Chapter.12 Establishing Operations Complete Test Bank nan

Entrepreneurship, 3e (Bamford)

Chapter 12 Establishing Operations

1) A root cause of many of the problems in a new business can be traced to the lack of development or implementation of its operational plan.

2) Efficient use of time is imperative for a new business owner.

3) When developing a critical path chart, assigning responsibilities and estimated time of tasks is considered to be an intellectual activity.

4) The purpose of a critical path chart is to be a formal document for a business plan.

5) The founders of a business setting a schedule allows them to get a solid handle on how soon they can begin operations.

6) Underestimating the amount of time it will take to begin operations is a mistake that harms many new business owners.

7) The chart of how actions fit together is a critical path chart that shows the set of activities that are dependent on each other and that take the longest time.

8) A critical path chart allows an owner to understand which activities can occur concurrently and which ones must be in place before the next activity can occur.

9) In marketing, the old axiom of location, location, and location is the key to business success.

10) A mall shopping center is a retail center that occupies a small area of land along a major street.

11) Commercial real estate firms are a major source of information for a new business owner who is trying to decide where to locate the business.

12) A strip center generally has anchor stores to draw in customers.

13) Picking which bank to work with is a very simple and easy decision for a small business owner as all banks are capable of working with small businesses and want their business.

14) Financing the initial operations begins with a variety of initial payments and the process of setting up a business and ends with the first completed sale.

15) Legitimacy is a term used by financial institutions interacting with new businesses, which indicates there are questionable areas of concern.

16) Developing the perception of legitimacy for both customers and suppliers is very easy, and it does not affect the long-term survival of a business.

17) The perception of looking like and acting like a successful company can help a new small business build legitimacy.

18) Regardless of the business location, an entrepreneur needs to consider the potential means with which to establish the legitimacy of a business in the eyes of the customers and suppliers.

19) Legitimacy is the acceptance by key stakeholders such as customers and suppliers that you are a genuine business that will still be in operation next year.

20) A production management system is an important step to accomplish in the later stages of a new business start-up.

21) A production system developed ad hoc for an operation is expensive and results in many lost opportunities.

22) The importance of a production managements system is exaggerated during the harvest period of a business, as the firm has unlimited resources and a strong customer base.

23) All businesses have a production management system, whether the system is put in writing or not.

24) A production management system helps employees to focus their energy on the expected routine aspects of the job because it takes care of the unusual aspects.

25) A production chart details each step that must occur within a firm's production process.

26) A production chart is different from a critical path chart in that it focuses on the founding of a business.

27) One example of a production chart could be a chef making a meal and having everything done at the same time.

28) In order to be successful, new business owners should establish a production management system from scratch even if the business is part of an established industry.

29) Dr. W. Edwards Deming is considered the father of the quality movement in the United States.

30) Quality is an assumed standard to be achieved in any business.

31) Dr. W. Edwards Deming insists a business should be guided by the behavioral approach of management.

32) Dr. W. Edwards Deming suggested that using the scientific method of quality, a firm should change lots of things at the same time rather than changing only one thing at a time.

33) Firms should focus on strategic alliances, where firms join together to form long-term relationships for the benefit of both companies.

34) A competitor's actions may change the opening date of a new business.

35) When practicing time management, an entrepreneur should focus on long-term items that are critical and give them more priority.

36) Prioritizing tasks is a critical aspect of time management.

37) An owner who does not set ________ and ________ risks the possibility of losing funds and valuable resources.

A) timetables; objectives

B) goals; responsibilities

C) goals; objectives

D) timetables; responsibilities

38) A(n) ________ demonstrates how a set of activities are dependent on each other and which activities take the longest time.

A) critical path chart

B) pro forma chart

C) activity-setting chart

D) production pie chart

39) A new businessperson should be guided by developing a ________ that provides the most assistance and information.

A) main path analysis

B) production management system

C) critical path chart

D) line analysis

40) A critical path chart should be updated ________ as entrepreneurs develop the plan for a business.

A) every other month

B) at the end of every quarter

C) yearly

D) constantly

41) Which of the following statements is true of critical path analysis developed by entrepreneurs?

A) Entrepreneurs should not update their critical path analysis once the plan for a business is set.

B) Entrepreneurs should not share their critical path analysis with potential suppliers and industry experts.

