Essentials Of Entrepreneurship And Small Business Management 6th Edition by Scarborough – Test Bank
To Purchase
this Complete Test Bank with Answers Click the link Below
If face any problem or
Further information contact us At tbzuiqe@gmail.com
Sample
Test
Essentials of Entrepreneurship & Small Business Management,
6e (Scarborough)
Chapter 3 Designing a Competitive Business Model and
Building a Solid Strategic Plan
1) Which of the following is not one of the three components of
intellectual capital?
1. A)
Human
2. B)
Structural
3. C)
Competitor
4. D)
Customer
Answer: C
Diff:
2 Page
Ref: 70
AACSB: Analytic Skills
2) ________ involves developing a game plan to guide a company
as it strives to accomplish its mission, goals, and objectives to keep it on
its desired course.
1. A)
Competitive advantage
2. B)
Mission
3. C)
Strategic management
4. D)
Market segmentation
Answer: C
Diff:
1 Page
Ref: 71
AACSB: Analytic Skills
3) The aggregation of factors that sets a company apart from its
competitors and gives it a unique position in the market superior to its
competition is its:
1. A)
mission statement.
2. B)
competitive advantage.
3. C)
competitive profile.
4. D)
strategic plan.
Answer: B
Diff:
1 Page
Ref: 71
AACSB: Analytic Skills
4) A strategic plan serves as a blueprint to help a company to:
1. A)
match their company’s strengths and weaknesses to the environment’s
opportunities and threats.
2. B)
accomplish its mission, goals, and objectives.
3. C)
identify a company’s competitive advantage and set it apart from its
competition with a unique position in the market.
4. D)
All of the above
Answer: D
Diff:
2 Page
Ref: 71
AACSB: Analytic Skills
5) Which of the following was not identified
as a way for the typical small business to establish a competitive advantage?
1. A)
Lowering prices
2. B)
Providing higher quality goods or services
3. C) Improving
customer service
4. D)
Doing whatever the company does for its customers better than its competitors
Answer: A
Diff:
2 Page
Ref: 71
AACSB: Reflective Thinking
6) ________ are a unique set of capabilities that a company
develops in key operational areassuch as service, innovation, and othersthat
allow it to potentially vault past its competitors.
1. A)
Core competencies
2. B)
Opportunities
3. C)
Key success factors
4. D)
Mission statements
Answer: A
Diff:
2 Page
Ref: 72
AACSB: Reflective Thinking
7) The relationship between core competencies and competitive
advantage is best described by which statement?
1. A)
Strengthening a company’s competitive advantage strengthens its core
competencies.
2. B) A
company’s core competencies become the nucleus of its competitive advantage.
3. C) As
a company’s core competencies become stronger, its competitive advantage
becomes weaker.
4. D)
There is no relationship between core competencies and competitive advantage.
Answer: B
Diff:
3 Page
Ref: 72
AACSB: Analytic Skills
8) The key to entrepreneurial success over time is to build a
________ competitive advantage.
1. A)
defensible
2. B)
sustainable
3. C)
coherent
4. D)
random
Answer: B
Diff:
3 Page
Ref: 72
AACSB: Analytic Skills
9) Which of the following is NOT a characteristic of the
strategic management procedure for a small company?
1. A) It
should use a relatively short planning horizontwo years or less, typically.
2. B) It
should begin with an extensive objective-setting session.
3. C) It
should encourage the participation of employees and even outsiders to improve
the reliability and creativity of the resulting plan.
4. D) It
should allow for flexibility and not be overly structured.
Answer: B
Diff:
2 Page
Ref: 74
AACSB: Reflective Thinking
10) A clearly defined vision helps a company in which of the
following ways?
1. A)
Provides direction
2. B)
Determines decisions
3. C)
Motivates people
4. D)
All of the above
Answer: D
Diff:
1 Page
Ref: 74-75
AACSB: Reflective Thinking
11) A small company’s mission statement:
1. A)
establishes its purpose in writing.
2. B)
gives the business and everyone in it a sense of direction.
3. C)
defines what the company is, why it exists, and its reason for being.
