought Whisper Systems primarily so it could improve it's security.Whisper Systems was a

Accepted Answer

Whisper Systems had a first-mover advantage in developing efficient and error-free encryption systems.

Question 4

Service businesses are the fastest growing segment of small-business enterprises primarily because of

Accepted Answer

The answer of Service businesses are the fastest growing segment...

Question 5

An entrepreneur looking to enter the manufacturing industry is more likely to fail due to

Accepted Answer

All of the choices are valid reasons why an entrepreneur is more likely to fail when entering the manufacturing industry. The cost of initial capital investment can be high, and there are often economies of scale that make it difficult for new entrants to compete with established companies. Additionally, manufacturing often requires a significant amount of labor, which can add further costs and complexity. Finally, the market may already be saturated with established players, making it difficult for new entrants to gain a foothold.

Question 6

Which of the following is an example of identifying a new niche in an established market?

Accepted Answer

The answer of Which of the following is an example...

Question 7

Which of the following statements explains why small businesses are generally more effective than large companies in specialty retailing?

Accepted Answer

Specialty retailing often requires customization to meet the unique needs and preferences of customers. Small businesses are generally more effective in this area because they have more flexibility and are able to offer personalized products and services. Large companies may struggle to achieve the same level of customization due to the higher costs associated with mass production and distribution. Therefore, option E explains why small businesses are generally more effective than large companies in specialty retailing.

Question 8

Bai5 is a beverage company "born and raised in Princeton NJ." The beverages come in a variety of flavors,with 5 calories per serving,no carbonation,and lots of antioxidants.In a beverage market that is dominated by Coca-Cola and Pepsi,Bai5 is an example of

Accepted Answer

Bai5 has identified a specific niche in the market by providing low calorie and antioxidant-rich beverages, which sets it apart from the other dominant players like Coca-Cola and Pepsi.

Question 9

In which of the following ventures would a small business operator be most effective?

Accepted Answer

A small business operator would be most effective in the service industry as it typically requires lower initial investments compared to other industries such as construction, manufacturing, or wholesale. Services can also often be provided with a smaller workforce and require less specialized skills and equipment. Furthermore, there is usually a steady demand for services, particularly in areas such as healthcare, education, consulting, and personal services.

Question 10

In which of the following industries are you LEAST likely to find a small business owner performing well due to a lack of economies of scale?

Accepted Answer

Manufacturing typically requires significant investments in machinery, equipment, and infrastructure, making it difficult for small businesses to compete with larger ones that can take advantage of economies of scale to lower their costs.

Question 11

Which of the following is an example of a first-mover advantage?

Accepted Answer

Orange County Choppers has the advantage of being the first in their industry to have their own reality TV show, which can attract new customers and increase brand recognition.

Note: B, C, D, and E are not examples of first-mover advantage. B is an example of market expansion. C is an example of a follower strategy. D is an example of product diversification. E is an example of a product improvement strategy.

Question 12

The overall purpose of a business plan is to

Accepted Answer

The answer of The overall purpose of a business plan...

Question 13

In which of the following areas of retailing are small businesses most likely to create jobs through success?

Accepted Answer

Creating organic health products is an area of retailing that has been growing in recent years, and small businesses that specialize in this area have the potential to create jobs through their success. This is due to the trend towards healthier lifestyles and the increasing demand for natural and organic products. Gas stations, general hardware stores, department stores, and factory outlets are all retail areas that are experiencing increased competition and consolidation, which may make it more difficult for small businesses to create jobs through success.

Question 14

Which of the following is NOT considered to be a distinctive competency for small business?

Accepted Answer

Achieving economies of scale is typically associated with larger businesses that have greater resources, production capabilities, and buying power. Small businesses are often characterized by their ability to be agile, innovative, and able to identify and capitalize on emerging opportunities, such as new niches or markets or a first-mover advantage.

Question 15

Large businesses are more likely to succeed in the manufacturing industry than small businesses due to

Accepted Answer

Large businesses can achieve economies of scale, meaning they can produce goods at a lower cost than small businesses by taking advantage of their buying power, efficient production processes, and distribution channels. This makes it more difficult for small businesses to compete on cost and succeed in the manufacturing industry.

Question 16

Which of the following statements is TRUE about the industries that small business owners may consider entering?

Accepted Answer

Barriers to entry are generally small in many industries, making it possible for small business owners to enter and operate. However, small businesses do not dominate the construction industry (A), the deregulation of banks has not completely caused the disappearance of small local banks (B), there are small businesses operating in the wholesaling industry (D), and discounting is not an industry, but a pricing strategy that can be applied to various industries (E).

Question 17

Which of the following statements about service businesses that are classified as small businesses is TRUE?

Accepted Answer

Each statement accurately reflects characteristics or advantages of small service businesses: A) highlights the appeal of innovation in service businesses; B) provides an example of a small service business based on size and ownership; C) suggests a common benefit of service businesses in terms of return on time; D) notes the low start-up resources often needed for service industry businesses.

Question 18

Whole Foods has succeeded in bringing natural foods to mainstream retail.A small business entering the natural food retail market would have a(n)

Accepted Answer

Whole Foods is an established market competitor in the natural food retail market, making it challenging for a small business to enter and compete.

Question 19

Why are some small business owners successful in the wholesaling industry?

Accepted Answer

Small business owners in the wholesaling industry are able to develop personal working relationships with their buyers, which helps in establishing trust and loyalty. This personal touch and attention to customer service can result in repeat business and positive referrals. Additionally, small businesses are often more nimble and able to adapt quickly to changes in the market, allowing them to stay competitive. The other options listed are not necessarily true for all small businesses in the wholesaling industry.

Question 20

In which of the following industries are small businesses typically poorer performers than large businesses?

Accepted Answer

Manufacturing often requires significant capital investment, economies of scale, and extensive distribution networks, which can be challenging for small businesses to achieve compared to larger companies.

Quiz 9: Managing Start-Ups and New Ventures