C) Entrepreneurs should modify the critical path analysis during the process of actually accomplishing the tasks.

D) Entrepreneurs should treat the critical path analysis as a formal document for a business plan.

42) The critical chart process for an Internet-based business is ________ for a manufacturing business.

A) more complex than

B) the same as that

C) somewhat simpler than

D) none of these

43) A small retail center located along a major road is called a(n) ________.

A) industry center

B) shopping mall

C) anchor stores

D) strip shopping center

44) Locations can be evaluated by

A) the lease.

B) the amount of rent.

C) the amount of traffic that they draw.

D) the quality of the facility.

45) According to the book, ________ is(are) a source of valuable information for new business owners trying to choose a location for their business.

A) incubators

B) a small business center

C) commercial real estate firms

D) the Chamber of Commerce

46) A financial consideration in choosing a location for a new business owner is(are)

A) security deposit.

B) initial supplies.

C) licenses and inspections.

D) all of these.

47) Which of the following is an example of initial payments that a new small business has to make?

A) Bank set-up fees

B) Initial advertising expenses

C) Security deposits

D) all of these

48) It is recommended that no one individual should be able to write checks for a business in excess of ________ without a countersignature.

A) $1000

B) $5000

C) $100

D) $500

49) ________ is the acceptance by key stakeholders that you are a genuine business that will still be in operation next year.

A) Efficiency

B) Applicability

C) Legitimacy

D) Generalizability

50) Delicious Donuts Store has been making and distributing donuts for the past 4 years from the same location. It also maintains a good payment record. However, due to some bad operational decisions, it is now facing cash crunch. Nevertheless, the suppliers are ready to supply material for a credit period of 120 days. Which of the following terms is the most probable reason behind the trust that suppliers have on Delicious Donuts Store?

A) Efficiency

B) Transparency

C) Elasticity

D) Legitimacy

51) According to the book, which of the following terms is used to discuss the acceptance by key stakeholders that your business is more than just a "start-up" and will be successful?

A) Efficiency

B) Applicability

C) Efficacy

D) Legitimacy

52) Which of the following terms is used by key stakeholders for acceptance of a company as a reputable ongoing business?

A) Positive cooperation

B) Legitimacy

C) Acceptance contract

D) Dual compact

53) Which of the following is true of the effects of business incubators in establishing a business operation?

A) They are a potential setting for new businesses, except nonfood service businesses, to fund their initial operations.

B) They offer office space for new businesses at reduced rates and provide services such as a receptionist.

C) They maintain the liquidity of the business by entering into agreements with financiers and creditors.

D) They are usually swamped with failing businesses that face bankruptcy and would like to be considered for a turnaround.

54) All of these are items that establish legitimacy EXCEPT

A) a professional business card.

B) a high-quality Web page.

C) a land line.

D) a bank line of credit.

55) In production management, the two most important elements are

A) charting and quality.

B) financing and quality.

C) charting and organization.

D) financing and organization.

56) Why is the importance of a production management system exaggerated in the early stages of a new business?

A) There are customers who are ready to pay exorbitant price for a newly launched product.

B) The firm has only limited resources and strong time pressures to perform well at the outset.

C) There are a number of suppliers who are ready to supply raw materials for a credit.

D) The firm has to pay very high interest rate to banks and other financial institutions.

57) Which of the following have well-established methods of operation?

A) Franchises

B) New start-up firms

C) Bankrupt firms

D) All of these

58) Which of the following gives a detailed understanding about a firm's method of operation and its sequence?

A) A production chart

B) A main path analysis diagram

C) A production management system

D) A directed acyclic graph

59) A production chart is similar to a

A) analysis chart.

B) critical path chart.

C) deficit gap chart.

D) pro forma chart.

60) What percentage of businesses have a production process?

A) 25

B) 50

C) 75

D) 100

61) Which of the following statements is true of the production chart of a business firm?

A) It focuses on the founding of a business.

B) It details each step that must occur within a production process.

C) It starts with the delivery to a customer and finishes with a final order being received.

D) It is different from a critical path chart in that all steps in a production process must occur simultaneously.

62) Mama's Hot Dogs Store is a leading fast-food restaurant that sells a variety of hot dogs. This restaurant is known for its impeccable customer service. It provides a playground for kids, maintains clean tables and restrooms, and provides free Wi-Fi. John, an entrepreneur, wants to start a fast-food restaurant and compete against Mama's Hot Dogs Store. Which of the following strategies would most probably help John to be more successful than Mama's Hot Dogs Store?