4. D)
All of the above
Answer: D
Diff:
1 Page
Ref: 75
AACSB: Reflective Thinking
12) When developing a company’s mission statement, an
entrepreneur should remember to:
1. A)
write the statement alone without anyone else’s interference.
2. B)
omit statements about her values because they may turn some stakeholders off.
3. C)
keep it short and simple.
4. D)
All of the above
Answer: C
Diff:
3 Page
Ref: 75-76
AACSB: Communication
13) Strengths and weaknesses are ________ to the organization.
1. A)
internal factors
2. B)
external factors
3. C)
internal and/or external factors
4. D)
factors not belonging
Answer: A
Diff:
1 Page
Ref: 77
AACSB: Analytic Skills
14) ________ are positive internal factors that contribute
toward accomplishing the company’s mission, goals, and objectives, while
________ are negative internal factors that inhibit the accomplishment of a
firm’s mission, goals, and objectives.
1. A)
Strengths; weaknesses
2. B)
Weaknesses; strengths
3. C)
Opportunities; threats
4. D)
Threats; opportunities
Answer: A
Diff:
1 Page
Ref: 77
AACSB: Analytic Skills
15) Kevin Abt noticed that people were cooking meals in their
homes less often but wanted to avoid the hassle of going out to eat. They
wanted to “eat in” without cooking. Abt launched a company, Takeout Taxi, that
delivers restaurant-prepared food to his customers’ homes and businesses.
Takeout Taxi is the result of a(n):
1. A)
strength.
2. B)
weakness.
3. C)
opportunity.
4. D)
threat.
Answer: C
Diff:
2 Page
Ref: 78
AACSB: Analytic Skills
16) Maria Sanchez is the owner of the Main Street Café and a new
restaurant opens a few blocks away. From Maria’s perspective, this new
restaurant constitutes a(n):
1. A)
strength.
2. B)
weakness.
3. C)
threat.
4. D)
opportunity.
Answer: C
Diff:
2 Page
Ref: 78
AACSB: Reflective Thinking
17) Every business is characterized by a set of controllable
variables that determines the relative success (or lack of it) of market
participants called:
1. A)
distinctive competencies.
2. B)
key success factors.
3. C)
opportunities and threats.
4. D)
competitive edge.
Answer: B
Diff:
1 Page
Ref: 80-81
AACSB: Analytic Skills
18) Gathering competitive intelligence, such as “dumpster
diving” in a competitors trash, may raise questions regarding:
1. A)
the integrity of the data.
2. B)
the competitive profile matrix.
3. C) a
cost benefit analysis.
4. D)
ethical standards.
Answer: D
Diff:
2 Page
Ref: 83
AACSB: Ethical Reasoning
19) Your ________ competitors offer the same products and services,
and customers often compare prices, features, and deals from these competitors
as they shop.
1. A)
significant
2. B)
direct
3. C)
indirect
4. D)
All of the above
Answer: B
Diff:
1 Page
Ref: 83
AACSB: Analytic Skills
20) Which of the following is true about the
information-gathering process in competitive analysis?
1. A) It
is an expensive process which only large companies can afford.
2. B) It
can be relatively inexpensive and easy for the small business owner to conduct.
3. C) It
is a process closely regulated by various federal laws which prohibit doing
things like purchasing competitive products and analyzing them.
4. D) It
is a process that requires expert help and is relatively expensive.
Answer: B
Diff:
3 Page
Ref: 84
AACSB: Analytic Skills
21) Which of the following is an effective method of collecting
information about competitors?
1. A)
Ask customers and suppliers what competitors are doing.
2. B)
Talk to employees, especially sales representatives and purchasing agents,
about competitors.
3. C)
Attend trade shows and collect competitors’ sales literature.
4. D)
All of the above
Answer: D
Diff:
1 Page
Ref: 84
AACSB: Analytic Skills
22) Which of the following is not a
recommended method of collecting competitive intelligence?
1. A)
Attend trade shows and collect competitors’ sales literature.
2. B)
Buy competitors’ products or services and assess their quality and features,
benchmarking their products and services against yours.