A) Providing better quality of food and service

B) Charging higher prices for the food and service

C) Giving more quantity of food

D) Giving discounts on unsold food items

63) According to Dr. W. Edwards Deming, rather than focusing on obtaining the lowest prices for supplies, firms should focus on

A) the quantity of inputs.

B) the quality of inputs.

C) both of these.

D) none of these.

64) ________ is considered the father of the quality movement in the United States.

A) Peter Drucker

B) Dr. W. Edwards Deming

C) George Isoo

D) Frederick Taylor

65) According to Dr. W. Edwards Deming's quality movement, quality efforts need to be ________ and ________ improved.

A) fair; consistently

B) constantly; consistently

C) constantly; justly

D) fair; justly

66) Universal Studios, which made the Indiana Jones movies, forms a relationship with Burger King to put advertisements for a movie on drink cups. This is a form of ________.

A) compact alliance

B) strategic alliance

C) promotional alliance

D) none of these

67) Bubbles Beverages Company entered into a sponsorship agreement with Play Big Stadium. According to this agreement, the company will sponsor the stadium to maintain its courts regularly. In return, the stadium should allow only company products to be sold inside its premises. Identify the type of business relation between Bubbles Beverages Company and Play Big Stadium.

A) Limited partnership

B) Investment alliance

C) Limited liability partnership

D) Strategic alliance

68) Which of the following is typical when purchasing new equipment instead of used equipment?

A) It is usually the most expensive option.

B) It is delivered directly to the new business.

C) It is guaranteed that the new equipment is the most current available.

D) All of these

69) It is relatively common for new equipment to depreciate in the first year after purchase. What is the typical rate of depreciation of new equipment in the first year?

A) Less than 50 percent

B) More than 10 percent

C) More than 50 percent

D) Less than 40 percent

70) What does a new business owner need to keep in mind while making a decision about what equipment to buy?

A) How long it will be before the equipment will need to be replaced

B) The type of equipment needed

C) The cost of the equipment

D) All of these

71) Which of the following factors should a new business owner consider when deciding the best time to start a new business?

A) Competitors' moves

B) The general environment

C) Lifestyle issues

D) All of these

72) Which of the following correctly depicts the typical cycle of the economy?

A) Growth, boom, slowdown, recession, and boom

B) Boom, growth, slowdown, recession, and boom

C) Boom, slowdown, recession, growth, and boom

D) Boom, slowdown, recession, and growth

73) The timing of opening up a new business is impacted by all the following EXCEPT

A) line of credit.

B) general environment.

C) competitor moves.

D) lifestyle issues.

74) Which of the following is true of the opening time of a business?

A) The opening of a new business does not depend on the competitors' moves

B) The timing of start is a function of the general environment and lifestyle issues.

C) Entrepreneurs should realize that businesses depend on similar conditions for opening.

D) One should open a business during or at the beginning of a recession.

75) Your ability to obtain critical supplies may dictate your ________ time and ________ time.

A) order; supply

B) lead; opening

C) supply; lead

D) none of these

76) When using a time management system, a new owner must ________ his or her tasks.

A) alphabetize

B) prioritize

C) study

D) analyze

77) A(n) ________ is a living document that should be modified during the process of actually accomplishing the tasks.

78) ________ stores are major retail stores in a mall. They serve as the foundation for the rest of the establishments.

79) ________ are a potential setting for new businesses (especially nonfood service businesses) to locate their initial operations.

80) A(n) ________ defines the steps that are involved in moving from a product or service offering to the point where one actually receives money.

81) ________ alliances are the joining together of firms to form long-term, mutually beneficial relationships.

82) List the actions that must occur in order for a new business to begin operations.

83) Why is a critical path chart necessary for a new business owner? What are the benefits of creating one?

84) How do commercial agents become a valuable asset to new business owners as they seek to locate properties that match their needs?

85) List and explain what expenses a new business will need to cover in order to finance the initial operations.

86) List the "classic" items that assist a company in establishing its legitimacy.

87) How can quality be built into a product or service?

88) List the four factors that impact the timing of the opening of a new business.

89) List and explain the steps that will help new business owners in managing their time.