3. C)
Pay competitors’ employees to become informants about their companies’
strategies, markets, and trade secrets.
4. D)
Watch for employment ads from competitors to determine the types of workers
they are hiring.
Answer: C
Diff:
2 Page
Ref: 84
AACSB: Ethical Reasoning
23) Purchasing rival companies’ products, taking them apart, and
analyzing them is:
1. A)
called industrial espionage.
2. B)
considered illegal due to federal regulation.
3. C)
benchmarking.
4. D)
cataloging.
Answer: C
Diff:
1 Page
Ref: 84
AACSB: Analytic Skills
For the questions below, consider the following competitive
profile matrix:
Key Success
Your Business
Competitor 1
Competitor 2
Factors
Weighted
Weighted
Weighted
Weight Rating
Score Rating
Score
Rating
Score
Quality
.35
4
1.40
2
.70
1
.35
Service
.20
4
.80
2
.40
2
.40
Convenience
.15
2
.30 4
.60
1
.15
On-Time
Delivery
.20
2
.40
4
.80
2
.40
Location
.10
3
.30
1
.10
2
.20
TOTAL
1.00
3.20
2.60
1.50
24) Which of the following statements is true?
1. A)
Overall, Competitor 2 is the strongest of these three companies.
2. B)
Your company’s most serious weakness is its poor quality.
3. C)
Your company’s most vulnerable point against these two competitors is in the
area of on-time delivery.
4. D)
The most important of the key success factors is location.
Answer: C
Diff:
2 Page
Ref: 84-85, Table 3.2
AACSB: Analytic Skills
25) Which company has the strongest competitive position?
1. A)
Your company
2. B)
Competitor 1
3. C) Competitor
2
4. D)
Impossible to tell from the information given
Answer: A
Diff:
2 Page
Ref: 84-85
AACSB: Analytic Skills
26) Which company has the worst location?
1. A)
Your company
2. B)
Competitor 1
3. C)
Competitor 2
4. D)
Impossible to tell from the information given
Answer: B
Diff:
2 Page
Ref: 84-85
AACSB: Analytic Skills
27) In terms of quality, which company has the weakest competitive
position?
1. A)
Your company
2. B)
Competitor 1
3. C)
Competitor 2
4. D)
Impossible to tell from the information given
Answer: C
Diff:
2 Page
Ref: 84-85
AACSB: Analytic Skills
28) Which key success factor does the entrepreneur who built
this table believe is most important?
1. A)
Quality
2. B)
Service and on-time delivery
3. C)
Convenience
4. D)
Location
Answer: A
Diff:
2 Page
Ref: 84-85
AACSB: Reflective Thinking
29) A competitive profile matrix:
1. A)
identifies a firm’s core competencies.
2. B)
permits the small business owner to divide a mass market into smaller, more
manageable segments.
3. C)
allows the small business owner to evaluate her firm against competitors on the
key success factors for the industry.
4. D)
creates a road map of action for the entrepreneur in order to fulfill her
company’s mission, goals, and objectives.
Answer: C
Diff:
3 Page
Ref: 84-85
AACSB: Reflective Thinking
30) ________ are the broad, long-range attributes the small
business seeks to accomplish; ________ are the more specific targets for
performance.
1. A)
Goals; objectives
2. B)
Goals; strategies
3. C)
Objectives; goals
4. D)
Strategies; goals
Answer: A
Diff:
1 Page
Ref: 85
AACSB: Reflective Thinking
31) Which of the following is not a
characteristic of a well-written objective?
1. A)
Realistic, yet challenging
2. B)
Measurable
3. C) General
4. D)
Timely
Answer: C
Diff:
2 Page
Ref: 85-86
AACSB: Reflective Thinking
32) The focal point of any company’s strategy, whatever it may
be, should be:
1. A)
its product or service.
2. B)
its competition.
3. C)
its customers.
4. D)
its strengths and weaknesses.
Answer: C
Diff:
2 Page
Ref: 87
AACSB: Reflective Thinking
33) A ________ is a road map of the tactics and actions an
entrepreneur draws up to fulfill the company’s mission, goals, and objectives.
1. A)
mission
2. B)
strategy
3. C)
competitive edge
4. D)
core competency
Answer: B
Diff:
1 Page
Ref: 87
AACSB: Reflective Thinking
34) ________ spell(s) out the “ends” an organization is to
achieve; ________ define(s) the “means” for achieving the ends.
1. A)
Mission, goals, and objectives; strategy
2. B)
Key success factors; strategy
3. C)
Strategy; mission, goals, and objectives
4. D)
Strategy; vision
Answer: A
Diff:
2 Page
Ref: 85-87
AACSB: Reflective Thinking
35) The relationship between a company’s mission, goals, and objectives
and its strategy is best described by which of the following statements?
1. A)
Developing a company’s strategy lays the groundwork for creating its mission,
goals, and objectives.
2. B)
The mission, goals, and objectives spell out the ends the company wants to
achieve, and the strategy defines the means for reaching them.
3. C)
Although managers must change a company’s mission, goals, and objectives as
competitive conditions change, they should avoid adjusting the company’s
strategy to prevent the company from losing its focus and momentum.
4. D)
There is no real link between a company’s mission, goals, and objectives and
its strategy.
Answer: B
Diff:
3 Page
Ref: 87
AACSB: Reflective Thinking
36) A strategy should:
1. A) be
comprehensive and well integrated.
2. B)
focus on establishing for the firm the key success factors in the industry.
3. C)
identify how the firm will accomplish its mission, goals, and objectives.
4. D)
All of the above
Answer: D
Diff:
2 Page
Ref: 87
AACSB: Reflective Thinking
37) A cost-leadership strategy:
1. A)
enables companies to concentrate on a niche within the overall market.
2. B) is
built on differences among market segments.
3. C)
works best when buyers’ primary purchase criterion is price.
4. D) All
of the above
Answer: C
Diff:
2 Page
Ref: 88
AACSB: Reflective Thinking
38) A cost-leadership strategy works well when:
1. A)
buyers are sensitive to price changes.
2. B)
competing firms sell the same commodity products.
3. C) a
company can reap savings from economies of scale.
4. D)
All of the above
Answer: D
Diff:
2 Page
Ref: 88
AACSB: Reflective Thinking
39) Small firms pursuing a cost-leadership strategy have an
advantage in reaching customers whose primary purchase criterion is:
1. A)
quality.
2. B)
constant innovation.
3. C)
price.
4. D)
customer service.
Answer: C
Diff:
1 Page
Ref: 88
AACSB: Reflective Thinking
40) Skatell’s, a small jewelry store with three locations,
designs and manufactures much of its own jewelry while its competitors (many of
them large department stores) sell standard, “off-the-shelf” jewelry. As
a result, Skatell’s has developed a loyal customer base of people who seek
unique pieces of jewelry. Skatell’s reputation for selling unique and
custom-designed jewelry allows them to benefit from a:
1. A)
cost-leadership strategy.
2. B)
differentiation strategy.
3. C)
focus strategy.
4. D)
competitive strategy.
Answer: A
Diff:
2 Page
Ref: 88
AACSB: Reflective Thinking
41) Cost-leadership may have which of the following inherent
dangers?
1. A)
What is chosen to distinguish the product does not boost its performance.
2. B) An
overfocus on the physical characteristics of the product
3. C)
The identified niche is not large enough to be profitable.
4. D) An
overemphasis on costs to the elimination of other strategies
Answer: D
Diff:
3 Page
Ref: 88
AACSB: Reflective Thinking
42) A differentiation strategy:
1. A)
seeks to build customer loyalty by positioning goods or services in a unique
fashion.
2. B) is
built on a company’s core competence.
3. C)
must create the perception of value in the customer’s eyes.
4. D)
All of the above
Answer: D
Diff:
2 Page
Ref: 89
AACSB: Analytic Skills
43) A small company following a ________ strategy seeks to build
customer loyalty by positioning its goods and services in a unique fashion.
1. A)
differentiation
2. B)
cost-leadership
3. C)
focus
4. D)
niche
Answer: A
Diff:
1 Page
Ref: 89
AACSB: Analytic Skills
44) A company that offers superior product quality, extra
customer service, and fast delivery times is pursuing a:
1. A)
cost-leadership strategy.
2. B)
differentiation strategy.
3. C)
concentration strategy.
4. D)
strategic alliance.
Answer: B
Diff:
2 Page
Ref: 90
AACSB: Analytic Skills
45) Which of the following is a danger in choosing a
differentiation strategy?
1. A)
Focusing only on physical characteristics of a product or service and ignoring
important psychological factors, such as status, prestige, image, and customer
service
2. B)
Choosing a market that is not large enough to be profitable
3. C)
Misunderstanding the firm’s true cost drivers
4. D)
All of the above
Answer: A
Diff:
3 Page
Ref: 90
AACSB: Reflective Thinking
46) The principle behind a ________ strategy is to select one or
more market segments, identify customers’ special needs, and approach them with
a good or service designed to excel in meeting these needs.
1. A)
cost-leadership
2. B)
differentiation
3. C)
focus
4. D)
concentration
Answer: C
Diff:
1 Page
Ref: 91
AACSB: Reflective Thinking
47) Rather than attempting to serve the total market, the small
firm pursuing a ________ strategy specializes in serving a specific target
segment.
1. A)
cost-leadership
2. B)
differentiation
3. C)
focus
4. D) head-to-head
Answer: C
Diff:
2 Page
Ref: 91
AACSB: Reflective Thinking
48) Shere Vincente operates a travel service that specializes in
arranging trips for women, giving special attention to their needs and
preferences, from security and comfort to activities and events designed to
appeal to her target customers. Vincente is pursuing a ________ strategy.
1. A)
cost-leadership
2. B)
differentiation
3. C)
focus
4. D)
positioning
Answer: C
Diff:
2 Page
Ref: 91-92
AACSB: Analytic Skills
49) Small companies must develop strategies that exploit all of
the competitive advantages of their size by:
1. A)
responding quickly to customers’ needs.
2. B)
remaining flexible and willing to change.
3. C)
constantly innovating.
4. D)
All of the above
Answer: D
Diff:
1 Page
Ref: 11291
AACSB: Analytic Skills
50) In order for the control process to work, the business owner
must:
1. A)
make as few changes and modifications in the operational plans as possible.
2. B)
concentrate on competitive information.
3. C)
identify and track key performance indicators.
4. D)
maintain control and delegate as little authority and responsibility as
possible.
Answer: C
Diff:
2 Page
Ref: 93
AACSB: Analytic Skills
51) Which of the following is NOT one of the four important
perspectives a balanced scorecard should look at a business from?
1. A)
Competitor perspective
2. B)
Internal business perspective
3. C)
Innovation and learning perspective
4. D)
Financial perspective
Answer: A
Diff:
3 Page
Ref: 94
AACSB: Analytic Skills
52) The balanced scorecard ideally looks at a business from four
important perspectives relating to:
1. A)
low-cost, differentiation, focus, and initiative.
2. B)
customers, buyers, suppliers, and substitute products.
3. C)
customers, internal factors, capital, and human resources.
4. D)
customers, internal factors, innovation, and finances.
Answer: D
Diff:
3 Page
Ref: 94
AACSB: Reflective Thinking
53) With the growth of the Internet, globalization, and
increased competition, the business environment has become more turbulent and
challenging.
Answer: TRUE
Diff:
1 Page
Ref: 70
AACSB: Use of IT
54) One of the biggest changes entrepreneurs face is the shift
in the economy from a base of financial to intellectual capital.
Answer: TRUE
Diff:
2 Page
Ref: 70
AACSB: Analytic Skills
55) The three components of intellectual capital are human,
structural, and customer.
Answer: TRUE
Diff:
2 Page
Ref: 70
AACSB: Analytic Skills
56) Narrower product lines, smaller customer bases, and more
limited geographic areas give small companies a natural advantage over large
businesses when preparing a strategic plan.
Answer: TRUE
Diff:
2 Page
Ref: 71
AACSB: Analytic Skills
57) The most effective way for a small business to establish a
competitive advantage is by offering lower prices.
Answer: FALSE
Diff:
1 Page
Ref: 71
AACSB: Analytic Skills
58) Small companies’ core competencies are often the result of
benefits such as agility, speed, closeness to customers, superior service, and
innovative abilityall of which are size advantages that allow them to do
things that their larger competitors cannot.
Answer: TRUE
Diff:
2 Page
Ref: 72
AACSB: Analytic Skills
59) Large companies have a natural advantage over small firms
when it comes to preparing a strategic plan.
Answer: FALSE
Diff:
2 Page
Ref: 72
AACSB: Analytic Skills
60) Although developing a strategic plan is important for large companies,
it is not essential to managing a small company successfully because of its
limited resources.
Answer: FALSE
Diff:
1 Page
Ref: 74
AACSB: Analytic Skills
61) The ideal strategic planning process for a small company
should start with setting objectives.
Answer: FALSE
Diff:
2 Page
Ref: 74
AACSB: Analytic Skills
62) The ideal strategic planning procedure for a small company
should be formal and highly structured.
Answer: FALSE
Diff:
2 Page
Ref: 74
AACSB: Analytic Skills
63) The most effective way to communicate the values of a
company to everyone it touches is to formulate an effective mission statement.
Answer: TRUE
Diff:
2 Page
Ref: 74-75
AACSB: Communication
64) The mission statement addresses the first question of any
business venture: “What business am I in?”
Answer: TRUE
Diff:
1 Page
Ref: 75
AACSB: Communication
65) A company’s mission statement defines what it stands for,
why it exists, and its reason for being.
Answer: TRUE
Diff:
1 Page
Ref: 75
AACSB: Communication
66) As business and competitive conditions change, so should a
small company’s mission statement.
Answer: TRUE
Diff:
2 Page
Ref: 75
AACSB: Analytic Skills
67) A company’s mission statement should be lengthy and use
fancy jargon to impress outsiders.
Answer: FALSE
Diff:
2 Page
Ref: 76, Table 3.1
AACSB: Communication
68) Conducting a SWOT analysis for her own business and for her
key competitors allows an entrepreneur to gain a competitive edge by matching
her company’s strengths against her competitors’ weaknesses.
Answer: TRUE
Diff:
1 Page
Ref: 77-78
AACSB: Analytic Skills
69) Strengths are positive internal factors that contribute towards
accomplishing the company’s mission, goals, and objectives.
Answer: TRUE
Diff:
1 Page
Ref: 77
AACSB: Analytic Skills
70) Weaknesses are negative external forces that inhibit the
firm’s ability to achieve its mission, goals, and objectives.
Answer: FALSE
Diff:
1 Page
Ref: 77
AACSB: Analytic Skills
71) After a company’s strengths and weaknesses are assessed, the
strategic planning process should identify opportunities and threats facing the
company and should isolate the key factors for success in business.
Answer: TRUE
Diff:
2 Page
Ref: 78
AACSB: Analytic Skills
72) Threats are negative external forces that inhibit a
company’s ability to achieve its mission, goals, and objectives.
Answer: TRUE
Diff: 1
Page Ref: 78
AACSB: Analytic Skills
73) “Big box retailers” present an opportunity for many small
business owners.
Answer: FALSE
Diff:
2 Page
Ref: 79, Hands On …
AACSB: Analytic Skills
74) A firm’s strategy must focus on establishing for the firm
the key success factors the entrepreneur has identified for the industry.
Answer: TRUE
Diff:
2 Page
Ref: 80-81
AACSB: Analytic Skills
75) To be effective, the small business owner should limit
strategic analysis to only the two or three most significant opportunities
facing the firm.
Answer: TRUE
Diff:
2 Page
Ref: 80-81
AACSB: Analytic Skills
76) A small business owner can collect a great deal of
information about competitors through a number of low-cost competitive
intelligence methods.
Answer: TRUE
Diff:
1 Page
Ref: 81-84
AACSB: Analytic Skills
Comments
Post a Comment